Delaware | | | 7371 | | | 87-3100817 |
(State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification Number) |
Phillip R. Mills Marc O. Williams Cheryl Chan Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 212-450-4000 | | | Frederic G. Hammond Senior Vice President, General Counsel and Secretary Aspen Technology, Inc. 20 Crosby Drive Bedford, MA 01730 781-221-6400 | | | Graham Robinson Chadé Severin Skadden, Arps, Slate, Meagher & Flom LLP 500 Boylston Street Boston, MA 02116 617-573-4800 |
Large accelerated filer ☐ | | | Accelerated filer ☐ |
Non-accelerated filer ☒ (Do not check if a smaller reporting company) | | | Smaller reporting company ☐ |
| | Emerging growth company ☐ |
• | a proposal to adopt the Transaction Agreement and approve the Transactions, including the Merger; |
• | a proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable to AspenTech’s named executive officers in connection with the Transactions, including the Merger; and |
• | a proposal to adjourn AspenTech’s special meeting if AspenTech determines it is necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the Transaction Agreement. |
| | Sincerely, | |
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| | /s/ Antonio Pietri | |
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| | Antonio Pietri | |
| | President and Chief Executive Officer | |
| | Aspen Technology, Inc. |
1. | To consider and vote on a proposal to adopt the Transaction Agreement and Plan of Merger, as amended by Amendment No. 1, dated as of March 23, 2022 (as it may be further amended from time to time, the “Transaction Agreement”), dated October 10, 2021, among Aspen Technology, Inc. (“AspenTech”), Emerson Electric Co. (“Emerson”), EMR Worldwide Inc., a wholly owned subsidiary of Emerson, Emersub CX, Inc., a wholly owned subsidiary of Emerson (“Newco”), and Emersub CXI, Inc., a wholly owned subsidiary of Newco (“Merger Sub”), and approve the transactions contemplated by the Transaction Agreement, including the merger of Merger Sub with and into AspenTech (collectively, the “Transactions”). |
2. | To consider and vote on a proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable to AspenTech’s named executive officers in connection with the Transactions. |
3. | To consider and vote on a proposal to approve the adjournment of the special meeting if AspenTech determines that it is necessary or advisable to permit further solicitation of proxies in the event there are not sufficient votes at the time of the special meeting to adopt the Transaction Agreement. |
4. | To transact any other business properly brought before the special meeting and any adjournment or postponement thereof, in each case, by or at the direction of the AspenTech board of directors. |
| | By Order of the Board of Directors | |
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| | /s/ Frederic G. Hammond | |
| | ||
| | Frederic G. Hammond | |
| | Senior Vice President, General Counsel and Secretary | |
| | Aspen Technology, Inc. |
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Q: | Why am I receiving this combined proxy statement/prospectus? |
A: | This document is being delivered to you because you are a stockholder of AspenTech. AspenTech is holding a special meeting in connection with the Transactions contemplated by the Transaction Agreement. |
Q: | What is happening in the Transactions? |
A: | If the Transactions are consummated, New AspenTech will own AspenTech and the Emerson Industrial Software Business. In connection with the Transactions, Emerson Sub will contribute the Emerson Industrial Software Business and Emerson will contribute $6,014,000,000 in cash to Newco in exchange for Newco common stock (the Contribution), and Merger Sub will merge with and into AspenTech, with AspenTech being the Surviving Corporation and becoming a wholly owned subsidiary of Newco (the Merger). As a result of the Merger, each issued and outstanding share of AspenTech common stock (subject to certain exceptions) will be converted into the right to receive 0.42 shares of Newco common stock and a per share cash consideration amount, calculated by dividing $6,014,000,000 by the number of outstanding shares of AspenTech common stock as of the Closing on a fully diluted basis, which per share cash consideration amount is currently estimated to be approximately $87.50 per share of AspenTech common stock. This means that holders of AspenTech common stock as of the Closing will receive an estimated $5,839 million in the aggregate at the Closing, with the remaining $175 million of the cash consideration remaining on the New AspenTech balance sheet as of the Closing. |
Q: | What will existing stockholders of AspenTech own after the Transactions? |
A: | Following the Transactions, the Emerson Group is expected to beneficially own or control 55% of the outstanding shares of Common Stock on a fully diluted basis. Holders of AspenTech common stock immediately prior to the Closing will own the remaining outstanding shares of Common Stock, which will be shares in a “Controlled Company” under the NASDAQ corporate governance listing standards. When the Transactions are completed, each share of AspenTech common stock you own prior to the Closing (other than Excluded Shares and Dissenting Shares) will have been converted automatically into the right to receive 0.42 shares of Common Stock and a per share cash consideration amount, calculated by dividing $6,014,000,000 by the number of outstanding shares of Common Stock as of the Closing on a fully diluted basis, which per share cash consideration amount is currently estimated to be approximately $87.50 per share of AspenTech common stock. |
Q: | Are there risks associated with the Transactions? |
A: | Yes. The Transactions may not be completed or, if completed, we may not achieve the expected benefits of the Transactions because of the risks and uncertainties discussed in the section titled “Risk Factors” beginning on page 33 of this combined proxy statement/prospectus, which you should read carefully. Those risks include, among other things, risks relating to the uncertainty of whether the closing conditions to the completion of the Transactions will be satisfied and, if the Transactions are completed, whether we will be able to successfully integrate the Emerson Industrial Software Business with the existing AspenTech business, and uncertainties relating to the performance of the combined businesses following the completion of the Transactions due to factors outside our control. There are also other risks associated with the Transactions that are described in the “Risk Factors” section. |
Q: | How will my rights as a New AspenTech stockholder after the Closing differ from my current rights as an AspenTech stockholder? |
A: | New AspenTech will be a Delaware corporation, as is AspenTech, and your rights as a stockholder of a corporation incorporated in Delaware under the DGCL will remain the same. However, after the Closing, your rights as a stockholder of New AspenTech will be governed by the New AspenTech Charter, a form of which is attached hereto as Annex B, and by the New AspenTech Bylaws, a form of which is attached |
Q: | How are outstanding AspenTech stock options and restricted stock units treated as a result of the Transactions? |
A: | Pursuant to the terms of the Transaction Agreement and the plans and agreements governing such awards, any AspenTech stock option and restricted stock unit awards that are outstanding at the Closing will be treated as follows: |
Q: | How is the AspenTech Employee Stock Purchase Plan being treated as a result of the Transactions? |
A: | Prior to the Closing, the AspenTech Board (or the appropriate committee thereof) will take all actions necessary to cause the “Offering Period” under the Aspen 2018 Employee Stock Purchase Plan (the “AspenTech ESPP”) that is scheduled to be ongoing as of the Closing Date to terminate, and all options outstanding under the AspenTech ESPP to be exercised, on a date that is no later than five Business Days prior to the Closing Date, with any participant payroll deductions not applied to the purchase of shares of AspenTech common stock returned to the participant. |
Q: | What are the U.S. federal income tax consequences to AspenTech stockholders resulting from the Transactions? |
A: | For U.S. federal income tax purposes, the Transactions, taken together, are intended to qualify as a transaction described in Section 351 of the Code, and AspenTech |
Q: | When will the Transactions be completed? |
A: | We are working to complete the Transactions as quickly as reasonably practicable, subject to receipt of necessary regulatory approvals, the stockholder approval that is being sought at the AspenTech special meeting, and the completion of the Emerson Industrial Software Business Reorganization in all material respects, among other closing conditions. AspenTech and Emerson currently expect to complete the Transactions in the second calendar quarter of 2022. However, AspenTech and Emerson cannot predict when regulatory review will be completed, whether or when regulatory or stockholder approval will be received or the potential terms and conditions of any regulatory approval that is received, and it is possible that those or other factors could require us to complete the Transactions at a later time or not complete them at all. For a discussion of the conditions to the Transactions, see the section titled “The Transaction Agreement—Conditions to Closing” beginning on page |
Q: | What happens if AspenTech stockholders fail to adopt the Transaction Agreement? |
A: | Adoption of the Transaction Agreement by AspenTech stockholders requires the affirmative vote, in person or by proxy, of the holders of a majority of the shares of AspenTech common stock outstanding and entitled to vote. If AspenTech stockholders do not adopt the Transaction Agreement, then both AspenTech and Emerson will be permitted to terminate the Transaction Agreement unilaterally. In addition, if AspenTech subsequently enters into a definitive agreement providing for an alternative proposal for certain transactions involving AspenTech (or recommends to its stockholders entering into such an agreement) within twelve months after the Transaction Agreement is terminated, AspenTech will be required to pay Emerson a termination fee of $325,000,000 (the “Termination Fee”). See the section titled “The Transaction Agreement—Termination and Termination Fees” beginning on page |
Q: | Am I entitled to exercise appraisal rights instead of receiving the Merger Consideration for my shares of AspenTech common stock? |
A: | Yes. AspenTech stockholders are entitled to appraisal rights under Section 262 of the DGCL, provided they fully comply with and follow the procedures and satisfy the conditions set forth in Section 262 of the DGCL. For more information regarding appraisal rights, see the section titled “The Transactions—Appraisal Rights” beginning on page |
Q: | What will Emerson shareholders be entitled to receive pursuant to the Transactions? |
A: | Emerson shareholders will not receive any consideration pursuant to the Transactions. Emerson shareholders will continue to own shares of Emerson and as such will indirectly own a share in the investments held by Emerson in New AspenTech following the completion of the Transactions through their ownership of Emerson stock. |
Q: | When and where is the special meeting? |
A: | The special meeting will take place on [ ], 2022, at [ ] a.m., Eastern time, at [ ]. Due to health and safety considerations related to COVID-19, in-person attendance will require compliance with any then-applicable governmental requirements or recommendations as well as with facility requirements, which currently include the use of face coverings and proof of either vaccination or a negative COVID-19 test result from within 72 hours of the commencement of the special meeting. |
Q: | Is it possible that the special meeting will be changed to a virtual format? |
A: | Although we are currently planning to hold the special meeting in person, in light of the ongoing public health concerns surrounding the COVID-19 pandemic, we are planning for the possibility that the special meeting may be held solely by means of remote communication (i.e., a virtual-only meeting) in lieu of an in-person meeting. If we decide to hold a virtual special meeting, we will publicly announce the decision in advance in a press release, and details will be posted on our website at www.AspenTech.com as soon as |
Q: | What do I need to do now? |
A: | After you carefully read this combined proxy statement/prospectus, please respond by submitting your proxy by telephone, by the Internet or by completing, signing, dating and returning your signed proxy card(s) in the enclosed prepaid return envelope(s), as soon as possible, so that your shares may be represented at the special meeting. If you hold your shares in “street name” through a broker, nominee, fiduciary or other custodian, follow the directions given by the broker, nominee, fiduciary or other custodian regarding how to instruct them to vote your shares. In order to ensure that your vote is recorded, please submit your proxy as instructed on your proxy card(s) even if you currently plan to attend the special meeting in person. |
Q: | Who is entitled to vote at the special meeting? |
A: | Only stockholders of record as of the close of business on [ ], 2022, the record date, will be entitled to vote at the special meeting. On the record date, there were [ ] shares of AspenTech common stock outstanding and entitled to vote. Each share of AspenTech common stock is entitled to one vote. |
Q: | Why is my vote important? |
A: | If you do not submit your proxy, vote in person at the special meeting, or provide voting instructions, it will be more difficult for AspenTech to obtain the necessary quorum to hold the special meeting and to obtain the stockholder approvals necessary for the completion of the Transactions. For the special meeting, the presence, in person or by proxy, of holders of a majority of AspenTech common stock issued and outstanding and entitled to vote at the special meeting constitutes a quorum for the transaction of business. If a quorum is not present at the special meeting, AspenTech stockholders will not be able to take action on any of the proposals at that meeting. |
Q: | How will my proxy be voted? |
A: | If you submit your proxy by telephone, by the Internet or by completing, signing, dating and returning your signed proxy card(s), your proxy will be voted in accordance with your instructions. If other matters are properly brought before the special meeting, or any adjournments or postponements of the meeting, your proxy includes discretionary authority on the part of the individuals appointed to vote your shares to act on those matters in their discretion. |
Q: | May I vote in person? |
A: | Yes. If you hold shares directly in your name as a stockholder of record of AspenTech common stock as of the close of business on [ ], 2022, you may attend the special meeting and vote your shares in person, subject to compliance with any then-applicable governmental requirements or recommendations as well as with facility requirements due to health and safety considerations related to COVID-19, which currently include use of face coverings and proof of either vaccination or a negative COVID-19 test result from within 72 hours of the commencement of the special meeting. |
Q: | What constitutes a quorum for the special meeting? |
A: | A quorum is the number of shares that must be represented at a meeting to lawfully conduct business. The presence at the special meeting, in person or by proxy, of the holders of a majority of the shares of AspenTech common stock issued and outstanding and entitled to vote at the special meeting constitutes a quorum for the transaction of business. Abstentions and broker non-votes, if any, will be included in the calculation of the number of shares considered to be present at the meeting for quorum purposes. |
Q: | What are the votes required to approve the proposals? |
Q: | Does the AspenTech Board recommend that AspenTech stockholders approve the Transaction Proposal? |
A: | Yes. The AspenTech Board has approved the Transaction Agreement and the Transactions contemplated thereby, including the Merger, and determined that the Transaction Agreement and the Transactions are in the best interest of AspenTech and its stockholders. Therefore, the AspenTech Board recommends that you vote FOR the Transaction Proposal at the special meeting. See the section titled “The Transactions—Recommendation of the AspenTech Board and Its Reasons for the Transactions” beginning on page |
Q: | If I am a record holder of my shares, what happens if I abstain from voting (whether by returning my proxy card or submitting my proxy by telephone or via the Internet) or I don’t submit a proxy? |
Q: | What will happen if I return my proxy card without indicating how to vote? |
A: | If you are an AspenTech stockholder of record and submit your proxy but do not make specific choices with respect to the proposals, your proxy will follow the AspenTech Board’s recommendations and your shares will be voted: |
Q: | What if my shares are held in “street name”? |
A: | If some or all of your shares of AspenTech are held in “street name” by your broker, nominee, fiduciary or other custodian, you must provide your broker, nominee, fiduciary or other custodian with instructions on how to vote your shares; otherwise, your broker, nominee, fiduciary or other custodian may submit a broker non-vote so as to be present for quorum purposes but will not be able to vote your shares on any of the proposals before the special meeting. |
Q: | What if I fail to instruct my broker how to vote? Will my broker automatically vote my shares for me? |
A: | Under NASDAQ rules, your bank, broker or other nominee will not vote your shares if you do not provide your bank, broker or other nominee with a signed voting instruction form with respect to your shares on matters deemed “non-routine,” such failure to vote being referred to as a “broker non-vote.” The proposed matters to be voted on the special meeting are “non-routine.” Therefore, if you are an AspenTech stockholder and you do not instruct your broker on how to vote your shares: |
Q: | What happens if I sell my shares of AspenTech common stock after the record date but before the special meeting or before the Closing? |
A: | The record date for the special meeting (the close of business on [ ], 2022) is earlier than the date of the special meeting and earlier than the date that the Transactions are expected to be completed. If you sell or otherwise transfer shares of AspenTech common stock after the record date but before the date of the special meeting, you will retain your right to vote those shares at the special meeting. However, you will not have the right to receive the Merger Consideration in respect of those shares. In order to receive the Merger Consideration, you must hold your shares through the effective time of the Transactions. |
Q: | Who will count the votes? |
A: | The inspector of elections will count all ballots submitted, including those submitted by proxies, and report the votes at the special meeting. Whether you vote your shares by Internet, telephone or mail, your vote will be received directly by Broadridge Financial Solutions, Inc. |
Q: | What does it mean if I receive more than one set of materials? |
A: | This means you own shares of AspenTech common stock that are registered under different names or held in different brokerage accounts. For example, you may own some shares directly as a stockholder of record and other shares through a broker or you may own shares through more than one broker. In these situations, you may receive multiple sets of proxy materials. It is necessary for you to vote, sign and return all of the proxy cards or follow the instructions for submitting your proxy by telephone or by the Internet on each of the proxy cards you receive in order to vote all of the shares you own. Each proxy card you receive will come with its own prepaid return envelope; if you submit your proxy by mail, make sure you return each proxy card in the return envelope which accompanied that proxy card. |
Q: | Can I revoke my proxy and change my vote? |
A: | Yes. You can revoke your proxy at any time prior to the time your shares of AspenTech common stock are voted at the special meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways: |
Q: | Should I send in my AspenTech stock certificates now? |
A: | No. After the Transactions are completed, New AspenTech will send former AspenTech stockholders written instructions for exchanging their AspenTech stock certificates for the Merger Consideration, if applicable. |
Q: | Who can answer any questions I may have about the special meeting or the Transactions? |
A: | AspenTech stockholders may call Innisfree M&A Incorporated, AspenTech’s proxy solicitor for the special meeting, at +1 (877) 717-3095. |
• | the expiration or termination of any applicable waiting period under the HSR Act relating to the Merger and the making, obtainment or receipt of the necessary consent from the Austrian Federal Competition Authority, the Federal Antimonopoly Service of Russia and the Korea Fair Trade Commission (or, as applicable, the expiration or termination of any waiting periods with respect thereto), in each case without the imposition of a Burdensome Condition (as more fully described in “The Transaction Agreement—Government Approvals” beginning on page |
• | the nonoccurrence of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on AspenTech and its subsidiaries (as this term is described in the section “The Transaction Agreement—Representations and Warranties; Material Adverse Effect” beginning on page |
• | the nonoccurrence of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Emerson Industrial Software Business (as this term is described in the section “The Transaction Agreement—Representations and Warranties; Material Adverse Effect” beginning on page |
| | AspenTech Closing Price | |
October 6, 2021 | | | $125.52 |
October 8, 2021 | | | $141.55 |
| | $ |
• | the expiration or termination of any applicable waiting period under the HSR Act relating to the Merger and the making, obtainment or receipt of the necessary consent from the Austrian Federal Competition Authority, the Federal Antimonopoly Service of Russia and the Korea Fair Trade Commission (or, as applicable, the expiration or termination of any waiting periods with respect thereto), in each case without the imposition of a Burdensome Condition (as more fully described in “The Transaction Agreement—Government Approvals” beginning on page 128 of this combined proxy statement/prospectus) (including any Burdensome Condition that would come into effect at the Closing); |
• | the nonoccurrence of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on AspenTech and its subsidiaries (as this term is described in the section “The Transaction Agreement—Representations and Warranties; Material Adverse Effect” beginning on page 119 of this combined proxy statement/prospectus). |
• | the nonoccurrence of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Emerson Industrial Software Business (as this term is described in the section “The Transaction Agreement—Representations and Warranties; Material Adverse Effect” beginning on page 119 of this combined proxy statement/prospectus); and |
| | AspenTech Closing Price | |
October 6, 2021 | | | $125.52 |
October 8, 2021 | | | $141.55 |
April 4, 2022 | | | $167.72 |
• | the expiration or termination of any applicable waiting period under the HSR Act relating to the Merger and the making, obtainment or receipt of the necessary consent from the Austrian Federal Competition Authority, the Federal Antimonopoly Service of Russia and the Korea Fair Trade Commission (or, as applicable, the expiration or termination of any waiting periods with respect thereto), in each case without the imposition of a Burdensome Condition (as more fully described in “The Transaction Agreement—Government Approvals” beginning on page 128 of this combined proxy statement/prospectus) (including any Burdensome Condition that would come into effect at the Closing); |
• | the nonoccurrence of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on AspenTech and its subsidiaries (as this term is described in the section “The Transaction Agreement—Representations and Warranties; Material Adverse Effect” beginning on page 119 of this combined proxy statement/prospectus). |
• | the nonoccurrence of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Emerson Industrial Software Business (as this term is described in the section “The Transaction Agreement—Representations and Warranties; Material Adverse Effect” beginning on page 119 of this combined proxy statement/prospectus); and |
| | AspenTech Closing Price | |
October 6, 2021 | | | $125.52 |
October 8, 2021 | | | $141.55 |
April 4, 2022 | | | $167.72 |
• | Business and Financial Information of AspenTech. The AspenTech Board considered AspenTech’s current, historical and projected financial condition, results of operations, business, competitive position, prospects, properties, assets, liabilities and the long-range plan of AspenTech on a standalone basis. The AspenTech Board also considered execution risks associated with AspenTech’s long-range plan. Specifically, the AspenTech Board considered the need for AspenTech to diversify and expand the industries and markets served by its products and to provide new or enhanced products to meet customer requirements for emerging market opportunities, including demands for greater safety, sustainability, reliability and efficiency. The AspenTech Board also considered the ability of AspenTech to address these needs through certain potential acquisitions, as well as recent challenges in pursuing such acquisitions. The AspenTech Board considered these execution risks associated with AspenTech’s long-range plan as compared to the certainty of realizing the payment of the cash component of the Merger Consideration to AspenTech stockholders and the additional opportunities afforded to AspenTech stockholders through the equity component of the Merger Consideration. See “Projected Financial Data” beginning on page |
• | Strategic Alternatives. The AspenTech Board considered strategic alternatives for maximizing stockholder value over the long term, including remaining as a standalone company and the potential to acquire, be acquired by or combine with other third parties, and the potential risks, rewards, and uncertainties associated with such alternatives. As part of this process, the AspenTech Board considered various transaction options and structures, including public and private acquisitions by financial or strategic buyers, recapitalizations, PIPE investments, and minority investments. In particular, the AspenTech Board considered the process and results of AspenTech’s extensive outreaches to 12 counterparties for opportunities of potential strategic transactions involving AspenTech throughout late 2020 and the first half of 2021. The AspenTech Board also considered the fact that if any potential counterparty, including any counterparty that had signed a confidentiality agreement with AspenTech that contained a standstill, was interested in pursuing a transaction with AspenTech on terms more favorable to AspenTech and its stockholders than those contemplated by the Transaction Agreement, such potential counterparty could make a proposal to AspenTech notwithstanding AspenTech’s entry into the Transaction Agreement. See “—Background of the Transactions” beginning on page |
• | Pro Forma Effect. The AspenTech Board considered information and discussions regarding the benefits of size, scale and the expected credit profile of the combined company as well as the expected pro forma effect of the Transactions. See “Projected Financial Data” beginning on page |
• | The AspenTech Board considered the written opinion of J.P. Morgan, dated October 10, 2021, which was delivered to the AspenTech Board on October 10, 2021 and stated that, as of such date and based upon and subject to the factors and assumptions set forth in such written opinion, the consideration to be paid to the holders of AspenTech common stock in the proposed Transactions was fair, from a financial point of view, to such holders. The AspenTech Board also considered the financial analyses presented by J.P. Morgan in connection with the delivery of its opinion, as further described under “—Opinion of AspenTech’s Financial Advisor” beginning on page |
• | The commitment made by Emerson to cooperate and use reasonable best efforts to obtain necessary regulatory clearances, including clearance under the HSR Act and any other applicable antitrust laws, as further discussed under “—Regulatory Matters Relating to the Transactions” beginning on page |
• | Emerson may terminate the Transaction Agreement only under limited circumstances, as further discussed under “The Transaction Agreement—Termination and Termination Fees” beginning on page |
• | The ability of AspenTech, under certain circumstances, to provide information to and to engage in discussions or negotiations with a third party that makes an unsolicited acquisition proposal, as further described under “The Transaction Agreement—AspenTech Non-Solicitation; AspenTech’s Ability to Change Recommendation” beginning on page |
• | The ability of the AspenTech Board, under certain circumstances, to change its recommendation to AspenTech stockholders concerning the Transactions, as further described under “The Transaction Agreement—AspenTech Non-Solicitation; AspenTech’s Ability to Change Recommendation” beginning on page |
• | The ability of the AspenTech Board to terminate the Transaction Agreement under certain circumstances, subject to certain conditions and the payment by AspenTech of the Termination Fee under certain circumstances, as further described under “The Transaction Agreement—Termination and Termination Fees” beginning on page |
• | The scope of matters that are specifically excluded from consideration in determining whether a “material adverse effect” has occurred is sufficient to protect AspenTech’s interest in ensuring the certainty of the consummation of the Transactions, as further discussed under “The Transaction Agreement—Representations and Warranties; Material Adverse Effect” beginning on page |
• | The fact that the Transactions may not be completed in a timely manner, or at all, despite the parties’ efforts. Even if the requisite approval is obtained from AspenTech stockholders, if required antitrust approvals are not obtained or if obtaining antitrust approval would require Emerson agreeing to divestitures of assets, businesses or product lines that would constitute a Burdensome Condition, as further discussed under “—Regulatory Matters Relating to the Transactions” beginning on page |
• | The fact that, after the completion of the Transactions, Emerson is expected to beneficially own or control 55% of the outstanding shares of Common Stock on a fully diluted basis and Emerson will control, subject to the terms of the Stockholders Agreement, the outcome of corporate actions of New AspenTech, including the election of directors, any merger, consolidation or sale of all or substantially all of New AspenTech’s assets and certain other agreed-upon corporate transactions, and Emerson will continue to have approval rights over certain actions taken by New AspenTech so long as Emerson beneficially owns a certain percentage of the outstanding shares of Common Stock under the Stockholders Agreement, as further discussed under the sections titled “Risk Factors” and “Certain Agreements Related to the Transactions—Stockholders Agreement” beginning on pages 33 and |
• | The expectation that AspenTech stockholders may recognize a gain for U.S. federal income tax purposes as a result of the exchange of their shares of AspenTech common stock for cash in the Transactions, as further described under “U.S. Federal Income Tax Consequences of the Transactions” beginning on page |
• |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E |
Revenue | | | $792 | | | $831 | | | $949 | | | $1,069 |
EBITDA (including stock based compensation) | | | $401 | | | $396 | | | $454 | | | $501 |
Unlevered free cash flow(1) | | | $258 | | | $298 | | | $351 | | | $413 |
(1) | Stock-based compensation treated as a cash expense. |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E |
Revenue | | | $772 | | | $805 | | | $903 | | | $1,009 |
EBITDA (including stock based compensation) | | | $383 | | | $376 | | | $419 | | | $460 |
Unlevered free cash flow(1) | | | $255 | | | $291 | | | $338 | | | $392 |
(1) | Stock-based compensation treated as a cash expense. |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E |
Revenue | | | $753 | | | $780 | | | $853 | | | $943 |
EBITDA (including stock based compensation) | | | $366 | | | $360 | | | $392 | | | $434 |
Unlevered free cash flow(1) | | | $252 | | | $285 | | | $327 | | | $377 |
(1) | Stock-based compensation treated as a cash expense. |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E |
Revenue | | | $742 | | | $802 | | | $939 | | | $1,046 |
EBITDA (including stock based compensation) | | | $360 | | | $379 | | | $462 | | | $507 |
Unlevered free cash flow(1) | | | $244 | | | $278 | | | $317 | | | $364 |
(1) | Stock-based compensation treated as a cash expense. |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E | | | FY26E |
Revenue | | | $728 | | | $784 | | | $895 | | | $984 | | | $1,063 |
EBITDA (including stock based compensation) | | | $350 | | | $380 | | | $438 | | | $467 | | | $458 |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E | | | FY26E |
Revenue | | | $728 | | | $784 | | | $895 | | | $984 | | | $1,063 |
EBITDA (including stock based compensation) | | | $350 | | | $380 | | | $438 | | | $467 | | | $458 |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E | | | FY26E |
Revenue | | | $728 | | | $784 | | | $895 | | | $984 | | | $1,063 |
Adj. EBITDA (including stock based compensation) | | | $350 | | | $380 | | | $438 | | | $467 | | | $479 |
Unlevered free cash flow(1) | | | $254 | | | $265 | | | $308 | | | $357 | | | $448 |
(1) | Stock-based compensation treated as a cash expense. |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E | | | FY26E |
Revenue | | | $342 | | | $376 | | | $414 | | | $456 | | | $498 |
Adj. EBITDA (including stock based compensation) | | | $105 | | | $120 | | | $138 | | | $160 | | | $179 |
Unlevered free cash flow(1) | | | $64 | | | $84 | | | $100 | | | $121 | | | $129 |
(1) | Stock-based compensation treated as a cash expense. |
(in millions) | | | FY22E | | | FY23E | | | FY24E | | | FY25E | | | FY26E | | | FY27E-FY32E (sum of unlevered FCF synergy impact) |
Revenue synergies | | | $0 | | | $46 | | | $99 | | | $101 | | | $91 | | | |
EBITDA synergies(1) | | | $(8) | | | $26 | | | $137 | | | $160 | | | $146 | | | |
Unlevered free cash flow synergies(1) | | | $(7) | | | $(23) | | | $(40) | | | $(26) | | | $5 | | | $680 |
(1) | Including costs to achieve. |
(in millions) | | | FY22E | ��� | | FY23E | | | FY24E | | | FY25E | | | FY26E |
Revenue | | | $1,070 | | | $1,206 | | | $1,409 | | | $1,540 | | | $1,653 |
Adj. EBITDA (including stock based compensation) | | | $447 | | | $526 | | | $713 | | | $787 | | | $805 |
Unlevered free cash flow(1) | | | $351 | | | $367 | | | $413 | | | $501 | | | $633 |
(1) | Stock-based compensation treated as a non-cash expense. |
| | Implied Equity Value of Emerson Industrial Software Business | ||||
| | Low | | | High | |
FV/FY2022 uFCF | | | $1,930 | | | $2,290 |
FV/FY2023 uFCF | | | $2,340 | | | $2,860 |
Target | | | Acquiror | | | Announcement Date |
Infor Inc. | | | Hexagon AB | | | July 2021 |
QAD Inc. | | | Thoma Bravo | | | June 2021 |
Plex Systems, Inc. | | | Rockwell Automation, Inc. | | | June 2021 |
Sparta Systems Inc. | | | Honeywell International Inc. | | | December 2020 |
Arena Solutions, Inc. | | | PTC Inc. | | | December 2020 |
OSIsoft, LLC | | | AVEVA Group plc | | | August 2020 |
Open Systems International, Inc. | | | Emerson | | | August 2020 |
RIB Software SE | | | Schneider Electric SE | | | February 2020 |
Accruent, LLC | | | Fortive Corporation | | | July 2018 |
Gordian Group, Inc. | | | Fortive Corporation | | | July 2018 |
AVEVA Group plc | | | Schneider Electric SE | | | September 2017 |
| | Implied Equity Value of Emerson Industrial Software Business | ||||
| | Low | | | High | |
FV/NTM uFCF | | | $1,820 | | | $2,900 |
| | Implied Equity Value of Emerson Industrial Software Business | ||||
| | Low | | | High | |
Discounted Cash Flow Analysis | | | $2,220 | | | $3,590 |
| | Implied Equity Value Per Share of AspenTech common stock | ||||
| | Low | | | High | |
FV/FY2022 uFCF | | | $123.55 | | | $146.85 |
FV/FY2023 uFCF | | | $120.20 | | | $146.80 |
Target | | | Acquiror | | | Announcement Date |
Infor Inc. | | | Hexagon AB | | | July 2021 |
QAD Inc. | | | Thoma Bravo | | | June 2021 |
Plex Systems, Inc. | | | Rockwell Automation, Inc. | | | June 2021 |
Sparta Systems Inc. | | | Honeywell International Inc. | | | December 2020 |
Arena Solutions, Inc. | | | PTC Inc. | | | December 2020 |
OSIsoft, LLC | | | AVEVA Group plc | | | August 2020 |
Open Systems International, Inc. | | | Emerson | | | August 2020 |
RIB Software SE | | | Schneider Electric SE | | | February 2020 |
Accruent, LLC | | | Fortive Corporation | | | July 2018 |
Gordian Group, Inc. | | | Fortive Corporation | | | July 2018 |
AVEVA Group plc | | | Schneider Electric SE | | | September 2017 |
| | Implied Equity Value Per Share of AspenTech common stock | ||||
| | Low | | | High | |
FV/NTM uFCF | | | $109.80 | | | $174.10 |
| | Implied Equity Value Per Share of AspenTech common stock | ||||
| | Low | | | High | |
Discounted Cash Flow Analysis | | | $109.35 | | | $177.80 |
| | Implied Value of Projected Net Synergies | ||||
| | Low | | | High | |
Discounted Cash Flow Analysis | | | $1,700 | | | $2,980 |
(i) | the sum of $2,731 million, the implied equity value of the Emerson Industrial Software Business on a |
(ii) | 45%, the pro forma equity ownership percentage of New AspenTech attributable to the existing holders of AspenTech common stock pursuant to the Transactions, plus |
(iii) | $5,823 million, the estimated aggregate amount of cash consideration to be paid to holders of issued and outstanding AspenTech common stock in the Transactions. |
1. | the amount of cash received by the U.S. Holder in the Transactions; and |
2. | the fair market value of the Common Stock received by the U.S. Holder in the Transactions plus the amount of cash received by the U.S. Holder in the Transactions minus the U.S. Holder’s adjusted tax basis in the AspenTech common stock surrendered in the Transactions; |
Name | | | Position |
Antonio J. Pietri | | | President and Chief Executive Officer |
Chantelle Breithaupt | | | Senior Vice President and Chief Financial Officer |
John W. Hague | | | Executive Vice President, Operations |
Frederic G. Hammond | | | Senior Vice President, General Counsel and Secretary |
| | Number of Shares of AspenTech Common Stock Beneficially Owned(#) | |
Named Executive Officer | | | |
Antonio J. Pietri | | | |
Chantelle Breithaupt | | | |
John W. Hague | | | |
Frederic G. Hammond | | | |
Total: | | | |
| | ||
Non-Employee Board Member | | | |
Jill D. Smith | | | 168 |
Dr. Thomas Bradicich | | | |
Donald P. Casey | | | |
Karen M. Golz | | | |
Amar | | | |
Gary E. Haroian** | | | 17,515 |
Adriana Karaboutis | | | |
Dr. Georgia Keresty | | | |
Robert M. Whelan, Jr. | | | 12,865 |
R. Halsey Wise | | | |
Total: | | |
* | Mr. |
** | Mr. Haroian was serving as a member of the AspenTech Board at the time the Transaction Agreement was entered into and has subsequently retired from the AspenTech Board after serving as a Board member and chair of the audit committee since 2003. His share ownership figure is as of December 10, 2021, the date of his departure from the AspenTech Board. |
| | Number of Shares Subject to AspenTech Stock Options (#) | | Number of Shares Subject to Unvested AspenTech Stock Options (as of March 31, 2022) (#) | | Spread on Unvested AspenTech Stock Options at $165.20/Share ($) | | | Number of Shares Subject to AspenTech Stock Options (#) | | Number of Shares Subject to Unvested AspenTech Stock Options (as of March 31, 2022) (#) | | Spread on Unvested AspenTech Stock Options at $165.20/Share ($) | |||||
Named Executive Officer | | | | | | | ||||||||||||
Antonio J. Pietri | | 458,457 | | 115,894 | | 4,082,637 | | 458,457 | | 115,894 | | 4,082,637 | ||||||
Chantelle Breithaupt | | 43,158 | | 33,742 | | 896,532 | | 43,158 | | 33,742 | | 896,532 | ||||||
John W. Hague | | 45,438 | | 19,390 | | 681,380 | | 45,438 | | 19,390 | | 681,380 | ||||||
Frederic G. Hammond | | 32,271 | | 15,543 | | 547,337 | | 32,271 | | 15,543 | | 547,337 | ||||||
Total: | | 579,324 | | 184,569 | | 6,207,886 | | 579,324 | | 184,569 | | 6,207,886 | ||||||
| | | | | | |||||||||||||
Non-Employee Board Member | | | | | | | ||||||||||||
Jill D. Smith | | 1,586 | | 1,288 | | 20,376 | | 1,586 | | 1,288 | | 20,376 | ||||||
Dr. Thomas Bradicich | | 3,606 | | 348 | | 9,417 | | 3,606 | | 348 | | 9,417 | ||||||
Donald P. Casey | | — | | — | | — | | — | | — | | — | ||||||
Karen Golz | | 1,769 | | 750 | | 11,775 | ||||||||||||
Amar Hanspal | | 3,426 | | 825 | | 56,265 | ||||||||||||
Gary E. Haroian* | | 20,434 | | — | | — | ||||||||||||
Karen M. Golz | | 1,769 | | 750 | | 11,775 | ||||||||||||
Amar Hanspal* | | 2,436 | | — | | — | ||||||||||||
Gary E. Haroian** | | 20,434 | | — | | — | ||||||||||||
Adriana Karaboutis | | 3,426 | | 825 | | 56,265 | | 3,426 | | 825 | | 56,265 | ||||||
Dr. Georgia Keresty | | 4,962 | | — | | — | | 4,962 | | — | | — | ||||||
Robert M. Whelan, Jr. | | 21,526 | | — | | — | | 21,526 | | — | | — | ||||||
R. Halsey Wise | | 12,813 | | — | | — | | 12,813 | | — | | — | ||||||
Total: | | 73,548 | | 4,036 | | 154,098 | ||||||||||||
Total^: | | 72,558 | | 3,211 | | 97,833 |
* | Mr. |
** | Mr. Haroian was serving as a member of the AspenTech Board at the time the Transaction Agreement was entered into and has subsequently retired from the AspenTech Board after serving as a Board member and chair of the audit committee since 2003. At the time of his departure from the AspenTech Board on December 10, 2021, Mr. Haroian did not hold any unvested AspenTech Stock Options. His AspenTech Stock Option ownership figure is as of that date. |
^ | The total amounts in this table include and reflect Mr. Hanspal’s holdings as of March 13, 2022, the date of his departure from the AspenTech Board. |
Named Executive Officer | | Total Unvested AspenTech RSUs (as of March 31, 2022) (#) | | Total Value at $165.20/Share ($) | | Total Unvested AspenTech RSUs (as of March 31, 2022) (#) | | Total Value at $165.20/Share ($) | ||||
Antonio J. Pietri | | 64,574 | | 10,667,625 | | 64,574 | | 10,667,625 | ||||
Chantelle Breithaupt | | 20,663 | | 3,413,528 | | 21,789 | | 3,599,543 | ||||
John W. Hague | | 18,888 | | 3,120,298 | | 19,894 | | 3,286,489 | ||||
Frederic G. Hammond | | 15,772 | | 2,605,534 | | 16,765 | | 2,769,578 | ||||
Total: | | 119,897 | | 19,806,984 | | 123,022 | | 20,323,235 | ||||
| | | | |||||||||
Non-Employee Board Member | | | | | ||||||||
Jill D. Smith | | 653 | | 107,876 | | 653 | | 107,876 | ||||
Dr. Thomas Bradicich | | 176 | | 29,075 | | 176 | | 29,075 | ||||
Donald P. Casey | | — | | — | | — | | — | ||||
Karen Golz | | 381 | | 62,941 | ||||||||
Amar Hanspal | | 419 | | 69,219 | ||||||||
Gary E. Haroian* | | — | | — | ||||||||
Karen M. Golz | | 381 | | 62,941 | ||||||||
Amar Hanspal* | | — | | — | ||||||||
Gary E. Haroian** | | — | | — | ||||||||
Adriana Karaboutis | | 419 | | 69,219 | | 419 | | 69,219 | ||||
Dr. Georgia Keresty | | — | | — | | — | | — | ||||
Robert M. Whelan, Jr. | | — | | — | | — | | — | ||||
R. Halsey Wise | | — | | — | | — | | — | ||||
Total: | | 2,048 | | 338,330 | | 1,629 | | 269,111 |
* | Mr. |
** | Mr. Haroian was serving as a member of the AspenTech Board at the time the Transaction Agreement was entered into and has subsequently retired from the AspenTech Board after serving as a Board member and chair of the audit committee since 2003. At the time of his departure from the AspenTech Board on December 10, 2021, Mr. Haroian did not hold any unvested AspenTech RSUs. |
Named Executive Officer | | | Type of Equity Award | | | Number of Shares Subject to Award (#) | | | Value of Award (at $165.20/Share) ($) |
Chantelle Breithaupt | | | Restricted Stock Units | | | 4,504 | | | 744,061 |
John W. Hague | | | Restricted Stock Units | | | 4,027 | | | 665,260 |
Frederic G. Hammond | | | Restricted Stock Units | | | 3,974 | | | 656,505 |
Named Executive Officer | | | Type of Equity Award | | | Number of Shares Subject to Award (#) | | | Value of Award (at $165.20/Share) ($) |
Chantelle Breithaupt | | | Restricted Stock Units | | | 4,504 | | | 744,061 |
John W. Hague | | | Restricted Stock Units | | | 4,027 | | | 665,260 |
Frederic G. Hammond | | | Restricted Stock Units | | | 3,974 | | | 656,505 |
Name(1) | | | Cash ($)(2) | | | Equity ($)(3) | | | Perquisites/ Benefits ($)(4) | | | Total ($) |
Antonio J. Pietri | | | 2,100,000 | | | 14,750,262 | | | 82,861 | | | 16,933,123 |
Chantelle Breithaupt | | | 725,000 | | | 4,310,060 | | | 69,754 | | | 5,104,814 |
John W. Hague | | | 780,000 | | | 3,801,678 | | | 64,823 | | | 4,646,501 |
Frederic G. Hammond | | | 660,000 | | | 3,152,871 | | | 64,899 | | | 3,877,770 |
(1) | Under relevant SEC rules, AspenTech is required to provide information in this table with respect to AspenTech’s named executive officers, who are generally the individuals whose compensation was required to be reported in the summary compensation table of AspenTech’s most recent proxy statement. Karl Johnsen was a named executive officer in AspenTech’s most recent proxy statement but is no longer employed by AspenTech and is not eligible to receive any compensation based on, or otherwise related to, the Transactions. |
(2) | The amounts in this column represent the cash severance payments that would be payable to each named executive officer upon a qualifying termination under their respective Amended Agreements within 12 months following the Closing, as described in more detail under “Interests of AspenTech’s Directors and Executive Officers in the Transactions—Potential Executive Severance.” The amounts in this column are considered “double-trigger” (i.e., such amounts are payable upon a qualifying termination of employment following the Closing). The cash severance amounts for each named executive officer are calculated as follows: |
Named Executive Officer | | | Salary ($) | | | Bonus ($) | | | Severance Multiple | | | Total ($) |
Antonio J. Pietri | | | 600,000 | | | 800,000 | | | 150% | | | 2,100,000 |
Chantelle Breithaupt | | | 425,000 | | | 300,000 | | | 100% | | | 725,000 |
John W. Hague | | | 380,000 | | | 400,000 | | | 100% | | | 780,000 |
Frederic G. Hammond | | | 375,000 | | | 285,000 | | | 100% | | | 660,000 |
(3) | The amounts in this column represent the estimated pre-tax value to each named executive officer of the vesting of unvested AspenTech Stock Options and unvested AspenTech RSUs estimated to be held by such named executive officer as of March 31, 2022 (including the Executive Retention RSUs described above). The value of such AspenTech Stock Options is calculated by multiplying the excess of $165.20 (the average closing market price of AspenTech common stock over the first five business days following the first public announcement of the Transaction) over the exercise price per share under such AspenTech Stock Option by the number of shares subject to such AspenTech Stock Option. The value of the AspenTech RSUs is calculated by multiplying the number of shares subject to such AspenTech RSU by $165.20. The following table breaks down the amounts in this column by types of AspenTech equity award. These amounts are considered “double trigger” as they vest upon a qualifying termination following a change in control, which change in control will occur upon the Closing. For additional information on the treatment of outstanding equity awards held by each named executive officer in the Transactions, see “Interests of AspenTech’s Directors and Executive Officers in the Transactions—Equity Incentive Awards.” |
Name | | | Unvested AspenTech Stock Options($) | | | AspenTech RSUs($) |
Antonio J. Pietri | | | 4,082,637 | | | 10,667,625 |
Chantelle Breithaupt | | | 896,532 | | | 3,413,528 |
John W. Hague | | | 681,380 | | | 3,120,298 |
Frederic G. Hammond | | | 547,337 | | | 2,605,534 |
(4) | The amounts in this column represent the estimated value of outplacement benefits and COBRA, life, disability and accident insurance benefits payments, as described in more detail under “Interests of AspenTech’s Directors and Executive Officers in the Transactions—Potential Executive Severance.” The amounts in this column are considered “double-trigger” as they will only be payable in the event of a qualifying termination of employment following the Closing. |
• | the expiration or termination of any applicable waiting period under the HSR Act relating to the Merger and the making, obtainment or receipt of the necessary consent from the Austrian Federal Competition Authority, the Federal Antimonopoly Service of Russia and the Korea Fair Trade Commission (or, as applicable, the expiration or termination of any waiting periods with respect thereto), in each case without the imposition of a Burdensome Condition (as more fully described in “—Government Approvals” beginning on page |
• | the non-occurrence of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on AspenTech and its subsidiaries (as described above under the section titled “—Representations and Warranties; Material Adverse Effect” beginning on page |
• | the non-occurrence of any event, circumstance, development, change, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Emerson Industrial Software Business (as described above under the section titled “—Representations and Warranties; Material Adverse Effect” beginning on page |
• |
| | Historical | | | Pro Forma | ||||||||||
| | Emerson Industrial Software Business | | | AspenTech | | | Transaction Accounting Adjustments (Note 4) | | | | | Pro Forma Combined | ||
| | (a) | | | (b) | | | | | | | ||||
ASSETS | | | | | | | | | | | |||||
Current assets | | | | | | | | | | | |||||
Cash and equivalents | | | $27,651 | | | 211,399 | | | 175,000 | | | (c) | | | 414,050 |
Accounts receivable, net | | | 94,149 | | | 35,696 | | | | | | | 129,845 | ||
Current contract assets, net | | | 69,752 | | | 324,710 | | | | | | | 394,462 | ||
Prepaid expenses and other current assets | | | 9,009 | | | 13,401 | | | | | | | 22,410 | ||
Income tax receivable | | | 3,414 | | | 2,696 | | | | | | | 6,110 | ||
Total current assets | | | 203,975 | | | 587,902 | | | 175,000 | | | | | 966,877 | |
Property, equipment and leasehold improvements, net | | | 13,905 | | | 4,741 | | | | | | | 18,646 | ||
Goodwill | | | 1,044,383 | | | 156,626 | | | 6,011,076 | | | (d) | | | 7,212,085 |
Intangible assets, net | | | 815,108 | | | 40,804 | | | 4,339,196 | | | (e) | | | 5,195,108 |
Non-current contract assets, net | | | — | | | 448,331 | | | | | | | 448,331 | ||
Contract costs | | | — | | | 29,679 | | | (29,679) | | | (f) | | | — |
Operating lease right-of-use assets | | | 44,647 | | | 29,984 | | | 11,200 | | | (g) | | | 85,831 |
Deferred tax assets | | | 7,002 | | | 2,145 | | | | | | | 9,147 | ||
Other noncurrent assets | | | 4,994 | | | 3,718 | | | | | | | 8,712 | ||
Total Assets | | | $2,134,014 | | | 1,303,930 | | | 10,506,793 | | | | | 13,944,737 | |
LIABILITIES AND EQUITY | | | | | | | | | | | |||||
Current liabilities | | | | | | | | | | | |||||
Accounts payable | | | $5,995 | | | 4,666 | | | | | | | 10,661 | ||
Accrued expenses and other current liabilities | | | 37,487 | | | 44,637 | | | 64,700 | | | (h) | | | 146,824 |
Current operating lease liabilities | | | 5,668 | | | 7,511 | | | 800 | | | (g) | | | 13,979 |
Income taxes payable | | | 2,674 | | | 42,457 | | | | | | | 45,131 | ||
Current borrowings | | | — | | | 24,000 | | | | | | | 24,000 | ||
Current contract liabilities | | | 89,709 | | | 49,464 | | | | | | | 139,173 | ||
Total current liabilities | | | 141,533 | | | 172,735 | | | 65,500 | | | | | 379,768 | |
Non-current contract liabilities | | | 5,771 | | | 9,478 | | | | | | | 15,249 | ||
Deferred tax liabilities | | | 146,545 | | | 139,914 | | | 956,954 | | | (i) | | | 1,243,413 |
Non-current operating lease liabilities | | | 39,776 | | | 26,481 | | | 9,700 | | | (g) | | | 75,957 |
Non-current borrowings, net | | | — | | | 261,177 | | | | | | | 261,177 | ||
Other non-current liabilities | | | 11,796 | | | 2,341 | | | | | | | 14,137 | ||
Equity | | | | | | | | | | | |||||
Net parent investment | | | 1,794,388 | | | — | | | (1,794,388) | | | (j) | | | — |
Common stock | | | — | | | 10,480 | | | (10,480) | | | (j) | | | — |
Additional paid-in capital | | | — | | | 828,780 | | | 11,149,051 | | | (g),(h),(i),(j) | | | 11,977,831 |
Retained earnings (accumulated deficit) | | | — | | | 1,879,396 | | | (1,896,396) | | | (j) | | | (17,000) |
Accumulated other comprehensive income (loss) | | | (5,795) | | | 4,336 | | | (4,336) | | | (j) | | | (5,795) |
Treasury stock, at cost | | | — | | | (2,031,188) | | | 2,031,188 | | | (j) | | | — |
Total equity | | | $1,788,593 | | | 691,804 | | | 9,474,639 | | | | | 11,955,036 | |
Total liabilities and equity | | | $2,134,014 | | | 1,303,930 | | | 10,506,793 | | | | | 13,944,737 |
| | Historical | | | Pro Forma | |||||||||||||
| | Emerson Industrial Software Business | | | AspenTech | | | Transaction Accounting Adjustments (Note 4) | | | | | Pro Forma Combined | | | |||
| | (k) | | | (l) | | | | | | | | | |||||
Revenue: | | | | | | | | | | | | | ||||||
License and solutions | | | $48,491 | | | 116,111 | | | | | | | 164,602 | | | |||
Maintenance | | | 26,272 | | | 48,385 | | | | | | | 74,657 | | | |||
Services and other | | | 7,012 | | | 6,860 | | | | | | | 13,872 | | | |||
Total revenue | | | 81,775 | | | 171,356 | | | | | | | 253,131 | | | |||
Cost of revenue: | | | | | | | | | | | | |||||||
License and solutions | | | 33,221 | | | 2,340 | | | 30,425 | | | (m) | | | 65,986 | | | |
Maintenance | | | 4,074 | | | 4,352 | | | 65 | | | (n) | | | 8,491 | | | |
Services and other | | | 4,282 | | | 8,204 | | | 120 | | | (n) | | | 12,606 | | | |
Total cost of revenue | | | 41,577 | | | 14,896 | | | 30,610 | | | | | 87,083 | | | ||
Gross profit | | | 40,198 | | | 156,460 | | | (30,610) | | | | | 166,048 | | | ||
Operating expenses: | | | | | | | | | | | | |||||||
Research and development | | | 15,383 | | | 25,414 | | | 680 | | | (n) | | | 41,477 | | | |
General and administrative | | | 7,036 | | | 31,927 | | | 1,990 | | | (n),(o) | | | 40,953 | | | |
Selling and marketing | | | 17,995 | | | 30,630 | | | 43,689 | | | (n),(p) | | | 92,314 | | | |
Restructuring costs | | | 38 | | | — | | | | | | | 38 | | ||||
Total operating expenses | | | 40,452 | | | 87,971 | | | 46,359 | | | | | 174,782 | | | ||
Earnings (loss) from operations | | | (254) | | | 68,489 | | | (76,969) | | | | | (8,734) | | | ||
Other expense (income), net | | | 1,419 | | | 1,757 | | | | | | | 3,176 | | | |||
Interest expense (income), net | | | 20 | | | (7,177) | | | | | | | (7,157) | | | |||
Earnings (loss) before income taxes | | | (1,693) | | | 73,909 | | | (76,969) | | | | | (4,753) | | | ||
Provision (benefit) from income taxes | | | (933) | | | 12,045 | | | (16,881) | | | (q) | | | (5,769) | | | |
Net earnings (loss) | | | $(760) | | | 61,864 | | | (60,088) | | | | | 1,016 | | | ||
Earnings per share (in Dollars): | | | | | | | | | | | | | ||||||
Basic | | | | | $0.93 | | | | | | | $0.02 | | | (r) | |||
Diluted | | | | | $0.92 | | | | | | | $0.02 | | | (r) | |||
Weighted average outstanding shares (in thousands of shares): | | | | | | | | | | | | | ||||||
Basic | | | | | 66,775 | | | (2,000) | | | (r) | | | 64,775 | | | ||
Diluted | | | | | 67,249 | | | (2,000) | | | (r) | | | 65,249 | | |
| | Historical | | | Pro Forma | |||||||||||||
| | Emerson Industrial Software Business | | | AspenTech | | | Transaction Accounting Adjustments (Note 4) | | | | | Pro Forma Combined | | | |||
| | (k) | | | (l) | | | | | | | | | |||||
Revenue: | | | | | | | | | | | | | ||||||
License and solutions | | | $180,914 | | | 516,724 | | | | | | | 697,638 | | | |||
Maintenance | | | 92,562 | | | 186,519 | | | | | | | 279,081 | | | |||
Services and other | | | 27,164 | | | 27,182 | | | | | | | 54,346 | | | |||
Total revenue | | | 300,640 | | | 730,425 | | | | | | | 1,031,065 | | | |||
Cost of revenue: | | | | | | | | | | | | | ||||||
License and solutions | | | 125,181 | | | 9,602 | | | 121,800 | | | (m) | | | 256,583 | | | |
Maintenance | | | 18,610 | | | 18,085 | | | 525 | | | (n) | | | 37,220 | | | |
Services and other | | | 19,219 | | | 31,881 | | | 950 | | | (n) | | | 52,050 | | | |
Total cost of revenue | | | 163,010 | | | 59,568 | | | 123,275 | | | | | 345,853 | | | ||
Gross profit | | | 137,630 | | | 670,857 | | | (123,275) | | | | | 685,212 | | | ||
Operating expenses: | | | | | | | | | | | | | ||||||
Research and development | | | 59,646 | | | 98,556 | | | 5,275 | | | (n) | | | 163,477 | | | |
General and administrative | | | 32,638 | | | 88,924 | | | 81,900 | | | (n),(o) | | | 203,462 | | | |
Selling and marketing | | | 103,311 | | | 119,268 | | | 176,144 | | | (n),(p) | | | 398,723 | | | |
Restructuring costs | | | 2,474 | | | — | | | | | | | 2,474 | | | |||
Total operating expenses | | | 198,069 | | | 306,748 | | | 263,319 | | | | | 768,136 | | | ||
Earnings (loss) from operations | | | (60,439) | | | 364,109 | | | (386,594) | | | | | (82,924) | | | ||
Other expense (income), net | | | 5,359 | | | 2,603 | | | | | | | 7,962 | | | |||
Interest expense (income), net | | | 115 | | | (30,100) | | | | | | | (29,985) | | | |||
Earnings (loss) before income taxes | | | (65,913) | | | 391,606 | | | (386,594) | | | | | (60,901) | | | ||
Provision (benefit) from income taxes | | | (45,305) | | | 65,115 | | | (80,402) | | | (q) | | | (60,592) | | | |
Net earnings (loss) | | | $(20,608) | | | 326,491 | | | (306,192) | | | | | (309) | | | ||
| | | | | | | | | | | | |||||||
Earnings per share (in Dollars): | | | | | | | | | | | | | ||||||
Basic | | | | | $4.82 | | | | | | | $(0.00) | | | (r) | |||
Diluted | | | | | $4.79 | | | | | | | $(0.00) | | | (r) | |||
| | | | | | | | | | | | |||||||
Weighted average outstanding shares (in thousands of shares): | | | | | | | | | | | | | ||||||
Basic | | | | | 67,680 | | | (2,000) | | | (r) | | | 65,680 | | | ||
Diluted | | | | | 68,218 | | | (2,538) | | | (r) | | | 65,680 | | |
| | For the fiscal year ended June 30, 2021 | | | For the three months ended Sept 30, 2020 (Less) | | | For the three months ended Sept 30, 2021 (Plus) | | | For the twelve months ended Sept 30, 2021 | |
Revenue: | | | | | | | | | ||||
License and solutions | | | $497,479 | | | 61,859 | | | 81,104 | | | 516,724 |
Maintenance | | | 185,164 | | | 46,858 | | | 48,213 | | | 186,519 |
Services and other | | | 26,733 | | | 6,254 | | | 6,703 | | | 27,182 |
Total revenue | | | 709,376 | | | 114,971 | | | 136,020 | | | 730,425 |
Cost of revenue: | | | | | | | | | ||||
License and solutions | | | 9,276 | | | 2,136 | | | 2,462 | | | 9,602 |
Maintenance | | | 18,287 | | | 4,764 | | | 4,562 | | | 18,085 |
Services and other | | | 32,588 | | | 8,566 | | | 7,859 | | | 31,881 |
Total cost of revenue | | | 60,151 | | | 15,466 | | | 14,883 | | | 59,568 |
Gross profit | | | 649,225 | | | 99,505 | | | 121,137 | | | 670,857 |
Operating expenses: | | | | | | | | | ||||
Research and development | | | 94,229 | | | 22,530 | | | 26,857 | | | 98,556 |
General and administrative | | | 81,636 | | | 17,633 | | | 24,921 | | | 88,924 |
Selling and marketing | | | 114,959 | | | 25,172 | | | 29,481 | | | 119,268 |
Total operating expenses | | | 290,824 | | | 65,335 | | | 81,259 | | | 306,748 |
Earnings from operations | | | 358,401 | | | 34,170 | | | 39,878 | | | 364,109 |
Other expense, net | | | 3,200 | | | 1,469 | | | 872 | | | 2,603 |
Interest (income), net | | | (29,546) | | | (6,574) | | | (7,128) | | | (30,100) |
Earnings before income taxes | | | 384,747 | | | 39,275 | | | 46,134 | | | 391,606 |
Provision for income taxes | | | 64,944 | | | 6,564 | | | 6,735 | | | 65,115 |
Net earnings | | | $319,803 | | | 32,711 | | | 39,399 | | | 326,491 |
(1) | DESCRIPTION OF THE ACQUISITION |
(2) | BASIS OF PRESENTATION |
(3) | PRELIMINARY PURCHASE PRICE ALLOCATION |
AspenTech shares outstanding | | | 66,561,786 |
AspenTech share price | | | $150.16 |
Estimated purchase price | | | $9,994,918 |
Estimated value of stock-based compensation awards attributable to pre-combination service | | | 67,300 |
Total estimated purchase price | | | $10,062,218 |
| |
Carrying value of AspenTech net assets as of December 31, 2021 | | | $691,804 |
Less: Pre-existing AspenTech goodwill | | | (156,626) |
Less: Pre-existing AspenTech intangible assets | | | (40,804) |
Less: Deferred tax liabilities on pre-existing AspenTech goodwill and intangible assets | | | 6,892 |
Adjusted book value of net assets acquired | | | $501,266 |
Purchase accounting adjustments: | | | |
Identifiable intangible assets at fair value | | | $4,380,000 |
Fair value adjustment to AspenTech deferred contract acquisition costs | | | (29,679) |
Goodwill | | | 6,167,702 |
Deferred tax impact of fair value adjustments | | | (957,071) |
Total purchase price allocation including book value of net assets acquired | | | $10,062,218 |
(4) | PRO FORMA ADJUSTMENTS AND ASSUMPTIONS |
a. | Represents the Emerson Industrial Software Business’s historical unaudited consolidated and combined balance sheet as of December 31, 2021 which is included elsewhere in this combined proxy statement/prospectus. |
b. | Represents AspenTech’s historical unaudited consolidated balance sheet as of December 31, 2021, included in its Form 10-Q filed with the SEC on January 26, 2022. |
c. | As part of the transaction agreement with AspenTech, Emerson will contribute $6,014,000,000 in cash to Newco. A portion of the cash will be paid out at approximately $87.50 per share to holders of issued and outstanding shares of AspenTech common stock as of the Closing, with an estimated $175 million of cash consideration remaining on the New AspenTech balance sheet as of the Closing. |
d. | Represents the elimination of $156.6 million of existing goodwill of AspenTech and the preliminary recognition of $6,167.7 million of goodwill which is not expected to be deductible for tax purposes. |
e. | Represents the elimination of $40.8 million of existing intangible assets of AspenTech and the preliminary recognition of $4,380.0 million of identifiable intangible assets attributable to the transaction. |
| | Amount | | | Amortization Expense for Three months ended Dec. 31, 2021 | | | Amortization Expense for Year ended Sept. 30, 2021 | | | Estimated Weighted Average life (Years) | |
Developed technology | | | $1,160,000 | | | 32,225 | | | 128,900 | | | 9.0 |
Customer relationships | | | 2,700,000 | | | 45,000 | | | 180,000 | | | 15.0 |
Trade names | | | 520,000 | | | — | | | — | | | Indefinite-lived |
Total | | | $4,380,000 | | | 77,225 | | | 308,900 | | |
f. | Represents the elimination of $29.7 million of deferred contract costs of AspenTech which have no future value. |
g. | Represents increases in AspenTech's historical operating lease right-of-use assets, current and noncurrent operating lease liabilities and additional paid-in-capital of $11.2 million, $0.8 million, $9.7 million and $0.7 million, respectively, as a result of AspenTech conforming to the Emerson Industrial Software Business's accounting policy election to combine lease and non-lease components as a single lease component for offices and manufacturing facilities. |
h. | Reflects the accrual of the remaining AspenTech non-recurring transaction costs of $64.7 million related to the transaction including fees expected to be paid for financial advisors, legal services, and professional accounting services. These remaining acquiree costs are not reflected in the historical balance sheet of AspenTech as of December 31, 2021, but are reflected in the New AspenTech unaudited pro forma condensed combined balance sheet as of December 31, 2021 as an increase to accrued expenses and a decrease to additional paid-in capital. These costs are not expected to be incurred in any period beyond 12 months from the closing date of the transaction. |
i. | Represents the net change in deferred tax liabilities associated with the fair value adjustments related to allocation of the purchase price to assets acquired and liabilities assumed (excluding goodwill). Deferred taxes were computed using a combined U.S. federal and state statutory tax rate of 22%. This rate is subject to change when New AspenTech performs a complete tax analysis after the transaction is completed. Additionally, the amount shown includes an adjustment of $6.8 million related to certain tax attributes in the Emerson Industrial Software Business’s historical financial statements that will not be retained as part of the transaction. |
j. | Represents adjustments to equity for the following: |
k. | Represents the Emerson Industrial Software Business’s historical unaudited consolidated statement of operations for the three months ended December 31, 2021 and historical consolidated statement of operations for the year ended September 30, 2021 which is included elsewhere in this combined proxy statement/prospectus. |
l. | Represents AspenTech’s historical unaudited consolidated statement of operations for the three months ended December 31, 2021, included in their Form 10-Q filed with the SEC on January 26, 2022, and its results for the 12 months ended September 30, 2021. AspenTech’s results for the 12 months ended September 30, 2021 were derived from the following: (a) the historical consolidated financial statements of AspenTech as of and for the year ended June 30, 2021, included in their Annual Report |
m. | Represents the net change from the removal of AspenTech’s historical intangibles amortization of $1.8 million and $7.1 million for the three months ended December 31, 2021 and 12 months ended September 30, 2021, respectively, and the recognition of new amortization expense of |
n. | Represents expense related to the retention cash and equity incentive awards under the Emerson Retention Program and the AspenTech Retention Program. Expense includes $0.1 million in cost of maintenance, $0.1 million in cost of services and other, $0.7 million in research and development, $2.4 million in general and administrative, and $0.5 million in selling and marketing for the three months ended December 31, 2021, and $0.5 million in cost of maintenance, $1.0 million in cost of services and other, $5.3 million in research and development, $18.9 million in general and administrative, and $3.9 million in selling and marketing for the year ended September 30, 2021. |
o. | Represents the removal of AspenTech’s historical intangibles amortization of $0.4 million and $1.7 million for the three months ended December 31, 2021 and 12 months ended September 30, 2021, respectively, and the accrual of non-recurring transaction costs of $64.7 million related to the transaction, including fees expected to be paid for financial advisors, legal services, and professional accounting services which are reflected in the results for the year ended September 30, 2021 (see note (h) above). These transaction costs are not reflected in the historical results of operations of AspenTech for the 12 months ended September 30, 2021. These transaction costs are not expected to be incurred in any period beyond 12 months from the Closing Date. For the three months ended December 31, 2021, AspenTech’s historical financial statements included $10.3 million of costs related to the Transactions, all of which are non-recurring. For the year ended September 30, 2021, the Emerson Industrial Software Business’s historical statements included $6.1 million of transaction costs related to the OSI Inc. acquisition, while AspenTech’s historical financial statements included $7.3 million of costs related to the Transactions, all of which are non-recurring. |
p. | Represents the recognition of new amortization expense of $45.0 million and $180.0 million for the three months ended December 31, 2021 and year ended September 30, 2021, respectively, resulting from intangibles identified as part of the estimated purchase price allocation (see note (e) above), and the removal of AspenTech’s historical amortization of capitalized contract costs of $1.8 million and $7.7 million for the three months ended December 31, 2021 and 12 months ended September 30, 2021, respectively. |
q. | Represents the income tax effect of the pro forma adjustments presented. The pro forma income tax adjustments were estimated using a combined U.S. federal and statutory tax rate of 22%, except for the accrued transaction costs and the retention cash and equity incentive awards which were at a lower rate. The effective tax rate of New AspenTech could be materially different depending on post-combination activities. |
r. | Represents the estimated change in shares of Common Stock from the exchange of shares by existing AspenTech stockholders and the issuance of shares of Common Stock to Emerson. |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
Authorized Capital Stock | |||
New AspenTech will be authorized to issue: • • The New AspenTech Board is authorized to issue the Preferred Stock in one or more classes or series. | | | AspenTech is authorized to issue: • 210,000,000 shares of common stock, of which of • 10,000,000 shares of preferred stock, of which none were issued and outstanding as of The AspenTech Board is authorized to issue the preferred stock in one or more series. |
| | ||
Voting Rights | |||
Under the New AspenTech Charter, holders of Common Stock will be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote. Except as otherwise required by law, holders of Common Stock (as such) will not be entitled to vote on any amendment to the New AspenTech Charter that relates solely to the terms of one or more outstanding classes or series of Preferred Stock if the holders of such affected class or series are entitled, either separately or together with the holders of one or more other such classes or series, to vote thereon pursuant to the New AspenTech Charter or the DGCL. | | | Under AspenTech’s certificate of incorporation, the holders of AspenTech common stock are entitled to one vote for each share held at all meetings of stockholders, subject to and qualified by the rights of holders of any preferred stock of AspenTech as may be designated in any resolution or resolutions providing for the issue of such preferred stock as may be adopted by the AspenTech Board. |
| |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
Quorum | |||
Under the New AspenTech Bylaws, unless otherwise provided under the New AspenTech Charter and subject to the DGCL, the holders of a majority of the voting power of all of the outstanding shares of capital stock of New AspenTech generally entitled to vote at a meeting, present in person or by proxy will constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or classes or series is required, the holders of a majority of the voting power of the shares of such class or classes or series, present in person or by proxy, will constitute a quorum entitled to take action with respect to the vote on such matter. | | | Under AspenTech’s bylaws, the holders of a majority of the shares of capital stock of AspenTech issued and outstanding and entitled to vote thereat, present in person or represented by proxy, will constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise required by law or AspenTech’s certificate of incorporation. |
| | ||
Stockholder Rights Plans | |||
New AspenTech will not be a party to a stockholder rights plan at the Closing. | | | AspenTech is not a party to a stockholder rights plan. |
| | ||
Number of Directors | |||
The New AspenTech Bylaws provide that, subject to the Stockholders Agreement and any rights of holders of any series of Preferred Stock, the New AspenTech Board will consist of not less than seven nor more than 15 directors, with the exact number of directors to be determined from time to time solely by resolution adopted by the affirmative vote of the total number of authorized directors constituting the New AspenTech Board whether or not there exist any vacancies or other unfilled seats. The Stockholders Agreement provides that immediately following the Closing, the New AspenTech Board will be comprised of (i) five designees of Emerson Sub (one of whom will be Jill D. Smith, the current chair of the AspenTech Board and who will also be the chair of the New AspenTech Board, and three of whom will be designated by Emerson Sub following consultation with Ms. Smith), (ii) the Chief Executive Officer of AspenTech immediately prior to the Closing and (iii) three designees of AspenTech (all of whom will be reasonably acceptable to Emerson Sub and also be Independent Directors, which three directors will have been designated by AspenTech prior to the designation of any director (other than Ms. Smith) by Emerson Sub pursuant to clause (i) above.) Under the Stockholders Agreement and before the Third Trigger Date, Emerson Sub will have the right to designate a number of the total authorized number of directors of the New AspenTech Board as of such time that is proportionate to the Emerson Group’s beneficial ownership of outstanding shares of Common Stock at such time (rounded up to the nearest whole person), | | | AspenTech’s bylaws provide that the number of directors that constitute the AspenTech Board will be determined by resolution of the AspenTech Board but must not be less than three directors. |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
provided that Emerson Sub will have the right to designate at least a majority of the directors on the New AspenTech Board until the Second Trigger Date. Following the Third Trigger Date until the Fourth Trigger Date, Emerson Sub will have the right to designate one director. See “Certain Agreements Related to the Transactions—Stockholders Agreement” beginning on page | | | |
| | ||
Filling Vacancies on the Board of Directors | |||
Subject to the terms of the Stockholders Agreement, under the New AspenTech Charter and the New AspenTech Bylaws, newly created directorships resulting from any increase in the number of directors and other vacancies in the New AspenTech Board may be filled solely by a majority vote of the directors then in office, although less than a quorum, or by a sole remaining director. Under the Stockholders Agreement, in the event of a vacancy on the New AspenTech Board upon the death, resignation, retirement, disqualification, removal from office or other cause of any director who is not an Emerson Director, the Nominating & Governance Committee will have the sole right to fill such vacancy or designate a person for nomination for election to the New AspenTech Board to fill such vacancy in accordance with applicable law. However, until the Third Trigger Date, (i) the then-current Chief Executive Officer of New AspenTech must be included for nomination at any annual or special meeting of New AspenTech at which directors are elected and (ii) each designee to the New AspenTech Board (other than Emerson Sub’s designees and the then-current Chief Executive Officer of New AspenTech) must be a New AspenTech Independent Director and must meet all other requirements under applicable law for membership on the Audit Committee of the New AspenTech Board, and one of which such designees must also be an “audit committee financial expert” under Item 407(d)(5) of Regulation S K. In the event that any Emerson Director will cease to serve as a director for any reason, the resulting vacancy will be filled by the New AspenTech Board with a substitute person designated by Emerson Sub. New AspenTech will take all actions necessary to facilitate the removal and replacement of any Emerson Director upon the written request of Emerson Sub. See “Certain Agreements Related to the Transactions—Stockholders Agreement” beginning on page | | | Under AspenTech’s bylaws, newly created directorships resulting from any increase in the number of directors and other vacancies in the AspenTech Board may be filled by a majority vote of the directors then in office, although less than a quorum, or by a sole remaining director. |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights | | ||
Classified Board | | |||||
The New AspenTech Board is not classified. Under the New AspenTech Bylaws, the New AspenTech directors will hold office until their successors have been duly elected and qualified or until their earlier deaths, resignations or removal. | | | Under AspenTech’s certificate of incorporation and bylaws, the board of directors is classified and directors hold office for a term of three years, with each term ending on the date of the third annual meeting following the annual meeting at which the director was elected, subject to the election and qualification of a successor to such director and to the earlier death, resignation or removal of such director. | | ||
Removal of Directors | | |||||
Under the New AspenTech Charter, subject to the terms of the Stockholders Agreement with respect to the parties to such agreement and any rights of holders of any series of Preferred Stock, any director or the entire New AspenTech Board may be removed from office at any time with or without cause by the affirmative vote of the holders of a majority of the voting power of the then-outstanding shares of capital stock of New AspenTech entitled to vote thereon. Under the Stockholders Agreement, New AspenTech agrees to take all actions necessary to facilitate the removal and replacement of any Emerson Director upon the written request of Emerson Sub. See “Certain Agreements Related to the Transactions—Stockholders Agreement” beginning on page | | | Under AspenTech’s certificate of incorporation, directors may be removed only for cause by the affirmative vote of at least two-thirds of the shares of capital stock issued and outstanding and entitled to vote. | | ||
| | | ||||
Director Nominations by Stockholders | | |||||
Nominations of persons for election to the New AspenTech Board may be made at an annual or special meeting of stockholders. For a nomination to be properly made by a stockholder, the stockholder must, among other things, give timely notice in writing to New AspenTech (i) with respect to an election to be held at the annual meeting of stockholders, not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders; provided, however, in the event the annual meeting of stockholders is more than 30 days before or more than 90 days after such anniversary date, not more than 120 days prior to the date of such annual meeting and not later than the later of 90 days prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made by New AspenTech; and (ii) with respect to an election to be held at a special meeting of stockholders called by New AspenTech, which is not called at the request of holders of at least 20% of the voting power of the then outstanding Common Stock, not earlier than 120 days prior to such special meeting and not later than the later of 90 days prior to such special | | | Under AspenTech’s bylaws, nominations of persons for election to the AspenTech Board may be made at an annual or special meeting of stockholders. For nominations to be properly made before an annual or special meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of AspenTech. To be timely, notice must be delivered to the Secretary with respect to an election to be held at the annual meeting of stockholders, not less than 90 days nor more than 120 days before the one year anniversary of the previous year’s annual meeting of stockholders; provided, however, if the date of the annual meeting is more than 30 days before or more than 70 days after such one year anniversary of the date of the preceding year’s annual meeting, the notice must be received by the Secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the later of the 90th day prior to such annual meeting or the 10th day following the day on which a public announcement is first made by AspenTech that announces the date of the annual meeting. Nominations of persons for election to the board of directors may be made at a special meeting of | |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
meeting and the 10th day following the day on which public announcement is first made of the date of the special meeting. In addition to other information required by the New AspenTech Bylaws, except for any nomination pursuant to the Stockholders Agreement, a stockholder’s nomination of person(s) for election to the New AspenTech Board must set forth, as to each person whom the stockholder proposes to nominate for election or re-election as a director, in general, (i) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, (ii) a reasonably detailed description of any compensatory, payment or other financial agreement, arrangement or understanding that such person has with any other person or entity other than New AspenTech including the amount of any payment or payments received or receivable thereunder, in each case in connection with candidacy or service as a director of New AspenTech, (iii) a completed D&O questionnaire (in the form provided by the secretary of New AspenTech at the request of the nominating stockholder) containing information regarding the nominee’s background and qualifications and such other information as may reasonably be required by New AspenTech to determine the eligibility of such proposed nominee to serve as a director of New AspenTech or to serve as an independent director of New AspenTech, (2) a written representation that, unless previously disclosed to New AspenTech, the nominee is not and will not become a party to any voting agreement, arrangement or understanding with any person or entity as to how such nominee, if elected as a director, will vote on any issue or that could interfere with such person’s ability to comply, if elected as a director, with his/her fiduciary duties under applicable law, (3) a written representation and agreement that, unless previously disclosed to New AspenTech pursuant to the notice provisions of the New AspenTech Bylaws, the nominee is not and will not become a party to any arrangements described in (ii) above and (4) a written representation that, if elected as a director, such nominee would be in compliance and will continue to comply with New AspenTech’s corporate governance guidelines as disclosed on New AspenTech’s website, as amended from time to time. Under the Stockholders Agreement, with respect to Emerson Sub’s designees to the New AspenTech Board, | | | stockholders pursuant to AspenTech’s notice of meeting: (a) by or at the direction of the AspenTech Board or any committee thereof or (b) by any stockholder of AspenTech who is a stockholder of record at the time the notice is provided and who complies with the notice procedures in AspenTech’s bylaws. In addition to other information required by AspenTech’s bylaws, a stockholder’s nomination of person(s) for election to the AspenTech Board must set forth, as to each person whom the stockholder proposes to nominate for election or re-election as a director, in general, (i) all information relating to such person that is required to be disclosed, in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act, and (ii) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected. With respect to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (A) the name and address of such stockholder, (B) the class, series and number of shares of AspenTech capital stock which are owned beneficially and of record, (C) a description of any agreement, arrangement or understanding with respect to the nomination among the stockholder and/or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, including the nominee, (D) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder and such beneficial owners, whether or not such instrument or right shall be subject to settlement in underlying shares or capital stock of AspenTech, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner, with respect to equity securities of AspenTech, (E) a representation that the stockholder is a holder of record of AspenTech stock entitled to vote at the meeting and intends to appear in person or by proxy at such meeting to propose such nomination, (F) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group that intends (i) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of AspenTech’s outstanding capital stock required to elect the nominee or (ii) otherwise to solicit proxies or votes |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
New AspenTech will cause each such person to be included in the slate of nominees recommended by the New AspenTech Board to holders of Common Stock for election (including at any annual or special meeting of stockholders held for the election of directors) and will use its best efforts to cause the election of each such designee, including soliciting proxies in favor of the election of such persons. See “Certain Agreements Related to the Transactions—Stockholders Agreement” beginning on page | | | from stockholders in support of such nomination, and (G) any other information related to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act. |
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Stockholder Proposals | |||
Stockholders may propose business to be brought before an annual meeting. The New AspenTech Bylaws provide that to be properly brought before an annual meeting of the stockholders, business must be brought (a) pursuant to New AspenTech’s notice of meeting (or any supplement thereto), (b) by or at the direction of the New AspenTech Board or any committee thereof, (c) as may be provided in the certificate of designations for any class or series of Preferred Stock, (d) pursuant to the Stockholders Agreement or (e) by any stockholder of New AspenTech who delivers timely notice in proper form and the other required information to New AspenTech’s secretary and who is a stockholder of record at the time of giving of such notice and at the time of the annual meeting and who is entitled to vote at the meeting, except as otherwise required by law. For business to be properly brought before an annual meeting by a stockholder, such proposed business must constitute a proper matter for stockholder action and the stockholder must, among other things, give timely notice in writing to New AspenTech not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event the annual meeting of stockholders is more than 30 days before or more than 90 days after such anniversary date, no earlier than 120 days prior to the date of such annual meeting and no later than the later of 90 days prior to such annual meeting or the 10th day following the day on which public announcement of the date of such annual meeting is first made by New AspenTech. A stockholder’s notice must set forth, in addition to other information required by the New AspenTech Bylaws, in general, (i) a brief description of the business desired to be brought before the annual meeting, (ii) the text of the proposal or business (including the complete text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the New AspenTech Bylaws, the text of the proposed amendment), | | | Under AspenTech’s bylaws, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of AspenTech and such proposed business must constitute a proper matter for stockholder action. To be timely, notice must be received by the Secretary not less than 90 days nor more than 120 days before the one year anniversary of the previous year’s annual meeting of stockholders; provided, however, if the date of the annual meeting is more than 30 days before or more than 70 days after such one year anniversary of the date of the preceding year’s annual meeting, the notice must be received by the Secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the later of (A) the 90th day prior to the annual meeting or (B) the 10th day following the day on which public announcement of the meeting date was first made by AspenTech. A stockholder’s notice must set forth, in addition to other information required by AspenTech’s bylaws, in general, (i) a brief description of the business desired to be brought before the meeting, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the AspenTech bylaws, the language of the proposed amendment), (iii) the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and (iv) a description of any agreement, arrangement or understanding with respect to the proposal among the stockholder and/or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing. |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
(iii) the reasons for conducting such business at the annual meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made and (iv) a description of any agreement, arrangement and understanding between such stockholder and beneficial owner, if any, and their respective affiliates and associates, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder. Stockholders shall not be permitted to propose business to be brought before a special meeting of the stockholders that is not a Stockholder Requested Meeting. | | | |
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Stockholder Action by Written Consent | |||
The New AspenTech Charter permits action being taken by written consent of New AspenTech stockholders in lieu of a meeting, so long as Emerson and its affiliates beneficially own in the aggregate at least 20% of the voting power of all of the then-outstanding shares of capital stock of New AspenTech. If Emerson and its affiliates do not beneficially own in the aggregate at least 20% of the voting power of all of the then-outstanding shares of capital stock of New AspenTech, New AspenTech stockholders may not act by written consent. | | | AspenTech’s certificate of incorporation and AspenTech’s bylaws provide that stockholders may not take any action by written consent in lieu of a meeting. |
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Amendments to Certificate of Incorporation | |||
The New AspenTech Charter provides that New AspenTech may amend the New AspenTech Charter in any manner permitted by the DGCL. Under the DGCL, an amendment to a certificate of incorporation generally requires the approval of the New AspenTech Board and the approval of the holders of a majority of the voting power of the outstanding stock entitled to vote upon the proposed amendment. The Stockholders Agreement provides that, without the prior written consent of Emerson Sub: (i) until the Second Trigger Date, New AspenTech will not amend the New AspenTech Charter, (ii) following the Second Trigger Date until the Third Trigger Date, New AspenTech will not make any material amendments to the New AspenTech Charter, and (iii) following the Third Trigger Date until the Fourth Trigger Date, New AspenTech will not amend the New AspenTech Charter in any manner that disproportionately and adversely affects Emerson Sub in its capacity as a stockholder of New AspenTech as compared to other stockholders of the same class of securities of New AspenTech. See “Certain Agreements Related to the Transactions—Stockholders Agreement” beginning on page | | | AspenTech’s certificate of incorporation provides that AspenTech may amend its certificate of incorporation as provided therein and by the DGCL. Under the DGCL, an amendment to a certificate of incorporation generally requires the approval of the AspenTech Board and the approval of the holders of a majority of the outstanding stock entitled to vote upon the proposed amendment. AspenTech’s certificate of incorporation provides that notwithstanding the foregoing or any other law or provision of AspenTech’s certificate of incorporation or AspenTech’s bylaws, the affirmative vote of the holders of at least 75% of the shares of the capital stock of AspenTech issued and outstanding and entitled to vote will be required to amend certain provisions of the certificate of incorporation concerning (i) the prohibition on stockholders acting by written consent and the calling of special meetings of stockholders, (ii) the number, election, classes, terms, class allocation, or removal of directors, and (iii) amending the certificate of incorporation. |
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New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
Amendments to Bylaws | |||
The New AspenTech Bylaws provide that, subject to the Stockholders Agreement, the New AspenTech Bylaws may be adopted, amended or repealed by the affirmative vote of a majority of the total number of authorized directors constituting the New AspenTech Board whether or not there exist any vacancies or other unfilled seats, or the affirmative vote at an annual or special meeting of stockholders of the holders of a majority in of the votes cast by the holders of the shares of capital stock of New AspenTech issued, outstanding and entitled to vote thereon. The Stockholders Agreement provides that, without the prior written consent of Emerson Sub: (i) until the Second Trigger Date, New AspenTech will not amend the New AspenTech Bylaws, (ii) following the Second Trigger Date until the Third Trigger Date, New AspenTech will not make any material amendments to the New AspenTech Bylaws, and (iii) following the Third Trigger Date until the Fourth Trigger Date, New AspenTech will not amend the New AspenTech Bylaws in any manner that disproportionately and adversely affects Emerson in its capacity as a stockholder of New AspenTech as compared to other stockholders of the same class of securities of New AspenTech. See “Certain Agreements Related to the Transactions—Stockholders Agreement” beginning on page | | | AspenTech’s bylaws provide that such bylaws (i) may be amended by the affirmative vote of a majority of the AspenTech Board present at the meeting at which a quorum is present and (ii) may be amended by the affirmative vote of the holders of a majority of AspenTech capital stock outstanding and entitled to vote at the meeting present at the meeting. AspenTech’s bylaws further provide that notwithstanding the foregoing or any other law or provision of AspenTech’s certificate of incorporation or AspenTech’s bylaws, the affirmative vote of the holders of at least 75% of the shares of the capital stock of AspenTech entitled to vote will be required to amend certain provisions of the bylaws concerning stockholder meetings, directors, forum selection or amendments. |
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Special Meetings of Stockholders | |||
The New AspenTech Bylaws provide that, a special meeting of stockholders (i) may be called only by the New AspenTech Board, the chair of the New AspenTech Board, or the president or the secretary of New AspenTech, and (ii) shall be called by the secretary of New AspenTech upon the written request of the holders of at least 20% of the voting power of all of the then-outstanding shares of capital stock of New AspenTech entitled to vote on the matter or matters to be brought before the proposed special meeting. | | | Under AspenTech’s certificate of incorporation and bylaws, special meetings of the stockholders may be called for any purpose or purposes by the chair of the AspenTech Board, the chief executive officer (or if there is no chief executive officer, the president) or the AspenTech Board. |
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Limitation of Personal Liability of Directors | |||
The New AspenTech Charter provides that, to the fullest extent permitted by applicable law, directors of New AspenTech will not be liable to New AspenTech or its stockholders for monetary damages for breach of fiduciary duty as a director. | | | AspenTech’s certificate of incorporation provides that no director shall be personally liable to AspenTech or to any of its stockholders for monetary damages arising out of such director’s breach of fiduciary duty as a director of AspenTech, except to the extent that such elimination or limitation of liability is not permitted by the DGCL. |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
Indemnification | |||
The New AspenTech Charter provides that each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of New AspenTech or is or was serving at the request of New AspenTech as a director or officer of another corporation, partnership, joint venture, trust or other enterprise will be indemnified and held harmless by New AspenTech to the fullest extent permitted by the DGCL. Such right to indemnification will also include the right to be paid by New AspenTech the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by applicable law. | | | AspenTech’s certificate of incorporation provides that AspenTech shall indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of AspenTech), by reason of the fact that such person is or was, or has agreed to become, a director or officer of AspenTech, or is or was serving or has agreed to serve, at the request of AspenTech, as a director, officer or trustee of, or in a similar capacity with, another corporation (including any partially or wholly owned subsidiary of AspenTech), partnership, joint venture, trust or other enterprise (including any employee benefit plan) (each of such persons being referred to as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf in connection with such action, suit or proceedings and any appeal therefrom, if (A) the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of AspenTech and (B) with respect to any criminal action or proceeding, the Indemnitee had no reasonable cause to believe the Indemnitee’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith, did not act in a manner that the Indemnitee reasonably believed to be in, or not opposed to, the best interests of AspenTech or, with respect to any criminal action or proceeding, did not have reasonable cause to believe that the Indemnitee’s conduct was unlawful. AspenTech shall not indemnify an Indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the AspenTech Board. |
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Corporate Opportunities | |||
The New AspenTech Charter provides that New AspenTech has waived certain corporate opportunities as identified in the Stockholders Agreement, such that Emerson and the other persons specified therein shall not be liable to New AspenTech, its affiliates or its stockholders for breach of any fiduciary duty as a stockholder or director of New AspenTech from pursuit of such opportunities as set forth in the | | | AspenTech’s certificate of incorporation does not waive the corporate opportunity doctrine. |
New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
Stockholders Agreement. Under the New AspenTech Charter, any person or entity purchasing or otherwise acquiring or holding any interest in the shares of capital stock of New AspenTech shall be deemed to have notice of and consented to the foregoing. | | | |
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Business Combinations | |||
The New AspenTech Charter provides that New AspenTech elects not to be subject to Section 203 of the DGCL. However, the New AspenTech Charter provides that if a person (other than (a) Emerson and any direct transferees of voting stock of New AspenTech from Emerson or its affiliates, and their respective affiliates or successors or any “group,” or any member of any such group, to which such persons are a party under Rule 13d-5 of the Exchange Act, and (b) any person whose ownership of shares in excess of the 15% limit described in this paragraph is the result of any action taken solely by New AspenTech) acquires 15% or more of the voting stock of New AspenTech, is an affiliate or associate of New AspenTech and was the owner of 15% or more of the outstanding voting stock of New AspenTech at any time within the three-year period immediately prior to the date of determination, such person becomes an “interested stockholder” and may not engage in certain “business combinations” with New AspenTech for a period of three years from the time such person became an interested stockholder, unless: (1) the New AspenTech Board approved either the business combination or the transaction which resulted in such person becoming an interested stockholder, (2) upon consummation of the transaction which resulted in such person becoming an interested stockholder, the interested stockholder owned at least 85% of the voting power of all of the then-outstanding shares of capital stock of New AspenTech at the time the transaction commenced (excluding voting stock owned by directors who are also officers and certain employee stock plans), or (3) at or subsequent to such time, the business combination is approved by the New AspenTech Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662∕3% of the voting power of all of the then-outstanding shares of capital stock of New AspenTech which is not owned by the interested stockholder. See “Certain Agreements Related to the Transactions—Stockholders Agreement” beginning on page | | | AspenTech’s certificate of incorporation does not contain a provision expressly electing not to be governed by Section 203 of the DGCL and, accordingly, AspenTech is subject to Section 203 of the DGCL. Section 203 of the DGCL prohibits a Delaware corporation from engaging in a business combination with an interested stockholder (which is defined to include any person that owns 15% or more of the corporation’s outstanding voting stock) for three years following the time that person becomes an “interested stockholder,” unless (i) prior to the date the person becomes an interested stockholder, the board of directors approves either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding certain shares), or (iii) the business combination is approved by the board of directors and by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder at a meeting. AspenTech’s certificate of incorporation does not contain any provision requiring a supermajority vote of stockholders for business combinations. |
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New AspenTech Stockholder Rights | | | AspenTech Stockholder Rights |
Forum for Adjudication of Disputes | |||
The New AspenTech Charter provides that unless the New AspenTech Board consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (A) any derivative action or proceeding brought on behalf of New AspenTech, (B) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee or stockholder of New AspenTech to New AspenTech or New AspenTech’s stockholders, (C) any action asserting a claim arising pursuant to any provision of the DGCL, or the New AspenTech Charter or the New AspenTech Bylaws, (D) any action asserting a claim related to, involving, or against New AspenTech governed by the internal affairs doctrine, or (E) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL. The foregoing does not apply to claims arising under the Exchange Act or the rules and regulations promulgated thereunder. Unless the New AspenTech Board otherwise approves in writing the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities | | | AspenTech’s bylaws provide that, unless AspenTech consents in writing to the selection of an alternative forum, the Delaware Court of Chancery is the sole and exclusive forum for all internal corporate claims. Additionally, unless AspenTech consents in writing to the selection of an alternative forum, the federal district courts of the United States are the sole and exclusive forum for all causes of action arising under the Securities Act. |
○ | Deliver Higher Value to Customers with Joint Platform: We believe New AspenTech’s enhanced portfolio, providing differentiated offerings in industrial artificial intelligence and asset optimization, including T&D asset management and expanded reservoir modeling and optimization, will be better positioned to drive increased penetration with existing customers and adoption by new customers in existing and new markets. |
○ | Business Model Transformation: By transitioning OSI Inc. and GSS to token and subscription-based business models, including commercializing the recurring value of certain service offerings into a standardized solution under a token model, we believe New AspenTech will provide enhanced flexibility and broader access to New AspenTech’s software suite for customers and improve long-term revenue and profitability for New AspenTech. AspenTech has significant expertise in such business model transitions, having successfully implemented them in its existing portfolio. |
○ | Expanded Strategic Alliance: The Transactions will enhance the existing commercial alliance and increase collaboration between Emerson and New AspenTech as they drive innovation, develop new products and pursue joint go-to-market opportunities leveraging New AspenTech’s comprehensive product portfolio and Emerson’s $120 billion global installed base and its sales force. |
• | Advanced Automation Platform—OSI Inc.’s monarchTM platform is a modern real time operations technology control system architecture that has multiple layers of redundancy to meet the harshest resiliency requirements needed by utilities and industrial customers. The monarchTM platform is highly configurable and manages data acquisition, data management, alarming, visualization, and user interface. Purpose built applications interface with monarchTM through standard application programming interfaces (APIs) and provide a performant system for supporting, monitoring, controlling, scheduling and optimizing complex network operations for electric, oil & gas, transportation, water industries, and large-scale industrial internet of things applications such as Microgrids. Monarch’sTM flexibility and high-performance, real-time data management platform is an ideal foundation to support industry-specific advanced applications. It also serves as a foundational layer to build new applications within the utility markets as well as other markets that need highly resilient real time OT systems. |
• | Web Platform Architecture—OSI Inc.’s cloud-based deployment architecture is designed to meet the demands of future operational environments and is built on disruptive leading-edge technology. At its core, OSI Inc.’s web platform provides a web application layer that can connect with almost any data source. The web platform ingests data, provides visualization and real time control, and is highly configurable to support mobile applications to support field crews, executive dashboards, and an expanded user base outside the typical control room environment. This platform can connect with the monarchTM kernels as well as other applications. Over the long term, OSI Inc. expects that the web platform architecture will increasingly be deployed to support distributed control environments as well as the migration to the cloud. |
• | Next Generation Data Historian—CHRONUSTM is a comprehensive time series-based data historian platform for high-fidelity archival of time series data. Competitive historian solutions on the market may not meet all users’ needs and these existing solutions are not designed to support an exponential increase in data; are based on traditional and rigid database technology; and have limited platform support. CHRONUSTM is built on proven big data technology and excels in archiving time series data. |
• | Purpose Built T&D Applications—OSI Inc.’s product portfolio is made up of many industry-leading, purpose-built applications that interface with the monarchTM platform. OSI Inc.’s Generation Management System (GMS) software is the leading application controlling global generation fleets to ensure daily generation is optimized and meets demand. The Energy Management System software is used by many global transmission operators to ensure safe and reliable operation of their transmission networks. OSI Inc.’s advanced distribution management system (ADMS) application suite is used by distribution utilities to model and safely control switching operations, outages, etc. in the distribution network. OSI Inc. has many other applications that support utility companies as well as other industries such as water and gas distribution. |
• | Subsurface Production & Utilization: RMS, Tempest, Mette—GSS’s reservoir simulation and risk assessment, Big LoopTM history-matched reservoir modeling, production and utilization forecasting optimization, and virtual metering software provide customers with operational cost and capital expenditure optimization. |
Location | | | Approximate Square Feet |
Bangalore, India | | | 30,642 |
Houston, Texas | | | 8,425 |
Macquarie Park, Australia | | | 8,837 |
Medina, Minnesota | | | 180,400 |
Montreal, Canada | | | 12,549 |
Location | | | Approximate Square Feet |
Beijing, China | | | 3,358 |
Brisbane, Australia | | | 7,500 |
Buenos Aires, Argentina | | | 1,200 |
Houston, Texas | | | 1,995 |
Kuala Lumpur, Malaysia | | | 3,653 |
Oslo, Norway | | | 16,114 |
Mexico City, Mexico | | | 850 |
Moscow, Russia | | | 12,000 |
Mumbai, India | | | 750 |
Nancy, France | | | 7,534 |
Oxford, United Kingdom | | | 857 |
Paris, France | | | 2,152 |
Pau, France | | | 3,616 |
Pune, India | | | 10,000 |
Rio De Janeiro, Brazil | | | 3,844 |
Tel Aviv, Israel | | | 38,500 |
Tyumen, Russia | | | 2,250 |
Woking, United Kingdom | | | 1,300 |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Revenue: | | | | | | | ||||||||||||
License and solutions | | $48,491 | | 36,788 | | 32% | | $48,491 | | 36,788 | | 32% | ||||||
Maintenance | | 26,272 | | 23,113 | | 14% | | 26,272 | | 23,113 | | 14% | ||||||
Services and other | | 7,012 | | 5,834 | | 20% | | 7,012 | | 5,834 | | 20% | ||||||
Total revenue | | 81,775 | | 65,735 | | 24% | | 81,775 | | 65,735 | | 24% | ||||||
Cost of revenue: | | | | | | | ||||||||||||
License and solutions | | 33,221 | | 27,552 | | 21% | | 33,221 | | 27,552 | | 21% | ||||||
Maintenance | | 4,074 | | 4,697 | | (13)% | | 4,074 | | 4,697 | | (13)% | ||||||
Services and other | | 4,282 | | 4,612 | | (7)% | | 4,282 | | 4,612 | | (7)% | ||||||
Total cost of revenue | | 41,577 | | 36,861 | | 13% | | 41,577 | | 36,861 | | 13% | ||||||
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Gross profit | | 40,198 | | 28,874 | | 39% | | 40,198 | | 28,874 | | 39% | ||||||
Operating expenses: | | | | | | | ||||||||||||
Research and development | | 15,383 | | 14,394 | | 7% | | 15,383 | | 14,394 | | 7% | ||||||
General and administrative | | 7,036 | | 12,304 | | (43)% | | 7,036 | | 12,304 | | (43)% | ||||||
Selling and marketing | | 17,995 | | 28,124 | | (36)% | | 17,995 | | 28,124 | | (36)% | ||||||
Restructuring costs | | 38 | | 3,948 | | | 38 | | 3,948 | | ||||||||
Total operating expenses | | 40,452 | | 58,770 | | | 40,452 | | 58,770 | | ||||||||
Earnings (loss) from operations | | (254) | | (29,896) | | | (254) | | (29,896) | | ||||||||
Other expense (income), net | | 1,419 | | 1,361 | | | 1,419 | | 1,361 | | ||||||||
Interest expense, net | | 20 | | (143) | | | 20 | | (143) | | ||||||||
Earnings (loss) before income taxes | | (1,693) | | (31,114) | | (95)% | | (1,693) | | (31,114) | | (95)% | ||||||
Benefit from income taxes | | (933) | | (36,086) | | | (933) | | (36,086) | | ||||||||
Net earnings (loss) | | $(760) | | 4,972 | | (115)% | | $(760) | | 4,972 | | (115)% |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
License and solutions revenue | | | $ 48,491 | | | 36,788 | | | 32% |
As a percent of total revenue | | | 59.3% | | | 56.0% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
License and solutions revenue | | | $ 48,491 | | | 36,788 | | | 32% |
As a percent of total revenue | | | 59.3% | | | 56.0% | | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Maintenance revenue | | $ 26,272 | | 23,113 | | 14% | | $ 26,272 | | 23,113 | | 14% | ||||||
As a percent of total revenue | | 32.1% | | 35.1% | | | 32.1% | | 35.1% | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Services & other revenue | | $ 7,012 | | 5,834 | | 20% | | $ 7,012 | | 5,834 | | 20% | ||||||
As a percent of total revenue | | 8.6% | | 8.9% | | | 8.6% | | 8.9% | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Cost of license and solutions revenue | | $ 33,221 | | 27,552 | | 21% | | $ 33,221 | | 27,552 | | 21% | ||||||
As a percent of license and solutions revenue | | 68.5% | | 74.9% | | | 68.5% | | 74.9% | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Cost of maintenance revenue | | $4,074 | | 4,697 | | (13)% | | $4,074 | | 4,697 | | (13)% | ||||||
As a percent of maintenance revenue | | 15.5% | | 20.3% | | | 15.5% | | 20.3% | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Cost of services and other revenue | | $4,282 | | 4,612 | | (7)% | | $4,282 | | 4,612 | | (7)% | ||||||
As a percent of services and other revenue | | 61.1% | | 79.1% | | | 61.1% | | 79.1% | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Gross profit | | $40,198 | | 28,874 | | 39% | | $40,198 | | 28,874 | | 39% | ||||||
As a percent of total revenue | | 49.2% | | 43.9% | | | 49.2% | | 43.9% | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Research and development expense | | $15,383 | | 14,394 | | 7% | | $15,383 | | 14,394 | | 7% | ||||||
As a percent of total revenue | | 18.8% | | 21.9% | | | 18.8% | | 21.9% | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
General and administrative expense | | $7,036 | | 12,304 | | (43)% | | $7,036 | | 12,304 | | (43)% | ||||||
As a percent of total revenue | | 8.6% | | 18.7% | | | 8.6% | | 18.7% | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
License and solutions revenue | | | $ 48,491 | | | 36,788 | | | 32% |
As a percent of total revenue | | | 59.3% | | | 56.0% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Maintenance revenue | | | $ 26,272 | | | 23,113 | | | 14% |
As a percent of total revenue | | | 32.1% | | | 35.1% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Services & other revenue | | | $ 7,012 | | | 5,834 | | | 20% |
As a percent of total revenue | | | 8.6% | | | 8.9% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Cost of license and solutions revenue | | | $ 33,221 | | | 27,552 | | | 21% |
As a percent of license and solutions revenue | | | 68.5% | | | 74.9% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Cost of maintenance revenue | | | $4,074 | | | 4,697 | | | (13)% |
As a percent of maintenance revenue | | | 15.5% | | | 20.3% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Cost of services and other revenue | | | $4,282 | | | 4,612 | | | (7)% |
As a percent of services and other revenue | | | 61.1% | | | 79.1% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Gross profit | | | $40,198 | | | 28,874 | | | 39% |
As a percent of total revenue | | | 49.2% | | | 43.9% | | |
| | 2021 | | 2020 | | 2021 vs. 2020 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||
Selling and marketing | | $17,995 | | 28,124 | | (36)% | ||||||||||||
Research and development expense | | $15,383 | | 14,394 | | 7% | ||||||||||||
As a percent of total revenue | | 22.0% | | 42.8% | | | 18.8% | | 21.9% | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
General and administrative expense | | | $7,036 | | | 12,304 | | | (43)% |
As a percent of total revenue | | | 8.6% | | | 18.7% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Restructuring costs | | | $38 | | | 3,948 | | | (99)% |
As a percent of total revenue | | | —% | | | 6.0% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Other expenses (income), net | | | $1,419 | | | 1,361 | | | 4% |
As a percent of total revenue | | | 1.7% | | | 2.1% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Benefit from income taxes | | | $(933) | | | (36,086) | | | (97)% |
Effective tax rate | | | 55.1% | | | 116.0% | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Revenue: | | | | | | | | | | | |||||
License and solutions | | | $180,914 | | | 42,038 | | | 52,609 | | | 330% | | | (20)% |
Maintenance | | | 92,562 | | | 65,591 | | | 74,937 | | | 41% | | | (12)% |
Services and other | | | 27,164 | | | 22,866 | | | 66,670 | | | 19% | | | (66)% |
Total revenue | | | 300,640 | | | 130,495 | | | 194,216 | | | 130% | | | (33)% |
Cost of revenue: | | | | | | | | | | | |||||
License and solutions | | | 125,181 | | | 17,462 | | | 16,849 | | | 617% | | | 4% |
Maintenance | | | 18,610 | | | 16,092 | | | 17,679 | | | 16% | | | (9)% |
Services and other | | | 19,219 | | | 17,336 | | | 51,143 | | | 11% | | | (66)% |
Total cost of revenue | | | 163,010 | | | 50,890 | | | 85,671 | | | 220% | | | (41)% |
| | | | | | | | | | ||||||
Gross profit | | | 137,630 | | | 79,605 | | | 108,545 | | | 73% | | | (27)% |
Operating expenses: | | | | | | | | | | | |||||
Research and development | | | 59,646 | | | 36,842 | | | 41,639 | | | 62% | | | (12)% |
General and administrative | | | 32,638 | | | 21,717 | | | 30,707 | | | 50% | | | (29)% |
Selling and marketing | | | 103,311 | | | 32,876 | | | 39,180 | | | 214% | | | (16)% |
Restructuring costs | | | 2,474 | | | 6,230 | | | 2,070 | | | | | ||
Total operating expenses | | | 198,069 | | | 97,665 | | | 113,596 | | | | | ||
Earnings (loss) from operations | | | (60,439) | | | (18,060) | | | (5,051) | | | | | ||
Other expense (income), net | | | 5,359 | | | 4,335 | | | (3,908) | | | | | ||
Interest expense, net | | | 115 | | | 50 | | | 215 | | | | | ||
Earnings (loss) before income taxes | | | (65,913) | | | (22,445) | | | (1,358) | | | (194)% | | | (1,553)% |
Benefit from income taxes | | | (45,305) | | | (2,128) | | | (6,971) | | | | | ||
Net earnings (loss) | | | $(20,608) | | | (20,317) | | | 5,613 | | | (1)% | | | (462)% |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
License and solutions revenue | | | $ 48,491 | | | 36,788 | | | 32% |
As a percent of total revenue | | | 59.3% | | | 56.0% | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
License and solutions revenue | | | $180,914 | | | 42,038 | | | 52,609 | | | 330% | | | (20)% |
As a percent of total revenue | | | 60.2% | | | 32.2% | | | 27.1% | | | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Maintenance revenue | | | $ 26,272 | | | 23,113 | | | 14% |
As a percent of total revenue | | | 32.1% | | | 35.1% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Services & other revenue | | | $ 7,012 | | | 5,834 | | | 20% |
As a percent of total revenue | | | 8.6% | | | 8.9% | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Maintenance revenue | | | $92,562 | | | 65,591 | | | 74,937 | | | 41% | | | (12)% |
As a percent of total revenue | | | 30.8% | | | 50.3% | | | 38.6% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Services and other revenue | | | $27,164 | | | 22,866 | | | 66,670 | | | 19% | | | (66)% |
As a percent of total revenue | | | 9.0% | | | 17.5% | | | 34.3% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Cost of license and solutions revenue | | | $125,181 | | | 17,462 | | | 16,849 | | | 617% | | | 4% |
As a percent of license and solutions revenue | | | 69.2% | | | 41.5% | | | 32.0% | | | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Cost of license and solutions revenue | | | $ 33,221 | | | 27,552 | | | 21% |
As a percent of license and solutions revenue | | | 68.5% | | | 74.9% | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Cost of maintenance revenue | | | $18,610 | | | 16,092 | | | 17,679 | | | 16% | | | (9)% |
As a percent of maintenance revenue | | | 20.1% | | | 24.5% | | | 23.6% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Cost of services and other revenue | | | $19,219 | | | 17,336 | | | 51,143 | | | 11% | | | (66)% |
As a percent of services and other revenue | | | 70.8% | | | 75.8% | | | 76.7% | | | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Cost of maintenance revenue | | | $4,074 | | | 4,697 | | | (13)% |
As a percent of maintenance revenue | | | 15.5% | | | 20.3% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Cost of services and other revenue | | | $4,282 | | | 4,612 | | | (7)% |
As a percent of services and other revenue | | | 61.1% | | | 79.1% | | |
| | 2021 | | 2020 | | 2019 | | 2021 vs. 2020 | | 2020 vs. 2019 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||||
Gross profit | | $137,630 | | 79,605 | | 108,545 | | 73% | | (27)% | | $40,198 | | 28,874 | | 39% | ||||||||
As a percent of total revenue | | 45.8% | | 61.0% | | 55.9% | | | | 49.2% | | 43.9% | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Research and development expense | | | $15,383 | | | 14,394 | | | 7% |
As a percent of total revenue | | | 18.8% | | | 21.9% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
General and administrative expense | | | $7,036 | | | 12,304 | | | (43)% |
As a percent of total revenue | | | 8.6% | | | 18.7% | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Research and development expense | | | $59,646 | | | 36,842 | | | 41,639 | | | 62% | | | (12)% |
As a percent of total revenue | | | 19.8% | | | 28.2% | | | 21.4% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
General and administrative expense | | | $32,638 | | | 21,717 | | | 30,707 | | | 50% | | | (29)% |
As a percent of total revenue | | | 10.9% | | | 16.6% | | | 15.8% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Selling and marketing | | | $103,311 | | | 32,876 | | | 39,180 | | | 214% | | | (16)% |
As a percent of total revenue | | | 34.4% | | | 25.2% | | | 20.2% | | | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Selling and marketing | | | $17,995 | | | 28,124 | | | (36)% |
As a percent of total revenue | | | 22.0% | | | 42.8% | | |
| | 2021 | | 2020 | | 2019 | | 2021 vs. 2020 | | 2020 vs. 2019 | | | 2021 | | 2020 | | 2021 vs. 2020 | |||||||
Restructuring costs | | $2,474 | | 6,230 | | 2,070 | | (60)% | | 201% | | $38 | | 3,948 | | (99)% | ||||||||
As a percent of total revenue | | 0.8% | | 4.8% | | 1.1% | | | | —% | | 6.0% | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Other expenses (income), net | | | $1,419 | | | 1,361 | | | 4% |
As a percent of total revenue | | | 1.7% | | | 2.1% | | |
| | 2021 | | | 2020 | | | 2021 vs. 2020 | |
Benefit from income taxes | | | $(933) | | | (36,086) | | | (97)% |
Effective tax rate | | | 55.1% | | | 116.0% | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Revenue: | | | | | | | | | | | |||||
License and solutions | | | $180,914 | | | 42,038 | | | 52,609 | | | 330% | | | (20)% |
Maintenance | | | 92,562 | | | 65,591 | | | 74,937 | | | 41% | | | (12)% |
Services and other | | | 27,164 | | | 22,866 | | | 66,670 | | | 19% | | | (66)% |
Total revenue | | | 300,640 | | | 130,495 | | | 194,216 | | | 130% | | | (33)% |
Cost of revenue: | | | | | | | | | | | |||||
License and solutions | | | 125,181 | | | 17,462 | | | 16,849 | | | 617% | | | 4% |
Maintenance | | | 18,610 | | | 16,092 | | | 17,679 | | | 16% | | | (9)% |
Services and other | | | 19,219 | | | 17,336 | | | 51,143 | | | 11% | | | (66)% |
Total cost of revenue | | | 163,010 | | | 50,890 | | | 85,671 | | | 220% | | | (41)% |
| | | | | | | | | | ||||||
Gross profit | | | 137,630 | | | 79,605 | | | 108,545 | | | 73% | | | (27)% |
Operating expenses: | | | | | | | | | | | |||||
Research and development | | | 59,646 | | | 36,842 | | | 41,639 | | | 62% | | | (12)% |
General and administrative | | | 32,638 | | | 21,717 | | | 30,707 | | | 50% | | | (29)% |
Selling and marketing | | | 103,311 | | | 32,876 | | | 39,180 | | | 214% | | | (16)% |
Restructuring costs | | | 2,474 | | | 6,230 | | | 2,070 | | | | | ||
Total operating expenses | | | 198,069 | | | 97,665 | | | 113,596 | | | | | ||
Earnings (loss) from operations | | | (60,439) | | | (18,060) | | | (5,051) | | | | | ||
Other expense (income), net | | | 5,359 | | | 4,335 | | | (3,908) | | | | | ||
Interest expense, net | | | 115 | | | 50 | | | 215 | | | | | ||
Earnings (loss) before income taxes | | | (65,913) | | | (22,445) | | | (1,358) | | | (194)% | | | (1,553)% |
Benefit from income taxes | | | (45,305) | | | (2,128) | | | (6,971) | | | | | ||
Net earnings (loss) | | | $(20,608) | | | (20,317) | | | 5,613 | | | (1)% | | | (462)% |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
License and solutions revenue | | | $180,914 | | | 42,038 | | | 52,609 | | | 330% | | | (20)% |
As a percent of total revenue | | | 60.2% | | | 32.2% | | | 27.1% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Maintenance revenue | | | $92,562 | | | 65,591 | | | 74,937 | | | 41% | | | (12)% |
As a percent of total revenue | | | 30.8% | | | 50.3% | | | 38.6% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Services and other revenue | | | $27,164 | | | 22,866 | | | 66,670 | | | 19% | | | (66)% |
As a percent of total revenue | | | 9.0% | | | 17.5% | | | 34.3% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Cost of license and solutions revenue | | | $125,181 | | | 17,462 | | | 16,849 | | | 617% | | | 4% |
As a percent of license and solutions revenue | | | 69.2% | | | 41.5% | | | 32.0% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Cost of maintenance revenue | | | $18,610 | | | 16,092 | | | 17,679 | | | 16% | | | (9)% |
As a percent of maintenance revenue | | | 20.1% | | | 24.5% | | | 23.6% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Cost of services and other revenue | | | $19,219 | | | 17,336 | | | 51,143 | | | 11% | | | (66)% |
As a percent of services and other revenue | | | 70.8% | | | 75.8% | | | 76.7% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Gross profit | | | $137,630 | | | 79,605 | | | 108,545 | | | 73% | | | (27)% |
As a percent of total revenue | | | 45.8% | | | 61.0% | | | 55.9% | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Research and development expense | | | $59,646 | | | 36,842 | | | 41,639 | | | 62% | | | (12)% |
As a percent of total revenue | | | 19.8% | | | 28.2% | | | 21.4% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
General and administrative expense | | | $32,638 | | | 21,717 | | | 30,707 | | | 50% | | | (29)% |
As a percent of total revenue | | | 10.9% | | | 16.6% | | | 15.8% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Selling and marketing | | | $103,311 | | | 32,876 | | | 39,180 | | | 214% | | | (16)% |
As a percent of total revenue | | | 34.4% | | | 25.2% | | | 20.2% | | | | |
| | 2021 | | | 2020 | | | 2019 | | | 2021 vs. 2020 | | | 2020 vs. 2019 | |
Restructuring costs | | | $2,474 | | | 6,230 | | | 2,070 | | | (60)% | | | 201% |
As a percent of total revenue | | | 0.8% | | | 4.8% | | | 1.1% | | | | |
| | 2021 | | 2020 | | 2019 | | 2021 vs. 2020 | | 2020 vs. 2019 | | | 2021 | | 2020 | | 2019 | | 2021 vs. 2020 | | 2020 vs. 2019 | |||||||||
Other expenses (income), net | | $5,359 | | 4,335 | | (3,908) | | 24% | | (211)% | | $5,359 | | 4,335 | | (3,908) | | 24% | | (211)% | ||||||||||
As a percent of total revenue | | 1.8% | | 3.3% | | (2.0)% | | | | 1.8% | | 3.3% | | (2.0)% | | |
| | 2021 | | 2020 | | 2019 | | 2021 vs. 2020 | | 2020 vs. 2019 | | | 2021 | | 2020 | | 2019 | | 2021 vs. 2020 | | 2020 vs. 2019 | |||||||||
Benefit from income taxes | | $(45,305) | | (2,128) | | (6,971) | | 2,029% | | (69)% | | $(45,305) | | (2,128) | | (6,971) | | 2,029% | | (69)% | ||||||||||
Effective tax rate | | 68.7% | | 9.5% | | 513.3% | | | | 68.7% | | 9.5% | | 513.3% | | |
Cash flow provided by (used in): | | | 2021 | | | 2020 |
Operating activities | | | $(15,256) | | | (6,076) |
Investing activities | | | (788) | | | (1,588,532) |
Financing activities | | | 18,118 | | | 1,598,167 |
Effect of exchange rates on cash and cash equivalents | | | (136) | | | 171 |
Increase (decrease) in cash and cash equivalents | | | $1,938 | | | 3,730 |
Cash flow provided by (used in): | | | 2021 | | | 2020 | | | 2019 |
Operating activities | | | $53,056 | | | 14,599 | | | 31,360 |
Investing activities | | | (1,594,982) | | | (2,456) | | | (5,202) |
Financing activities | | | 1,553,281 | | | (17,268) | | | (34,554) |
Effect of exchange rates on cash and cash equivalents | | | (141) | | | (551) | | | 97 |
Increase (decrease) in cash and cash equivalents | | | $11,214 | | | (5,676) | | | (8,299) |
Name | | | Position with New AspenTech | | | Age | | | Nominated By |
Jill D. Smith | | | Chair | | | 63 | | | Emerson |
Antonio J. Pietri | | | CEO | | | 56 | | | — |
Karen M. Golz | | | Director | | | ||||
| | AspenTech | |||||||
Robert M. Whelan, Jr. | | | Director | | | 70 | | | AspenTech |
Ram R. Krishnan | | | Director | | | 51 | | | Emerson |
Arlen R. Shenkman | | | Director | | | 51 | | | Emerson |
Thomas F. Bogan | | | Director | | | 70 | | | Emerson |
Patrick M. Antkowiak | | | Director | | | 61 | | | Emerson |
Board Member | | | Audit Committee | | | Human Capital Committee | | | Nominating & Governance Committee | | | M&A Committee |
Jill D. Smith | | | | | | | X (Chair) | | | |||
Antonio J. Pietri | | | | | | | | | ||||
Karen M. Golz | | | X (Chair) | | | | | | | |||
Robert M. Whelan, Jr. | | | | | X | | | X | | | ||
Ram R. Krishnan | | | | | X | | | X | | | X (Chair) | |
Arlen R. Shenkman | | | X | | | | | | | X | ||
Thomas F. Bogan | | | | | X (Chair) | | | | | X | ||
Patrick M. Antkowiak | | | X | | | | | | |
The following is a brief biography of each director nominee of the New AspenTech Board that is known as of the date of this combined proxy statement/prospectus. Jill D. Smith has served on the AspenTech Board since April 2021 and was appointed Chair in July 2021. Ms. Smith brings more than 20 years of significant international business leadership, most recently serving as President and Chief Executive Officer and director of Allied Minds plc, an intellectual property commercialization company for technology and life sciences, from March 2017 to June 2019. Previously, she served as Chair, Chief Executive Officer, and President of DigitalGlobe Inc., a global provider of satellite imagery products and services. Ms. Smith has also served as President and Chief Executive Officer of eDial, a VoIP collaboration company, and President and Chief Executive Officer of SRDS, a business-to-business publishing firm. Ms. Smith began her career as a Consultant at Bain & Company, where she rose to Partner, before taking leadership roles with Sara Lee in France, and becoming Executive Vice President and President and Chief Operating Officer of Micron Electronics, a direct to consumer PC manufacturing firm. Ms. Smith holds a M.Sc. in Management from MIT Sloan School of Management and currently serves on the board of directors for R1 RCM Inc., a technology-led revenue cycle management company, Circor International, a flow control, engineered products producer, and MDA, a space technology developer and manufacturer, as well as other privately held technology companies. Ms. Smith previously served as a director of Gemalto NV, a SIM card manufacturer, from 2016 to 2018, and Endo International plc, a pharmaceutical company, from 2012 to 2018. We believe Ms. Smith’s proven business leadership, extensive experience as a technology executive, including as a chief executive officer, track record in growing innovative companies and experience serving on corporate boards qualify her to serve on the New AspenTech Board. Antonio J. Pietri was named AspenTech’s President and Chief Executive Officer in October 2013 and has served on the AspenTech Board since July 2013. Before accepting his appointment as President and Chief Executive Officer, he had served as AspenTech’s Executive Vice President, Field Operations since July 2007. Mr. Pietri served as AspenTech’s Senior Vice President and Managing Director for the Asia-Pacific region from 2002 to June 2007 and held various other positions with AspenTech from 1996 until 2002. From 1992 to 1996, he was at Setpoint Systems, Inc., which AspenTech acquired, and before that he worked at ABB Simcon and AECTRA Refining and Marketing, Inc. He holds an M.B.A. from the University of Houston and a B.S. in Chemical Engineering from the University of Tulsa. We believe Mr. Pietri will be a valuable member of the New AspenTech Board because he has developed extensive working relationships with AspenTech’s customers and employees, and therefore will provide a unique perspective on New AspenTech’s growth strategy as well as its day-to-day operations. 205 Karen M. Golz has served on the AspenTech Board since March 2021. Ms. Golz is a retired partner of Ernst & Young (EY), where she held various senior leadership positions during her 40-year tenure, including most recently, Global Vice Chair, Japan (2016-2017). In addition to accounting, financial reporting and audit expertise, Ms. Golz brings considerable experience in international and regulatory matters. As Global Vice Chair of Professional Practice (2010-2016), Ms. Golz oversaw accounting, auditing, regulatory, tools and methodologies and supported innovation within EY’s Global Assurance practice. Prior to that, Ms. Golz held the Americas and Global Vice-Chair of Professional Ethics/Independence. Ms. Golz is a board and audit committee member of Analog Devices, Inc., a semiconductor company, iRobot Corporation, a consumer robot company, and Osteon Holdings/Exactech, a privately held company. She is senior advisor to The Boston Consulting Group’s Audit and Risk Committee and is a National Association of Corporate Directors (NACD) Board Leadership Fellow and sits on the Board of Trustees of the University of Illinois Foundation. She earned her Bachelor of Science degree in Accountancy, summa cum laude, from the University of Illinois, Urbana-Champaign and is a certified public accountant. We believe that Ms. Golz’s financial, international and corporate governance expertise will be valuable to the New AspenTech Board. Robert M. Whelan, Jr. has served on the AspenTech Board since 2011. He served as the Chair of the AspenTech Board from January 29, 2013 to July 28, 2021. Mr. Whelan has an extensive background as an advisor to, investor in and board member of emerging growth companies in the U.S. and Canada. From 1976 until 2001, Mr. Whelan worked in the investment banking industry. In 1999, his company, Volpe Brown Whelan & Company, an investment banking, brokerage and asset management firm, was acquired by Prudential Securities, for which Mr. Whelan served as Vice Chair of the global technology investment banking division until 2001. Mr. Whelan then formed Whelan & Co., a consulting firm which advises CEOs, boards and investors of emerging growth companies on financing and strategic matters. During this time, Mr. Whelan served on several for-profit boards of public and private companies and on the board of several non-profit organizations. Mr. Whelan has served as a director for iAnthus Capital Holdings Inc., which owns, operates and partners with regulated cannabis operations across the United States, from December 2019 to January 2022; Annovis Bio, a drug development company focused on novel treatments for neurodegenerative diseases, from April 2016 to March 2021; and ARIAD Pharmaceuticals, Inc., a developer of small-molecule drugs to treat patients with aggressive cancers, from April 2010 to September 2014; as well as other privately-held companies. Mr. Whelan holds a B.A. in History from Dartmouth College and an M.B.A. from Stanford University Graduate School of Business with a concentration in Finance and Accounting. We believe that Mr. Whelan’s executive management and technology investment banking experience will be valuable to the New AspenTech Board. Ram R. Krishnan has served as Executive Vice President and Chief Operating Officer of Emerson since February 17, 2021 and is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Krishnan has extensive experience across Emerson’s Automation Solutions and Commercial & Residential Solutions businesses. He joined Emerson in 1994 as a project engineer and held a number of management roles of increasing responsibility. He was named President of Climate Technologies in Asia in 2011, serving in Hong Kong. He returned to the United States as Vice President of Profit Planning and Perfect Execution in 2015, a role he held until 2016, when he became Group President of Flow Solutions. He was named Chief Operating Officer of Final Control in January 2017 and became the Group President of Final Control in November 2017 following the successful $3.15 billion acquisition of Pentair’s valves and controls business. As Chief Operating Officer of Emerson, Mr. Krishnan oversees global supply chain operations, information technology, and mergers and acquisitions. Mr. Krishnan has a bachelor’s degree in metallurgical engineering from the India Institute of Technology, a master’s degree in materials engineering from the Rensselaer Polytechnic Institute and a master’s degree in business administration from Xavier University. We believe Mr. Krishnan’s extensive operational, strategic, and mergers and acquisitions experience will be valuable to the New AspenTech Board. Arlen R. Shenkman is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Shenkman has served as Executive Vice President and Chief Financial Officer of Citrix Systems Inc. since September 2019. Prior to joining Citrix, Mr. Shenkman served as Executive Vice President and Global Head of Business Development and Ecosystems of SAP from May 2017 to August 2019, where he was responsible for driving business development by building new ecosystems, fostering strategic partnerships, incubating new business models, and overseeing investments and mergers and acquisitions. Prior to that role from January 2015 to May 2017, Mr. Shenkman served as Chief Financial Officer of SAP North America, SAP’s largest business unit, responsible for all finance functions in North America, including 206 forecasting and planning, identifying efficiencies, and ensuring the region’s overall financial health. Mr. Shenkman previously served as SAP’s Global Head of Corporate Development from January 2012 to January 2015 and was a principal architect of SAP’s rapid transformation into a cloud company. Mr. Shenkman has a J.D. from the University of Miami School of Law, an M.B.A. from the Fox School of Business at Temple University, and a bachelor’s degree in political science from George Washington University. He has also completed the London Business School’s Corporate Finance Program. Shenkman is the Chair of the Operating Committee and member of the Audit Committee and Board of Directors of Commvault Systems Inc., a data protection and information management software company. We believe Mr. Shenkman’s extensive operational experience in the software industry will be valuable to the New AspenTech Board. Thomas F. Bogan is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Bogan served as Vice Chairman at Workday, Inc. from February 2020 to January 2022, and previously served as Executive Vice President of Workday’s Planning Business Unit. Mr. Bogan joined Workday from Adaptive Insights, where he was Chief Executive Officer and a director from January 2015 until its acquisition by Workday in August 2018. From 2007 until January 2019, he was a director of Apptio, Inc., including its Chair from 2012 to January 2019. Mr. Bogan was a director of Citrix Systems, Inc. from 2003 to June 2016, including its Chair from 2004 to 2015, and was a director of PTC, Inc. from 2011 to June 2015; and of Rally Software Development Corp. from 2009 to July 2015. He has also served as a director and executive officer of various public and privately-held companies, including Greylock Partners, Rational Software, Avatar Technologies and Pacific Data. Mr. Bogan received a bachelor’s degree in accounting from Stonehill College. We believe Mr. Bogan’s varied experiences in the software industry and venture capital will be valuable to the New AspenTech Board. Patrick M. Antkowiak is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Antkowiak is currently president of CEM Technology Advisors, LLC, a strategy and technology consulting business. He spent over 38 years in increasingly senior roles at Northrop Grumman Corporation, including as the company’s Chief Technology Officer from 2014 to 2018, and retired in 2019 as the company’s Chief Technology and Strategy Officer having led the company’s technology development strategy and execution, focusing the company on competitive differentiation in emerging technology areas across the space, airborne, maritime, ground and cyber domains. Mr. Antkowiak currently serves on the board of directors for the Advanced Robotics for Manufacturing (ARM) Institute, a non-profit organization focused on accelerating the development and adoption of innovative robotics technologies and workforce strategies for the nation. He is also a member of The Johns Hopkins University’s Whiting School of Engineering Dean’s advisory board. Mr. Antkowiak received his BSEE in electrical and computer engineering (ECE) from The Johns Hopkins University, his MSEE from the University of Maryland, and completed the General Manager’s Program at the Harvard Business School. We believe Mr. Antkowiak’s extensive experience in technology development and corporate strategy will be valuable to the New AspenTech Board. Director Nominations Immediately following the Closing, the New AspenTech Board will consist of nine directors as described above; five directors will be designated by Emerson Sub (sometimes referred to as the “Emerson Directors”); one of whom will be Jill D. Smith, the current chair of the AspenTech Board and who will also be the chair of the New AspenTech Board, and three of whom will be designated by Emerson Sub following consultation with Ms. Smith; one director will be the Chief Executive Officer of AspenTech as of immediately prior to the Closing; and three directors will be designated by AspenTech (all of whom will be reasonably acceptable to Emerson Sub and will be Independent Directors, which three directors will have been designated by AspenTech prior to the designation of any director (other than Ms. Smith) by Emerson Sub) (such directors, including the Chief Executive Officer of AspenTech, and their successors, are sometimes referred to as the “non-Emerson Directors”). In the event of a vacancy on the New AspenTech Board upon the death, resignation, retirement, disqualification, removal from office or other cause of any non-Emerson Director, the Nominating & Governance Committee has the sole right to fill such vacancy or designate a person for nomination for election to the New AspenTech Board to fill such vacancy. Prior to the Third Trigger Date, Emerson Sub has the right to designate a number of the total authorized number of directors on the New AspenTech Board as of such time that is proportionate to the Emerson Group’s beneficial ownership of outstanding shares of Common Stock at such time (rounded up to the nearest whole person); provided that Emerson Sub will have the right to designate at least a majority of the directors on the New AspenTech Board until the Second Trigger Date. Following the Third Trigger Date, Emerson Sub has the right to designate one director to the New AspenTech Board and 207 following the Fourth Trigger Date, Emerson Sub does not have the right to designate any directors to the New AspenTech Board. The Audit Committee will consist of three directors who must be New AspenTech Independent Directors. The Emerson Group is required to vote in favor of all non-Emerson Directors nominated in accordance with the Stockholders Agreement. Controlled Company Under NASDAQ rules, a “Controlled Company” is defined as a listed company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. On completion of the Transactions, the Emerson Group will own 55% of the outstanding shares of Common Stock (on a fully diluted basis), which will be more than 50% of the voting power of New AspenTech and accordingly, New AspenTech will be a “Controlled Company”. Under NASDAQ rules, a “Controlled Company” is not required to comply with NASDAQ’s requirements that (i) a majority of a company’s board of directors consist of independent directors, (ii) a company’s nominating/corporate governance committee be composed solely of independent directors, and (iii) a company’s compensation committee be composed solely of independent directors. For so long as the Emerson Group beneficially owns more than 50% of the outstanding shares of Common Stock, upon the request of Emerson Sub, New AspenTech will avail itself of such “Controlled Company” exemptions in whole or in part, as requested by Emerson Sub. Emerson Sub will request that New AspenTech avail itself of the exemptions from the requirements that (i) the nominating/corporate governance committee be composed solely of independent directors and (ii) the compensation committee be composed solely of independent directors, in each case, so that Mr. Krishnan can be a member of each of the committees. Board Meetings and Committees Pursuant to the New AspenTech Bylaws, every act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the New AspenTech Board, unless a greater number is required by law or by the New AspenTech Charter. The Stockholders Agreement provides that the New AspenTech Board will initially have an Audit Committee, Human Capital Committee, Nominating & Governance Committee and an M&A Committee. The table below sets forth the anticipated composition of the committees of the New AspenTech Board following the Closing:
| | | | | | | | Robert M. Whelan, Jr. | | | | | | | | Ram R. Krishnan | | | | X | | X | | X (Chair) Arlen R. Shenkman | | X | | | | | | X Thomas F. Bogan | | | | | | | | X Patrick M. Antkowiak | | X | |
Audit Committee It is expected that the primary responsibilities of the Audit Committee will be to oversee the accounting and financial reporting processes of New AspenTech as well as its subsidiaries, and to oversee the internal and external audit processes. It is also expected that the Audit Committee will assist the New AspenTech Board in fulfilling its oversight responsibilities by reviewing the financial information which is provided to stockholders and others and the system of internal controls which management and the New AspenTech Board will have established. It is expected that the Audit Committee will oversee the independent auditors, including their independence and objectivity. However, the Audit Committee members will not act as professional accountants or auditors, and their functions will not be intended to duplicate or substitute for the activities of management and the independent auditors. It is expected that the Audit Committee will be empowered to retain independent legal counsel and other advisors as it deems necessary or appropriate to assist the Audit Committee in fulfilling its responsibilities, and to approve the fees and other retention terms of the advisors. 208 Pursuant to the Stockholders Agreement, the Audit Committee will have three directors, each of whom shall be a New AspenTech Independent Director. At least one member of the Audit Committee will qualify as an “audit committee financial expert” under Item 407(d)(5) of Regulation S-K and each member of the Audit Committee will be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement as required under the NASDAQ rules. So long as the Emerson Group holds at least 20% of the outstanding Common Stock, Emerson Sub shall be entitled to designate one non-voting observer who is entitled to attend meetings of the Audit Committee (which non-voting observer need not be a member of the New AspenTech Board). Human Capital Committee It is expected that the primary responsibilities of the Human Capital Committee will be to periodically review and approve the compensation and other benefits for New AspenTech’s executive officers. It is also expected that New AspenTech’s Human Capital Committee will administer and have discretionary authority over the issuance of stock awards under any New AspenTech stock compensation plans. Prior to the Second Trigger Date, Emerson Sub has the right to designate a number of directors to the Human Capital Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Human Capital Committee at such time (rounded up to the nearest whole person), Emerson Sub will have the right to designate the chair of the Human Capital Committee (except that the initial chair shall be designated by AspenTech) and in no event will the number of Emerson Directors on the Human Capital Committee be less than a majority of the members of the Human Capital Committee. Following the Second Trigger Date and prior to the Third Trigger Date, Emerson Sub has the right to designate a number of directors to the Human Capital Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Human Capital Committee at such time (rounded down to the nearest whole person), Emerson Sub will have the right to designate the chair of the Human Capital Committee (except that the initial chair shall be designated by AspenTech) and in no event will the number of Emerson Directors on the Human Capital Committee be less than one. Following the Third Trigger Date, Emerson Sub has no right to designate directors to the Human Capital Committee. Nominating & Governance Committee It is expected that the Nominating & Governance Committee will, subject to the terms of the Stockholders Agreement, assist the New AspenTech Board with respect to: (a) the organization and membership and function of the New AspenTech Board, including the identification and recommendation of director nominees and the structure and membership of each committee of the New AspenTech Board, (b) corporate governance principles applicable to New AspenTech, and (c) New AspenTech’s policies and programs that relate to matters of corporate responsibility. It is expected that the Nominating & Governance Committee will not formally establish any specific, minimum qualifications that must be met by each candidate for the New AspenTech Board or specific qualities or skills that are necessary for one or more of the members of the New AspenTech Board to possess. However, it is expected that the Nominating & Governance Committee, when considering a potential candidate, will factor into its determination the following qualities of a candidate, among others: professional experience, educational background, knowledge of our business, diverse identity (gender, race/ethnicity, or LGBTQ+), integrity, professional reputation, independence, wisdom, and ability to represent the best interests of our stockholders. It is also expected that the Nominating & Governance Committee will review and make recommendations to the New AspenTech Board regarding the nature, composition and duties of the committees of the New AspenTech Board. It is expected that the Nominating & Governance Committee will review and consider stockholder-recommended candidates for nomination to the New AspenTech Board. Prior to the Second Trigger Date, Emerson Sub has the right to designate a number of directors to the Nominating & Governance Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Nominating & Governance Committee at such time (rounded up to the nearest whole person), Emerson Sub will have the right to designate the chair of the Nominating & Governance Committee and in no event will the number of Emerson Directors on the Nominating & Governance Committee be less than a majority of the members of the Nominating & Governance Committee. Following the Second Trigger Date and prior to the Third Trigger Date, Emerson Sub has the right to designate a number of directors to the Nominating & Governance Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Nominating & 209 Governance Committee at such time (rounded down to the nearest whole person), Emerson Sub will have the right to designate the chair of the Nominating & Governance Committee and in no event will the number of Emerson Directors on the Nominating & Governance Committee be less than one. Following the Third Trigger Date, Emerson Sub has no right to designate directors to the Nominating & Governance Committee. M&A Committee The M&A Committee shall be an advisory committee that will, among other things, (i) review the New AspenTech’s strategy regarding mergers, acquisitions, investments and dispositions with management periodically and (ii) review all proposed mergers, acquisitions, investments or dispositions of assets or businesses (it being understood that (x) ordinary course capital expenditures which are otherwise unrelated to any acquisition or disposition of a business will not be within the purview of the M&A Committee and (y) the charter for the M&A Committee will permit the M&A Committee to establish materiality thresholds for transactions as to which the M&A Committee will not review, which thresholds shall be approved by Emerson Sub). Until the Third Trigger Date, Emerson Sub shall be entitled to appoint one member of the M&A Committee and designate one non-voting observer who is entitled to attend meetings of the M&A Committee (which non-voting observer need not be a member of the New AspenTech Board). RPT Committee The RPT Committee is an ad-hoc committee formed from time to time as needed or required under the Stockholders Agreement with respect to transactions requiring RPT Committee approval as set forth in the Related Party Transaction Policy. Under the Related Party Transaction Policy, with certain exceptions, neither New AspenTech nor any of its subsidiaries may enter into certain Related Party Transactions without the prior written approval from the RPT Committee. An RPT Committee must consist of at least two directors who are designated by a majority of the Independent Directors. All members of the RPT Committee must be New AspenTech Independent Directors. Following the completion of the Transactions, compensation for directors of New AspenTech will be determined by the New AspenTech Board. We anticipate that compensation for service on the New AspenTech Board will be provided only to the non-employee directors of New AspenTech who are not officers or employees of Emerson or its affiliates and will generally be consistent with the compensation provided to the current non-employee directors of AspenTech. The New AspenTech Board will periodically assess the amount and terms of any compensation paid to directors of New AspenTech. Indemnification of Officers and Directors The New AspenTech Charter provides that New AspenTech shall indemnify to the fullest extent permitted by the DGCL its directors and officers and any person who is or was serving at the request of New AspenTech as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. The New AspenTech Charter also provides that New AspenTech may indemnify its employees and agents as determined by the New AspenTech Board in accordance with applicable law. In addition, the New AspenTech Charter states that it shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of New AspenTech, or is or was serving at the request of New AspenTech as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any expense, liability or loss incurred by that person in any such capacity, or arising out of that person’s status as such, whether or not the corporation would have the power to indemnify that person against such liability under the DGCL. We also have and intend to maintain director and officer liability insurance, if available on reasonable terms. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling as under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 210 The Stockholders Agreement provides that Antonio J. Pietri, current Chief Executive Officer of AspenTech, will serve as the Chief Executive Officer of New AspenTech after Closing. Additional executive officers of New AspenTech will be identified at a later date. See “Executive Officers” and “Compensation Discussion And Analysis” of AspenTech’s Proxy Statement on Schedule 14A filed with the SEC on October 28, 2021 (incorporated herein by reference) for information of Mr. Pietri. See also “Where You Can Find Additional Information” beginning on page 213 of this combined proxy statement/prospectus. During the last completed fiscal year of AspenTech, Donald P. Casey, Dr. Thomas M. Bradicich, Amar Hanspal, Dr. Georgia Keresty, and Robert M. Whelan, Jr., served as members of the AspenTech compensation committee, none of whom was formerly an officer of AspenTech or has served as an employee of AspenTech since July 1, 2020. For additional information see the section below titled “Related-Party Transactions.” See “Related-Party Transactions” of AspenTech’s Proxy Statement on Schedule 14A filed with the SEC on October 28, 2021 (incorporated herein by reference). New AspenTech Assuming consummation of the Transactions, New AspenTech stockholders will be entitled to present proposals for consideration at forthcoming New AspenTech stockholder meetings provided that they comply with the proxy rules promulgated by the SEC and the New AspenTech Charter and New AspenTech Bylaws. The deadline for submission of all New AspenTech stockholder proposals for its next annual meeting will be disclosed in a subsequent filing with the SEC. AspenTech AspenTech will hold an annual meeting in 2022 only if the Transactions have not already closed. If a stockholder wishes to have a proposal considered for inclusion in AspenTech’s proxy statement and proxy card in accordance with Rule 14a-8 under the Exchange Act for presentation at the 2022 annual meeting of stockholders, the proposal must be received in writing by August 11, 2022 by AspenTech’s Secretary at AspenTech’s principal executive offices at 20 Crosby Drive, Bedford, Massachusetts 01730. Additionally, if a stockholder wishes to propose a director nominee or item of business before the 2022 annual meeting, the stockholder must give timely written notice to AspenTech’s Secretary at the address noted above. To be timely, a stockholder’s notice must be delivered to AspenTech’s Secretary not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder to be timely must be delivered not less than 90 days nor more than 120 days prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by AspenTech. In addition to the timing requirements set forth above, AspenTech’s bylaws set forth the procedures a stockholder must follow in order to nominate a director for election or to present any other proposal at an annual meeting, other than proposals intended to be included in AspenTech’s sponsored proxy materials. 211 Some banks, brokers and other nominee record holders may participate in the practice of “householding” the notice or the proxy statement. This means that only one copy of each of the notice or the proxy statement may have been sent to multiple stockholders in your household. AspenTech will promptly deliver a separate copy of these documents to you if you call or write to Aspen Technology, Inc., 20 Crosby Drive, Bedford, Massachusetts 01730, Attention: Investor Relations, Telephone: (781) 221-6400. If you prefer to receive copies of such documents in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee, or you may contact us at the above address or phone number. The consolidated financial statements of Aspen Technology, Inc. and subsidiaries as of June 30, 2021 and 2020, and for each of the years in the three-year period ended June 30, 2021, and management’s assessment of the effectiveness of Aspen Technology, Inc. and its subsidiaries’ internal control over financial reporting as of June 30, 2021, have been incorporated in this combined proxy statement/prospectus by reference in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of such firm as experts in accounting and auditing. The audit report covering the June 30, 2021 consolidated financial statements refers to a change in accounting for leases as of July 1, 2019, due to the adoption of Accounting Standards Codification (ASC), Topic 842, Leases. The consolidated and combined financial statements of the Emerson Industrial Software Business as of September 30, 2021 and 2020, and for each of the years in the three-year period ended September 30, 2021, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. Certain legal matters in connection with the validity of the Common Stock to be issued in the Transactions will be passed on for us by Davis Polk & Wardwell LLP, New York, New York. 212 AspenTech electronically files annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including AspenTech, who file electronically with the SEC. The address of that site is https://www.sec.gov. Newco has filed a registration statement on this Form S-4 to register with the SEC the common stock to be issued to AspenTech stockholders under the Securities Act. Newco is not a reporting company under the Exchange Act, and following the effectiveness of the registration statement on this Form S-4, Newco will be subject to the information reporting requirements of the Exchange Act. This combined proxy statement/prospectus is a part of that registration statement and constitutes a prospectus of Newco in addition to being a proxy statement of AspenTech for its special meeting. As permitted by SEC rules, this combined proxy statement/prospectus does not contain all the information you can find in the registration statement and the accompanying exhibits. The SEC allows AspenTech to “incorporate by reference” information into this combined proxy statement/prospectus, which means that AspenTech can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this combined proxy statement/prospectus, except for any information superseded by information in, or incorporated by reference in, this combined proxy statement/prospectus. This combined proxy statement/prospectus incorporates by reference the documents listed below that AspenTech has previously filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in connection with SEC rules). These documents contain important information about AspenTech and its financial position.
AspenTech is also incorporating by reference additional documents that it files with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this combined proxy statement/prospectus and the date of the special meeting, provided, however, that AspenTech is not incorporating by reference any information furnished (but not filed), except as otherwise specified herein. All information contained or incorporated by reference into this combined proxy statement/prospectus relating to AspenTech has been supplied by AspenTech. If you are a stockholder, AspenTech may have sent you some of the documents incorporated by reference, but you can obtain any of them through AspenTech or the SEC. Documents incorporated by reference are available from AspenTech without charge, excluding all exhibits unless AspenTech has specifically incorporated by reference an exhibit in this combined proxy statement/prospectus. Stockholders may obtain documents incorporated by reference into this combined proxy statement/prospectus by requesting them in writing or by telephone at the following address and telephone number: Aspen Technology, Inc. 20 Crosby Drive Bedford, Massachusetts 01730 Investor Relations (781) 221-6400 If you would like to request documents from AspenTech, please do so no later than 5 business days before the date of the special meeting in order to receive them before the special meeting on [ ], 2022. 213 You also can get more information about AspenTech by visiting its website at www.AspenTech.com. Website materials are not part of this combined proxy statement/prospectus. You should rely only on the information contained or incorporated by reference into this combined proxy statement/prospectus to vote on the proposals to AspenTech stockholders in connection with the Transactions. AspenTech has not authorized anyone to provide you with information that is different from what is contained in this combined proxy statement/prospectus. This combined proxy statement/prospectus is dated [ ], 2022. You should not assume that the information contained in this combined proxy statement/prospectus is accurate as of any date other than such date, and the mailing of this combined proxy statement/prospectus to stockholders shall not create any implication to the contrary. 214 To the Stockholders and Board of Directors Emerson Electric Co.: Opinion on the Consolidated and Combined Financial Statements We have audited the accompanying consolidated and combined balance sheets of the Emerson Industrial Software Business (a business of Emerson Electric Co.) (the Business) as of September 30, 2021 and 2020, the related consolidated and combined statements of earnings (loss), comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended September 30, 2021, and the related notes (collectively, the consolidated and combined financial statements). In our opinion, the consolidated and combined financial statements present fairly, in all material respects, the financial position of the Business as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2021, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated and combined financial statements are the responsibility of the Business’s management. Our responsibility is to express an opinion on these consolidated and combined financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Business in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated and combined financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated and combined financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated and combined financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated and combined financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Business’s auditor since 2021. Houston, Texas January 11, 2022 FS-2 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-3 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-4 EMERSON INDUSTRIAL SOFTWARE BUSINESS September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-5 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-6 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-7 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands except where noted) Description of Business The Emerson Industrial Software Business (“the Business”) is a global leader in providing grid modernization technology, advanced distribution management systems and geological simulation software. The Business operates two businesses: Open Systems International, Inc. (“OSI Inc.”) and Geological Simulation Software (“GSS”). OSI Inc. and GSS are two of Emerson Electric Co.’s (“Emerson”) industrial software businesses. OSI Inc. offers operational technology (“OT”) solutions that enable utilities to control generation, transmission, and distribution of power and ultimately ensure supply equals demand in the power grid. GSS is a leading developer of software solutions to the global energy and alternative energy, carbon capture and storage, and minerals and mining industries. GSS provides geological simulation software that characterizes subsurface geological formations from seismic interpretation to dynamic simulation, connecting reservoirs to operational activities to optimize production and utilization. The Proposed Transaction On October 10, 2021, Emerson entered into a definitive agreement (the “Transactions”) with Aspen Technology, Inc. (“AspenTech”) to contribute OSI, Inc. and GSS, along with $6.014 billion in cash, to create a diversified, high performance industrial software leader with greater scale, capabilities, and technologies (“New AspenTech”). Upon closing of the Transactions, Emerson will own 55% of the outstanding shares of New AspenTech on a fully diluted basis and the results and financial position of New AspenTech will be consolidated in Emerson’s financial statements. The Transactions are expected to close in the second calendar quarter of 2022, subject to certain closing conditions and customary regulatory approvals. Basis of Presentation GSS and OSI Inc. are two of Emerson’s industrial software businesses, and their results of operations and financial statements have previously been reflected in Emerson’s consolidated financial statements. These consolidated and combined financial statements of the Business present the historical financial position, results of operations, and cash flows of the Business as historically managed within Emerson and include all accounts of the Business in a combination of dedicated legal entities and shared legal entities of Emerson. Intercompany transactions, profits and balances among the Business’s entities have been eliminated. These consolidated and combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Sale and purchase transactions between the Business and other Emerson affiliates are included in the consolidated and combined financial statements. See Note 11. These consolidated and combined financial statements reflect charges for costs directly related to the Business and the Business has been allocated a portion of Emerson’s general corporate costs. All such costs are reflected in the consolidated and combined financial statements. The Business participates in various Emerson programs which include information technology services, employee benefits, medical insurance, and other programs. Costs associated with these programs are charged to the Business based on Emerson’s actual cost and the Business’s relative level of usage. The Business also utilizes Emerson’s global shared service centers and is charged for direct costs and its share of associated overhead costs. Emerson provides certain oversight and support services, including assistance with management strategy, logistics, marketing, finance, treasury, tax, human resources, legal and other activities. A charge for these services has historically been allocated to the Business based principally on revenue. While management believes the methodologies and assumptions used to allocate these costs are reasonable, the consolidated and combined financial statements do not purport to represent the financial position, the results of operations, changes in equity, and cash flows of the Business in the future, or what such costs would have been had the Business operated as a stand-alone entity during the periods presented. FS-8 Emerson utilizes a centralized treasury function which manages the working capital and financing needs of all of its business operations. This function oversees a cash pooling arrangement which sweeps participating Business cash accounts into pooled Emerson cash accounts on a daily basis. Pooled cash and nontrade intercompany balances attributable to Emerson have not been presented as assets and liabilities in the accompanying consolidated and combined financial statements. These balances are reflected as “Net parent investment” in the equity section of the consolidated and combined balance sheets. Changes in these balances are reflected as “Net transfer from (to) Emerson” in the financing activities section of the consolidated and combined statements of cash flows. Cash and cash equivalents from entities not participating in the Emerson centralized treasury function and specifically attributable to the Business have been reflected in the consolidated and combined financial statements. The When two or more contracts are entered into at or near the same time with the same customer, the Emerson Industrial Software Business evaluates the facts and circumstances associated with the negotiation of those contracts. Where the
Assets and liabilities acquired in business combinations are accounted for using the acquisition method and recorded at their respective fair values. Goodwill represents the excess of consideration paid over the net assets acquired and is assigned to the reporting unit that acquires the business. The Emerson Industrial Software Business conducts annual impairment tests of goodwill in the fourth quarter and between 202 estimated fair value to its carrying value. An impairment charge would be recorded for the amount by which the carrying value of the reporting unit exceeds the estimated fair value. Estimated fair values are developed primarily under an income approach that discounts estimated future cash flows using risk-adjusted interest rates, as well as earnings multiples or other techniques as warranted. No goodwill impairment was recorded for any of the periods presented. All of the Emerson Industrial Software Business’s identifiable intangible assets are subject to amortization on a straight-line basis over their estimated useful lives. Identifiable intangibles consist of intellectual property such as patented and unpatented technology and trademarks, customer relationships and capitalized software. Identifiable intangible assets are also subject to evaluation for potential impairment if events or circumstances indicate the carrying value may not be recoverable. The accounting for a business combination requires the excess of the purchase price for an acquisition over the net book value of assets acquired to be allocated to identifiable assets, including intangible assets. The Emerson Industrial Software Business The key assumption requiring the use of judgement in the valuation of the The key assumptions requiring the use of judgement in the valuation of the technology intangible asset were the royalty rate of 20% and the obsolescence factor. The royalty rate was based on information obtained from third party market analysis corroborating the advantages of the technology in relation to OSI Inc. competitors and market royalty data. A five-percentage point increase or decrease in the royalty rate would change the fair value of intangible assets by approximately $96.5 million. The obsolescence factor was calculated assuming a straight-line phase out over In connection with the preparation and audit of the Emerson Industrial Software Business financial statements for the three years ended September 30, 2021, control deficiencies primarily related to revenue recognition were identified. Specifically, the Emerson Industrial Software Business did not have effective controls in place at two locations to review the accounting for significant new revenue contracts, which resulted in audit adjustments that reduced 2021 revenue by $4.9 million, and management had identified deficiencies in the design of information system program change controls over certain reports utilized in the determination of revenue recognition at OSI Inc. The combination of those deficiencies was deemed by management to be a material weakness in internal control over financial reporting. A material weakness is Subsequent to year-end, the Emerson Industrial Software Business has implemented focused reviews of new revenue contracts at the Emerson corporate level to assess the accounting for those contracts. Additionally, revenue recognition training will be See Note 1 for information about recently adopted accounting pronouncements. While the Emerson Industrial Software Business has no operations in Ukraine, the ongoing conflict there could negatively impact its financial position and results of operations. The United States and other governments have imposed sanctions and taken other regulatory actions that adversely affect doing business in Russia and with Russian companies. The Emerson Industrial Software Business’s GSS business licenses software and provides related services to customers in Russia and has operations there. The GSS business had net sales of approximately $24 million and $3 million for the fiscal year ended September 30, 2021 and the 3-months ended December 31, 2021, respectively, and total assets of approximately $17 million as of December 31, 2021. OSI Inc. does not have sales or operations in Russia. The Emerson Industrial Software Business assesses its operations for potential asset impairment in accordance with its accounting practices, and is evaluating the impact, if any, of the various sanctions and export controls measures imposed by the United States and other governments on its ability to do business in Russia, maintain contracts with vendors and pay employees in Russia, as well as receive payment from customers in Russia or Ukraine. The outcome of these assessments will depend on how the conflict evolves and on further actions that may be taken by the United States, Russia, and other governments around the world. No material impact to supply chain operations is expected due to the conflict in Ukraine. 204 The business and affairs of New AspenTech will be managed by or under the direction of the New AspenTech Board. The Stockholders Agreement provides for the designation by Emerson Sub of a certain number of members of the New AspenTech Board, and for the designation by AspenTech of a certain number of members of the initial New AspenTech Board. The table below lists eight of the nine persons expected to be designated, and subsequently nominated and elected to the New AspenTech Board as of the completion of the Transactions, along with the party to the Stockholders Agreement expected to nominate each person, each nominee’s age as of the date of the special meeting and any other position that such nominee will hold with New AspenTech. The final person expected to be designated and subsequently nominated and elected to the New AspenTech Board is expected to be determined prior to the Closing. To the extent not determined prior to the Closing, there will be a vacancy on the New AspenTech Board as of the Closing which will be filled in accordance with the Stockholders Agreement.
The following is a brief biography of each director nominee of the New AspenTech Board that is known as of the date of this combined proxy statement/prospectus. Jill D. Smith has served on the AspenTech Board since April 2021 and was appointed Chair in July 2021. Ms. Smith brings more than 20 years of significant international business leadership, most recently serving as President and Chief Executive Officer and director of Allied Minds plc, an intellectual property commercialization company for technology and life sciences, from March 2017 to June 2019. Previously, she served as Chair, Chief Executive Officer, and President of DigitalGlobe Inc., a global provider of satellite imagery products and services. Ms. Smith has also served as President and Chief Executive Officer of eDial, a VoIP collaboration company, and President and Chief Executive Officer of SRDS, a business-to-business publishing firm. Ms. Smith began her career as a Consultant at Bain & Company, where she rose to Partner, before taking leadership roles with Sara Lee in France, and becoming Executive Vice President and President and Chief Operating Officer of Micron Electronics, a direct to consumer PC manufacturing firm. Ms. Smith holds a M.Sc. in Management from MIT Sloan School of Management and currently serves on the board of directors for R1 RCM Inc., a technology-led revenue cycle management company, Circor International, a flow control, engineered products producer, and MDA, a space technology developer and manufacturer, as well as other privately held technology companies. Ms. Smith previously served as a director of Gemalto NV, a SIM card manufacturer, from 2016 to 2018, and Endo International plc, a pharmaceutical company, from 2012 to 2018. We believe Ms. Smith’s proven business leadership, extensive experience as a technology executive, including as a chief executive officer, track record in growing innovative companies and experience serving on corporate boards qualify her to serve on the New AspenTech Board. Antonio J. Pietri was named AspenTech’s President and Chief Executive Officer in October 2013 and has served on the AspenTech Board since July 2013. Before accepting his appointment as President and Chief Executive Officer, he had served as AspenTech’s Executive Vice President, Field Operations since July 2007. Mr. Pietri served as AspenTech’s Senior Vice President and Managing Director for the Asia-Pacific region from 2002 to June 2007 and held various other positions with AspenTech from 1996 until 2002. From 1992 to 1996, he was at Setpoint Systems, Inc., which AspenTech acquired, and before that he worked at ABB Simcon and AECTRA Refining and Marketing, Inc. He holds an M.B.A. from the University of Houston and a B.S. in Chemical Engineering from the University of Tulsa. We believe Mr. Pietri will be a valuable member of the New AspenTech Board because he has developed extensive working relationships with AspenTech’s customers and employees, and therefore will provide a unique perspective on New AspenTech’s growth strategy as well as its day-to-day operations. 205 Karen M. Golz has served on the AspenTech Board since March 2021. Ms. Golz is a retired partner of Ernst & Young (EY), where she held various senior leadership positions during her 40-year tenure, including most recently, Global Vice Chair, Japan (2016-2017). In addition to accounting, financial reporting and audit expertise, Ms. Golz brings considerable experience in international and regulatory matters. As Global Vice Chair of Professional Practice (2010-2016), Ms. Golz oversaw accounting, auditing, regulatory, tools and methodologies and supported innovation within EY’s Global Assurance practice. Prior to that, Ms. Golz held the Americas and Global Vice-Chair of Professional Ethics/Independence. Ms. Golz is a board and audit committee member of Analog Devices, Inc., a semiconductor company, iRobot Corporation, a consumer robot company, and Osteon Holdings/Exactech, a privately held company. She is senior advisor to The Boston Consulting Group’s Audit and Risk Committee and is a National Association of Corporate Directors (NACD) Board Leadership Fellow and sits on the Board of Trustees of the University of Illinois Foundation. She earned her Bachelor of Science degree in Accountancy, summa cum laude, from the University of Illinois, Urbana-Champaign and is a certified public accountant. We believe that Ms. Golz’s financial, international and corporate governance expertise will be valuable to the New AspenTech Board. Robert M. Whelan, Jr. has served on the AspenTech Board since 2011. He served as the Chair of the AspenTech Board from January 29, 2013 to July 28, 2021. Mr. Whelan has an extensive background as an advisor to, investor in and board member of emerging growth companies in the U.S. and Canada. From 1976 until 2001, Mr. Whelan worked in the investment banking industry. In 1999, his company, Volpe Brown Whelan & Company, an investment banking, brokerage and asset management firm, was acquired by Prudential Securities, for which Mr. Whelan served as Vice Chair of the global technology investment banking division until 2001. Mr. Whelan then formed Whelan & Co., a consulting firm which advises CEOs, boards and investors of emerging growth companies on financing and strategic matters. During this time, Mr. Whelan served on several for-profit boards of public and private companies and on the board of several non-profit organizations. Mr. Whelan has served as a director for iAnthus Capital Holdings Inc., which owns, operates and partners with regulated cannabis operations across the United States, from December 2019 to January 2022; Annovis Bio, a drug development company focused on novel treatments for neurodegenerative diseases, from April 2016 to March 2021; and ARIAD Pharmaceuticals, Inc., a developer of small-molecule drugs to treat patients with aggressive cancers, from April 2010 to September 2014; as well as other privately-held companies. Mr. Whelan holds a B.A. in History from Dartmouth College and an M.B.A. from Stanford University Graduate School of Business with a concentration in Finance and Accounting. We believe that Mr. Whelan’s executive management and technology investment banking experience will be valuable to the New AspenTech Board. Ram R. Krishnan has served as Executive Vice President and Chief Operating Officer of Emerson since February 17, 2021 and is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Krishnan has extensive experience across Emerson’s Automation Solutions and Commercial & Residential Solutions businesses. He joined Emerson in 1994 as a project engineer and held a number of management roles of increasing responsibility. He was named President of Climate Technologies in Asia in 2011, serving in Hong Kong. He returned to the United States as Vice President of Profit Planning and Perfect Execution in 2015, a role he held until 2016, when he became Group President of Flow Solutions. He was named Chief Operating Officer of Final Control in January 2017 and became the Group President of Final Control in November 2017 following the successful $3.15 billion acquisition of Pentair’s valves and controls business. As Chief Operating Officer of Emerson, Mr. Krishnan oversees global supply chain operations, information technology, and mergers and acquisitions. Mr. Krishnan has a bachelor’s degree in metallurgical engineering from the India Institute of Technology, a master’s degree in materials engineering from the Rensselaer Polytechnic Institute and a master’s degree in business administration from Xavier University. We believe Mr. Krishnan’s extensive operational, strategic, and mergers and acquisitions experience will be valuable to the New AspenTech Board. Arlen R. Shenkman is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Shenkman has served as Executive Vice President and Chief Financial Officer of Citrix Systems Inc. since September 2019. Prior to joining Citrix, Mr. Shenkman served as Executive Vice President and Global Head of Business Development and Ecosystems of SAP from May 2017 to August 2019, where he was responsible for driving business development by building new ecosystems, fostering strategic partnerships, incubating new business models, and overseeing investments and mergers and acquisitions. Prior to that role from January 2015 to May 2017, Mr. Shenkman served as Chief Financial Officer of SAP North America, SAP’s largest business unit, responsible for all finance functions in North America, including 206 forecasting and planning, identifying efficiencies, and ensuring the region’s overall financial health. Mr. Shenkman previously served as SAP’s Global Head of Corporate Development from January 2012 to January 2015 and was a principal architect of SAP’s rapid transformation into a cloud company. Mr. Shenkman has a J.D. from the University of Miami School of Law, an M.B.A. from the Fox School of Business at Temple University, and a bachelor’s degree in political science from George Washington University. He has also completed the London Business School’s Corporate Finance Program. Shenkman is the Chair of the Operating Committee and member of the Audit Committee and Board of Directors of Commvault Systems Inc., a data protection and information management software company. We believe Mr. Shenkman’s extensive operational experience in the software industry will be valuable to the New AspenTech Board. Thomas F. Bogan is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Bogan served as Vice Chairman at Workday, Inc. from February 2020 to January 2022, and previously served as Executive Vice President of Workday’s Planning Business Unit. Mr. Bogan joined Workday from Adaptive Insights, where he was Chief Executive Officer and a director from January 2015 until its acquisition by Workday in August 2018. From 2007 until January 2019, he was a director of Apptio, Inc., including its Chair from 2012 to January 2019. Mr. Bogan was a director of Citrix Systems, Inc. from 2003 to June 2016, including its Chair from 2004 to 2015, and was a director of PTC, Inc. from 2011 to June 2015; and of Rally Software Development Corp. from 2009 to July 2015. He has also served as a director and executive officer of various public and privately-held companies, including Greylock Partners, Rational Software, Avatar Technologies and Pacific Data. Mr. Bogan received a bachelor’s degree in accounting from Stonehill College. We believe Mr. Bogan’s varied experiences in the software industry and venture capital will be valuable to the New AspenTech Board. Patrick M. Antkowiak is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Antkowiak is currently president of CEM Technology Advisors, LLC, a strategy and technology consulting business. He spent over 38 years in increasingly senior roles at Northrop Grumman Corporation, including as the company’s Chief Technology Officer from 2014 to 2018, and retired in 2019 as the company’s Chief Technology and Strategy Officer having led the company’s technology development strategy and execution, focusing the company on competitive differentiation in emerging technology areas across the space, airborne, maritime, ground and cyber domains. Mr. Antkowiak currently serves on the board of directors for the Advanced Robotics for Manufacturing (ARM) Institute, a non-profit organization focused on accelerating the development and adoption of innovative robotics technologies and workforce strategies for the nation. He is also a member of The Johns Hopkins University’s Whiting School of Engineering Dean’s advisory board. Mr. Antkowiak received his BSEE in electrical and computer engineering (ECE) from The Johns Hopkins University, his MSEE from the University of Maryland, and completed the General Manager’s Program at the Director Nominations Immediately following the Closing, the New AspenTech Board will consist of nine directors as described above; five directors will be designated by Emerson Sub (sometimes referred to as the “Emerson Directors”); one of whom will be Jill D. Smith, the current chair of the AspenTech Board and who will also be the chair of the New AspenTech Board, and three of whom will be designated by Emerson Sub following consultation with Ms. Smith; one director will be the Chief Executive Officer of AspenTech as of immediately prior to the Closing; and three directors will be designated by AspenTech (all of whom will be reasonably acceptable to Emerson Sub and will be Independent Directors, which three directors will have been designated by AspenTech prior to the designation of any director (other than Ms. Smith) by Emerson Sub) (such directors, including the Chief Executive Officer of AspenTech, and their successors, are sometimes referred to as the “non-Emerson Directors”). In the event of a vacancy on the New AspenTech Board upon the death, resignation, retirement, disqualification, removal from office or other cause of any non-Emerson Director, the Nominating & Governance Committee has the sole right to fill such vacancy or designate a person for nomination for election to the New AspenTech Board to fill such vacancy. Prior to the Third Trigger Date, Emerson Sub has the right to designate a number of the total authorized number of directors on the New AspenTech Board as of such time that is proportionate to the Emerson Group’s beneficial ownership of outstanding shares of Common Stock at such time (rounded up to the nearest whole person); provided that Emerson Sub will have the right to designate at least a majority of the directors on the New AspenTech Board until the Second Trigger Date. Following the Third Trigger Date, Emerson Sub has the right to designate one director to the New AspenTech Board and 207 following the Fourth Trigger Date, Emerson Sub does not have the right to designate any directors to the New AspenTech Board. The Audit Committee will consist of three directors who must be New AspenTech Independent Directors. The Emerson Group is required to vote in favor of all non-Emerson Directors nominated in accordance with the Stockholders Agreement. Controlled Company Under NASDAQ rules, a “Controlled Company” is defined as a listed company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. On completion of the Transactions, the Emerson Group will own 55% of the outstanding shares of Common Stock (on a fully diluted basis), which will be more than 50% of the voting power of New AspenTech and accordingly, New AspenTech will be a “Controlled Company”. Under NASDAQ rules, a “Controlled Company” is not required to comply with NASDAQ’s requirements that (i) a majority of a company’s board of directors consist of independent directors, (ii) a company’s nominating/corporate governance committee be composed solely of independent directors, and (iii) a company’s compensation committee be composed solely of independent directors. For so long as the Emerson Group beneficially owns more than 50% of the outstanding shares of Common Stock, upon the request of Emerson Sub, New AspenTech will avail itself of such “Controlled Company” exemptions in whole or in part, as requested by Emerson Sub. Emerson Sub will request that New AspenTech avail itself of the exemptions from the requirements that (i) the nominating/corporate governance committee be composed solely of independent directors and (ii) the compensation committee be composed solely of independent directors, in each case, so that Mr. Krishnan can be a member of each of the committees. Board Meetings and Committees Pursuant to the New AspenTech Bylaws, every act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the New AspenTech Board, unless a greater number is required by law or by the New AspenTech Charter. The Stockholders Agreement provides that the New AspenTech Board will initially have an Audit Committee, Human Capital Committee, Nominating & Governance Committee and an M&A Committee. The table below sets forth the anticipated composition of the committees of the New AspenTech Board following the Closing:
Audit Committee It is expected that the primary responsibilities of the Audit Committee will be to oversee the accounting and financial reporting processes of New AspenTech as well as its subsidiaries, and to oversee the internal and external audit processes. It is also expected that the Audit Committee will assist the New AspenTech Board in fulfilling its oversight responsibilities by reviewing the financial information which is provided to stockholders and others and the system of internal controls which management and the New AspenTech Board will have established. It is expected that the Audit Committee will oversee the independent auditors, including their independence and objectivity. However, the Audit Committee members will not act as professional accountants or auditors, and their functions will not be intended to duplicate or substitute for the activities of management and the independent auditors. It is expected that the Audit Committee will be empowered to retain independent legal counsel and other advisors as it deems necessary or appropriate to assist the Audit Committee in fulfilling its responsibilities, and to approve the fees and other retention terms of the advisors. 208 Pursuant to the Stockholders Agreement, the Audit Committee will have three directors, each of whom shall be a New AspenTech Independent Director. At least one member of the Audit Committee will qualify as an “audit committee financial expert” under Item 407(d)(5) of Regulation S-K and each member of the Audit Committee will be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement as required under the NASDAQ rules. So long as the Emerson Group holds at least 20% of the outstanding Common Stock, Emerson Sub shall be entitled to designate one non-voting observer who is entitled to attend meetings of the Audit Committee (which non-voting observer need not be a member of the New AspenTech Board). Human Capital Committee It is expected that the primary responsibilities of the Human Capital Committee will be to periodically review and approve the compensation and other benefits for New AspenTech’s executive officers. It is also expected that New AspenTech’s Human Capital Committee will administer and have discretionary authority over the issuance of stock awards under any New AspenTech stock compensation plans. Prior to the Second Trigger Date, Emerson Sub has the right to designate a number of directors to the Human Capital Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Human Capital Committee at such time (rounded up to the nearest whole person), Emerson Sub will have the right to designate the chair of the Human Capital Committee (except that the initial chair shall be designated by AspenTech) and in Nominating & Governance Committee It is expected that the Nominating & Governance Committee will, subject to the terms of the Stockholders Agreement, assist the New AspenTech Board with respect to: (a) the organization and membership and function of the New AspenTech Board, including the identification and recommendation of director nominees and the structure and membership of each committee of the New AspenTech Board, (b) corporate governance principles applicable to New AspenTech, and (c) New AspenTech’s policies and programs that relate to matters of corporate responsibility. It is expected that the Nominating & Governance Committee will not formally establish any specific, minimum qualifications that must be met by each candidate for Prior to the Second Trigger Date, Emerson Sub has the right to designate a number of directors to the Nominating & Governance Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Nominating & Governance Committee at such time (rounded up to the nearest whole person), Emerson Sub will have the right to designate the chair of the Nominating & Governance Committee and in no event will the number of Emerson Directors on the Nominating & Governance Committee be less than a majority of the members of the Nominating & Governance Committee. Following the Second Trigger Date and prior to the Third Trigger Date, Emerson Sub has the right to designate a number of directors to the Nominating & Governance Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Nominating & 209 Governance Committee at such time (rounded down to the nearest whole person), Emerson Sub will have the right to designate the chair of the Nominating & Governance Committee and in no event will the number of Emerson Directors on the Nominating & Governance Committee be less than one. Following the Third Trigger Date, Emerson Sub has no right to designate directors to the Nominating & Governance Committee. M&A Committee The M&A Committee shall be an advisory committee that will, among other things, (i) review the New AspenTech’s strategy regarding mergers, acquisitions, investments and dispositions with management periodically and (ii) review all proposed mergers, acquisitions, investments or dispositions of assets or businesses (it being understood that (x) ordinary course capital expenditures which are otherwise unrelated to any acquisition or disposition of a business will not be within the purview of the M&A Committee and (y) the charter for the M&A Committee will permit the M&A Committee to establish materiality thresholds for transactions as to which the M&A Committee will not review, which thresholds shall be approved by Emerson Sub). Until the Third Trigger Date, Emerson Sub shall be entitled to appoint one member of the M&A Committee and designate one non-voting observer who is entitled to attend meetings of the M&A Committee (which non-voting observer need not be a member of the New AspenTech Board). RPT Committee The RPT Committee is an ad-hoc committee formed from time to time as needed or required under the Stockholders Agreement with respect to transactions requiring RPT Committee approval as set forth in the Related Party Transaction Policy. Under the Related Party Transaction Policy, with certain exceptions, neither New AspenTech nor any of its subsidiaries may enter into certain Related Party Transactions without the prior written approval from the RPT Committee. An RPT Committee must consist of at least two directors who are designated by a majority of the Independent Directors. All members of the RPT Committee must be New AspenTech Independent Directors. Following the completion of the Transactions, compensation for directors of New AspenTech will be determined by the New AspenTech Board. We anticipate that compensation for service on the New AspenTech Board will be provided only to the non-employee directors of New AspenTech who are not officers or employees of Emerson or its affiliates and will generally be consistent with the compensation provided to the current non-employee directors of AspenTech. The New AspenTech Board will periodically assess the amount and terms of any compensation paid to directors of New AspenTech. Indemnification of Officers and Directors The New AspenTech Charter provides that New AspenTech shall indemnify to the fullest extent permitted by the DGCL its directors and officers and any person who is or was serving at the request of New AspenTech as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. The New AspenTech Charter also provides that New AspenTech may indemnify its employees and agents as determined by the New AspenTech Board in accordance with applicable law. In addition, the New AspenTech Charter states that it shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of New AspenTech, or is or was serving at the request of New AspenTech as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any expense, liability or loss incurred by that person in any such capacity, or arising out of that person’s status as such, whether or not the corporation would have the power to indemnify that person against such liability under the DGCL. We also have and intend to maintain director and officer liability insurance, if available on reasonable terms. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling as under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 210 The Stockholders Agreement provides that Antonio J. Pietri, current Chief Executive Officer of AspenTech, will serve as the Chief Executive Officer of New AspenTech after Closing. Additional executive officers of New AspenTech will be identified at a later date. See “Executive Officers” and “Compensation Discussion And Analysis” of AspenTech’s Proxy Statement on Schedule 14A filed with the SEC on October 28, 2021 (incorporated herein by reference) for information of Mr. Pietri. See also “Where You Can Find Additional Information” beginning on page 213 of this combined proxy statement/prospectus. During the last completed fiscal year of AspenTech, Donald P. Casey, Dr. Thomas M. Bradicich, Amar Hanspal, Dr. Georgia Keresty, and Robert M. Whelan, Jr., served as members of the AspenTech compensation committee, none of whom was formerly an officer of AspenTech or has served as an employee of AspenTech since July 1, 2020. For additional information see the section below titled “Related-Party Transactions.” See “Related-Party Transactions” of AspenTech’s Proxy Statement on Schedule 14A filed with the SEC on October 28, 2021 (incorporated herein by reference). New AspenTech Assuming consummation of the Transactions, New AspenTech stockholders will be entitled to present proposals for consideration at forthcoming New AspenTech stockholder meetings provided that they comply with the proxy rules promulgated by the SEC and the New AspenTech Charter and New AspenTech Bylaws. The deadline for submission of all New AspenTech stockholder proposals for its next annual meeting will be disclosed in a subsequent filing with the SEC. AspenTech AspenTech will hold an annual meeting in 2022 only if the Transactions have not already closed. If a stockholder wishes to have a proposal considered for inclusion in AspenTech’s proxy statement and proxy card in accordance with Rule 14a-8 under the Exchange Act for presentation at the 2022 annual meeting of stockholders, the proposal must be received in writing by August 11, 2022 by AspenTech’s Secretary at AspenTech’s principal executive offices at 20 Crosby Drive, Bedford, Massachusetts 01730. Additionally, if a stockholder wishes to propose a director nominee or item of business before the 2022 annual meeting, the stockholder must give timely written notice to AspenTech’s Secretary at the address noted above. To be timely, a stockholder’s notice must be delivered to AspenTech’s Secretary not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder to be timely must be delivered not less than 90 days nor more than 120 days prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by AspenTech. In addition to the timing requirements set forth above, AspenTech’s bylaws set forth the procedures a stockholder must follow in order to nominate a director for election or to present any other proposal at an annual meeting, other than proposals intended to be included in AspenTech’s sponsored proxy materials. 211 Some banks, brokers and other nominee record holders may participate in the practice of “householding” the notice or the proxy statement. This means that only one copy of each of the notice or the proxy statement may have been sent to multiple stockholders in your household. AspenTech will promptly deliver a separate copy of these documents to you if you call or write to Aspen Technology, Inc., 20 Crosby Drive, Bedford, Massachusetts 01730, Attention: Investor Relations, Telephone: (781) 221-6400. If you prefer to receive copies of such documents in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee, or you may contact us at the above address or phone number. The consolidated financial statements of Aspen Technology, Inc. and subsidiaries as of June 30, 2021 and 2020, and for each of the years in the three-year period ended June 30, 2021, and management’s assessment of the effectiveness of Aspen Technology, Inc. and its subsidiaries’ internal control over financial reporting as of June 30, 2021, have been incorporated in this combined proxy statement/prospectus by reference in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of such firm as experts in accounting and auditing. The audit report covering the June 30, 2021 consolidated financial statements refers to a change in accounting for leases as of July 1, 2019, due to the adoption of Accounting Standards Codification (ASC), Topic 842, Leases. The consolidated and combined financial statements of the Emerson Industrial Software Business as of September 30, 2021 and 2020, and for each of the years in the three-year period ended September 30, 2021, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. Certain legal matters in connection with the validity of the Common Stock to be issued in the Transactions will be passed on for us by Davis Polk & Wardwell LLP, New York, New York. 212 AspenTech electronically files annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including AspenTech, who file electronically with the SEC. The address of that site is https://www.sec.gov. Newco has filed a registration statement on this Form S-4 to register with the SEC the common stock to be issued to AspenTech stockholders under the Securities Act. Newco is not a reporting company under the Exchange Act, and following the effectiveness of the registration statement on this Form S-4, Newco will be subject to the information reporting requirements of the Exchange Act. This combined proxy statement/prospectus is a The SEC allows AspenTech to
AspenTech is also incorporating by reference additional documents that it files with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this combined proxy statement/prospectus and the date of the special meeting, provided, however, that AspenTech is not incorporating by reference any information furnished (but not filed), except as otherwise specified herein. All information contained or incorporated by reference into this combined proxy statement/prospectus relating to AspenTech has been supplied by AspenTech. If you are a Aspen Technology, Inc. 20 Crosby Drive Bedford, Massachusetts 01730 Investor Relations (781) 221-6400 If you would like to 213 You also can get more information about AspenTech by visiting its website at www.AspenTech.com. Website materials are not part of this combined proxy statement/prospectus. You should rely only on the information contained or incorporated by reference into this combined proxy statement/prospectus to vote on the proposals to AspenTech stockholders in connection with the Transactions. AspenTech has not authorized anyone to provide you with information that is 214 To the Stockholders and Board of Directors Emerson Electric Co.: Opinion on the Consolidated and Combined Financial Statements We have audited the accompanying consolidated and combined balance sheets of the Emerson Industrial Software Business (a business of Emerson Electric Co.) (the Business) as of September 30, 2021 and 2020, the related consolidated and combined statements of earnings (loss), comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended September 30, 2021, and the related notes (collectively, the consolidated and combined financial statements). In our opinion, the consolidated and combined financial statements present fairly, in all material respects, the financial position of the Business Basis for Opinion These consolidated and combined financial statements are the responsibility of the Business’s management. Our responsibility is to express an opinion on these consolidated and combined financial statements based on our audits. We are a We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated and combined financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated and combined financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated and combined financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated and combined financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Business’s auditor since 2021. Houston, Texas January 11, 2022 FS-2 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-3 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-4 EMERSON INDUSTRIAL SOFTWARE BUSINESS September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-5 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-6 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-7 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands except where noted) Description of Business The Emerson Industrial Software Business OSI Inc. The Proposed Transaction On October 10, 2021, Emerson entered into a definitive agreement (the “Transactions”) with Basis of Presentation GSS and OSI Inc. are two of Emerson’s industrial software businesses, and their results of operations and financial statements have previously been reflected in Emerson’s consolidated financial statements. These consolidated and combined financial statements of the Business present the historical financial position, results of operations, and cash flows of the Business as historically managed within Emerson and include all accounts of the Business in a These consolidated and combined financial statements reflect charges for costs directly related to the Business and the Business has Emerson provides certain oversight and support services, including assistance with management strategy, logistics, marketing, finance, treasury, tax, human resources, legal and other activities. A charge for these services has historically been allocated to the FS-8 Emerson utilizes a centralized treasury function which manages the working capital and financing needs of all of its business operations. This function oversees a cash pooling arrangement which sweeps participating Business cash accounts into pooled Emerson cash accounts on a daily basis. Pooled cash and nontrade intercompany balances attributable to Emerson have not been presented as assets and liabilities in the accompanying consolidated and combined financial statements. These balances are reflected as “Net parent investment” in the equity section of the consolidated and combined balance sheets. Changes in these balances are reflected as “Net transfer from Contracts with Multiple Performance Obligations The Emerson Industrial Software Business allocates total contract consideration to each distinct performance obligation in an arrangement on a relative standalone selling price basis. The standalone selling price reflects the price that would be charged for a specific product or service if it was sold separately in similar circumstances and to similar customers. When two or more contracts are entered into at or near the same time with the same customer, the Emerson Industrial Software Business evaluates the facts and circumstances associated with the negotiation of those contracts. Where the contracts are negotiated as a package, the Emerson Industrial Software Business will account for them as a single arrangement and allocate the consideration for the combined contracts among the performance obligations accordingly. When available, the Emerson Industrial Software Business uses directly observable transactions to determine the standalone selling prices for performance obligations. If directly observable data is not available when software licenses are sold together with software maintenance in a bundled arrangement, the Emerson Industrial Software Business estimates a standalone selling price for these distinct performance obligations using relevant information, including the Emerson Industrial Software Business’s overall pricing objectives and strategies, historical pricing data, market consideration and other factors. Assets and liabilities acquired in business combinations are accounted for using the acquisition method and recorded at their respective fair values. Goodwill represents the excess of consideration paid over the net assets acquired and is assigned to the reporting unit that acquires the business. The Emerson Industrial Software Business conducts annual impairment tests of goodwill in the fourth quarter and between tests if events or circumstances indicate a reporting unit’s fair value may be less than its carrying value. If an initial assessment indicates it is more likely than not goodwill may be impaired, it is evaluated by comparing the reporting unit’s 202 estimated fair value to its carrying value. An impairment charge would be recorded for the amount by which the carrying value of the reporting unit exceeds the estimated fair value. Estimated fair values are developed primarily under an income approach that discounts estimated future cash flows using risk-adjusted interest rates, as well as earnings multiples or other techniques as warranted. No goodwill impairment was recorded for any of the periods presented. All of the Emerson Industrial Software Business’s identifiable intangible assets are subject to amortization on a straight-line basis over their estimated useful lives. Identifiable intangibles consist of intellectual property such as patented and unpatented technology and trademarks, customer relationships and capitalized software. Identifiable intangible assets are also subject to evaluation for potential impairment if events or circumstances indicate the carrying value may not be recoverable. The accounting for a business combination requires the excess of the purchase price for an acquisition over the net book value of assets acquired to be allocated to identifiable assets, including intangible assets. The Emerson Industrial Software Business engaged an independent third-party valuation specialist to assist in the determination of the fair value of intangible assets related to the acquisition of OSI Inc. This included the use of certain assumptions and estimates, including the customer attrition rate, forecasted cash flow attributable to existing customers, and the discount rate for the customer relationship intangible asset and the royalty rate, forecasted revenue attributable to acquired technology, obsolescence factor and the discount rate for the technology intangible asset. Although we believe the assumptions and estimates to be reasonable and appropriate, they require judgement and are based on experience and historical information obtained from OSI Inc. The key assumption requiring the use of judgement in the valuation of the customer relationship intangible asset was the attrition rate of 5%. This rate was selected based on experience and historical information obtained from OSI Inc. management. An increase in the customer attrition rate to 7.5% would reduce the fair value of intangible assets by approximately $31.9 million and a decrease in the customer attrition rate to 2.5% would increase the fair value of intangibles by approximately $50.2 million. The key assumptions requiring the use of judgement in the valuation of the technology intangible asset were the royalty rate of 20% and the obsolescence factor. The royalty rate was based on information obtained from third party market analysis corroborating the advantages of the technology in relation to OSI Inc. competitors and market royalty data. A five-percentage point increase or decrease in the royalty rate would change the fair value of intangible assets by approximately $96.5 million. The obsolescence factor was calculated assuming a straight-line phase out over 15 years after an initial five-year period of no obsolescence based on where the technology was in the lifecycle and expectations of OSI Inc. management regarding remaining economic life, and the level of integration of the technology in customer facilities. A two-year increase in the economic life of the technology intangible asset would increase the fair value of intangible assets by approximately $27.3 million and a two-year decrease in the economic life of the technology intangible asset would decrease the fair value of intangible assets by approximately $29.0 million. In connection with the preparation and audit of the Emerson Industrial Software Business financial statements for the three years ended September 30, 2021, control deficiencies primarily related to revenue recognition were identified. Specifically, the Emerson Industrial Software Business did not have effective controls in place at two locations to review the accounting for significant new revenue contracts, which resulted in audit adjustments that reduced 2021 revenue by $4.9 million, and management had identified deficiencies in the design of information system program change controls over certain reports utilized in the determination of revenue recognition at OSI Inc. The combination of those deficiencies was deemed by management to be a material weakness in internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of interim or annual financial statements will not be prevented or detected and corrected on a timely basis. Subsequent to year-end, the Emerson Industrial Software Business has implemented focused reviews of new revenue contracts at the Emerson corporate level to assess the accounting for those contracts. Additionally, revenue recognition training will be conducted. Management has also designed and implemented information 203 system program change controls over the relevant reports. These remediation activities and any others will be tested as appropriate in fiscal year 2022. Should we fail to remediate these control deficiencies or experience material weaknesses in our internal control over financial reporting in the future, management may conclude that the Emerson Industrial Software Business’s disclosure controls and procedures are not effective. See Note 1 for information about recently adopted accounting pronouncements. While the Emerson Industrial Software Business has no operations in Ukraine, the ongoing conflict there could negatively impact its financial position and results of operations. The United States and other governments have imposed sanctions and taken other regulatory actions that adversely affect doing business in Russia and with Russian companies. The Emerson Industrial Software Business’s GSS business licenses software and provides related services to customers in Russia and has operations there. The GSS business had net sales of approximately $24 million and $3 million for the fiscal year ended September 30, 2021 and the 3-months ended December 31, 2021, respectively, and total assets of approximately $17 million as of December 31, 2021. OSI Inc. does not have sales or operations in Russia. The Emerson Industrial Software Business assesses its operations for potential asset impairment in accordance with its accounting practices, and is evaluating the impact, if any, of the various sanctions and export controls measures imposed by the United States and other governments on its ability to do business in Russia, maintain contracts with vendors and pay employees in Russia, as well as receive payment from customers in Russia or Ukraine. The outcome of these assessments will depend on how the conflict evolves and on further actions that may be taken by the United States, Russia, and other governments around the world. No material impact to supply chain operations is expected due to the conflict in Ukraine. 204 The business and affairs of New AspenTech will be managed by or under the direction of the New AspenTech Board. The Stockholders Agreement provides for the designation by Emerson Sub of a certain number of members of the New AspenTech Board, and for the designation by AspenTech of a certain number of members of the initial New AspenTech Board. The table below lists eight of the nine persons expected to be designated, and subsequently nominated and elected to the New AspenTech Board as of the completion of the Transactions, along with the party to the Stockholders Agreement expected to nominate each person, each nominee’s age as of the date of the special meeting and any other position that such nominee will hold with New AspenTech. The final person expected to be designated and subsequently nominated and elected to the New AspenTech Board is expected to be determined prior to the Closing. To the extent not determined prior to the Closing, there will be a vacancy on the New AspenTech Board as of the Closing which will be filled in accordance with the Stockholders Agreement.
The following is a brief biography of each director nominee of the New AspenTech Board that is known as of the date of this combined proxy statement/prospectus. Jill D. Smith has served on the AspenTech Board since April 2021 and was appointed Chair in July 2021. Ms. Smith brings more than 20 years of significant international business leadership, most recently serving as President and Chief Executive Officer and director of Allied Minds plc, an intellectual property commercialization company for technology and life sciences, from March 2017 to June 2019. Previously, she served as Chair, Chief Executive Officer, and President of DigitalGlobe Inc., a global provider of satellite imagery products and services. Ms. Smith has also served as President and Chief Executive Officer of eDial, a VoIP collaboration company, and President and Chief Executive Officer of SRDS, a business-to-business publishing firm. Ms. Smith began her career as a Consultant at Bain & Company, where she rose to Partner, before taking leadership roles with Sara Lee in France, and becoming Executive Vice President and President and Chief Operating Officer of Micron Electronics, a direct to consumer PC manufacturing firm. Ms. Smith holds a M.Sc. in Management from MIT Sloan School of Management and currently serves on the board of directors for R1 RCM Inc., a technology-led revenue cycle management company, Circor International, a flow control, engineered products producer, and MDA, a space technology developer and manufacturer, as well as other privately held technology companies. Ms. Smith previously served as a director of Gemalto NV, a SIM card manufacturer, from 2016 to 2018, and Endo International plc, a pharmaceutical company, from 2012 to 2018. We believe Ms. Smith’s proven business leadership, extensive experience as a technology executive, including as a chief executive officer, track record in growing innovative companies and experience serving on corporate boards qualify her to serve on the New AspenTech Board. Antonio J. Pietri was named AspenTech’s President and Chief Executive Officer in October 2013 and has served on the AspenTech Board since July 2013. Before accepting his appointment as President and Chief Executive Officer, he had served as AspenTech’s Executive Vice President, Field Operations since July 2007. Mr. Pietri served as AspenTech’s Senior Vice President and Managing Director for the Asia-Pacific region from 2002 to June 2007 and held various other positions with AspenTech from 1996 until 2002. From 1992 to 1996, he was at Setpoint Systems, Inc., which AspenTech acquired, and before that he worked at ABB Simcon and AECTRA Refining and Marketing, Inc. He holds an M.B.A. from the University of Houston and a B.S. in Chemical Engineering from the University of Tulsa. We believe Mr. Pietri will be a valuable member of the New AspenTech Board because he has developed extensive working relationships with AspenTech’s customers and employees, and therefore will provide a unique perspective on New AspenTech’s growth strategy as well as its day-to-day operations. 205 Karen M. Golz has served on the AspenTech Board since March 2021. Ms. Golz is a retired partner of Ernst & Young (EY), where she held various senior leadership positions during her 40-year tenure, including most recently, Global Vice Chair, Japan (2016-2017). In addition to accounting, financial reporting and audit expertise, Ms. Golz brings considerable experience in international and regulatory matters. As Global Vice Chair of Professional Practice (2010-2016), Ms. Golz oversaw accounting, auditing, regulatory, tools and methodologies and supported innovation within EY’s Global Assurance practice. Prior to that, Ms. Golz held the Americas and Global Vice-Chair of Professional Ethics/Independence. Ms. Golz is a board and audit committee member of Analog Devices, Inc., a semiconductor company, iRobot Corporation, a consumer robot company, and Osteon Holdings/Exactech, a privately held company. She is senior advisor to The Boston Consulting Group’s Audit and Risk Committee and is a National Association of Corporate Directors (NACD) Board Leadership Fellow and sits on the Board of Trustees of the University of Illinois Foundation. She earned her Bachelor of Science degree in Accountancy, summa cum laude, from the University of Illinois, Urbana-Champaign and is a certified public accountant. We believe that Ms. Golz’s financial, international and corporate governance expertise will be valuable to the New AspenTech Board. Robert M. Whelan, Jr. has served on the AspenTech Board since 2011. He served as the Chair of the AspenTech Board from January 29, 2013 to July 28, 2021. Mr. Whelan has an extensive background as an advisor to, investor in and board member of emerging growth companies in the U.S. and Canada. From 1976 until 2001, Mr. Whelan worked in the investment banking industry. In 1999, his company, Volpe Brown Whelan & Company, an investment banking, brokerage and asset management firm, was acquired by Prudential Securities, for which Mr. Whelan served as Vice Chair of the global technology investment banking division until 2001. Mr. Whelan then formed Whelan & Co., a consulting firm which advises CEOs, boards and investors of emerging growth companies on financing and strategic matters. During this time, Mr. Whelan served on several for-profit boards of public and private companies and on the board of several non-profit organizations. Mr. Whelan has served as a director for iAnthus Capital Holdings Inc., which owns, operates and partners with regulated cannabis operations across the United States, from December 2019 to January 2022; Annovis Bio, a drug development company focused on novel treatments for neurodegenerative diseases, from April 2016 to March 2021; and ARIAD Pharmaceuticals, Inc., a developer of small-molecule drugs to treat patients with aggressive cancers, from April 2010 to September 2014; as well as other privately-held companies. Mr. Whelan holds a B.A. in History from Dartmouth College and an M.B.A. from Stanford University Graduate School of Business with a concentration in Finance and Accounting. We believe that Mr. Whelan’s executive management and technology investment banking experience will be valuable to the New AspenTech Board. Ram R. Krishnan has served as Executive Vice President and Chief Operating Officer of Emerson since February 17, 2021 and is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Krishnan has extensive experience across Emerson’s Automation Solutions and Commercial & Residential Solutions businesses. He joined Emerson in 1994 as a project engineer and held a number of management roles of increasing responsibility. He was named President of Climate Technologies in Asia in 2011, serving in Hong Kong. He returned to the United States as Vice President of Profit Planning and Perfect Execution in 2015, a role he held until 2016, when he became Group President of Flow Solutions. He was named Chief Operating Officer of Final Control in January 2017 and became the Group President of Final Control in November 2017 following the successful $3.15 billion acquisition of Pentair’s valves and controls business. As Chief Operating Officer of Emerson, Mr. Krishnan oversees global supply chain operations, information technology, and mergers and acquisitions. Mr. Krishnan has a bachelor’s degree in metallurgical engineering from the India Institute of Technology, a master’s degree in materials engineering from the Rensselaer Polytechnic Institute and a master’s degree in business administration from Xavier University. We believe Mr. Krishnan’s extensive operational, strategic, and mergers and acquisitions experience will be valuable to the New AspenTech Board. Arlen R. Shenkman is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Shenkman has served as Executive Vice President and Chief Financial Officer of Citrix Systems Inc. since September 2019. Prior to joining Citrix, Mr. Shenkman served as Executive Vice President and Global Head of Business Development and Ecosystems of SAP from May 2017 to August 2019, where he was responsible for driving business development by building new ecosystems, fostering strategic partnerships, incubating new business models, and overseeing investments and mergers and acquisitions. Prior to that role from January 2015 to May 2017, Mr. Shenkman served as Chief Financial Officer of SAP North America, SAP’s largest business unit, responsible for all finance functions in North America, including 206 forecasting and planning, identifying efficiencies, and ensuring the region’s overall financial health. Mr. Shenkman previously served as SAP’s Global Head of Corporate Development from January 2012 to January 2015 and was a principal architect of SAP’s rapid transformation into a cloud company. Mr. Shenkman has a J.D. from the University of Miami School of Law, an M.B.A. from the Fox School of Business at Temple University, and a bachelor’s degree in political science from George Washington University. He has also completed the London Business School’s Corporate Finance Program. Shenkman is the Chair of the Operating Committee and member of the Audit Committee and Board of Directors of Commvault Systems Inc., a data protection and information management software company. We believe Mr. Shenkman’s extensive operational experience in the software industry will be valuable to the New AspenTech Board. Thomas F. Bogan is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Bogan served as Vice Chairman at Workday, Inc. from February 2020 to January 2022, and previously served as Executive Vice President of Workday’s Planning Business Unit. Mr. Bogan joined Workday from Adaptive Insights, where he was Chief Executive Officer and a director from January 2015 until its acquisition by Workday in August 2018. From 2007 until January 2019, he was a director of Apptio, Inc., including its Chair from 2012 to January 2019. Mr. Bogan was a director of Citrix Systems, Inc. from 2003 to June 2016, including its Chair from 2004 to 2015, and was a director of PTC, Inc. from 2011 to June 2015; and of Rally Software Development Corp. from 2009 to July 2015. He has also served as a director and executive officer of various public and privately-held companies, including Greylock Partners, Rational Software, Avatar Technologies and Pacific Data. Mr. Bogan received a bachelor’s degree in accounting from Stonehill College. We believe Mr. Bogan’s varied experiences in the software industry and venture capital will be valuable to the New AspenTech Board. Patrick M. Antkowiak is expected to become a member of the New AspenTech Board following the consummation of the Transactions. Mr. Antkowiak is currently president of CEM Technology Advisors, LLC, a strategy and technology consulting business. He spent over 38 years in increasingly senior roles at Northrop Grumman Corporation, including as the company’s Chief Technology Officer from 2014 to 2018, and retired in 2019 as the company’s Chief Technology and Strategy Officer having led the company’s technology development strategy and execution, focusing the company on competitive differentiation in emerging technology areas across the space, airborne, maritime, ground and cyber domains. Mr. Antkowiak currently serves on the board of directors for the Advanced Robotics for Manufacturing (ARM) Institute, a non-profit organization focused on accelerating the development and adoption of innovative robotics technologies and workforce strategies for the nation. He is also a member of The Johns Hopkins University’s Whiting School of Engineering Dean’s advisory board. Mr. Antkowiak received his BSEE in electrical and computer engineering (ECE) from The Johns Hopkins University, his MSEE from the University of Maryland, and completed the General Manager’s Program at the Harvard Business School. We believe Mr. Antkowiak’s extensive experience in technology development and corporate strategy will be valuable to the New AspenTech Board. Director Nominations Immediately following the Closing, the New AspenTech Board will consist of nine directors as described above; five directors will be designated by Emerson Sub (sometimes referred to as the “Emerson Directors”); one of whom will be Jill D. Smith, the current chair of the AspenTech Board and who will also be the chair of the New AspenTech Board, and three of whom will be designated by Emerson Sub following consultation with Ms. Smith; one director will be the Chief Executive Officer of AspenTech as of immediately prior to the Closing; and three directors will be designated by AspenTech (all of whom will be reasonably acceptable to Emerson Sub and will be Independent Directors, which three directors will have been designated by AspenTech prior to the designation of any director (other than Ms. Smith) by Emerson Sub) (such directors, including the Chief Executive Officer of AspenTech, and their successors, are sometimes referred to as the “non-Emerson Directors”). In the event of a vacancy on the New AspenTech Board upon the death, resignation, retirement, disqualification, removal from office or other cause of any non-Emerson Director, the Nominating & Governance Committee has the sole right to fill such vacancy or designate a person for nomination for election to the New AspenTech Board to fill such vacancy. Prior to the Third Trigger Date, Emerson Sub has the right to designate a number of the total authorized number of directors on the New AspenTech Board as of such time that is proportionate to the Emerson Group’s beneficial ownership of outstanding shares of Common Stock at such time (rounded up to the nearest whole person); provided that Emerson Sub will have the right to designate at least a majority of the directors on the New AspenTech Board until the Second Trigger Date. Following the Third Trigger Date, Emerson Sub has the right to designate one director to the New AspenTech Board and 207 following the Fourth Trigger Date, Emerson Sub does not have the right to designate any directors to the New AspenTech Board. The Audit Committee will consist of three directors who must be New AspenTech Independent Directors. The Emerson Group is required to vote in favor of all non-Emerson Directors nominated in accordance with the Stockholders Agreement. Controlled Company Under NASDAQ rules, a “Controlled Company” is defined as a listed company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. On completion of the Transactions, the Emerson Group will own 55% of the outstanding shares of Common Stock (on a fully diluted basis), which will be more than 50% of the voting power of New AspenTech and accordingly, New AspenTech will be a “Controlled Company”. Under NASDAQ rules, a “Controlled Company” is not required to comply with NASDAQ’s requirements that (i) a majority of a company’s board of directors consist of independent directors, (ii) a company’s nominating/corporate governance committee be composed solely of independent directors, and (iii) a company’s compensation committee be composed solely of independent directors. For so long as the Emerson Group beneficially owns more than 50% of the outstanding shares of Common Stock, upon the request of Emerson Sub, New AspenTech will avail itself of such “Controlled Company” exemptions in whole or in part, as requested by Emerson Sub. Emerson Sub will request that New AspenTech avail itself of the exemptions from the requirements that (i) the nominating/corporate governance committee be composed solely of independent directors and (ii) the compensation committee be composed solely of independent directors, in each case, so that Mr. Krishnan can be a member of each of the committees. Board Meetings and Committees Pursuant to the New AspenTech Bylaws, every act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the New AspenTech Board, unless a greater number is required by law or by the New AspenTech Charter. The Stockholders Agreement provides that the New AspenTech Board will initially have an Audit Committee, Human Capital Committee, Nominating & Governance Committee and an M&A Committee. The table below sets forth the anticipated composition of the committees of the New AspenTech Board following the Closing:
Audit Committee It is expected that the primary responsibilities of the Audit Committee will be to oversee the accounting and financial reporting processes of New AspenTech as well as its subsidiaries, and to oversee the internal and external audit processes. It is also expected that the Audit Committee will assist the New AspenTech Board in fulfilling its oversight responsibilities by reviewing the financial information which is provided to stockholders and others and the system of internal controls which management and the New AspenTech Board will have established. It is expected that the Audit Committee will oversee the independent auditors, including their independence and objectivity. However, the Audit Committee members will not act as professional accountants or auditors, and their functions will not be intended to duplicate or substitute for the activities of management and the independent auditors. It is expected that the Audit Committee will be empowered to retain independent legal counsel and other advisors as it deems necessary or appropriate to assist the Audit Committee in fulfilling its responsibilities, and to approve the fees and other retention terms of the advisors. 208 Pursuant to the Stockholders Agreement, the Audit Committee will have three directors, each of whom shall be a New AspenTech Independent Director. At least one member of the Audit Committee will qualify as an “audit committee financial expert” under Item 407(d)(5) of Regulation S-K and each member of the Audit Committee will be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement as required under the NASDAQ rules. So long as the Emerson Group holds at least 20% of the outstanding Common Stock, Emerson Sub shall be entitled to designate one non-voting observer who is entitled to attend meetings of the Audit Committee (which non-voting observer need not be a member of the New AspenTech Board). Human Capital Committee It is expected that the primary responsibilities of the Human Capital Committee will be to periodically review and approve the compensation and other benefits for New AspenTech’s executive officers. It is also expected that New AspenTech’s Human Capital Committee will administer and have discretionary authority over the issuance of stock awards under any New AspenTech stock compensation plans. Prior to the Second Trigger Date, Emerson Sub has the right to designate a number of directors to the Human Capital Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Human Capital Committee at such time (rounded up to the nearest whole person), Emerson Sub will have the right to designate the chair of the Human Capital Committee (except that the initial chair shall be designated by AspenTech) and in no event will the number of Emerson Directors on the Human Capital Committee be less than a majority of the members of the Human Capital Committee. Following the Second Trigger Date and prior to the Third Trigger Date, Emerson Sub has the right to designate a number of directors to the Human Capital Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Human Capital Committee at such time (rounded down to the nearest whole person), Emerson Sub will have the right to designate the chair of the Human Capital Committee (except that the initial chair shall be designated by AspenTech) and in no event will the number of Emerson Directors on the Human Capital Committee be less than one. Following the Third Trigger Date, Emerson Sub has no right to designate directors to the Human Capital Committee. Nominating & Governance Committee It is expected that the Nominating & Governance Committee will, subject to the terms of the Stockholders Agreement, assist the New AspenTech Board with respect to: (a) the organization and membership and function of the New AspenTech Board, including the identification and recommendation of director nominees and the structure and membership of each committee of the New AspenTech Board, (b) corporate governance principles applicable to New AspenTech, and (c) New AspenTech’s policies and programs that relate to matters of corporate responsibility. It is expected that the Nominating & Governance Committee will not formally establish any specific, minimum qualifications that must be met by each candidate for the New AspenTech Board or specific qualities or skills that are necessary for one or more of the members of the New AspenTech Board to possess. However, it is expected that the Nominating & Governance Committee, when considering a potential candidate, will factor into its determination the following qualities of a candidate, among others: professional experience, educational background, knowledge of our business, diverse identity (gender, race/ethnicity, or LGBTQ+), integrity, professional reputation, independence, wisdom, and ability to represent the best interests of our stockholders. It is also expected that the Nominating & Governance Committee will review and make recommendations to the New AspenTech Board regarding the nature, composition and duties of the committees of the New AspenTech Board. It is expected that the Nominating & Governance Committee will review and consider stockholder-recommended candidates for nomination to the New AspenTech Board. Prior to the Second Trigger Date, Emerson Sub has the right to designate a number of directors to the Nominating & Governance Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Nominating & Governance Committee at such time (rounded up to the nearest whole person), Emerson Sub will have the right to designate the chair of the Nominating & Governance Committee and in no event will the number of Emerson Directors on the Nominating & Governance Committee be less than a majority of the members of the Nominating & Governance Committee. Following the Second Trigger Date and prior to the Third Trigger Date, Emerson Sub has the right to designate a number of directors to the Nominating & Governance Committee equal to the percentage of Common Stock owned by the Emerson Group multiplied by the authorized number of directors on the Nominating & 209 Governance Committee at such time (rounded down to the nearest whole person), Emerson Sub will have the right to designate the chair of the Nominating & Governance Committee and in no event will the number of Emerson Directors on the Nominating & Governance Committee be less than one. Following the Third Trigger Date, Emerson Sub has no right to designate directors to the Nominating & Governance Committee. M&A Committee The M&A Committee shall be an advisory committee that will, among other things, (i) review the New AspenTech’s strategy regarding mergers, acquisitions, investments and dispositions with management periodically and (ii) review all proposed mergers, acquisitions, investments or dispositions of assets or businesses (it being understood that (x) ordinary course capital expenditures which are otherwise unrelated to any acquisition or disposition of a business will not be within the purview of the M&A Committee and (y) the charter for the M&A Committee will permit the M&A Committee to establish materiality thresholds for transactions as to which the M&A Committee will not review, which thresholds shall be approved by Emerson Sub). Until the Third Trigger Date, Emerson Sub shall be entitled to appoint one member of the M&A Committee and designate one non-voting observer who is entitled to attend meetings of the M&A Committee (which non-voting observer need not be a member of the New AspenTech Board). RPT Committee The RPT Committee is an ad-hoc committee formed from time to time as needed or required under the Stockholders Agreement with respect to transactions requiring RPT Committee approval as set forth in the Related Party Transaction Policy. Under the Related Party Transaction Policy, with certain exceptions, neither New AspenTech nor any of its subsidiaries may enter into certain Related Party Transactions without the prior written approval from the RPT Committee. An RPT Committee must consist of at least two directors who are designated by a majority of the Independent Directors. All members of the RPT Committee must be New AspenTech Independent Directors. Following the completion of the Transactions, compensation for directors of New AspenTech will be determined by the New AspenTech Board. We anticipate that compensation for service on the New AspenTech Board will be provided only to the non-employee directors of New AspenTech who are not officers or employees of Emerson or its affiliates and will generally be consistent with the compensation provided to the current non-employee directors of AspenTech. The New AspenTech Board will periodically assess the amount and terms of any compensation paid to directors of New AspenTech. Indemnification of Officers and Directors The New AspenTech Charter provides that New AspenTech shall indemnify to the fullest extent permitted by the DGCL its directors and officers and any person who is or was serving at the request of New AspenTech as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. The New AspenTech Charter also provides that New AspenTech may indemnify its employees and agents as determined by the New AspenTech Board in accordance with applicable law. In addition, the New AspenTech Charter states that it shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of New AspenTech, or is or was serving at the request of New AspenTech as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any expense, liability or loss incurred by that person in any such capacity, or arising out of that person’s status as such, whether or not the corporation would have the power to indemnify that person against such liability under the DGCL. We also have and intend to maintain director and officer liability insurance, if available on reasonable terms. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling as under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 210 The Stockholders Agreement provides that Antonio J. Pietri, current Chief Executive Officer of AspenTech, will serve as the Chief Executive Officer of New AspenTech after Closing. Additional executive officers of New AspenTech will be identified at a later date. See “Executive Officers” and “Compensation Discussion And Analysis” of AspenTech’s Proxy Statement on Schedule 14A filed with the SEC on October 28, 2021 (incorporated herein by reference) for information of Mr. Pietri. See also “Where You Can Find Additional Information” beginning on page 213 of this combined proxy statement/prospectus. During the last completed fiscal year of AspenTech, Donald P. Casey, Dr. Thomas M. Bradicich, Amar Hanspal, Dr. Georgia Keresty, and Robert M. Whelan, Jr., served as members of the AspenTech compensation committee, none of whom was formerly an officer of AspenTech or has served as an employee of AspenTech since July 1, 2020. For additional information see the section below titled “Related-Party Transactions.” See “Related-Party Transactions” of AspenTech’s Proxy Statement on Schedule 14A filed with the SEC on October 28, 2021 (incorporated herein by reference). New AspenTech Assuming consummation of the Transactions, New AspenTech stockholders will be entitled to present proposals for consideration at forthcoming New AspenTech stockholder meetings provided that they comply with the proxy rules promulgated by the SEC and the New AspenTech Charter and New AspenTech Bylaws. The deadline for submission of all New AspenTech stockholder proposals for its next annual meeting will be disclosed in a subsequent filing with the SEC. AspenTech AspenTech will hold an annual meeting in 2022 only if the Transactions have not already closed. If a stockholder wishes to have a proposal considered for inclusion in AspenTech’s proxy statement and proxy card in accordance with Rule 14a-8 under the Exchange Act for presentation at the 2022 annual meeting of stockholders, the proposal must be received in writing by August 11, 2022 by AspenTech’s Secretary at AspenTech’s principal executive offices at 20 Crosby Drive, Bedford, Massachusetts 01730. Additionally, if a stockholder wishes to propose a director nominee or item of business before the 2022 annual meeting, the stockholder must give timely written notice to AspenTech’s Secretary at the address noted above. To be timely, a stockholder’s notice must be delivered to AspenTech’s Secretary not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder to be timely must be delivered not less than 90 days nor more than 120 days prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by AspenTech. In addition to the timing requirements set forth above, AspenTech’s bylaws set forth the procedures a stockholder must follow in order to nominate a director for election or to present any other proposal at an annual meeting, other than proposals intended to be included in AspenTech’s sponsored proxy materials. 211 Some banks, brokers and other nominee record holders may participate in the practice of “householding” the notice or the proxy statement. This means that only one copy of each of the notice or the proxy statement may have been sent to multiple stockholders in your household. AspenTech will promptly deliver a separate copy of these documents to you if you call or write to Aspen Technology, Inc., 20 Crosby Drive, Bedford, Massachusetts 01730, Attention: Investor Relations, Telephone: (781) 221-6400. If you prefer to receive copies of such documents in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee, or you may contact us at the above address or phone number. The consolidated financial statements of Aspen Technology, Inc. and subsidiaries as of June 30, 2021 and 2020, and for each of the years in the three-year period ended June 30, 2021, and management’s assessment of the effectiveness of Aspen Technology, Inc. and its subsidiaries’ internal control over financial reporting as of June 30, 2021, have been incorporated in this combined proxy statement/prospectus by reference in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of such firm as experts in accounting and auditing. The audit report covering the June 30, 2021 consolidated financial statements refers to a change in accounting for leases as of July 1, 2019, due to the adoption of Accounting Standards Codification (ASC), Topic 842, Leases. The consolidated and combined financial statements of the Emerson Industrial Software Business as of September 30, 2021 and 2020, and for each of the years in the three-year period ended September 30, 2021, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. Certain legal matters in connection with the validity of the Common Stock to be issued in the Transactions will be passed on for us by Davis Polk & Wardwell LLP, New York, New York. 212 AspenTech electronically files annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including AspenTech, who file electronically with the SEC. The address of that site is https://www.sec.gov. Newco has filed a registration statement on this Form S-4 to register with the SEC the common stock to be issued to AspenTech stockholders under the Securities Act. Newco is not a reporting company under the Exchange Act, and following the effectiveness of the registration statement on this Form S-4, Newco will be subject to the information reporting requirements of the Exchange Act. This combined proxy statement/prospectus is a part of that registration statement and constitutes a prospectus of Newco in addition to being a proxy statement of AspenTech for its special meeting. As permitted by SEC rules, this combined proxy statement/prospectus does not contain all the information you can find in the registration statement and the accompanying exhibits. The SEC allows AspenTech to “incorporate by reference” information into this combined proxy statement/prospectus, which means that AspenTech can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this combined proxy statement/prospectus, except for any information superseded by information in, or incorporated by reference in, this combined proxy statement/prospectus. This combined proxy statement/prospectus incorporates by reference the documents listed below that AspenTech has previously filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in connection with SEC rules). These documents contain important information about AspenTech and its financial position.
AspenTech is also incorporating by reference additional documents that it files with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this combined proxy statement/prospectus and the date of the special meeting, provided, however, that AspenTech is not incorporating by reference any information furnished (but not filed), except as otherwise specified herein. All information contained or incorporated by reference into this combined proxy statement/prospectus relating to AspenTech has been supplied by AspenTech. If you are a stockholder, AspenTech may have sent you some of the documents incorporated by reference, but you can obtain any of them through AspenTech or the SEC. Documents incorporated by reference are available from AspenTech without charge, excluding all exhibits unless AspenTech has specifically incorporated by reference an exhibit in this combined proxy statement/prospectus. Stockholders may obtain documents incorporated by reference into this combined proxy statement/prospectus by requesting them in writing or by telephone at the following address and telephone number: Aspen Technology, Inc. 20 Crosby Drive Bedford, Massachusetts 01730 Investor Relations (781) 221-6400 If you would like to request documents from AspenTech, please do so no later than 5 business days before the date of the special meeting in order to receive them before the special meeting on [ ], 2022. 213 You also can get more information about AspenTech by visiting its website at www.AspenTech.com. Website materials are not part of this combined proxy statement/prospectus. You should rely only on the information contained or incorporated by reference into this combined proxy statement/prospectus to vote on the proposals to AspenTech stockholders in connection with the Transactions. AspenTech has not authorized anyone to provide you with information that is different from what is contained in this combined proxy statement/prospectus. This combined proxy statement/prospectus is dated [ ], 2022. You should not assume that the information contained in this combined proxy statement/prospectus is accurate as of any date other than such date, and the mailing of this combined proxy statement/prospectus to stockholders shall not create any implication to the contrary. 214 To the Stockholders and Board of Directors Emerson Electric Co.: Opinion on the Consolidated and Combined Financial Statements We have audited the accompanying consolidated and combined balance sheets of the Emerson Industrial Software Business (a business of Emerson Electric Co.) (the Business) as of September 30, 2021 and 2020, the related consolidated and combined statements of earnings (loss), comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended September 30, 2021, and the related notes (collectively, the consolidated and combined financial statements). In our opinion, the consolidated and combined financial statements present fairly, in all material respects, the financial position of the Business as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2021, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated and combined financial statements are the responsibility of the Business’s management. Our responsibility is to express an opinion on these consolidated and combined financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Business in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated and combined financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated and combined financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated and combined financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated and combined financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ KPMG LLP We have served as the Business’s auditor since 2021. Houston, Texas January 11, 2022 FS-2 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-3 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-4 EMERSON INDUSTRIAL SOFTWARE BUSINESS September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-5 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-6 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands)
See accompanying Notes to Consolidated and Combined Financial Statements. FS-7 EMERSON INDUSTRIAL SOFTWARE BUSINESS Years ended September 30 (Dollars in thousands except where noted) Description of Business The Emerson Industrial Software Business (“the Business”) is a global leader in providing grid modernization technology, advanced distribution management systems and geological simulation software. The Business operates two businesses: Open Systems International, Inc. (“OSI Inc.”) and Geological Simulation Software (“GSS”). OSI Inc. and GSS are two of Emerson Electric Co.’s (“Emerson”) industrial software businesses. OSI Inc. offers operational technology (“OT”) solutions that enable utilities to control generation, transmission, and distribution of power and ultimately ensure supply equals demand in the power grid. GSS is a leading developer of software solutions to the global energy and alternative energy, carbon capture and storage, and minerals and mining industries. GSS provides geological simulation software that characterizes subsurface geological formations from seismic interpretation to dynamic simulation, connecting reservoirs to operational activities to optimize production and utilization. The Proposed Transaction On October 10, 2021, Emerson entered into a definitive agreement (the “Transactions”) with Aspen Technology, Inc. (“AspenTech”) to contribute OSI, Inc. and GSS, along with $6.014 billion in cash, to create a diversified, high performance industrial software leader with greater scale, capabilities, and technologies (“New AspenTech”). Upon closing of the Transactions, Emerson will own 55% of the outstanding shares of New AspenTech on a fully diluted basis and the results and financial position of New AspenTech will be consolidated in Emerson’s financial statements. The Transactions are expected to close in the second calendar quarter of 2022, subject to certain closing conditions and customary regulatory approvals. Basis of Presentation GSS and OSI Inc. are two of Emerson’s industrial software businesses, and their results of operations and financial statements have previously been reflected in Emerson’s consolidated financial statements. These consolidated and combined financial statements of the Business present the historical financial position, results of operations, and cash flows of the Business as historically managed within Emerson and include all accounts of the Business in a combination of dedicated legal entities and shared legal entities of Emerson. Intercompany transactions, profits and balances among the Business’s entities have been eliminated. These consolidated and combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Sale and purchase transactions between the Business and other Emerson affiliates are included in the consolidated and combined financial statements. See Note 11. These consolidated and combined financial statements reflect charges for costs directly related to the Business and the Business has been allocated a portion of Emerson’s general corporate costs. All such costs are reflected in the consolidated and combined financial statements. The Business participates in various Emerson programs which include information technology services, employee benefits, medical insurance, and other programs. Costs associated with these programs are charged to the Business based on Emerson’s actual cost and the Business’s relative level of usage. The Business also utilizes Emerson’s global shared service centers and is charged for direct costs and its share of associated overhead costs. Emerson provides certain oversight and support services, including assistance with management strategy, logistics, marketing, finance, treasury, tax, human resources, legal and other activities. A charge for these services has historically been allocated to the Business based principally on revenue. While management believes the methodologies and assumptions used to allocate these costs are reasonable, the consolidated and combined financial statements do not purport to represent the financial position, the results of operations, changes in equity, and cash flows of the Business in the future, or what such costs would have been had the Business operated as a stand-alone entity during the periods presented. FS-8 Emerson utilizes a centralized treasury function which manages the working capital and financing needs of all of its business operations. This function oversees a cash pooling arrangement which sweeps participating Business cash accounts into pooled Emerson cash accounts on a daily basis. Pooled cash and nontrade intercompany balances attributable to Emerson have not been presented as assets and liabilities in the accompanying consolidated and combined financial statements. These balances are reflected as “Net parent investment” in the equity section of the consolidated and combined balance sheets. Changes in these balances are reflected as “Net transfer from (to) Emerson” in the financing activities section of the consolidated and combined statements of cash flows. Cash and cash equivalents from entities not participating in the Emerson centralized treasury function and specifically attributable to the Business have been reflected in the consolidated and combined financial statements. Use of Estimates The preparation of the consolidated and combined financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that could affect the reported amounts of assets, liabilities, revenues and expenses for the periods presented. Actual results could differ from those estimates. Foreign Currency Translation The determination of the functional currency of the Business’s subsidiaries is based on the subsidiaries’ financial and operational environment. Adjustments resulting from translating local currency functional financial statements into U.S. dollars are reflected in accumulated other comprehensive income (loss). Transactions denominated in currencies other than the subsidiaries’ functional currencies are subject to changes in exchange rates with resulting gains/losses recorded in net earnings (loss). Cash and Cash Equivalents Cash and cash equivalents are reflected on the consolidated and combined balance sheets and consist of highly liquid investments with original maturities of three months or less. Fair Value Measurement Accounting Standards Codification (ASC) 820, Fair Value Measurement, establishes a formal hierarchy and framework for measuring certain financial statement items at fair value, and requires disclosures about fair value measurements and the reliability of valuation inputs. Under ASC 820, measurement assumes the transaction to sell an asset or transfer a liability occurs in the principal or at least the most advantageous market for that asset or liability. Within the hierarchy, Level 1 instruments use observable market prices for the identical item in active markets and have the most reliable valuations. Level 2 instruments are valued through broker/dealer quotation or through market-observable inputs for similar items in active markets, including forward and spot prices, interest rates and volatilities. Level 3 instruments are valued using inputs not observable in an active market, such as Business-developed future cash flow estimates, and are considered the least reliable. The carrying value approximates fair value for accounts receivable and accounts payable. Property, Equipment and Leasehold Improvements The Business records investments in leasehold improvements and equipment at cost. Depreciation is recorded using the straight-line method over estimated service lives, which for equipment is 3 to 12 years and for leasehold improvements, the remaining term of the lease or the life of the underlying asset, whichever is shorter. Long-lived tangible assets are reviewed for impairment whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. Impairment losses are recognized based on estimated fair values if the sum of expected future undiscounted cash flows of the related assets is less than the carrying values. FS-9 The components of property, equipment and leasehold improvements as of September 30 are as follows:
Goodwill and Other Intangibles Assets and liabilities acquired in business combinations are accounted for using the acquisition method and recorded at their respective fair values. Goodwill represents the excess of consideration paid over the net assets acquired and is assigned to the reporting unit that acquires the business. The Business conducts annual impairment tests of goodwill in the fourth quarter and between annual tests if events or circumstances indicate a reporting unit’s fair value may be less than its carrying value. If an initial assessment indicates it is more likely than not goodwill may be impaired, it is evaluated by comparing the reporting unit’s estimated fair value to its carrying value. An impairment charge would be recorded for the amount by which the carrying value of the reporting unit exceeds the estimated fair value. Estimated fair values are developed primarily under an income approach that discounts estimated future cash flows using risk-adjusted interest rates, as well as earnings multiples or other techniques as warranted. No goodwill impairment was recorded for any of the periods presented. All of the Business’s identifiable intangible assets are subject to amortization on a straight-line basis over their estimated useful lives. Identifiable intangibles consist of intellectual property such as technology and trademarks, customer relationships and capitalized software. Identifiable intangible assets are also subject to evaluation for potential impairment if events or circumstances indicate the carrying value may not be recoverable. Leases The Business leases offices and equipment under operating lease arrangements. The Business determines whether an arrangement is, or contains, a lease at contract inception. An arrangement contains a lease if the Business has the right to direct the use of and obtain substantially all of the economic benefits of an identified asset. Right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet and are recorded as short-term lease expense. The discount rate used to calculate present value is the Business’s incremental borrowing rate based on the lease term and the economic environment of the applicable country or region. Certain leases have renewal options or options to terminate prior to lease expiration, which are included in the measurement of right-of-use assets and lease liabilities when it is reasonably certain they will be exercised. The Business has elected to account for lease and non-lease components as a single lease component for its office facilities. Some lease arrangements include payments that are adjusted periodically based on actual charges incurred for common area maintenance, utilities, taxes and insurance, or changes in an index or rate referenced in the lease. The fixed portion of these payments is included in the measurement of right-of-use assets and lease liabilities at lease commencement, while the variable portion is recorded as variable lease expense. The Business’s leases do not contain material residual value guarantees or restrictive covenants. Net Parent Investment The net parent investment balance included in the consolidated and combined balance sheets represents Emerson’s historical investment in the Business, the Business’s accumulated net earnings after income taxes, and the net effect of transactions with Emerson. Revenue Recognition In accordance with ASC 606, Revenue from Contracts with Customers, the Business evaluates its contracts with customers to identify the promised goods or services and recognizes revenue for the identified performance FS-10 obligations at the amount the Business expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. Revenue is recognized when, or as, performance obligations are satisfied, and control has transferred to the customer and the Business has a present right to payment. The Business disaggregates its revenue into three categories: (i) license and solutions, (ii) maintenance and (iii) services and other. License and solutions License and solutions revenue is primarily derived from term software licenses sold by GSS and perpetual software license sold by OSI Inc. Term software license revenue is recognized at a point in time when control transfers to the customer, which generally aligns with the first day of the contractual term. OSI Inc. perpetual software licenses are primarily sold with professional services and hardware to form an integrated solution for the customer. Maintenance is also sold with the integrated solution but is accounted for as a separate performance obligation (see below). The professional services and hardware sold with the perpetual license significantly customize the underlying functionality and usability of the software. As such, neither the license, hardware, nor professional services are considered distinct within the context of the contract and are therefore considered a single performance obligation. Because the integrated solution has no alternative use to the Business and the Business has an enforceable right to payment, revenue is recognized over time (typically one to two years) using an input measure of progress based on the ratio of actual costs incurred to date to the total estimated cost to complete. Revenue recognition related to the integrated solution ends once implementation is complete. Maintenance Maintenance is derived from both businesses and consists of software maintenance. Software maintenance revenue includes technical support, software assurance patch management services and the right to receive any when-and-if available updates to the software. For term software licenses, maintenance is included with the license. For perpetual software licenses, maintenance is initially sold with the license and subsequently sold separately, both primarily on an annual basis. Software maintenance does not significantly modify or otherwise depend on other performance obligations within the contracts and therefore is accounted for as a separate performance obligation. Software maintenance revenue is recognized ratably over the maintenance term. For maintenance sold with the integrated solution, the maintenance term begins once implementation is complete. Services and other Both businesses offer services, which consist of professional services and training. Professional service revenue, not considered part of an integrated software solution, is provided to customers on a time-and-materials (“T&M”) or fixed-price basis. The obligation to provide professional services is generally satisfied over time, with the customer simultaneously receiving and consuming the benefits as the Business satisfies its performance obligation. Professional service revenue is recognized by measuring progress toward the completion of the Business’s obligations. The Business recognizes professional services revenue for its T&M contracts based upon hours worked at contractually agreed-upon hourly rates. Fixed-price engagements recognize revenue using the proportional performance method by comparing the costs incurred to the total estimated project cost. The use of the proportional performance method depends on the Business’s ability to reliably estimate the costs to complete a project. Historical experience is used as a basis for future estimates to complete current projects. Additionally, the Business believes that costs are the best available measure of performance. Training services provided to customers include on-site internet-based and customized training. These services are considered separate performance obligations as they do not significantly modify, integrate or otherwise depend on other performance obligations included in a contract. Revenue is recognized as the customer consumes the benefits of the services the Business provides. FS-11 Contracts with Multiple Performance Obligations The Business allocates total contract consideration to each distinct performance obligation in an arrangement on a relative standalone selling price basis. The standalone selling price reflects the price that would be charged for a specific product or service if it was sold separately in similar circumstances and to similar customers. When two or more contracts are entered into at or near the same time with the same customer, the Business evaluates the facts and circumstances associated with the negotiation of those contracts. Where the contracts are negotiated as a package, the Business will account for them as a single arrangement and allocate the consideration for the combined contracts among the performance obligations accordingly. When available, the Business uses directly observable transactions to determine the standalone selling prices for performance obligations. If directly observable data is not available when software licenses are sold together with software maintenance in a bundled arrangement, the Business estimates a standalone selling price for these distinct performance obligations using relevant information, including the Business’s overall pricing objectives and strategies, historical pricing data, market consideration and other factors. Contract Modifications The Business sometimes enters into agreements to modify previously executed contracts, which constitute contract modifications. The Business assesses each of these contract modifications to determine (i) if the additional products and services are distinct from the products and services in the original arrangement; and (ii) if the amount of consideration expected for the added products and services reflects the standalone selling price of those products and services, as adjusted for contract-specific circumstances. A contract modification meeting both criteria is accounted for as a separate contract. A contract modification not meeting both requirements is considered a change to the original contract and is accounted for on either (i) a prospective basis as a termination of the existing contract and the creation of a new contract or (ii) a cumulative catch-up basis. Contract Assets and Contract Liabilities The timing of revenue recognition generally does not align with the right to invoice the customer. The Business records accounts receivable when it has the unconditional right to issue an invoice and receive payment regardless of whether revenue has been recognized. If revenue is not yet recognizable and the Business has a right to invoice, a contract liability is recorded to defer the revenue until recognition is appropriate. If revenue is recognizable in advance of the right to invoice, a contract asset is recorded until invoicing occurs. The Business defers unearned maintenance and service revenue when it has the right to invoice, with recognition of the revenue recognized over the support period. The Business classifies unearned maintenance and service revenue as a current liability on the balance sheet if the related revenue is expected to be realized within 12 months. The remaining unearned maintenance and service revenue is classified as long-term. Payment Terms Term software licenses generally require payment from the customer annually at the start of the contract term. Perpetual software licenses, sold along with professional services and hardware as an integrated solution, generally require payments from the customer aligned with progress milestones in the contract. Payment terms on invoiced amounts are typically net 30 days. The Business does not offer return rights for its products and services in the ordinary course of business, and contracts generally do not include customer acceptance clauses or significant financing components. Income Taxes The Business’s operations have historically been included in Emerson’s consolidated U.S. and non-U.S. income tax returns, in most locations. Income tax expense for the consolidated and combined financial statements has been calculated following the separate return method. The separate return method applies ASC 740, Income Taxes, to the consolidated and combined financial statements as if the Business was a separate enterprise and a stand-alone taxpayer for the periods presented. The calculation of income taxes under the separate return method requires considerable judgment and the use of both estimates and assumptions. These estimates and assumptions affect the calculation of certain tax liabilities and the determination of the recoverability of certain deferred tax assets, which arise from the temporary differences between the tax and financial statement recognition of revenue and expenses. As a result, the Business’s deferred tax rate and deferred tax balances may differ from those in Emerson’s historical periods. FS-12 The provision for income taxes is determined using the asset and liability approach of ASC 740. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes result from differences between the financial and tax basis of the Business’s assets and liabilities and are measured using enacted rates in effect for the year in which the temporary differences are expected to be recovered or settled. The impact of a change in income tax rates on deferred tax assets and liabilities is recognized in earnings in the period that includes the enactment date. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. The tax carryforwards reflected in the consolidated and combined financial statements have been determined using the separate return method. The tax carryforwards include net operating losses and tax credits. The Business’s carryforwards after the Transaction will be different than those reflected in the Business’s consolidated and combined financial statements. The Business’s operations and the complexity of global tax regulations require assessments of uncertainties in estimating the taxes the Business will ultimately pay. The Business recognizes liabilities for tax uncertainties based on its estimate of whether, and the extent to which, additional taxes will more likely than not be due. These tax liabilities are reflected net of related tax loss carryforwards. For purposes of the Business’s consolidated and combined financial statements, these estimated tax liabilities have been computed under the separate return method. The Business also provides for U.S. federal income taxes, net of available foreign tax credits, on earnings intended to be repatriated from non-U.S. locations. No provision has been made for U.S. income taxes on approximately $170,000 of undistributed earnings of non-U.S. subsidiaries as of September 30, 2021, as these earnings are considered permanently invested or otherwise indefinitely retained for continuing international operations. Recognition of U.S. taxes on undistributed non-U.S. earnings would be triggered by a management decision to repatriate those earnings. Determination of the amount of taxes that might be paid on these undistributed earnings if eventually remitted is not practicable. Adopted Accounting Pronouncements Effective October 1, 2020, the Business adopted the following two accounting standard updates and one new accounting standard, all of which had an immaterial impact on the Business’s financial statements. Updates to ASC 350, Intangibles- Goodwill and Other, which eliminate the requirement to measure impairment based on the implied fair value of goodwill compared to the carrying amount of a reporting unit’s goodwill. Instead, goodwill impairment will be measured as the excess of a reporting unit’s carrying amount over its estimated fair value. Updates to ASC 350, Intangibles- Goodwill and Other, which align the requirements for capitalizing implementation costs incurred in a software hosting arrangement with the requirements for costs incurred to develop or obtain internal-use software. Adoption of ASC 326, Financial Instruments- Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach to estimate lifetime expected credit losses on certain types of financial instruments, including trade receivables. On October 1, 2019, the Business adopted ASC 842, Leases, which requires rights and obligations related to lease arrangements to be recognized on the balance sheet, using the optional transition method under which prior periods were not adjusted. The Business elected the package of practical expedients for leases that commenced prior to the adoption date, which included carrying forward the historical lease classification as operating or finance. The adoption of ASC 842 resulted in the recognition of operating lease right-of-use assets and related lease liabilities of approximately $12,700 as of October 1, 2019 but did not materially impact the Business’s earnings or cash flows for the year ended September 30, 2020. On October 1, 2018, the Business adopted ASC 606, Revenue from Contracts with Customers, which updated and consolidated revenue recognition guidance from multiple sources into a single, comprehensive standard to be applied for all contracts with customers. The fundamental principle of the revised standard is to recognize revenue based on the transfer of goods and services to customers at the amount the Business expects to be entitled to in exchange for those goods and services. The Business adopted the new standard using the modified retrospective approach and applied the guidance to open contracts which were not completed at the date of adoption. The cumulative effect of adoption resulted in an increase to beginning retained earnings of $9,501 as FS-13 of October 1, 2018. This increase related to the timing of software license revenue recognition in term-based arrangements with a bundled software license and maintenance. Under the new standards, the Business recognizes the full license revenue upon delivery of the software license. The adoption of ASC 606 did not materially impact the Business’s consolidated and combined financial statements as of and for the year ended September 30, 2019. (2) REVENUE RECOGNITION The following table summarizes the Business’s contract assets and contract liabilities as of September 30:
The increases in contract assets and contract liabilities were primarily due to the acquisition of OSI Inc. completed on October 1, 2020. Other factors that impacted the change in net contract liabilities were immaterial. Revenue recognized for 2021 included revenue that was included in the beginning contract liability balance of $21,719. As of September 30, 2021, capitalized incremental costs to obtain customer contracts were $205. Capitalized costs to fulfill contracts are immaterial. Contract assets are reviewed for credit losses in accordance with ASC 326. The potential impact of credit losses is immaterial. Revenue recognized for 2021 for performance obligations that were fully satisfied in previous periods is immaterial. As of September 30, 2021, the Business’s backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $333,862. The Business expects to recognize approximately 55% of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter. See Note 14, “Business Segment Information,” for additional information about the Business’s revenues. (3) ACQUISITIONS On October 1, 2020, the Business completed the acquisition of OSI Inc. for approximately $1,588,802 net of cash acquired. OSI Inc., with annual revenue of approximately $170,000 at the time of acquisition, is a leading operations technology provider to the global power industry. The Business recognized goodwill of $967,383 (none of which is expected to be tax deductible) and identifiable intangible assets of $783,400, primarily technology, customer relationships, and trademarks with a weighted-average useful life of approximately 11 years. The purchase price of the OSI Inc. acquisition was allocated to assets and liabilities as follows.
FS-14 Results of operations for OSI Inc. in 2021 included revenue of $173,252 and a net loss of $(46,428), including first-year pretax acquisition accounting charges related to backlog and deferred revenue of $30,400 and $13,661, respectively. Results also included amortization of technology, customer relationships, and trademarks of $66,475. Pro forma Financial Information (Unaudited) The following pro forma consolidated and combined financial results of operations are presented as if the OSI Inc. acquisition occurred on October 1, 2019. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time.
The 2021 pro forma results exclude acquisition costs and first-year acquisition accounting charges of $6,102 and $44,061, respectively. The 2020 pro forma results include the acquisition costs and first-year acquisition charges and were further adjusted to include amortization of technology, customer relationships, and trademarks of $66,475. Other expense (income), net, is summarized as follows:
Restructuring expenses were $2,474, $6,230 and $2,070 respectively, for 2021, 2020, and 2019. The Business currently expects to incur 2022 restructuring expense of approximately $900. GSS severance in 2021 relates to a restructuring action to reduce 39 positions and transfer responsibilities to Emerson shared-service centers. OSI Inc. restructuring expense in 2021 related mostly to severance and resulted from a reduction in force, mainly in Asia. Reduction in force programs were implemented in 2020 in response to unfavorable economic conditions driven by the impact of the COVID-19 pandemic. These programs resulted in the elimination of approximately 150 positions worldwide. Severance expense in 2019 was driven by a reduction in force, mainly in Europe and the US, to improve profitability. The change in the liability for restructuring costs during the years ended September 30 follows:
FS-15 Restructuring expense by business follows:
The components of lease expense for the years ended September 30, 2021 and 2020 were as follows:
Operating lease right-of-use asset additions were $14,582 for the year ended September 30, 2021, primarily due to the OSI Inc. acquisition, and $179 for the year ended September 30, 2020. The following table summarizes the balances of the Business’s operating lease right-of-use assets and operating lease liabilities as of September 30, 2021 and 2020, and is primarily comprised of office facilities:
The weighted-average remaining lease term for operating leases was 7.6 years and 3.2 years and the weighted-average discount rate was 2.2% and 2.0% as of September 30, 2021 and September 30, 2020, respectively. Future maturities of operating lease liabilities as of September 30, 2021 are summarized below:
(7) GOODWILL AND OTHER INTANGIBLES The change in the carrying value of goodwill by segment follows:
FS-16 The gross carrying amount and accumulated amortization of identifiable intangible assets by major class follow:
The increase in goodwill and intangible asset balances in 2021 was due to the OSI Inc. acquisition. See note 3. Total intangible asset amortization expense for 2021, 2020 and 2019 was $120,330, $24,636 and $25,964, respectively. The increase in amortization for 2021 is due to the OSI Inc. acquisition. Based on intangible asset balances as of September 30, 2021, expected amortization expense is $89,361 in 2022, $89,101 in 2023, $88,298 in 2024, $88,182 in 2025, and $88,181 in 2026. (8) RETIREMENT PLANS Most of the Business’s U.S. and non-U.S. employees participate in defined contribution plans, including 401(k), profit sharing, and other savings plans that provide retirement benefits. Total expenses related to employees participating in these plans were $5,051, $2,107, and $1,545 for 2021, 2020, and 2019, respectively. Certain non-U.S. employees participate in Business-specific or statutorily required defined benefit plans. In general, the Business’s policy is to fund these plans based on legal requirements, required benefit payments, and other factors. Defined benefit plans expense includes the following components:
The non-U.S. defined benefit liability was $2,830 and $4,424 as of September 30, 2021 and 2020, respectively, as the projected benefit obligation and fair value of plan assets were $7,261 and $4,431 as of September 30, 2021 and $11,448 and $7,024 as of September 30, 2020, respectively, while the deferred actuarial gain in accumulated other comprehensive income was $842 as of September 30, 2021 and a loss of $169 as of September 30, 2020. Benefits paid were $803 and $58 for 2021 and 2020, respectively, and the Business estimates that future benefit payments will be $868 in 2022, $591 in 2023, $808 in 2024, $475 in 2025, $373 in 2026 and $1,827 in total over the five years 2027 through 2031. The Business expects to contribute approximately $331 to its retirement plans in 2022. Business defined benefit pension plan expense for 2022 is expected to be approximately $500, versus $509 in 2021. The Business’s operations have historically been included in Emerson’s combined U.S. and non-U.S. income tax returns, in most locations. Income tax expense and deferred income tax balances are presented in the consolidated and combined financial statements as if the Business filed its own income tax returns in each jurisdiction. Accordingly, tax results are presented utilizing the separate return method, are not necessarily FS-17 indicative of future performance and do not necessarily reflect the results that the Business would have generated as a separate and independent business for the periods presented. Earnings (loss) before income taxes consist of the following:
The principal components of income tax expense (benefit) follow:
Reconciliation of U.S. federal statutory taxes to the Business’s total income tax expense (benefit) follows:
The change in valuation allowance increased the income tax benefit in 2021 and reduced the income tax benefit in 2020 and 2019, while the resolution of uncertain tax benefits increased the income tax benefit in all years. The acquisition of OSI Inc. in 2021 changed the assessment as to the recoverability of certain U.S. deferred tax assets such that they became realizable and, accordingly, the associated valuation allowance was reversed. The Business has elected to recognize the U.S. tax on global intangible low taxed income as a period expense when it is incurred. Following are changes in unrecognized tax benefits before considering recoverability of cross-jurisdictional tax credits (federal, state, and non-U.S.) and temporary differences. The amount of unrecognized tax benefits is not expected to significantly increase or decrease within the next 12 months.
FS-18 If none of the unrecognized tax benefits are ultimately paid, the tax provision and the calculation of the effective tax rate would be favorably impacted by $7,623. The Business accrues interest and penalties related to income taxes in income tax expense. Total interest and penalties recognized were $(628), $1,007, and $(2,729) in 2021, 2020, and 2019, respectively. As of September 30, 2021 and 2020, total accrued interest and penalties were $2,789 and $3,889, respectively. The U.S. is the major jurisdiction for which the Business files income tax returns. Examinations for the U.S. are complete through 2013. The status of state and other non-U.S. tax examinations varies due to the numerous legal entities and jurisdictions in which the Business operates. The principal items that gave rise to deferred income tax assets and liabilities follow:
Total income taxes paid were approximately $9,600, $6,600 and $13,700 in 2021, 2020, and 2019, respectively. Approximately half of the $27,776 net operating losses and tax credits can be carried forward indefinitely, while the remainder expire over the next 20 years. (10) STOCK-BASED COMPENSATION Certain employees of the Business participate in Emerson stock-based compensation plans, which include performance share and restricted stock units. Compensation expense is recognized based on Emerson’s cost of the awards under ASC 718, Compensation- Stock Compensation. All awards granted under these stock-based compensation plans are based on Emerson’s common stock and are not indicative of the results that the Business would have experienced as a separate and independent business for the periods presented. Stock-based compensation expense reflected in the Business’s financial statements was $1,744, $606, and $516 for 2021, 2020, and 2019, respectively. Effective October 1, 2020, the Business adopted the following two accounting standard updates and Updates to ASC 350, Intangibles- Goodwill and Other, which Updates to ASC 350, Intangibles- Goodwill and Other, which align the requirements for capitalizing implementation costs incurred in a software hosting arrangement with the requirements for costs incurred to develop or obtain internal-use software. Adoption of ASC 326, Financial Instruments- Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach to estimate lifetime expected credit losses on certain types of financial instruments, including trade receivables. On October 1, 2019, the Business adopted ASC 842, Leases, which requires rights and obligations related to lease arrangements to be recognized on the balance sheet, using the optional transition method under which prior periods were not adjusted. The On October 1, 2018, the Business adopted ASC 606, Revenue from Contracts with Customers, which updated and consolidated revenue recognition guidance from multiple sources into a single, comprehensive standard to be applied for all contracts with customers. The fundamental principle of the revised standard is
(2) REVENUE RECOGNITION The following table summarizes the Business’s contract assets and contract liabilities as of September 30:
The increases in contract assets and contract liabilities were primarily due to the acquisition of OSI Inc. completed on October 1, 2020. Other factors that impacted the change in net contract liabilities were immaterial. Revenue recognized for 2021 included revenue that was included in the beginning contract liability balance of $21,719. As of September 30, 2021, capitalized incremental costs to obtain customer contracts were $205. Capitalized costs to fulfill contracts are immaterial. Contract assets are reviewed for credit losses in accordance with ASC 326. The potential impact of credit losses is immaterial. Revenue recognized for 2021 for performance obligations that were fully satisfied in previous periods is immaterial. As of September 30, 2021, the Business’s backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $333,862. The Business expects to recognize approximately 55% of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter. See Note 14, “Business Segment Information,” for additional information about the Business’s revenues. (3) ACQUISITIONS On October 1, 2020, the Business completed the acquisition of OSI Inc. for approximately $1,588,802 net of cash acquired. OSI Inc., with annual revenue of approximately $170,000 at the time of acquisition, is a leading operations technology provider to the global power industry. The Business recognized goodwill of $967,383 (none of which is expected to be tax deductible) and identifiable intangible assets of $783,400, primarily technology, customer relationships, and trademarks with a weighted-average useful life of approximately 11 years. The purchase price of the OSI Inc. acquisition was allocated to assets and liabilities as follows.
FS-14 Results of operations for OSI Inc. in 2021 included revenue of $173,252 and a net loss of $(46,428), including first-year pretax acquisition accounting charges related to backlog and deferred revenue of $30,400 and $13,661, respectively. Results also included amortization of technology, customer relationships, and trademarks of $66,475. Pro forma Financial Information (Unaudited) The following pro forma consolidated and combined financial results of operations are presented as if the OSI Inc. acquisition occurred on October 1, 2019. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time.
The 2021 pro forma results exclude acquisition costs and first-year acquisition accounting charges of $6,102 and $44,061, respectively. The 2020 pro forma results include the acquisition costs and first-year acquisition charges and were further adjusted to include amortization of technology, customer relationships, and trademarks of $66,475. Other expense (income), net, is summarized as follows:
Restructuring expenses were $2,474, $6,230 and $2,070 respectively, for 2021, 2020, and 2019. The Business currently expects to incur 2022 restructuring expense of approximately $900. GSS severance in 2021 relates to a restructuring action to reduce 39 positions and transfer responsibilities to Emerson shared-service centers. OSI Inc. restructuring expense in 2021 related mostly to severance and resulted from a reduction in force, mainly in Asia. Reduction in force programs were implemented in 2020 in response to unfavorable economic conditions driven by the impact of the COVID-19 pandemic. These programs resulted in the elimination of approximately 150 positions worldwide. Severance expense in 2019 was driven by a reduction in force, mainly in Europe and the US, to improve profitability. The change in the liability for restructuring costs during the years ended September 30 follows:
FS-15 Restructuring expense by business follows:
The components of lease expense for the years ended September 30, 2021 and 2020 were as follows:
Operating lease right-of-use asset additions were $14,582 for the The following table summarizes the balances of the Business’s operating lease right-of-use assets and operating lease liabilities as of September 30, 2021 and 2020, and is primarily comprised of office facilities:
The weighted-average remaining lease term for operating leases was 7.6 years and 3.2 years and the weighted-average discount rate was 2.2% and 2.0% as of September 30, 2021 and September 30, 2020, respectively. Future maturities of operating lease liabilities as of September 30, 2021 are summarized below:
(7) GOODWILL AND OTHER INTANGIBLES The change in the carrying value of goodwill by segment follows:
FS-16 The gross carrying amount and accumulated amortization of identifiable intangible assets by major class follow:
The increase in goodwill and intangible asset balances in 2021 was due to the OSI Inc. acquisition. See note 3. Total intangible asset amortization expense for 2021, 2020 and 2019 was $120,330, $24,636 and $25,964, respectively. The increase in amortization for 2021 is due to the OSI Inc. acquisition. Based on intangible asset balances as of September 30, 2021, expected amortization expense is $89,361 in 2022, $89,101 in 2023, $88,298 in 2024, $88,182 in 2025, and $88,181 in 2026. (8) RETIREMENT PLANS Most of the Business’s U.S. and non-U.S. employees participate in defined contribution plans, including 401(k), profit sharing, and other savings plans that provide retirement benefits. Total expenses related to employees participating in these plans were $5,051, $2,107, and $1,545 for 2021, 2020, and 2019, respectively. Certain non-U.S. employees participate in Business-specific or statutorily required defined benefit plans. In general, the Business’s policy is to fund these plans based on legal requirements, required benefit payments, and other factors. Defined benefit plans expense includes the following components:
The non-U.S. defined benefit liability was $2,830 and $4,424 as of September 30, 2021 and 2020, respectively, as the projected benefit obligation and fair value of plan assets were $7,261 and $4,431 as of September 30, 2021 and $11,448 and $7,024 as of September 30, 2020, respectively, while the deferred actuarial gain in accumulated other comprehensive income was $842 as of September 30, 2021 and a loss of $169 as of September 30, 2020. Benefits paid were $803 and $58 for 2021 and 2020, respectively, and the Business estimates that future benefit payments will be $868 in 2022, $591 in 2023, $808 in 2024, $475 in 2025, $373 in 2026 and $1,827 in total over the five years 2027 through 2031. The Business expects to contribute approximately $331 to its retirement plans in 2022. Business defined benefit pension plan expense for 2022 is expected to be approximately $500, versus $509 in 2021. The Business’s operations have historically been included in Emerson’s combined U.S. and non-U.S. income tax returns, in most locations. Income tax expense and deferred income tax balances are presented in the consolidated and combined financial statements as if the Business filed its own income tax returns in each jurisdiction. Accordingly, tax results are presented utilizing the separate return method, are not necessarily FS-17 indicative of future performance and do not necessarily reflect the results that the Business would have generated as a separate and independent business for the periods presented. Earnings (loss) before income taxes consist of the following:
The principal components of income tax expense (benefit) follow:
Reconciliation of U.S. federal statutory taxes to the Business’s total income tax expense (benefit) follows:
The change in valuation allowance increased the income tax benefit in 2021 and reduced the income tax benefit in 2020 and 2019, while the resolution of uncertain tax benefits increased the income tax benefit in all years. The acquisition of OSI Inc. in 2021 changed the assessment as to the recoverability of certain U.S. deferred tax assets such that they became realizable and, accordingly, the associated valuation allowance was reversed. The Business has elected to recognize the U.S. tax on global intangible low taxed income as a period expense when it is incurred. Following are changes in unrecognized tax benefits before considering recoverability of cross-jurisdictional tax credits (federal, state, and non-U.S.) and temporary differences. The amount of unrecognized tax benefits is not expected to significantly increase or decrease within the next 12 months.
FS-18 If none of the unrecognized tax benefits are ultimately paid, the tax provision and the calculation of the effective tax rate would be favorably impacted by $7,623. The Business accrues interest and penalties related to income taxes in income tax expense. Total interest and penalties recognized were $(628), $1,007, and $(2,729) in 2021, 2020, and 2019, respectively. As of September 30, 2021 and 2020, total accrued interest and penalties were $2,789 and $3,889, respectively. The U.S. is the major jurisdiction for which the Business files income tax returns. Examinations for the U.S. are complete through 2013. The status of state and other non-U.S. tax examinations varies due to the numerous legal entities and jurisdictions in which the Business operates. The principal items that gave rise to deferred income tax assets and liabilities follow:
Total income taxes paid were approximately $9,600, $6,600 and $13,700 in 2021, 2020, and 2019, respectively. Approximately half of the $27,776 net operating losses and tax credits can be carried forward indefinitely, while the remainder expire over the next 20 years. (10) STOCK-BASED COMPENSATION Certain employees of the Business participate in Emerson stock-based compensation plans, which include performance share and restricted stock units. Compensation expense is recognized based on Emerson’s cost of the awards under ASC 718, Compensation- Stock Compensation. All awards granted under these stock-based compensation plans are based on Emerson’s common stock and are not indicative of the results that the Business would have experienced as a separate and independent business for the periods presented. Stock-based compensation expense reflected in the Business’s financial statements was $1,744, $606, and $516 for 2021, 2020, and 2019, respectively. Adopted Accounting Pronouncements Effective October 1, 2020, the Business adopted the following two accounting standard updates and one new accounting standard, all of which had an immaterial impact on the Business’s financial statements. Updates to ASC 350, Intangibles- Goodwill and Other, which eliminate the requirement to measure impairment based on the implied fair value of goodwill compared to the carrying amount of a reporting unit’s goodwill. Instead, goodwill impairment will be measured as the excess of a reporting unit’s carrying amount over its estimated fair value. Updates to ASC 350, Intangibles- Goodwill and Other, which align the requirements for capitalizing implementation costs incurred in a software hosting arrangement with the requirements for costs incurred to develop or obtain internal-use software. Adoption of ASC 326, Financial Instruments- Credit Losses, which amends the impairment model by requiring entities to use a forward-looking approach to estimate lifetime expected credit losses on certain types of financial instruments, including trade receivables. On October 1, 2019, the Business adopted ASC 842, Leases, which requires rights and obligations related to lease arrangements to be recognized on the balance sheet, using the optional transition method under which prior periods were not adjusted. The Business elected the package of practical expedients for leases that commenced prior to the adoption date, which included carrying forward the historical lease classification as operating or finance. The adoption of ASC 842 resulted in the recognition of operating lease right-of-use assets and related lease liabilities of approximately $12,700 as of October 1, 2019 but did not materially impact the Business’s earnings or cash flows for the year ended September 30, 2020. On October 1, 2018, the Business adopted ASC 606, Revenue from Contracts with Customers, which updated and consolidated revenue recognition guidance from multiple sources into a single, comprehensive standard to be applied for all contracts with customers. The fundamental principle of the revised standard is to recognize revenue based on the transfer of goods and services to customers at the amount the Business expects to be entitled to in exchange for those goods and services. The Business adopted the new standard using the modified retrospective approach and applied the guidance to open contracts which were not completed at the date of adoption. The cumulative effect of adoption resulted in an increase to beginning retained earnings of $9,501 as FS-13 of October 1, 2018. This increase related to the timing of software license revenue recognition in term-based arrangements with a bundled software license and maintenance. Under the new standards, the Business recognizes the full license revenue upon delivery of the software license. The adoption of ASC 606 did not materially impact the Business’s consolidated and combined financial statements as of and for the year ended September 30, 2019. (2) REVENUE RECOGNITION The following table summarizes the Business’s contract assets and contract liabilities as of September 30:
The increases in contract assets and contract liabilities were primarily due to the acquisition of OSI Inc. completed on October 1, 2020. Other factors that impacted the change in net contract liabilities were immaterial. Revenue recognized for 2021 included revenue that was included in the beginning contract liability balance of $21,719. As of September 30, 2021, capitalized incremental costs to obtain customer contracts were $205. Capitalized costs to fulfill contracts are immaterial. Contract assets are reviewed for credit losses in accordance with ASC 326. The potential impact of credit losses is immaterial. Revenue recognized for 2021 for performance obligations that were fully satisfied in previous periods is immaterial. As of September 30, 2021, the Business’s backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $333,862. The Business expects to recognize approximately 55% of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter. See Note 14, “Business Segment Information,” for additional information about the Business’s revenues. (3) ACQUISITIONS On October 1, 2020, the Business completed the acquisition of OSI Inc. for approximately $1,588,802 net of cash acquired. OSI Inc., with annual revenue of approximately $170,000 at the time of acquisition, is a leading operations technology provider to the global power industry. The Business recognized goodwill of $967,383 (none of which is expected to be tax deductible) and identifiable intangible assets of $783,400, primarily technology, customer relationships, and trademarks with a weighted-average useful life of approximately 11 years. The purchase price of the OSI Inc. acquisition was allocated to assets and liabilities as follows.
FS-14 Results of operations for OSI Inc. in 2021 included revenue of $173,252 and a net loss of $(46,428), including first-year pretax acquisition accounting charges related to backlog and deferred revenue of $30,400 and $13,661, respectively. Results also included amortization of technology, customer relationships, and trademarks of $66,475. Pro forma Financial Information (Unaudited) The following pro forma consolidated and combined financial results of operations are presented as if the OSI Inc. acquisition occurred on October 1, 2019. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time.
The 2021 pro forma results exclude acquisition costs and first-year acquisition accounting charges of $6,102 and $44,061, respectively. The 2020 pro forma results include the acquisition costs and first-year acquisition charges and were further adjusted to include amortization of technology, customer relationships, and trademarks of $66,475. Other expense (income), net, is summarized as follows:
Restructuring expenses were $2,474, $6,230 and $2,070 respectively, for 2021, 2020, and 2019. The Business currently expects to incur 2022 restructuring expense of approximately $900. GSS severance in 2021 relates to a restructuring action to reduce 39 positions and transfer responsibilities to Emerson shared-service centers. OSI Inc. restructuring expense in 2021 related mostly to severance and resulted from a reduction in force, mainly in Asia. Reduction in force programs were implemented in 2020 in response to unfavorable economic conditions driven by the impact of the COVID-19 pandemic. These programs resulted in the elimination of approximately 150 positions worldwide. Severance expense in 2019 was driven by a reduction in force, mainly in Europe and the US, to improve profitability. The change in the liability for restructuring costs during the years ended September 30 follows:
FS-15 Restructuring expense by business follows:
The components of lease expense for the years ended September 30, 2021 and 2020 were as follows:
Operating lease right-of-use asset additions were $14,582 for the year ended September 30, 2021, primarily due to the OSI Inc. acquisition, and $179 for the year ended September 30, 2020. The following table summarizes the balances of the Business’s operating lease right-of-use assets and operating lease liabilities as of September 30, 2021 and 2020, and is primarily comprised of office facilities:
The weighted-average remaining lease term for operating leases was 7.6 years and 3.2 years and the weighted-average discount rate was 2.2% and 2.0% as of September 30, 2021 and September 30, 2020, respectively. Future maturities of operating lease liabilities as of September 30, 2021 are summarized below:
(7) GOODWILL AND OTHER INTANGIBLES The change in the carrying value of goodwill by segment follows:
FS-16 The gross carrying amount and accumulated amortization of identifiable intangible assets by major class follow:
The increase in goodwill and intangible asset balances in 2021 was due to the OSI Inc. acquisition. See note 3. Total intangible asset amortization expense for 2021, 2020 and 2019 was $120,330, $24,636 and $25,964, respectively. The increase in amortization for 2021 is due to the OSI Inc. acquisition. Based on intangible asset balances as of September 30, 2021, expected amortization expense is $89,361 in 2022, $89,101 in 2023, $88,298 in 2024, $88,182 in 2025, and $88,181 in 2026. (8) RETIREMENT PLANS Most of the Business’s U.S. and non-U.S. employees participate in defined contribution plans, including 401(k), profit sharing, and other savings plans that provide retirement benefits. Total expenses related to employees participating in these plans were $5,051, $2,107, and $1,545 for 2021, 2020, and 2019, respectively. Certain non-U.S. employees participate in Business-specific or statutorily required defined benefit plans. In general, the Business’s policy is to fund these plans based on legal requirements, required benefit payments, and other factors. Defined benefit plans expense includes the following components:
The non-U.S. defined benefit liability was $2,830 and $4,424 as of September 30, 2021 and 2020, respectively, as the projected benefit obligation and fair value of plan assets were $7,261 and $4,431 as of September 30, 2021 and $11,448 and $7,024 as of September 30, 2020, respectively, while the deferred actuarial gain in accumulated other comprehensive income was $842 as of September 30, 2021 and a loss of $169 as of September 30, 2020. Benefits paid were $803 and $58 for 2021 and 2020, respectively, and the Business estimates that future benefit payments will be $868 in 2022, $591 in 2023, $808 in 2024, $475 in 2025, $373 in 2026 and $1,827 in total over the five years 2027 through 2031. The Business expects to contribute approximately $331 to its retirement plans in 2022. Business defined benefit pension plan expense for 2022 is expected to be approximately $500, versus $509 in 2021. The Business’s operations have historically been included in Emerson’s combined U.S. and non-U.S. income tax returns, in most locations. Income tax expense and deferred income tax balances are presented in the consolidated and combined financial statements as if the Business filed its own income tax returns in each jurisdiction. Accordingly, tax results are presented utilizing the separate return method, are not necessarily FS-17 indicative of future performance and do not necessarily reflect the results that the Business would have generated as a separate and independent business for the periods presented. Earnings (loss) before income taxes consist of the following:
The principal components of income tax expense (benefit) follow:
Reconciliation of U.S. federal statutory taxes to the Business’s total income tax expense (benefit) follows:
The change in valuation allowance increased the income tax benefit in 2021 and reduced the income tax benefit in 2020 and 2019, while the resolution of uncertain tax benefits increased the income tax benefit in all years. The acquisition of OSI Inc. in 2021 changed the assessment as to the recoverability of certain U.S. deferred tax assets such that they became realizable and, accordingly, the associated valuation allowance was reversed. The Business has elected to recognize the U.S. tax on global intangible low taxed income as a period expense when it is incurred. Following are changes in unrecognized tax benefits before considering recoverability of cross-jurisdictional tax credits (federal, state, and non-U.S.) and temporary differences. The amount of unrecognized tax benefits is not expected to significantly increase or decrease within the next 12 months.
FS-18 If none of the unrecognized tax benefits are ultimately paid, the tax provision and the calculation of the effective tax rate would be favorably impacted by $7,623. The Business accrues interest and penalties related to income taxes in income tax expense. Total interest and penalties recognized were $(628), $1,007, and $(2,729) in 2021, 2020, and 2019, respectively. As of September 30, 2021 and 2020, total accrued interest and penalties were $2,789 and $3,889, respectively. The U.S. is the major jurisdiction for which the Business files income tax returns. Examinations for the U.S. are complete through 2013. The status of state and other non-U.S. tax examinations varies due to the numerous legal entities and jurisdictions in which the Business operates. The principal items that gave rise to deferred income tax assets and liabilities follow:
Total income taxes paid were approximately $9,600, $6,600 and $13,700 in 2021, 2020, and 2019, respectively. Approximately half of the $27,776 net operating losses and tax credits can be carried forward indefinitely, while the remainder expire over the next 20 years. (10) STOCK-BASED COMPENSATION Certain employees of the Business participate in Emerson stock-based compensation plans, which include performance share and restricted stock units. Compensation expense is recognized based on Emerson’s cost of the awards under ASC 718, Compensation- Stock Compensation. All awards granted under these stock-based compensation plans are based on Emerson’s common stock and are not indicative of the results that the Business would have experienced as a separate and independent business for the periods presented. Stock-based compensation expense reflected in the Business’s financial statements was $1,744, $606, and $516 for 2021, 2020, and 2019, respectively. Performance Shares and Restricted Stock Units Emerson’s incentive shares plans include performance shares awards which distribute the value of Emerson common stock to key management employees at the conclusion of a three-year period subject to certain operating performance and other restrictions. The form of distribution is primarily shares of Emerson common stock with a portion in cash in the first quarter following the end of the applicable three-year performance period. Dividend equivalents are only paid on earned awards after the performance period has concluded. Compensation expense for performance shares is recognized over the service period based on the number of shares ultimately expected to be earned. Performance shares awards are accounted for as liabilities in accordance with ASC 718, Compensation - Stock Compensation, with compensation expense adjusted at the end of each reporting period to reflect the change in fair value of the awards. Incentive shares plans also include restricted stock units which involve distribution of common stock to key management employees subject to cliff vesting at the end of a three-year service period. The fair value of restricted stock units is determined based on the average of the high and low market prices of Emerson common stock on the date of grant, with compensation expense recognized ratably over the applicable service period. FS-19 The Business has been charged for costs directly attributable to the Business and has been allocated a portion of Emerson’s general corporate costs. All of these costs are reflected in the Business’s consolidated and combined financial statements. Management believes the methodologies and assumptions used to allocate these costs to the Business are reasonable. Emerson maintains a centralized information technology function for its units. Services provided include application hosting, network support, network security, messaging, and technology related services. Charges to the Business for these services are based on Emerson’s costs and the Business’s actual usage. Emerson administers a medical insurance program for its employees in the U.S. that the Business participates in and for which it records the cost of claims incurred each period. The Business participates in other Emerson programs including, but not limited to, workers compensation and general and product liability insurance. Other Emerson programs are charged to the Business based on cost incurred and usage. The Business utilizes Emerson global shared service centers that host Business-dedicated resources providing customer facing support, research and development, and back office financial services. Costs for Business-dedicated resources are directly charged to the Business, most which relate to employee compensation and benefits, with the remaining portion related to the Business’s share of facility overhead, allocated based on headcount or space occupied. In addition, general corporate costs incurred by Emerson are allocated to the Business, based on its proportionate share of Emerson’s total consolidated revenue, and include the cost of support functions such as procurement, logistics, marketing, human resources, legal, finance, internal audit and other Emerson corporate functions. Allocations and charges from Emerson are as follows:
Corporate costs, information technology, and insurance and other benefits are recorded in general and administrative expenses and shared services and other is recorded primarily in research and development and general and administrative expenses. The Business engages in various transactions to sell software and purchase goods in the ordinary course of business with affiliates of Emerson as follows:
Related-party balances reported in the consolidated and combined balance sheets as of September 30 include the following:
(12) COMMITMENTS AND CONTINGENCIES The Business accrues estimated liabilities for loss contingencies arising from claims, assessments, litigation and other sources when it is probable that a liability has been incurred and the amount of the claim assessment or damages can be reasonably estimated. The Business believes it has sufficient accruals to cover any obligations resulting from claims, assessments or litigation that have met these criteria. As of September 30, 2021, there were no known contingent liabilities (including guarantees, taxes and other claims) that management believes will be material in relation to the Business’s consolidated and combined financial statements, nor were there any material commitments outside the normal course of business. FS-20 (13) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Activity in accumulated other comprehensive income (loss) is as follows:
(14) BUSINESS SEGMENT INFORMATION The Business operates and reports its results in two separate business segments consisting of: OSI Inc. and GSS. A description of the product and service offerings by each business segment follows. OSI Inc. offers operational technology (“OT”) solutions that enable utilities to control generation, transmission, and distribution of power and ultimately ensure supply equals demand in the power grid. OSI Inc.’s systems also play a key role in the energy transition to a more carbon neutral footprint. Utilities use OSI Inc.’s control platform to transform and digitize operations to more seamlessly incorporate renewable energy resources and improve energy efficiency and reliability. OSI Inc.’s advanced distribution management systems provide system resiliency, efficiency and safety by modeling the distribution network via a digital twin as well as monitoring and controlling the operational network. The platform also provides integrated workflows for switching operations, outage management and field service activities. OSI Inc.’s energy management systems provide efficient and holistic modeling, monitoring and controlling of complex transmission networks and generation fleets to manage grid stability and ensure security and regulatory compliance. GSS is a leading developer of software solutions to the global energy and alternative energy, carbon capture and storage, and minerals and mining industries. GSS provides geological simulation software that characterizes subsurface geological formations from seismic interpretation to dynamic simulation, connecting reservoirs to operational activities to optimize production and utilization. The primary income measure used for assessing business segment performance and making operating decisions is earnings (loss) from operations. Summarized below is information about the Business’s operations by business segment, geography and product and service offerings: Business
FS-21 Revenue by Product and Service Offering
Geographic Information Revenue by Destination
Americas included revenue in the U.S. of $123,213, $18,537, and $22,322 for 2021, 2020, and 2019, respectively.
Assets located in the U.S. were $10,463, $3,566, and $3,673 for 2021, 2020, and 2019, respectively. (15) OTHER FINANCIAL DATA The components of depreciation and amortization expense reported for the years ended September 30 include the following:
FS-22 Items reported in accrued expenses include the following:
(16) SUBSEQUENT EVENTS The Business has evaluated subsequent events through January 11, 2022, which is the date the consolidated and combined financial statements were available to be issued. FS-23 EMERSON INDUSTRIAL SOFTWARE BUSINESS (Unaudited) Three months ended December 31, 2021 and 2020 (Dollars in thousands)
See accompanying Notes to Unaudited Consolidated and Combined Financial Statements. FS-24 EMERSON INDUSTRIAL SOFTWARE BUSINESS (Unaudited) Three months ended December 31, 2021 and 2020 (Dollars in thousands)
See accompanying Notes to Unaudited Consolidated and Combined Financial Statements. FS-25 EMERSON INDUSTRIAL SOFTWARE BUSINESS (Dollars in thousands)
See accompanying Notes to Unaudited Consolidated and Combined Financial Statements. FS-26 EMERSON INDUSTRIAL SOFTWARE BUSINESS (Unaudited) Three months ended December 31, 2021 and 2020 (Dollars in thousands)
See accompanying Notes to Unaudited Consolidated and Combined Financial Statements. FS-27 EMERSON INDUSTRIAL SOFTWARE BUSINESS (Unaudited) Three months ended December 31, 2021 and 2020 (Dollars in thousands)
See accompanying Notes to Unaudited Consolidated and Combined Financial Statements. FS-28 EMERSON INDUSTRIAL SOFTWARE BUSINESS (Dollars in thousands except where noted) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business The Emerson Industrial Software Business (“the Business”) is a global leader in providing grid modernization technology, advanced distribution management systems and geological simulation software. The Business operates two businesses: Open Systems International, Inc. (“OSI Inc.”) and Geological Simulation Software (“GSS”). OSI Inc. and GSS are two of Emerson Electric Co.’s (“Emerson”) industrial software businesses. OSI Inc. offers operational technology (“OT”) solutions that enable utilities to control generation, transmission, and distribution of power and ultimately ensure supply equals demand in the power grid. GSS is a leading independent developer of software solutions to the global energy and alternative energy, carbon capture and storage, and minerals and mining industries. GSS provides geological simulation software that characterizes subsurface geological formations from seismic interpretation to dynamic simulation, connecting reservoirs to operational activities to optimize production and utilization. The Proposed Transaction On October 10, 2021, Emerson entered into a definitive agreement (the “Transactions”) with Aspen Technology, Inc. (“AspenTech”) to contribute OSI Inc. and GSS, along with $6.014 billion in cash, to create a diversified, high performance industrial software leader with greater scale, capabilities, and technologies (“New AspenTech”). Upon closing of the Transactions, Emerson will own 55% of the outstanding shares of New AspenTech on a fully diluted basis and the results and financial position of New AspenTech will be consolidated in Emerson’s financial statements. The Transactions are expected to close in the second calendar quarter of 2022 subject to certain closing conditions and regulatory approvals. Basis of Presentation GSS and OSI Inc. are two of Emerson’s industrial software businesses, and their results of operations and financial statements have previously been reflected in Emerson’s consolidated financial statements. These unaudited consolidated and combined financial statements present the historical financial position, results of operations, and cash flows of the Business as historically managed within Emerson and include all accounts of the Business in a combination of dedicated legal entities and shared legal entities of Emerson. Intercompany transactions, profits and balances among the Business’s entities have been eliminated. These unaudited consolidated and combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Sale and purchase transactions between the Business and other Emerson affiliates are included in the unaudited consolidated and combined financial statements. See Note 8. These unaudited consolidated and combined financial statements reflect charges for costs directly related to the Business and the Business has been allocated a portion of Emerson’s general corporate costs. All such costs are reflected in the unaudited consolidated and combined financial statements. The Business participates in various Emerson programs which include information technology services, employee benefits, medical insurance, and other programs. Costs associated with these programs are charged to the Business based on Emerson’s actual cost and the Business’s relative level of usage. The Business also utilizes Emerson’s global shared service centers and is charged for direct costs and its share of associated overhead costs. Emerson provides certain oversight and support services, including assistance with management strategy, logistics, marketing, finance, treasury, tax, human resources, legal and other activities. A charge for these services has historically been allocated to the Business based principally on revenue. While management believes the methodologies and assumptions used to allocate these costs are reasonable, the unaudited consolidated and combined financial statements do not purport to represent the financial position, the results of operations, changes in equity, and cash flows of the Business in the future, or what such costs would have been had the Business operated as a stand-alone entity during the periods presented. FS-29 Emerson utilizes a centralized treasury function which manages the working capital and financing needs of all of its business operations. This function oversees a cash pooling arrangement which sweeps participating Business cash accounts into pooled Emerson cash accounts on a daily basis. Pooled cash and nontrade intercompany balances attributable to Emerson have not been presented as assets and liabilities in the accompanying unaudited consolidated and combined financial statements. These balances are reflected as “Net parent investment” in the equity section of the unaudited consolidated and combined balance sheets. Changes in these balances are reflected as “Net transfer from (to) Emerson” in the financing activities section of the unaudited consolidated and combined statements of cash flows. Cash and cash equivalents from entities not participating in the Emerson centralized treasury function and specifically attributable to the Business have been reflected in the unaudited consolidated and combined financial statements. In the opinion of management, the accompanying unaudited consolidated and combined financial statements include all adjustments necessary for a fair presentation of operating results for the interim periods presented. Adjustments consist of normal and recurring accruals. The unaudited consolidated and combined financial statements included herein have been prepared by the Business pursuant to the rules and regulations of the Securities and Exchange Commission and consequently do not include all disclosures required for annual financial statements presented in conformity with U.S. GAAP. However, the Business believes that the disclosures are adequate to make the information presented not misleading. The unaudited consolidated and combined financial statements should be read in conjunction with the audited consolidated and combined financial statements as of and for the year ended September 30, 2021 and the notes thereto. Adopted Accounting Pronouncements Effective October 1, 2021, the Business adopted three accounting standard updates which had no impact or an immaterial impact on the Business’s financial statements. These included: Updates to ASC 805, Business Combinations, which clarify the accounting for contract assets and liabilities assumed in a business combination. In general, this will result in contract liabilities being recognized at their historical amounts under ASC 606, rather than at fair value in accordance with the general requirements of ASC 805. Updates to ASC 740, Income Taxes, which require the recognition of a franchise tax that is partially based on income as an income-based tax with any incremental amount as a non-income-based tax. These updates also make certain changes to intra-period tax allocation principles and interim tax calculations. Adoption of ASC 321, Equity Securities, ASC 323, Investments- Equity Method and Joint Ventures, and ASC 815, Derivatives and Hedging, which clarify when equity method of accounting should be applied or discontinued based on observable transactions. (2) REVENUE RECOGNITION The Business disaggregates its revenue into three categories: (i) license and solutions, (ii) maintenance and (iii) services and other. License and solutions revenue is primarily derived from term software licenses sold in the GSS segment and perpetual software license sold in the OSI Inc. segment. Term software license revenue is recognized at a point in time when control transfers to the customer, which generally aligns with the first day of the contractual term. OSI Inc. perpetual software license revenue is generally recognized over time using an input measure of progress based on the ratio of actual costs incurred to date to the total estimated cost to complete. In limited circumstances, OSI Inc. sells perpetual software licenses on a stand-alone basis and recognizes revenue on those sales on a point in time basis. Maintenance is derived from both segments and consists of software maintenance, recognized ratably over the maintenance term. Both segments offer services, which consist of professional services and training. Revenue from professional services not considered part of an integrated software solution and training are generally recognized as the customer consumes the associated benefits. See note 11, “Business Segment Information,” for additional information about the Business’s revenues. FS-30 The following table summarizes the Business's contract assets and contract liabilities:
The majority of the Business’s contract balances are related to arrangements where revenue is recognized over time and payments are made according to a contractual billing schedule. The increase in net contract liabilities was primarily due to customer billings which exceeded revenue recognized for performance completed during the period. Revenue recognized for the three months ended December 31, 2021 included $34,988 that was included in the beginning contract liability balance. As of December 31, 2021 and September 30, 2021, capitalized incremental costs to obtain customer contracts and capitalized costs to fulfill contracts are immaterial. Contract assets are reviewed for credit losses in accordance with ASC 326. The potential impact of credit losses is immaterial. Revenue recognized for the three months ended December 31, 2021 for performance obligations that were fully satisfied in previous periods is immaterial. As of December 31, 2021, the Business’s backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $361,435. The Business expects to recognize approximately 53% of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the subsequent two years. (3) ACQUISITIONS On October 1, 2020, the Business completed the acquisition of OSI Inc., for approximately $1,588,802 net of cash acquired. OSI Inc. is a leading operations technology provider to the global power industry. The Business recognized goodwill of $967,383 (none of which is tax deductible) and identifiable intangible assets of $783,400, primarily technology, customer relationships, and trademarks with a weighted-average useful life of approximately 11 years. Results of operations for OSI Inc. for fiscal year 2021 included revenue of $173,252 and a net loss of $(46,428), including first-year pretax acquisition accounting charges related to backlog and deferred revenue of $30,400 and $13,661, respectively. Results also included amortization of technology, customer relationships, and trademarks of $66,475. Proforma Financial Information (Unaudited) The following unaudited pro forma consolidated and combined financial results of operations are presented as if the OSI Inc. acquisition occurred on October 1, 2019. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time.
Unaudited pro forma results for the three months ended December 31, 2020 exclude acquisition costs of $6,042 and pretax acquisition accounting charges related to backlog and deferred revenue of $10,500 and $4,557, respectively. FS-31 (4) OTHER EXPENSE (INCOME), NET Other expense (income), net, is summarized as follows:
(5) GOODWILL AND OTHER INTANGIBLES The carrying value of goodwill by segment follows:
The gross carrying amount and accumulated amortization of identifiable intangible assets by major class follow:
Total intangible asset amortization expense for the three months ended December 31, 2021 and 2020 was $22,561 and $32,674 respectively. The decline in amortization expense was due primarily to no backlog amortization for the three months ended December 31, 2021 compared to $10,500 in the prior period. (6) INCOME TAXES Income tax benefit was $933 and $36,086, resulting in effective tax rates of 55% and 116% for the three months ended December 31, 2021 and 2020, respectively. The acquisition of OSI Inc. in the first quarter of fiscal year 2021 changed the assessment as to the recoverability of certain U.S. federal and state deferred tax assets such that they became realizable and, accordingly, a $29,431 tax benefit for the valuation allowance reversal was included in the three months ended December 31, 2020. The reversal of the valuation allowance for the three months ended December 31, 2020 and discrete benefits related to uncertain tax positions in both periods had a favorable impact of 30 and 96 percentage points for December 31, 2021 and 2020, respectively. (7) STOCK-BASED COMPENSATION Certain employees of the Business participate in Emerson stock-based compensation plans, which include performance share and restricted stock units. Compensation expense is recognized based on Emerson’s cost of the awards under ASC 718, Compensation- Stock Compensation. All awards granted under these stock-based compensation plans are based on Emerson’s common stock and are not indicative of the results that the Business would have experienced as a separate and independent business for the periods presented. Stock-based compensation expense reflected in the Business’s unaudited financial statements for the three months ended December 31, 2021 and 2020 was $458 and $459 respectively. FS-32 (8) RELATED-PARTY TRANSACTIONS The Business has been charged for costs directly attributable to the Business and has been allocated a portion of Emerson’s general corporate Emerson maintains a centralized information technology function for its units. Services provided include application hosting, network support, network security, messaging, and technology related services. Charges to the Business for these services are based on Emerson’s costs and the Business’s actual usage. Emerson administers a medical insurance program for its employees in the U.S. that the Business participates in and for which it records the cost of claims incurred each period. The Business participates in other Emerson programs including, but not limited to, workers compensation and general and product liability insurance. Other Emerson programs are charged to the Business based on cost incurred and usage. The Business utilizes Emerson global shared service centers that host Business-dedicated resources providing customer facing support, research and development, and back office financial services. Costs for Business-dedicated resources are directly charged to the Business, most which relate to employee compensation and benefits, with the remaining portion related to the Business’s share of facility overhead, allocated based on headcount or space occupied. In addition, general corporate costs incurred by Emerson are allocated to the Business, based on its proportionate share of Emerson’s total consolidated revenue, and include the cost of support functions such as procurement, logistics, marketing, human resources, legal, finance, internal audit and other Emerson corporate functions. Allocations and charges from Emerson are as follows:
Corporate costs, information technology, and insurance and other benefits are recorded in general and administrative expenses and shared services and other is recorded primarily in research and development and general and administrative expenses. The Business engages in various transactions to sell software and purchase goods in the ordinary course of business with affiliates of Emerson as follows:
Related-party balances reported in the unaudited consolidated and combined balance sheets as of December 31, 2021 and September 30, 2021 include the following:
FS-33 (9) COMMITMENTS AND CONTINGENCIES The Business accrues estimated liabilities for loss contingencies arising from claims, assessments, litigation and other sources when it is probable that a liability has been incurred and the amount of the claim, assessment or damages can be reasonably estimated. The Business believes it has sufficient accruals to cover any obligations resulting from claims, assessments or litigation that have met these criteria. As of December 31, 2021, there were no known contingent liabilities (including guarantees, taxes and other claims) that management believes will be material in relation to the Business’s unaudited consolidated and combined financial statements, nor were there any material commitments outside the normal course of business. (10) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Activity in accumulated other comprehensive income (loss) for the three months ended December 31, 2021 and December 31, 2020 is as follows:
(11) BUSINESS SEGMENT INFORMATION The Business reports two segments: OSI Inc. and GSS. A description of the product and service offerings by each segment follows. OSI Inc. offers OT solutions that enable utilities to control generation, transmission, and distribution of power and ultimately ensure supply equals demand in the power grid. OSI Inc.’s systems also play a key role in the energy transition to a more carbon neutral footprint. Utilities use OSI Inc.’s control platform to transform and digitize operations to more seamlessly incorporate renewable energy resources and improve energy efficiency and reliability. OSI Inc.’s advanced distribution management systems provide system resiliency, efficiency and safety by modeling the distribution network via a digital twin as well as monitoring and controlling the operational network. The platform also provides integrated workflows for switching operations, outage management and field service activities. OSI Inc.’s energy management systems provide efficient and holistic modeling, monitoring and controlling of complex transmission networks and generation fleets to manage grid stability and ensure security and regulatory compliance. GSS is a leading developer of software solutions to the global energy and alternative energy, carbon capture and storage, and minerals and mining industries. GSS provides geological simulation software that characterizes subsurface geological formations from seismic interpretation to dynamic simulation, connecting reservoirs to operational activities to optimize production and utilization. FS-34 The primary income measure used for assessing segment performance and making operating decisions is earnings (loss) from operations. Summarized below is information about the Business’s operations by business segment, geography and product and service offerings: Business Segments
Revenue by Product and Service Offering
Geographic Information Revenue by Destination
Americas included revenue in the U.S. of $30,048, and $35,396 for the three months ended December 31, 2021 and 2020, respectively. FS-35 (12) OTHER FINANCIAL DATA The components of depreciation and amortization expense reported for the three months ended December 31, 2021 and 2020 include the following:
Items reported in accrued expenses include the following:
The components of property, equipment and leasehold improvements are as follows:
(13) SUBSEQUENT EVENTS The Business has evaluated subsequent events through February 22, 2022, which is the date the unaudited consolidated and combined financial statements were available to be issued. FS-36 Annex A EXECUTION VERSION TRANSACTION AGREEMENT AND PLAN OF MERGER dated as of October 10, 2021 among ASPEN TECHNOLOGY, INC., EMERSON ELECTRIC CO., EMR WORLDWIDE INC., EMERSUB CX, INC., and EMERSUB CXI, INC. TABLE OF CONTENTS
THE EMERSON CONTRIBUTIONS AND THE MERGER | | | | | | | | | | | | | | | | A-17 | | | | | | | | A-18 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ASPEN | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF EMERSON | ||||||
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Section 4.11 | | | Litigation | | | |
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ARTICLE 5 COVENANTS OF ASPEN | ||||||
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ARTICLE 6 COVENANTS OF EMERSON | ||||||
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ARTICLE 7 ADDITIONAL COVENANTS OF THE PARTIES | ||||||
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ARTICLE 8 EMPLOYEE MATTERS | ||||||
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Exhibit A | | | – | | | Commercial Agreement Term Sheet |
Exhibit B | | | – | | | Form of Stockholders Agreement |
Exhibit C | | | – | | | Form of Tax Matters Agreement |
Exhibit D | | | – | | | Form of Transition Services Agreement |
Exhibit E | | | – | | | Form of Surviving Corporation Certificate of Incorporation |
Exhibit F | | | – | | | Form of Surviving Corporation Bylaws |
Exhibit G | | | – | | | Form of Newco Certificate of Incorporation |
Exhibit H | | | – | | | Form of Newco Bylaws |
Exhibit I | | | – | | | Pre-Closing Restructuring Plan |
Exhibit J | | | – | | | Form of Registration Rights Agreement |
Term | | | Section |
15% | | | 13.04(b)(ii) |
50% | | | 13.04(b)(ii) |
Acquired Trademarks | | | 7.12(e) |
Adverse Recommendation Change | | | 5.03(a) |
Agreement | | | Preamble |
Anti-Corruption Laws | | | 3.12(e) |
Aspen | | | Preamble |
Aspen Board Recommendation | | | 3.02(b) |
Aspen Equity Awards | | | 2.07(b) |
Aspen Indemnified D&O | | | 7.04(a) |
Aspen IT Assets | | | 3.16(b) |
Aspen Material Contract | | | 3.21 |
Aspen Offer Employee | | | 8.01 |
Aspen Permits | | | 3.14 |
Aspen Permitted Actions | | | 5.01 |
Aspen Preferred Stock | | | 3.05(a) |
Aspen Qualifying Offer | | | 8.01 |
Aspen RSU | | | 2.07(b) |
Aspen Securities | | | 3.05(a) |
Aspen Share | | | 2.04(a) |
Aspen Stock | | | Recitals |
Aspen Stock Option | | | 2.07(a) |
Aspen Stockholder Approval | | | 3.02(a) |
Aspen Stockholder Meeting | | | 5.02 |
Aspen Subsidiary Securities | | | 3.06(b) |
Aspen Tax Return | | | 3.18(a) |
AZPN | | | 6.03 |
Burdensome Condition | | | 7.01(c) |
Census Update Time | | | 8.16 |
Certificate | | | 2.05(a) |
Term | | | Section |
Certificate of Merger | | | 2.02(c) |
Closing | | | 2.01 |
Closing Date | | | 2.01 |
Code | | | Recitals |
Commercial Agreement | | | 7.07 |
Commercial Agreement Term Sheet | | | 7.07 |
Credit Support Instrument | | | 7.11 |
Current Representation | | | 7.16(a) |
Delaware Law | | | Recitals |
Designated Counsel | | | 7.16(a) |
Designated Person | | | 7.16(a) |
Echo Business Balance Sheet | | | 4.06 |
Echo Business IT Assets | | | 4.14(b) |
Effective Time | | | 2.02(c) |
Emerson | | | Preamble |
Emerson Carveout Financial Statements | | | 4.06 |
Emerson Cash Contribution | | | Recitals |
Emerson Contributed Subsidiary Indemnified D&O | | | 7.04(a) |
Emerson Contributed Subsidiary Securities | | | 4.05(b) |
Emerson Contributions | | | Recitals |
Emerson Indemnified Persons | | | 12.02 |
Emerson Material Contract | | | 4.19 |
Emerson Permits | | | 4.12 |
Emerson Permitted Actions | | | 6.01 |
Emerson Sub | | | Preamble |
Emerson Sub Contribution | | | Recitals |
Emerson Tax Return | | | 4.16(a) |
Employment Laws | | | 3.19(m) |
End Date | | | 11.01(b)(i) |
Enforceability Exceptions | | | 3.02(a) |
Exchange Agent | | | 2.05(a) |
Exchange Fund | | | 2.05(a) |
Excluded Benefits | | | 8.04 |
Indemnified Party | | | 12.03(a) |
Indemnifying Party | | | 12.03(a) |
Intended Tax Treatment | | | Recitals |
Intervening Event | | | 5.03(f) |
Last Look | | | 5.03(d) |
Lease | | | 3.15(b) |
Merger | | | Recitals |
Merger Consideration | | | 2.04(a) |
Merger Exchange | | | Recitals |
Merger Subsidiary | | | Preamble |
Nasdaq Notice | | | 6.03 |
Newco | | | Preamble |
Newco 401(k) Plan | | | 8.06 |
Newco Benefit Plans | | | 8.05 |
Newco Indemnified Persons | | | 12.01 |
Newco Options | | | 2.07(a) |
Newco RSUs | | | 2.07(b) |
Term | | | Section |
Newco Stock | | | Recitals |
Non-Transferred Business Records | | | 6.07(a) |
Omnibus Incentive Plan | | | 8.15 |
OSI Agreement | | | 7.12(f) |
Pre-Closing Business Records | | | 6.07(b) |
Pre-Closing Restructuring | | | 7.05 |
Proxy Statement/Prospectus | | | 7.02(a) |
Registered Aspen Intellectual Property | | | 3.16(a) |
Registered Echo Business Intellectual Property | | | 4.14(a) |
Registration Statement | | | 7.02(a) |
Release | | | 7.03 |
Representatives | | | 5.03(a) |
Roxar License Agreement | | | 7.20 |
Subsequent Echo Business Financial Statements | | | 6.06 |
Superior Proposal | | | 5.03(e) |
Surviving Corporation | | | Recitals |
Termination Fee | | | 13.04(b)(i) |
Third-Party Claim | | | 12.03(a) |
Title IV Plan | | | 3.19(b) |
Transaction Litigation | | | 7.13 |
Transferee | | | 7.06(b) |
Transferring Party | | | 7.06(b) |
Transition Period | | | 7.12(b) |
Treasury Regulations | | | Recitals |
Uncertificated Shares | | | 2.05(a) |
| | if to Emerson, Emerson Sub, Newco or Merger Subsidiary, to: | |||||||
| | | | | | ||||
| | | | Emerson Electric Co. 8000 West Florissant Avenue P.O. Box 4100 St. Louis, MO 63136 | |||||
| | | | Attention: | | | Sara Yang Bosco, Senior Vice President, Secretary and General Counsel Vincent M. Servello, Vice President, Strategy & Corporate Development | ||
| | | | E-mail: | | | Sara.Bosco@emerson.com Vincent.Servello@emerson.com | ||
| | | | | | ||||
| | with a copy to (which shall not constitute notice): | |||||||
| | | | | | ||||
| | | | Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 | |||||
| | | | Attention: | | | Phillip R. Mills Marc O. Williams Cheryl Chan | ||
| | | | Facsimile No.: (212) 701-5800 | |||||
| | | | Email: | | | phillip.mills@davispolk.com marc.williams@davispolk.com cheryl.chan@davispolk.com |
| | if to Aspen, to: | | |||||||||
| | | | | | | ||||||
| | | | Aspen Technology, Inc. 20 Crosby Drive Bedford, MA 01703 | | |||||||
| | | | Attention: | | | SVP and General Counsel | | ||||
| | | | Email: | | | legalnotices@aspentech.com | | ||||
| | | | | | | ||||||
| | with copies to (which shall not constitute notice): | | |||||||||
| | | | | | | ||||||
| | | | Aspen Technology, Inc. 20 Crosby Drive Bedford, MA 01703 | | | ||||||
| | | | Attention: | | | President and CEO | | ||||
| | | | Email: | | | legalnotices@aspentech.com | | ||||
| | | | | | | ||||||
| | and | | |||||||||
| | | | | | | ||||||
| | | | Skadden, Arps, Slate, Meagher & Flom LLP 500 Boylston Street Boston, MA 02116 | | |||||||
| | | | Attention: | | | Graham Robinson Chadé Severin | | ||||
| | | | Facsimile No.: (617) 573-4822 | | |||||||
| | | | Email: | | | graham.robinson@skadden.com chade.severin@skadden.com | |
| | ASPEN TECHNOLOGY, INC. | ||||
| | | | |||
| | By: | | | /s/ Antonio J. Pietri | |
| | | | Name: Antonio J. Pietri | ||
| | | | Title: President and Chief Executive Officer | ||
| | | | |||
| | EMERSON ELECTRIC CO. | ||||
| | | | |||
| | By: | | | /s/ Vincent M. Servello | |
| | | | Name: Vincent M. Servello | ||
| | | | Title: Vice President | ||
| | | | |||
| | EMR WORLDWIDE INC. | ||||
| | | | |||
| | By: | | | /s/ Vincent M. Servello | |
| | | | Name: Vincent M. Servello | ||
| | | | Title: Vice President | ||
| | | | |||
| | EMERSUB CX, INC. | ||||
| | | | |||
| | By: | | | /s/ Vincent M. Servello | |
| | | | Name: Vincent M. Servello | ||
| | | | Title: Vice President | ||
| | | | |||
| | EMERSUB CXI, INC. | ||||
| | | | |||
| | By: | | | /s/ Vincent M. Servello | |
| | | | Name: Vincent M. Servello | ||
| | | | Title: Vice President |
| | ASPEN TECHNOLOGY, INC. | |||||||
| | | | | | ||||
| | By: | | | /s/ Antonio J. Pietri | ||||
| | | | Name: | | | Antonio J. Pietri | ||
| | | | Title: | | | President and Chief Executive Officer | ||
| | | | | | ||||
| | EMERSON ELECTRIC CO. | |||||||
| | | | | | ||||
| | By: | | | /s/ Vincent M. Servello | ||||
| | | | Name: | | | Vincent M. Servello | ||
| | | | Title: | | | Vice President | ||
| | | | | | ||||
| | EMR WORLDWIDE INC. | |||||||
| | | | | | ||||
| | By: | | | /s/ Vincent M. Servello | ||||
| | | | Name: | | | Vincent M. Servello | ||
| | | | Title: | | | Vice President | ||
| | | | | | ||||
| | EMERSUB CX, INC. | |||||||
| | By: | | | /s/ Vincent M. Servello | ||||
| | | | Name: | | | Vincent M. Servello | ||
| | | | Title: | | | Vice President | ||
| | | | | | ||||
| | EMERSUB CXI, INC. | |||||||
| | | | | | ||||
| | By: | | | /s/ Vincent M. Servello | ||||
| | | | Name: | | | Vincent M. Servello | ||
| | | | Title: | | | Vice President |
(A) | Authorized Shares |
(B) | Voting Rights |
1. | any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the interested stockholder, or (b) with any other corporation, |
2. | any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation; |
3. | any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (a) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (c)-(e) of this clause (3) shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments); |
4. | any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or |
5. | any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in clauses 1 to 4) provided by or through the Corporation or any direct or indirect majority-owned subsidiary. |
1. | beneficially owns such stock, directly or indirectly; or |
2. | has (a) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (b) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten or more persons; or |
3. | has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (b) of subsection (2) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock. |
| | Aspen Technology, Inc. | |
| | ||
| | ||
| | [Name] | |
| | Title: Chief Executive Officer |
1. | prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
2. | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting power of all of the then-outstanding shares of capital stock of the Corporation at the time the transaction commenced, excluding for purposes of determining the voting power of all of the then-outstanding shares of capital stock of the Corporation (but not the voting power of the then-outstanding shares of capital stock of the Corporation owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
3. | at or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662∕3% of the voting power of all of the then-outstanding shares of capital stock of the Corporation which is not owned by the interested stockholder. |
1. | any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the interested stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Section (B) of this Article 12 is not applicable to the surviving entity; |
2. | any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation; |
3. | any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (a) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (c)-(e) of this clause (3) shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments); |
4. | any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of |
5. | any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in clauses 1 to 4) provided by or through the Corporation or any direct or indirect majority-owned subsidiary. |
1. | beneficially owns such stock, directly or indirectly; or |
2. | has (a) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (b) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten or more persons; or |
3. | has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (b) of subsection (2) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock. |
| | Aspen Technology, Inc. | |
| | ||
| | ||
| | [Name] | |
| | Title: Chief Executive Officer |
| | | | PAGE | ||
ARTICLE I | ||||||
DEFINITIONS | ||||||
| | | | |||
| | | | |||
| | | | |||
| | | | |||
ARTICLE II | ||||||
TERM | ||||||
| | | | |||
| | | | |||
| | | | |||
ARTICLE III | ||||||
Term | | | Section |
Agreement | | | Preamble |
Audit Committee | | | 3.2(e) |
Company | | | Preamble |
Company Auditors | | | 5.3(d)(ii) |
Company Confidential Information | | | 4.1(a) |
Company Public Documents | | | 5.3(b) |
Compensation Committee | | | 3.1 |
Compliance Audit | | | 5.3(g) |
Compliance Program | | | 5.3(g) |
Disclosure Committee | | | 5.3(f) |
Dispute | | | 6.1(a) |
Emerson | | | Preamble |
Emerson Auditors | | | 5.3(d)(ii) |
Term | | | Section |
Emerson Confidential Information | | | 4.1(b) |
Emerson Designee | | | 3.2(a) |
Emerson Law Firms | | | 7.10(a) |
Emerson Parent | | | Preamble |
Emerson Public Filings | | | 5.2 |
Election Period | | | 4.3(c) |
Initial Notice | | | 6.2 |
Issuance Notice | | | 4.3(b) |
Lead Independent Director | | | 3.2(i) |
Lockup Period | | | 4.2(a) |
M&A Committee | | | 3.3(a) |
Nominating & Governance Committee | | | 3.2(e) |
Non-Emerson Designee | | | 3.2(e) |
Non-Emerson Director | | | 3.2(e) |
Non-Privileged Deal Communications | | | 7.10(c) |
Old Aspen Tech | | | Preamble |
Old Aspen Tech Board | | | 3.1(i) |
Old Aspen Tech Chair | | | 3.1(i) |
Other Committees | | | 3.3(d)(i) |
Other Stockholders | | | 4.2(c) |
Percentage Maintenance Share | | | 4.3(b) |
Pre-Agreed Procedures | | | 4.5(c)(i) |
Pre-Closing Related Party Transactions | | | 4.5(a) |
Privilege | | | 5.5 |
Privileged Communications | | | 7.10(a) |
Privileged Deal Communications | | | 7.10(b) |
Proposed Purchase Price | | | 4.3(b)(ii) |
Related Party Transactions Policy | | | 4.5(b) |
Representatives | | | 4.1(a) |
Response | | | 6.2 |
Significant Subsidiary | | | 3.6(a)(i) |
Standstill Period | | | 4.2(b)(i) |
Transaction Agreement | | | Preamble |
| | If to Emerson Parent or Emerson, to: | |||||||
| | | | | | ||||
| | | | Emerson Electric Co. | |||||
| | | | 8000 West Florissant Avenue | |||||
| | | | P.O. Box 4100 | |||||
| | | | St. Louis, MO 63136 | |||||
| | | | Attention: | | | Sara Yang Bosco, Senior Vice President, Secretary and General Counsel | ||
| | | | | | Vincent M. Servello, Vice President, Strategy & Corporate Development | |||
| | | | E-mail: | | | Sara.Bosco@emerson.com | ||
| | | | | | Vincent.Servello@emerson.com |
| | with a copy to (which shall not constitute notice): | |||||||
| | | | | | ||||
| | | | Davis Polk & Wardwell LLP | |||||
| | | | 450 Lexington Avenue | |||||
| | | | New York, NY 10017 | |||||
| | | | Attention: | | | Phillip R. Mills | ||
| | | | | | Marc O. Williams | |||
| | | | | | Cheryl Chan | |||
| | | | Facsimile No.: | | | (212) 701-5800 | ||
| | | | E-mail: | | | phillip.mills@davispolk.com | ||
| | | | | | marc.williams@davispolk.com | |||
| | | | | | cheryl.chan@davispolk.com | |||
| | | | | | ||||
| | If to the Company, to: | |||||||
| | | | | | ||||
| | | | Aspen Technology, Inc. | |||||
| | | | 20 Crosby Drive | |||||
| | | | Bedford, MA 01703 | |||||
| | | | Attention: | | | SVP and General Counsel | ||
| | | | Email: | | | legalnotices@aspentech.com | ||
| | | | | | ||||
| | with copies to (which shall not constitute notice): | |||||||
| | | | | | ||||
| | | | Aspen Technology, Inc. | |||||
| | | | 20 Crosby Drive | |||||
| | | | Bedford, MA 01703 | |||||
| | | | Attention: | | | President and CEO | ||
| | | | Email: | | | legalnotices@aspentech.com | ||
| | | | | |||||
| | and | |||||||
| | | | | |||||
| | | | Skadden, Arps, Slate, Meagher & Flom LLP | |||||
| | | | 500 Boylston Street | |||||
| | | | Boston, MA 02116 | |||||
| | | | Attention: | | | Graham Robinson | ||
| | | | | | Chadé Severin | |||
| | | | Facsimile No.: | | | (617) 573-4822 | ||
| | | | Email: | | | graham.robinson@skadden.com | ||
| | | | | | chade.severin@skadden.com |
| | EMERSON ELECTRIC CO. | ||||
| | | | |||
| | By: | | | ||
| | | | Name: | ||
| | | | Title: | ||
| | | | |||
| | EMR WORLDWIDE INC. | ||||
| | | | |||
| | By: | | | ||
| | | | Name: | ||
| | | | Title: | ||
| | | | |||
| | ASPEN TECHNOLOGY, INC. | ||||
| | | | |||
| | By: | | | ||
| | | | Name: | ||
| | | | Title: |
1. | In the case of any issuance or sale of Company Securities (other than an issuance for cash (other than a public offering of Company Securities) or offer from a prospective third party for cash) subject to Section 4.3 or Section 4.4 of the Stockholders Agreement, the Proposed Purchase Price (as contemplated by Section 4.3(b)(iii) and Section 4.4(b)(iii) of the Stockholders Agreement) in connection with such issuance or sale shall be as follows (unless (x) Emerson elects to propose a different purchase price or procedure which is agreed to by an RPT Committee or (y) to the extent Article III of this Schedule 4.5(c) is applicable, Emerson exercises its rights pursuant to Article III of this Schedule 4.5(c) (and the exercise of such rights is approved as set forth in Article III of this Schedule 4.5(c)) in which case Article III of this Schedule 4.5(c) shall apply): |
a. | in the case of Company Common Stock issued or proposed to be issued (in whole or in part) as consideration in any M&A Transaction (including as any earnout, holdback, escrow or contingent payment (such Company Common Stock, the “Earnout Shares”)), a purchase price per share of Company Common Stock that is the lowest of (i) the average of the daily volume weighted average price of Company Common Stock on Nasdaq (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source selected in good faith by the Company Board) for the twenty (20) consecutive trading days (the “20-Day VWAP”) ending on and including the last trading day prior to the signing of any definitive agreement with respect to, such transaction, (ii) the closing trading price of Company Common Stock on Nasdaq (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source selected in good faith by the Company Board) (the “Spot Price”) on the last trading day prior to the signing of any definitive agreement with respect to, such transaction, (iii) the 20-Day VWAP ending on and including the last trading day prior to the consummation of such transaction and (iv) the Spot Price on the last trading day prior to the consummation of such transaction; provided that in the case of any Earnout Shares, Emerson shall only have the right to buy shares of Company Common Stock up to its Percentage Maintenance Share as such Earnout Shares are actually issued (but at the same purchase price as set forth in this clause (a)). |
b. | in the case of a public offering of Company Securities, a purchase price per Company Security that is equal to the per Company Security price at which the underwriting bank(s) sells the portion of the offering sold to Persons other than members of the Emerson Group; provided that if such price is more than ten percent (10%) less than the-then current trading price of such Company Security, Emerson shall have the ability to request to purchase more than its Pro Rata Portion or Percentage Maintenance Share, as applicable, of such Company Securities in which case the Company and the applicable underwriting bank(s) shall have the ability to allocate accordingly and, for the avoidance of doubt, such allocation decision by the Company and such banks shall not be subject to the approval of an RPT Committee; and |
c. | in all other cases (other than Equity Awards and Closing Equity Awards) in which (i) Company Common Stock is issued or sold or proposed to be issued or sold (including upon the conversion or exchange of any other Company Security), at a purchase price per share of Company Common Stock that is the lowest of (A) the 20-Day VWAP ending on and including the last trading day prior to the signing of any definitive agreement with respect to, such issuance, (B) the Spot Price on the last trading day prior to the signing of any definitive agreement with respect to, such issuance, (C) the 20-Day VWAP ending on and including the last trading day prior to the consummation of such issuance and (D) the Spot Price on the last trading day prior to the consummation of such issuance, and (ii) any other Company Security is issued or sold, at a purchase price proposed by an RPT Committee. |
1. | To the extent permitted under Nasdaq rules, the Company hereby grants to Emerson, with respect to each fiscal quarter of the Company after the date of the Stockholders Agreement: (i) the right to purchase shares of Company Common Stock up to its Equity Award Percentage Maintenance Share in connection with the issuance, grant or sale by the Company of restricted stock units, restricted shares, performance units or similar securities or rights (“RSUs”) issued, granted or sold during such fiscal quarter after the date of the Stockholders Agreement, (ii) the right to purchase shares of Company Common Stock up to its Equity Award Percentage Maintenance Share in connection with the issuance, grant or sale by the Company of stock options, warrants, stock appreciation rights, calls, subscriptions or similar securities or rights to acquire Company Common Stock (“Options”) issued, granted or sold during such fiscal quarter after the date of the Stockholders Agreement and (iii) the right to purchase Company Securities up to its Equity Award Percentage Maintenance Share in connection with the issuance, grant or sale of Company Securities pursuant to any “at the market” program or other similar mechanism (“ATM Program Securities”) during such fiscal quarter after the date of the Stockholders Agreement. The Company Common Stock or other Company Securities that Emerson has the right to purchase pursuant to this Section 1 of this Article II are the “Equity Awards”. For purposes of this Article II, “Equity Award Percentage Maintenance Share” means, with respect to any fiscal quarter of the Company after the date of the Stockholders Agreement, a number of shares of Company Common Stock or other Company Securities, as applicable as specified in this Section 1 of this Article II, such that, after taking into account the total number of outstanding Company Securities (on a Fully-Diluted basis) at the end of such fiscal quarter after giving effect to RSUs, Options or ATM Program Securities issued or sold during such fiscal quarter (including the Equity Award Percentage Maintenance Share in full) and excluding any other issuances or sales of Company Securities by the Company during the fiscal quarter and excluding any purchases, dispositions or sales of Company Securities by members of the Emerson Group during the fiscal quarter (but for the avoidance of doubt including the Equity Award Percentage Maintenance Share in full), the Emerson Fully-Diluted Ownership Percentage would be, assuming Emerson acquired such number of shares of Company Common Stock or other Company Securities, equal to the Emerson Fully-Diluted Ownership Percentage at the start of such fiscal quarter. |
2. | Without limiting Emerson’s rights pursuant to Section 3.6 of the Stockholders Agreement, the Company shall provide written notice to Emerson within five (5) Business Days after the end of each fiscal quarter of the Company after the date of the Stockholders Agreement (the “Quarterly Issuance Notice”). The Quarterly Issuance Notice for any fiscal quarter shall set forth (w) (A) the number of RSUs or Options issued, granted or sold during such fiscal quarter and the number of shares of Company Common Stock issuable thereunder and (B) the number, type and price of ATM Program Securities issued, granted or sold during such fiscal quarter, (x) the Percentage Maintenance Share with respect to such issuances, grants and sales described in the preceding clause (w) for such fiscal quarter (the aggregate amount of Company Common Stock and other Company Securities that Emerson is entitled to purchase pursuant to such Quarterly Issuance Notice, the “Quarterly Offered Securities”), (y) the Specified Purchase Price for each Quarterly Offered Security and (z) supporting detailed calculations of, and related documentation for, all such amounts. |
a. | “Specified Purchase Price” means: |
(i) | in the case of any Company Common Stock that Emerson has the right to buy in connection with the issuance, grant or sale of an RSU or an Option, a per share price equal to the Spot Price on the last trading day of the fiscal quarter in which such RSU or Option was issued, granted or sold; and |
(ii) | in the case of any ATM Program Security that Emerson has the right to buy, a per share price equal to the weighted average of the price at which all ATM Program Securities were issued during the fiscal quarter in which such Company ATM Program Securities were issued. |
3. | For a period of forty-five (45) days (such period, as it may be extended pursuant to the proviso of this sentence, the “Quarterly Election Period”) following the receipt by Emerson of a Quarterly Issuance Notice, Emerson shall have the right to elect irrevocably to purchase all or a portion of the Quarterly Offered Securities at the applicable Specified Purchase Prices noted in the Quarterly Issuance Notice by delivering a written notice to the Company; provided that, following receipt of a Quarterly Issuance Notice, with respect |
4. | The closing of any purchase by Emerson pursuant to this Article II shall be consummated promptly following Emerson’s delivery of such notice; provided that the closing of any such purchase by Emerson may be extended (i) to the extent necessary to obtain any required approval of a Governmental Authority or (ii) to the extent Company stockholder approval is required under the Nasdaq rules, in which case the Company and Emerson shall use their respective reasonable best efforts to obtain such approval(s) and after receipt of such approval(s), the Company and Emerson shall consummate such closing; and provided further that the Emerson Ownership Percentage and the Emerson Fully Diluted Ownership Percentage shall at all times during this period be calculated as if Emerson shall have exercised its rights pursuant to this Article II in full until such time that (i) such sale to Emerson is consummated, (ii) in the case of a required approval of a Governmental Authority, there is a final, non-appealable court order prohibiting Emerson from acquiring such Company Securities, (iii) in the case Company stockholder approval is required under the Nasdaq rules, such stockholder vote shall have occurred and such sale to Emerson not be approved or (iv) Emerson determines not to exercise its right pursuant to this Article II. |
5. | For the avoidance of doubt, without limiting any of Emerson’s rights in the Stockholders Agreement, Emerson shall not have any rights pursuant to Section 4.3 or Section 4.4 of the Stockholders Agreement to buy its Pro Rata Portion or Percentage Maintenance Share of Company Common Stock that are issued upon the exercise or vesting of (i) RSUs or Options described in this Article II at the time of such issuance or (ii) RSUs or Options granted prior to the Closing. |
1. | This Article III shall apply from the date of the Stockholders Agreement until the Second Trigger Date. |
2. | Without limiting Section 3.6, 4.3 or 4.4 of the Stockholders Agreement or Article I of this Schedule 4.5(c), in the event the Company desires to enter into any definitive agreement for any M&A Transaction and proposes to obtain any financing for such transaction (including an M&A Transaction in which Company Common Stock is proposed to be issued (in whole or in part) as consideration for such M&A Transaction), the Company shall provide the terms of such M&A Transaction and required financing, a copy of any draft definitive agreement relating to such M&A Transaction, and any other information reasonably requested by Emerson, no later than thirty (30) days prior to the entry into such definitive agreement, and Emerson shall have the right (but not the obligation) to provide a percentage of such financing equal to or greater than the Emerson Fully-Diluted Ownership Percentage (but no more than 100%) at its election: (i) in exchange for additional Company Common Stock, (ii) pursuant to a credit agreement, promissory note, bond or other debt instrument (a “Debt Instrument”) issued by a member of the Company Group or (iii) pursuant to a Debt Instrument which is, entirely or partially, permitted to be accounted for as equity in accordance with GAAP (as defined in the Transaction Agreement) at the date of issuance (a “Hybrid Instrument”) issued by a member of the Company Group, in each case, in accordance with the terms set forth in Section 2(a), Section 2(b) and Section 2(c), respectively, of this Article III, or, at Emerson’s election, as otherwise agreed by an RPT Committee. |
a. | In the case of clause (i) above, the price per share of Company Common Stock shall be the product of (1) the lower of (x) the 20-Day VWAP ending on and including the last trading day prior to the signing of any definitive agreement with respect to, such transaction and (y) the Spot Price on the last trading day prior to the signing of any definitive agreement with respect to, such transaction and (2) 0.95. |
b. | In the case of clause (ii) above, Emerson shall propose the collateral or security required for such Debt Instrument, if any, and the applicable interest rate of such Debt Instrument shall be the greater of |
c. | in the case of clause (iii), (1) Emerson shall propose the collateral or security required for such Hybrid Instrument, if any, (2) the applicable interest rate of such Hybrid Instrument shall be the greater of the average and median of the interest rates proposed in at least two (2) indications for acquisition debt on similar security terms that are received from commercial or investment banks by Emerson and (3) the applicable conversion price of such Hybrid Instrument shall be the greater of the average and median of the conversion prices proposed in at least two (2) indications for acquisition debt on similar security terms that are received from commercial or investment banks by Emerson. For the avoidance of doubt, any Hybrid Instrument in accordance with the foregoing terms shall not be subject to the approval of an RPT Committee with respect to any other terms of such Hybrid Instrument. |
3. | Emerson shall notify the Company if it elects to provide any such financing, the structure of any such financing if it so elects, and the terms of such financing in accordance with this Article III if it so elects, no later than twenty (20) days after receipt of notice from the Company regarding such M&A Transaction and financing. For the avoidance of doubt, it shall be a breach by the Company of the Stockholders Agreement if the Company obtains any financing for any M&A Transaction without following the procedures set forth in this Article III and providing Emerson with an opportunity to provide such financing as set forth herein. |
4. | Notwithstanding anything to the contrary herein, the financing that Emerson elects to provide pursuant to this Article III shall be subject to the approval of an RPT Committee and, if not so approved, Emerson shall not provide such financing pursuant to this Article III; provided that, for the avoidance of doubt, if such financing is not so approved, Emerson shall continue to have all of its other rights under the Stockholders Agreement, including pursuant to Section 4.3 and 4.4 of the Stockholders Agreement and the other provisions of this Schedule 4.5(c). For the avoidance of doubt, any transaction consummated pursuant to Section 2 of this Article III, if completed in accordance with the terms and procedures set forth herein including the approval of an RPT Committee, shall not be otherwise subject to the Related Party Transactions Policy (or any other related party, conflict of interest or similar policy or procedure of any member of the Company Group). |
1. | For a period of forty-five (45) days beginning on the date on which Emerson notifies the Company of the Deconsolidation Trigger (such period, the “Consolidation Cure Period”), Emerson shall have the right, upon notice to the Company, to elect to purchase a number of shares of Company Common Stock such that the Emerson Ownership Percentage at the end of the Consolidation Cure Period shall be up to fifty-five percent (55%), at a price per share of Company Common Stock equal to the lower of (x) the 20-Day VWAP ending on and including the last trading day prior to the beginning of the Consolidation Cure Period and (y) the Spot Price on the last trading day prior to the beginning of the Consolidation Cure Period; provided that this Section 1 of this Article IV shall be of no further force and effect on the date that is six months following the end of Emerson’s first full fiscal year for which the Emerson Group does not consolidate the Company’s financial statements with the Emerson Group’s financial statements in accordance with GAAP. |
a. | “Deconsolidation Trigger” means the members of the Emerson Group no longer being required (or in good faith, after consultation with accounting advisors, believing they will no longer be required) to consolidate the Company’s financial statements with the Emerson Group’s financial statements in accordance with GAAP. |
2. | For a period of forty-five (45) days beginning on the earliest of (x) the date on which the Company notifies Emerson in writing of the First Trigger, (y) the date on which Emerson makes an amendment to its Schedule 13D filing under the Exchange Act to disclose the First Trigger and (z) the date on which the General Counsel or Chief Financial Officer of Emerson Parent gains actual knowledge (and not constructive, imputed or other similar concepts of knowledge) of the First Trigger (such period, the “First Cure Period”), |
3. | For a period of forty-five (45) days beginning on the earliest of (x) the date on which the Company notifies Emerson in writing of the Second Trigger, (y) the date on which Emerson makes an amendment to its Schedule 13D filing under the Exchange Act to disclose the Second Trigger and (z) the date on which the General Counsel or Chief Financial Officer of Emerson Parent gains actual knowledge (and not constructive, imputed or other similar concepts of knowledge) of the Second Trigger (such period, the “Second Cure Period”), Emerson shall have the right, upon notice to the Company, to elect to purchase a number of shares of Company Common Stock such that the Emerson Ownership Percentage at the end of such Second Cure Period shall be up to fifty-five percent (55%), at a price per share of Company Common Stock equal to the lower of (x) the 20-Day VWAP ending on and including the last trading day of the Second Cure Period and (y) the Spot Price on the last trading day of the Second Cure Period. |
4. | For a period of forty-five (45) days beginning on the earliest of (x) the date on which the Company notifies Emerson in writing of the Third Trigger, (y) the date on which Emerson makes an amendment to its Schedule 13D filing under the Exchange Act to disclose the Third Trigger and (z) the date on which the General Counsel or Chief Financial Officer of Emerson Parent gains actual knowledge (and not constructive, imputed or other similar concepts of knowledge) of the Third Trigger (such period, the “Third Cure Period”), Emerson shall have the right, upon notice to the Company, to elect to purchase a number of shares of Company Common Stock such that the Emerson Ownership Percentage at the end of such Third Cure Period shall be up to twenty percent (20%), at a price per share of Company Common Stock equal to the lower of (x) the 20-Day VWAP ending on and including the last trading day of the Third Cure Period and (y) the Spot Price on the last trading day of the Third Cure Period. |
5. | The closing of any purchase by Emerson pursuant to this Article IV shall be consummated promptly following Emerson’s delivery of the notice to the Company pursuant to Section 1, Section 2, Section 3 or Section 4 of this Article IV; provided that the closing of any such purchase by Emerson may be extended (i) to the extent necessary to obtain any required approval of a Governmental Authority or (ii) to the extent Company stockholder approval is required under the Nasdaq rules, in which case the Company and Emerson shall use their respective reasonable best efforts to obtain such approval(s) and after receipt of such approval(s), the Company and Emerson shall consummate such closing; provided that the Emerson Ownership Percentage and the Emerson Fully-Diluted Ownership Percentage shall at all times during this period be calculated as if Emerson shall have exercised its rights pursuant to this Article IV in full until such time that (i) such sale to Emerson is consummated, (ii) in the case of a required approval of a Governmental Authority, there is a final, non-appealable court order prohibiting Emerson from acquiring such Company Securities, (iii) in the case Company stockholder approval is required under the Nasdaq rules, such stockholder vote shall have occurred and such sale to Emerson not be approved or (iv) Emerson determines not to exercise its rights pursuant to this Article IV. |
Term | | | Section |
Adverse Effect | | | Section 2.1.5 |
Advice | | | Section 2.6 |
Affiliate | | | Transaction Agreement |
Agreement | | | Introductory Paragraph |
Company | | | Introductory Paragraph |
Company Common Stock | | | Recitals |
Convertible or Exchange Registration | | | Section 2.7 |
Demand Registration | | | Section 2.1.1(a) |
Demanding Shareholders | | | Section 2.1.1(a) |
Demand Request | | | Section 2.1.1(a) |
Emerson | | | Introductory Paragraph |
FINRA | | | Section 2.8 |
Inspectors | | | Section 2.5(xiii) |
Old Aspen Tech | | | Recitals |
Transaction Agreement | | | Recitals |
Piggyback Registration | | | Section 2.2.1 |
Records | | | Section 2.5(xiii) |
Required Filing Date | | | Section 2.1.1(a) |
Seller Affiliates | | | Section 2.9.1 |
Shelf Registration | | | Section 2.1.2 |
Suspension Notice | | | Section 2.6 |
(1) | a term has the meaning assigned to it; |
(2) | “or” is not exclusive; |
(3) | words in the singular include the plural, and words in the plural include the singular; |
(4) | provisions apply to successive events and transactions; and |
(5) | “herein,” “hereof” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. |
(i) | prepare and file with the SEC, pursuant to Section 2.1.1(a) with respect to any Demand Registration, a registration statement on any appropriate form under the Securities Act with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective, provided that as far in advance as practicable before filing such registration statement or any amendment thereto, the Company will furnish to the selling Holders copies of reasonably complete drafts of all such documents prepared to be filed (including exhibits), and any such Holder shall have the opportunity to object to any information contained therein and the Company will make corrections reasonably requested by such Holder with respect to such information prior to filing any such registration statement or amendment; |
(ii) | except in the case of a Shelf Registration, prepare and file with the SEC such amendments, post-effective amendments, and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than one hundred eighty (180) days (or such lesser period as is necessary for the underwriters in an underwritten offering to sell unsold allotments) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement; |
(iii) | in the case of a Shelf Registration or Convertible or Exchange Registration, prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective (including the filing of a new registration statement upon the expiration of a prior one) and to comply with the provisions of the Securities Act with respect to the disposition (and, in the case of a Convertible or Exchange Registration, issuance) of all Registrable Securities subject thereto until the date on which all the Registrable Securities subject thereto have been sold pursuant to such registration statement; |
(iv) | furnish to each seller of Registrable Securities and the underwriters of the securities being registered such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), any prospectus supplement, any documents incorporated by reference therein and such other documents as such seller or underwriters may reasonably request in order to facilitate the disposition of the |
(v) | use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as the managing underwriter reasonably requests (or, in the event the registration statement does not relate to an underwritten offering, as the holders of a majority of such Registrable Securities may reasonably request); use its reasonable best efforts to keep each such registration or qualification (or exemption therefrom) effective during the period in which such registration statement is required to be kept effective; and do any and all other acts and things which may be reasonably necessary or advisable to enable each seller to consummate the disposition of the Registrable Securities owned by such seller in such jurisdictions (provided, however, that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph or (B) consent to general service of process in any such jurisdiction); |
(vi) | promptly notify each seller and each underwriter and (if requested by any such Person) confirm such notice in writing (A) when a prospectus or any prospectus supplement or post-effective amendment has been filed and, with respect to a registration statement or any post-effective amendment, when the same has become effective, (B) of the issuance by any state securities or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Securities under state securities or “blue sky” laws or the initiation of any proceedings for that purpose, and (C) of the happening of any event which makes any statement made in a registration statement or related prospectus untrue or which requires the making of any changes in such registration statement, prospectus or documents so that 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, as promptly as practicable thereafter, prepare and file with the SEC and furnish a supplement or amendment to such prospectus so that, as thereafter deliverable to the purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of a material fact or omit a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; |
(vii) | permit any selling Holder which, in such Holder’s sole and exclusive judgment, might reasonably be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such Holder and its counsel should be included; |
(viii) | make reasonably available members of management of the Company, as selected by the Holders of a majority of the Registrable Securities included in such registration, for assistance in the selling effort relating to the Registrable Securities covered by such registration, including, but not limited to, the participation of such members of the Company’s management in road show presentations and other information meetings reasonably organized by the underwriters; |
(ix) | otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, including the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and make generally available to the Company’s securityholders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days after the end of the twelve (12) month period beginning with the first day of the Company’s first fiscal quarter commencing after the effective date of a registration statement, which earnings statement shall cover said twelve (12) month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act; |
(x) | if requested by the managing underwriter or any seller promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or any seller reasonably requests to be included therein, including, without limitation, with respect to the Registrable Securities being sold by such seller, the purchase price being paid therefor by the underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering, and promptly make all required filings of such prospectus supplement or post-effective amendment; |
(xi) | as promptly as practicable after filing with the SEC of any document which is incorporated by reference into a registration statement (in the form in which it was incorporated), deliver a copy of each such document to each seller; |
(xii) | cooperate with the sellers and the managing underwriter to facilitate the timely preparation and delivery of certificates (which shall not bear any restrictive legends unless required under applicable law) representing securities sold under any registration statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or such sellers may request and keep available and make available to the Company’s transfer agent prior to the effectiveness of such registration statement a supply of such certificates; |
(xiii) | promptly make available for inspection by any seller, any underwriter participating in any disposition pursuant to any registration statement, and any attorney, accountant or other agent or representative retained by any such seller or underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any such Inspector in connection with such registration statement; provided, however, that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Company shall not be required to provide any information under this subparagraph (x) if either (1) the Company has requested and been granted from the SEC confidential treatment of such information contained in any filing with the SEC or documents provided supplementally or otherwise or (2) the Company reasonably determines in good faith that such Records are otherwise confidential and so notifies the Inspectors in writing, unless prior to furnishing any such information such Holder of Registrable Securities requesting such information agrees to enter into a confidentiality agreement in customary form and subject to customary exceptions; and provided, further, that each Holder of Registrable Securities agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action and to prevent disclosure of the Records deemed confidential; |
(xiv) | furnish to each seller and underwriter a signed counterpart of (A) an opinion or opinions and “10b-5” disclosure letter of counsel to the Company, and (B) a comfort letter or comfort letters from the Company’s independent public accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the sellers or managing underwriter reasonably requests; |
(xv) | cause the Registrable Securities included in any registration statement to be (A) listed on each securities exchange, if any, on which similar securities issued by the Company are then listed or (B) quoted on any inter-dealer quotation system if similar securities issued by the Company are quoted thereon, and, in each case, to be registered under the Exchange Act; |
(xvi) | provide a transfer agent and registrar for all Registrable Securities registered hereunder; |
(xvii) | cooperate with each seller and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the Financial Industry Regulatory Authority; |
(xviii) | during the period when the prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act; |
(xix) | notify each seller of Registrable Securities promptly of any request by the SEC for the amending or supplementing of such registration statement or prospectus or for additional information; |
(xx) | enter into such agreements (including underwriting agreements in the managing underwriter’s customary form) as are customary in connection with an underwritten registration, with any representations, warranties and other agreements contained therein for the benefit of the underwriters also being for the benefit of the sellers of Registrable Securities; and |
(xxi) | advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued. |
(a) | | | if to the Company to: | |||
| | | | |||
| | Aspen Technology, Inc. | ||||
| | 20 Crosby Drive | ||||
| | Bedford, MA 01703 | ||||
| | Attention: | | | SVP and General Counsel | |
| | Email: | | | legalnotices@aspentech.com | |
| | | | |||
| | with copies to (which shall not constitute notice): | ||||
| | | ||||
| | Aspen Technology, Inc. | ||||
| | 20 Crosby Drive | ||||
| | Bedford, MA 01703 | ||||
| | Attention: | | | President and CEO | |
| | Email: | | | legalnotices@aspentech.com | |
| | | | |||
| | and | ||||
| | | | |||
| | Skadden, Arps, Slate, Meagher & Flom LLP | ||||
| | 500 Boylston Street | ||||
| | Boston, MA 02116 | ||||
| | Attention: | | | Graham Robinson | |
| | | | Chadé Severin | ||
| | Facsimile No.: | | | (617) 573-4822 | |
| | E-mail: | | | graham.robinson@skadden.com | |
| | | | chade.severin@skadden.com | ||
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(b) | | | if to Emerson, to: | |||
| | | | |||
| | c/o Emerson Electric Co. | ||||
| | 8000 West Florissant Avenue | ||||
| | P.O. Box 4100 | ||||
| | St. Louis, MO 63136 | ||||
| | Attention: | | | Sara Yang Bosco, Senior Vice President, Secretary and General Counsel | |
| | | | Vincent M. Servello, Vice President, Strategy & Corporate Development | ||
| | E-mail: | | | Sara.Bosco@emerson.com | |
| | | | Vincent.Servello@emerson.com | ||
| | |||||
| | with a copy to (which shall not constitute notice): | ||||
| | |||||
| | Davis Polk & Wardwell LLP | ||||
| | 450 Lexington Avenue | ||||
| | New York, NY 10017 | ||||
| | Attention: | | | Phillip R. Mills | |
| | | | Marc O. Williams | ||
| | | | Cheryl Chan | ||
| | Facsimile No.: | | | (212) 701-5800 | |
| | E-mail: | | | phillip.mills@davispolk.com | |
| | | | marc.williams@davispolk.com | ||
| | | | cheryl.chan@davispolk.com |
| | ASPEN TECHNOLOGY, INC. | ||||
| | | | |||
| | By: | | | ||
| | | | Name: | ||
| | | | Title: | ||
| | | | |||
| | EMR WORLDWIDE INC. | ||||
| | | | |||
| | By: | | | ||
| | | | Name: | ||
| | | | Title: |
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SCHEDULE A-1: Roxar Software Business | | | ||||
SCHEDULE A-2: Paradigm Software Business | | | ||||
SCHEDULE B: Specified Tax Elections | | | ||||
SCHEDULE C: Specified OSI Refunds | | |
1 | NTD: To be revised before closing to reflect any changes to the Pre-Closing Restructuring Plan permitted by the Transaction Agreement. |
Term | | | Section |
Due Date | | | Section 11(a) |
Final Allocation | | | Section 5(b) |
OSI Acquisition | | | Section 9(c)(i) |
OSI Acquisition Date | | | Section 9(c)(i) |
OSI Covered Tax Period | | | Section 9(c)(i) |
OSI Pass-Through Tax Contest | | | Section 9(c)(ii) |
OSI Pass-Through Tax Return | | | Section 9(c)(i) |
OSI Sellers | | | Section 9(c)(iii) |
Past Practices | | | Section 4(e)(i) |
Paradigm Software Business | | | Schedule A-2 |
Proposed Allocation | | | Section 5(b) |
PTI | | | Section 5(b) |
Roxar Software Business | | | Schedule A-1 |
Specified OSI Refunds | | | Section 9(c)(iii) |
Spinco | | | Section 9(a)(i) |
Tax Arbiter | | | Section 24 |
Tax Refund Recipient | | | Section 7(c) |
| | if to Emerson or the Emerson Group, to: | | |||||||||
| | | | | | | ||||||
| | | | Emerson Electric Co. | | |||||||
| | | | [•] | | |||||||
| | | | Attention: [•] | | | ||||||
| | | | Email: [•] | | |||||||
| | | | | | | ||||||
| | | | with a copy (which shall not constitute notice) to: | | |||||||
| | | | | | | ||||||
| | | | Davis Polk & Wardwell LLP | | | ||||||
| | | | 450 Lexington Avenue | | |||||||
| | | | New York, New York 10017 | | |||||||
| | | | Attention: | | | Michael Mollerus | | ||||
| | | | Email: | | | michael.mollerus@davispolk.com | | ||||
| | | | | | | ||||||
| | if to Newco or the Newco Group, to: | | |||||||||
| | | | | | | ||||||
| | | | Aspen Technology, Inc. | | |||||||
| | | | [•] | | |||||||
| | | | Attention: [•] | | |||||||
| | | | Email: [•] | | |||||||
| | | | | | | ||||||
| | | | with a copy (which shall not constitute notice) to: | | |||||||
| | | | | | | ||||||
| | | | Skadden, Arps, Slate, Meagher & Flom LLP | | |||||||
| | | | 500 Boylston Street | | |||||||
| | | | Boston, Massachusetts 02116 | | |||||||
| | | | Attention: | | | Graham Robinson | | ||||
| | | | | | Moshe Spinowitz | | |||||
| | | | | | Chadé Severin | | |||||
| | | | E-mail: | | | graham.robinson@skadden.com | | ||||
| | | | | | moshe.spinowitz@skadden.com | | |||||
| | | | | | chade.severin@skadden.com | |
| | EMERSON ELECTRIC CO., on its own behalf and on behalf of the members of the Emerson Group | |||||||
| | | | | | ||||
| | By: | | | |||||
| | | | Name: | | | [•] | ||
| | | | Title: | | | [•] | ||
| | | | | | ||||
| | ASPEN TECHNOLOGY, INC. (formerly known as Emersub CX, Inc.) on its own behalf and on behalf of the members of the Newco Group | |||||||
| | | | | | ||||
| | By: | | | |||||
| | | | Name: | | | [•] | ||
| | | | Title: | | | [•] |
Commercial Agreement | | | | | | | |||
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Scope of Products | | | • aspenONE Engineering suite (ENG); | ||||||
| | | | | | ||||
| | • aspenONE Manufacturing and Supply Chain suite (MSC); | |||||||
| | | | | | ||||
| | • aspenONE Asset Performance Management suite (APM); | |||||||
| | | | | | ||||
| | • aspenONE Artificial Intelligence of Things (AIoT); | |||||||
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| | • the Emerson (as defined under the Transaction Agreement) (“Emerson”) products being transferred to Newco (as defined under the Transaction Agreement) (“Newco”) as part of the proposed transaction, as set forth on Exhibit A hereto; and | |||||||
| | | | | | ||||
| | • certain future Newco products as mutually agreed upon by the parties during the term of the agreement (collectively, the “Products”). | |||||||
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Order of Precedence | | | • Immediately upon the closing of the transaction, the following agreements between the parties shall automatically terminate: [***] | ||||||
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| | | | • [***] | |||||
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| | | | | | (1) [***] | |||
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| | | | | | (2) [***] | |||
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| | • Unless and until the Definitive Agreement is entered into between the parties, to the extent any term necessary to the transactions contemplated hereby is not addressed herein, the terms of the [***] shall apply, regardless of whether such agreement is terminated (it being understood that (i) in the event of any overlap or conflict between the terms of the [***] and the terms set forth herein, the terms set forth herein shall prevail and control, and (ii) [***]. | |||||||
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Agency/Reseller Authorization | | | • Newco authorizes Emerson and its affiliates to act as its agent and/or reseller to market, promote and sell the Products either (i) incorporated and/or embedded with current and future Emerson products and services or (ii) on a standalone basis, in each case in any field and for any purpose throughout the world. |
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| | • Certain of the Products will be subject to an agency relationship and certain of the Products will be subject to a reseller relationship. [***] | | |||||||||
Software License and Channel Agreement Elements | | | • The arrangement will consist of the following agreements: | | ||||||||
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| | | | • Software License Agreement: Newco grants Emerson and its affiliates a non-exclusive, license to (i) test Products for the purpose of incorporating and/or embedding the Products with current and future Emerson products and services, (ii) demonstrate the Products to prospective licensees, (iii) use the Products to train Emerson employees and prospective licensees, (iv) provide professional services/consulting to licensees, (v) develop interfaces and integration and (vi) otherwise exercise their rights and fulfill their obligations under the agreement. [***] | | |||||||
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| | | | | | • The parties shall mutually agree upon an appropriate structure for purposes of sublicensing from Emerson or licensing directly from Newco any applicable intellectual property rights to Emerson customers. | | |||||
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| | | | | | • [***] | | |||||
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| | | | | | • For the avoidance of doubt, the license described above does not include the rights to source code. | | |||||
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| | | | • Channel Sales Agreement: Newco appoints Emerson as a global channel partner authorized to solicit orders from prospective licensees for Newco software, on either a commission or sell-through basis. | | |||||||
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| | • The parties shall mutually agree upon (i) whether any Products will be re-branded or co-branded for purposes of marketing and sales of the Products by Emerson and (ii) the terms of any trademark licenses granted under the agreement in connection therewith. | | |||||||||
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Economic Terms | | | • Commission Sales (Agency Relationship – Newco Paper): | |||||||||
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| | | | • Emerson shall receive a commission on license orders sourced by Emerson and closed by Newco, which will be based on Newco’s then-applicable list prices for the Products, less a [***] commission to be paid to Emerson for all amounts paid by such customer to Newco [***]. Newco shall provide first line software support to customers to whom Newco sells the Products. | | |||||||
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| | | | • [***] Newco shall provide first line software support to customers to whom Newco sells the Products. | | |||||||
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| | • Sell-through Sales (Reseller Relationship – Emerson Paper): A [***] discount percentage shall be applied to the license fees payable by Emerson to Newco for license orders sourced by Emerson. Emerson will establish the license fee payable by customer to Emerson and Emerson will pay Newco the then-current list price less the [***] discount. [***]. Emerson shall provide first line software support to customers to whom Emerson sublicenses the Products. The agreement between Emerson and the end user will contain customary required licensing language. | | |||||||||
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| | • OEM Relationship: Emerson may embed the Products into Emerson products and sell such products as part of Emerson’s own solutions. [***] The potential OEM products may be identified prior to closing. Fees will be defined for OEM arrangements, on a case-by-case basis, when they are formally established; [***]. Emerson shall provide first line software support to customers with respect to such OEM products. | |||||||
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Payment Terms | | | • Commission Sales (Agency Relationship – Newco Paper): Payment terms shall be consistent with those in the [***]. | ||||||
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| | • Sell-through Sales (Reseller Relationship – Emerson Paper): Payment terms shall be consistent with those in the [***]. | |||||||
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| | • OEM Relationship: Payment terms for OEM arrangements shall be established on a case-by-case basis, when such arrangements are formally established. | |||||||
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Delivery | | | • The parties shall mutually agree upon the timing and manner of delivery of each Product to Emerson for purposes of the reseller relationship, to the extent applicable. | ||||||
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IP Ownership | | | • Newco shall own all intellectual property rights in new applications/solutions developed by or on behalf of Newco using the Products. [***] | ||||||
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Maintenance, Hosting and Updates | | | • The parties shall mutually agree upon an amount of training Newco shall provide to Emerson sales channel and/or service engineers. | ||||||
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| | • Newco shall not restrict Emerson’s access to Newco’s third party service providers (independent entities not controlled by Newco). | |||||||
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| | • The parties shall discuss and mutually agree upon hosting of Products under each of the agency and reseller relationship. | |||||||
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Joint Development | | | • The parties will explore opportunities to work together to [***]. The output of a successful exploration will be a separate written joint development agreement having terms and conditions mutually agreed upon by the parties. | ||||||
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| | • [***] | |||||||
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Commitments for Strategic Initiatives | | | • [***] | ||||||
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| | • [***] | |||||||
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Meetings and Governance | | | • The parties shall work together to establish the details of the governance and execution model under the agreement, including Executive Business Reviews, peer mapping and cadence of key stakeholder engagements. | ||||||
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Term and Termination | | | • [***] | ||||||
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| | • The initial term of the agreement shall be [***] and shall automatically renew for successive [***] renewal terms, unless either party provides at least [***] written notice to the other party prior to the end of the initial term or then-current renewal term, as applicable. | |||||||
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| | • The parties shall mutually agree upon other termination rights, including, among others, those customary in an agreement of this nature (e.g., breach, bankruptcy, change of control). | |||||||
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[***] | | | • [***] | ||||||
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[***] | | | • [***] | ||||||
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Governing Law | | | • Delaware. | ||||||
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Confidentiality | | | • All information furnished pursuant to the agreement shall be subject to the confidentiality terms included in the Stockholders Agreement between Emerson, EMR Worldwide Inc. and Newco (regardless of whether such terms are, or such agreement is, terminated or expired). | ||||||
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Indemnification | | | • Newco and its affiliates shall indemnify and hold harmless Emerson and its affiliates from and against any and all losses and damages arising from or relating to (i) claims that the Products infringe, misappropriate or otherwise violate any third-party intellectual property rights and (ii) Newco’s and its affiliates’ gross negligence, willful misconduct or violation of applicable law. | ||||||
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| | • Emerson and its affiliates shall indemnify and hold harmless Newco and its affiliates from and against any and all losses and damages arising from or relating to Emerson’s and its affiliates’ gross negligence, willful misconduct or violation of applicable law. | |||||||
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Limitation of Liability; Disclaimer | | | • Except for any amounts due and payable under the agreement, in no event will either party’s aggregate liability under the agreement exceed $[***]. | ||||||
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| | • Neither party shall be liable under the agreement for any special, indirect, punitive, exemplary, incidental or consequential damages, or any damages arising from the loss of use, data or profits, even if it has been advised of the possibility of such damages. | |||||||
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| | • The foregoing liability cap and exclusion of damages shall not apply with respect to (i) a breach by either party of its confidentiality obligations under the agreement, (ii) either party’s indemnification obligations under the agreement, (iii) infringement, misappropriation or other violations of intellectual property rights, (iv) gross negligence or (v) willful misconduct. | |||||||
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Dispute Resolution | | | • Any and all disputes arising out of or in connection with the agreement shall be escalated first to the parties’ senior management. In the event such senior management is unable to resolve such dispute, such dispute shall be escalated to the parties’ CEOs. In the event the parties’ CEOs are unable to resolve such dispute, such dispute shall be resolved through arbitration or litigation in the courts of the State of Delaware. The further details of such process will be agreed upon between signing and closing. | ||||||
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Additional Terms | | | • The agreement shall contain such other reasonable terms and conditions as are customary in an agreement of this nature and/or are mutually agreed upon by the parties. |
1. | Services to be Provided. |
(a) | During the Transition Period (as defined below) (or such shorter periods as may be specified in Schedule [A-1] and Schedule [A-2]1, respectively, attached to this Agreement and incorporated herein (each, a “TSA Schedule” and together, the “TSA Schedules”) with respect to any Services), Emerson shall provide (or cause to be provided by an Affiliate or a third-party provider (each, a “Subcontractor”)) to Newco the services described on Schedule [A-1] and Schedule [A-2] (collectively, and together with the Emerson Facility Services (as defined below), the “Services”); provided, however, that, without Newco’s prior written consent, not to be unreasonably withheld, conditioned or delayed, Emerson shall not cause a third-party Subcontractor to provide any Service if doing so would result in an increase in the aggregate Service Charges and out-of-pocket costs for such Service of more than ten percent (10%) compared to the Service Charges and out-of-pocket costs applicable to such Service as set forth in the applicable TSA Schedule; provided, further, that Emerson shall remain ultimately responsible for ensuring that the obligations set forth in this Agreement are satisfied with respect to any Service provided by any Subcontractor. The Services shall only be made available for, and Newco shall only be entitled to utilize the Services for, the benefit of the operation of the Echo Business and natural extensions or evolutions thereof. Services will not be provided in any location or jurisdiction to the extent the provision of any or all of the Services to an unrelated legal entity or business is illegal; provided, however, that in any such event, Emerson as promptly as commercially practicable shall notify Newco, and the Parties shall use their commercially reasonable efforts to develop, at Newco’s reasonable cost and expense (subject to Newco’s prior written approval), a work-around arrangement that is reasonably acceptable to Newco; provided, further, that in any such event, Emerson as promptly as commercially practicable shall use commercially reasonable efforts to perform, at Newco’s reasonable cost and expense (subject to Newco’s prior written approval), such Services through alternative means in accordance with Applicable Laws, and if not practicable, the Parties shall use commercially reasonable efforts, at Newco’s reasonable cost and expense (subject to Newco’s prior written approval), to minimize the impact, and negotiate in good faith to provide, at Newco’s reasonable cost and expense (subject to Newco’s prior written approval), a commercially reasonable alternative arrangement reasonably acceptable to Newco. The standard for such Services shall be as set forth in Section 3. |
1 | Note to Draft: Prior to the Closing, Emerson and Aspen shall cooperate in good faith to finalize the TSA Schedules reflecting Service Charges generally reflecting Emerson’s actual costs and the exhibits to the Transition Services Agreement as soon as reasonably practicable after the signing of the Transaction Agreement. |
(b) | If a service (i) was provided by Emerson or an Emerson Retained Subsidiary (or a third party on its or their behalf) to the Echo Business during the twelve (12) months prior to the Closing, (ii) cannot reasonably be obtained by Newco from a third party and (iii) is not included in Schedule [•] (Excluded Services) (any such service, an “Omitted Service”), Newco may submit a written notice describing such service to Emerson within six (6) months after the Effective Date (or, for Omitted Services that are performed on a quarterly, annual or other cyclical basis, within sixty (60) days after such Omitted Service would have been provided under the first of such cycle to occur following the Effective Date). Promptly following receipt of such written notice, Emerson shall commence providing such Omitted Service under the terms of this Agreement, such Omitted Service shall be promptly documented in writing by the Parties as an amendment to the TSA Schedule and such Omitted Service shall be included in the Services. For the avoidance of doubt, the Service Charges applicable to any Omitted Service will be reasonably determined consistent with the methodology used to determine the Service Charges for similar Services. |
(c) | Emerson will notify Newco and in good faith use reasonable efforts to obtain any Consents from any third party that may be required in connection with the performance of Emerson’s obligations hereunder, including the provision of the Services, in each case, with each Party bearing fifty percent (50%) of any out-of-pocket third-party costs and expenses associated with obtaining the applicable Consents; provided that in the event any necessary Consents cannot be obtained by Emerson despite its commercially reasonable efforts, Emerson as promptly as commercially practicable shall inform Newco, and the Parties shall develop and implement a commercially reasonable alternative arrangement reasonably acceptable to Newco, with each Party bearing fifty percent (50%) of any set-up costs for such arrangement. |
(d) | Management of, and control over, the provision of the Services provided hereunder (including the determination or designation at any time of the equipment, employees and other resources of Emerson, its Affiliates or any Subcontractor to be used in connection with the provision of such Services) shall reside solely with Emerson. Without limiting the generality of the foregoing, except as provided in the TSA Schedules, all labor matters relating to any employees of Emerson, its Affiliates and any Subcontractor shall be within the exclusive control of such entity, and Newco shall not have any rights with respect to such matters. Except as provided in the TSA Schedules, Emerson shall be solely responsible for the payment of all salary and benefits and all Taxes (including income tax, social security taxes, unemployment compensation, workers’ compensation tax, other employment taxes or withholdings) and premiums and remittances with respect to employees used to provide any Services hereunder. |
(e) | All procedures, methods, systems, strategies, tools, equipment, facilities and other resources used by Emerson, its Affiliates, or any Subcontractor in connection with the provision of Services (other than any such items being the property of Newco that are provided by Newco to Emerson to facilitate Emerson’s provision of the Services to Newco) hereunder shall remain the property of Emerson, its Affiliates or such Subcontractor and shall at all times be under the sole direction and control of Emerson, its Affiliates or such Subcontractor. Newco may not resell, license the use of or otherwise permit the use by others of any Services, except with the prior written consent of Emerson. Notwithstanding the foregoing, (i) all property, including all Intellectual Property, materials, equipment, samples, third-party licenses (or Intellectual Property licensed thereunder), software, hardware, servers and Confidential Information, (x) disclosed or provided by Newco to Emerson, its Affiliates or Subcontractors pursuant to this Agreement, together with Intellectual Property or data output generated by or on behalf of Emerson for Newco in the performance of the Services to the extent exclusively relating to the Echo Business as conducted during the Transition Period, is and shall remain the exclusive property of Newco or its Affiliates and its suppliers, as applicable and (ii) all property, including all Intellectual Property, materials, equipment, samples, third-party licenses (or Intellectual Property licensed thereunder), software, hardware, servers and Confidential Information, disclosed or provided by Newco to Emerson, its Affiliates or Subcontractors pursuant to this Agreement to the extent relating to the businesses of Emerson or the Emerson Retained Subsidiaries or otherwise not exclusively relating to the Echo Business or (y) disclosed or provided by Emerson to Newco, its Affiliates or Subcontractors pursuant to this Agreement, other than Intellectual Property generated by or on behalf of Emerson for Newco in the performance of the Services to the extent exclusively relating |
(f) | EXCEPT AS EXPRESSLY SET FORTH IN SECTION 1(e), NO LICENSES OR ANY OTHER RIGHT, TITLE OR INTEREST IN OR TO ANY INTELLECTUAL PROPERTY ARE GRANTED TO EITHER PARTY OR ANY OF ITS AFFILIATES UNDER THIS AGREEMENT, WHETHER BY IMPLICATION, ESTOPPEL, EXHAUSTION OR OTHERWISE, AND EACH PARTY RETAINS AND RESERVES ANY AND ALL RIGHT, TITLE AND INTEREST NOT EXPRESSLY GRANTED UNDER THIS AGREEMENT. |
2. | Consideration for Services. |
(a) | Newco shall pay to Emerson the fees for each Service (or category of Services, as applicable) as set forth on the applicable TSA Schedule (including, for the avoidance of doubt, as adjusted in connection with any extension pursuant to Section 9(a)) (collectively, the “Service Charges,” and each, a “Service Charge”). During the Transition Period, the amount of a Service Charge for any Service (or category of Services, as applicable) shall not increase, except to the extent such costs and amounts increase for other businesses of Emerson using the same service at the same location or changes in actual compensation and benefits costs. Where Service Charges are calculated on a per headcount basis, Emerson understands and agrees that headcount may fluctuate in the ordinary course of business; provided that, if Newco provides updates to the applicable headcount no later than five (5) days before any calendar month of the Transition Period, Emerson shall adjust the applicable Service Charges effective as of such calendar month. Newco will be charged for the then-current headcount for the invoiced period. Actual, documented out-of-pocket costs paid to any third-party provider that is providing goods or services used by Emerson in providing the Services (e.g., license costs for software) will be an incremental cost to Newco in addition to the Service Charges, and will be charged to Newco at the actual third-party cost allocated to the Services in a manner consistent with past practice; provided, however, that Newco’s prior written approval shall be required with respect to any out-of-pocket costs exceeding twenty five thousand dollars ($25,000). Notwithstanding the foregoing, for the avoidance of doubt, Emerson shall bear all costs and expenses associated with building or setting up the Transition Environment (as described in Schedule [A-1]) and the Service Charges to be paid by Newco shall reflect the costs and expenses associated with Newco’s connection to and Echo’s operation of the Transition Environment in connection with the provision and receipt of the Services. |
(b) | Echo shall deliver invoices to Newco on a monthly basis reflecting charges for the preceding month. Echo agrees to afford Newco, upon reasonable notice, access to such information, records and documentation of Echo as Newco may reasonably request in order to verify any invoices and charges for Services hereunder or additional out-of-pocket costs as set forth in Section 2(a). |
(c) | Newco shall pay the amount (other than amounts it disputes in good faith) of such invoice in U.S. dollars by wire transfer to Emerson within thirty (30) days of the date of receipt of such invoice to the account specified by Emerson and payment of the disputed amount (if and to the extent required) shall be made promptly after resolution of such dispute in accordance with this Section 2(c); provided that, at Emerson’s option, with respect to Services rendered outside the United States, payments may be required to be made in local currency, subject to Newco’s consent (not to be unreasonably withheld). If Newco fails to pay such amount by such date, Newco shall be obligated to pay to Emerson, in addition to the amount due, interest at the prime rate as published in The Wall Street Journal, Eastern Edition in effect on such date, compounded monthly, accruing from the date the payment was due through the date of actual payment. If Newco disputes in good faith the amount reflected on any invoice, Newco shall promptly, but in any event within sixty (60) days of the date of receipt of such invoice, specify in writing the portion that it disputes and the basis for that dispute. If Newco has disputed an amount in |
(d) | Except as set forth in Section 2(c), Newco shall pay the full amount of the Service Charges and shall not set-off, counterclaim or otherwise withhold any amount owed to Emerson under this Agreement on account of any obligation owed by Emerson to Newco that has not been finally adjudicated, settled or otherwise agreed upon by the Parties in writing. |
(e) | Incremental to any other payments, fees or charges in this Agreement, Newco shall pay any Taxes imposed on, or payable with respect to, the provision of Services, including all applicable sales, use, value added and similar Taxes, but excluding Taxes based on Emerson’s net income or assets. |
(f) | All amounts payable under this Agreement shall be paid free and clear of all deductions or withholdings unless the deduction or withholding is required by Applicable Law. If deduction or withholding is required by Applicable Law on the payment of any amount under this Agreement, the amount of the payment due from the Party required to make such payment shall be increased to an amount which, after any withholding or deduction, leaves an amount equal to the payment which would have been due if no such deduction or withholding were required. Newco shall withhold (or cause to be withheld) such taxes, levies or charges and pay (or cause to be paid) such withheld amounts over to the applicable taxing authority in accordance with the requirements of Applicable Law and provide Emerson with an official receipt confirming payment. Emerson shall, prior to the date of any payment to be made pursuant to this Agreement, at the request of Newco, use commercially reasonable efforts to provide Newco with any certificate or other documentary evidence (i) required by any Tax Law or (ii) which Emerson is entitled by any Tax Law to provide in order to reduce the amount of any Taxes that may be deducted or withheld from such payment and Newco agrees to accept and act in reliance on any such duly and properly executed or other applicable documentary evidence. Each Party shall reasonably cooperate and use commercially reasonable efforts to minimize or eliminate any withholding Tax liability. |
3. | Standard for Service. Except as otherwise provided in this Agreement or the TSA Schedules, Emerson agrees to perform each Service such that the nature, quality, standard of care, level of priority and the service level at which such Service is performed are not materially less than the nature, quality, standard of care, level of priority and service level at which substantially the same service was performed by or on behalf of Emerson to the Echo Business during the twelve (12) months prior to the Closing Date (or, if not so previously provided, then substantially the same as that applicable to similar services provided by Emerson to the Emerson Retained Subsidiaries). Without limiting the foregoing, in the event there is any restriction on Emerson under an existing contract with a third party that would restrict the nature, quality or standard of care applicable to delivery of a Service to be provided by Emerson to Newco, Emerson shall promptly provide notice to Newco of such restriction and Newco and Emerson shall reasonably cooperate in good faith to mutually agree on alternative arrangements or procedures to allow Emerson to provide such Service in a manner as close as possible to the standards described in this Section 3. Emerson shall not be responsible for any inability to provide a Service or any delay in doing so to the extent that such inability or delay is caused by the failure of Newco to timely provide the information, access or other cooperation necessary for Emerson to provide such Service. Without limiting Emerson’s obligation to provide the Services in accordance with the standards set forth in, and subject to, this Section 3, Emerson may supplement, modify, substitute or otherwise alter any of the Services from time to time in a manner that is generally consistent with supplements, modifications, substitutions or alterations made for similar services provided or otherwise made available by Emerson; provided that no such alteration adversely affects the Echo Business or natural expansions or extensions thereof in any material respect. Newco may request to modify the terms and conditions relating to the performance of a previously agreed-upon Service in order to |
4. | Cooperation for Statutory and Tax Filings. Newco undertakes and agrees to cooperate in accordance with the standard for Services described in Section 3 to enable Emerson to complete in a timely manner any and all statutory and Tax filings required to be filed by Emerson and/or its Affiliates pursuant to the Transaction Agreement that include any information related to the Echo Business. Newco will provide and, as applicable, cause its employees and its Affiliates and their employees to provide, all such reasonable cooperation to Emerson, its Affiliates and their respective representatives with respect to such filings as is reasonably requested, including preparing or causing to be prepared (to the extent consistent with past practices) and furnishing or causing to be furnished records, information, work papers, reports and other documents as requested by Emerson, its Affiliates or their respective representatives and causing Continuing Echo Business Employees who possess relevant knowledge to make themselves available for consultation with respect to the foregoing; provided that notwithstanding anything to the contrary in this Section 4, Newco will only be obligated to cause any Person to cooperate with Emerson pursuant to this Section 4 if and for so long as Newco is capable of directing the actions of such Person. |
5. | Migration Assistance. Within sixty (60) days after the date hereof, the Parties shall jointly develop a detailed plan for (a) separating and conveying any assets (including data) held by Emerson or its Affiliates that are to be, or that have been, assigned to Newco, in each case, pursuant to the Transaction Agreement and (b) migrating the Services and all related information and customer accounts, to Newco or its designee in an efficient, low-risk and low-disruption manner to both Parties (such plan, as mutually agreed to by the Parties, the “Migration Plan”). Each Party shall perform all of its respective obligations in the Migration Plan. Such plan shall include, at a minimum, key milestones and dependencies required by each Party to complete its own obligations. |
6. | Disaster Recovery & Business Continuity. During the Transition Period, Emerson shall implement and maintain (i) information technology security requirements and policies and (ii) disaster recovery and other business continuity systems and processes, in each case, that are substantially the same as Emerson maintains for the Emerson Retained Subsidiaries. |
7. | Force Majeure. No Party shall be responsible for a delay in delivery of or any failure to perform any Service if prohibited by Applicable Law or caused by an act of god or public enemy, war, terrorism, cyber-attack, government acts or regulations, fire, flood, embargo, quarantine, pandemic, epidemic, unusually severe weather or other cause similar to the foregoing, in each case which is beyond its reasonable control (each, a “Force Majeure Event”); provided, however, that such Party notifies the other Party as soon as reasonably practicable, in writing, upon learning of the occurrence of the Force Majeure Event. Subject to compliance with the foregoing provision, a Party’s obligations hereunder (except its payment obligations in respect of Services already provided) shall be postponed for such time as its performance is suspended or delayed on account of the Force Majeure Event, and upon the cessation of the Force Majeure Event, such Party will use commercially reasonable efforts to resume its performance hereunder. |
8. | Confidential and Proprietary Information and Rights. Newco and Emerson each acknowledge that any information provided to or coming into the possession of the other pursuant to this Agreement will be governed by the confidentiality provisions of the Stockholders Agreement, mutatis mutandis (as applicable hereto, the “Confidentiality Obligations”); provided, however, that notwithstanding any contrary provisions of the confidentiality provisions of the Stockholders Agreement, the Confidentiality Obligations |
9. | Transition Period and Termination. |
(a) | The term of this Agreement (the “Transition Period”) shall commence on the Closing Date and continue with respect to each of the Services for the term thereof (the “Service Term”), which Service Term shall, unless otherwise agreed to by Emerson and Newco in any TSA Schedule, terminate twelve months following the Closing Date; provided that except as otherwise specified on any TSA Schedule, Newco may, upon written notice prior to the expiration of the applicable Service Term, extend any Service Term by up to an additional six (6) months (i.e., for any twelve (12)-month Service Term, up to eighteen (18) months from the Effective Date) at the same Service Charges applicable to the initial Service Term (such Services Charge, as adjusted in accordance with Section 2(a), the “Base Charge”), and for up to a second additional six (6) month period (i.e., for any twelve (12)-month Service Term, up to twenty-four (24) months from the Effective Date) at Services Charges reflecting: (i) the Base Charge for the nineteenth (19th) month after the Effective Date, (ii) one hundred and ten percent (110%) of the Base Charge for the twentieth (20th) month after the Effective Date, (iii) one hundred and eleven percent (111%) of the Base Charge for the twenty-first (21st) month after the Effective Date, (iv) one hundred and twelve percent (112%) of the Base Charge for the twenty-second (22nd) month after the Effective Date, (v) one hundred and fourteen percent (114%) of the Base Charge for the twenty-third (23rd) month after the Effective Date and (vi) one hundred and fifteen percent (115%) in the twenty-fourth (24th) month after the Effective Date; provided, further, that except as otherwise specified on any TSA Schedule, (i) Newco may terminate one or more of the Services it receives at any time and for any reason on not less than thirty (30) days’ prior written notice to Emerson and (ii) both Parties may terminate this Agreement with respect to one or more Services immediately upon mutual agreement; provided, further, that the termination date of the Emerson Facility Services shall be as described in Section 12(b) hereof. |
(b) | Notwithstanding the foregoing, each Party reserves the right to immediately terminate this Agreement by written notice to the other Party in the event that the other Party materially breaches this Agreement and such breach remains uncured for thirty (30) days after receipt of written notice from the non-breaching Party. |
(c) | Upon the effective date of termination of any Service pursuant to this Agreement, Emerson will have no further obligation to provide the terminated Service, and Newco will have no obligation to pay any future Service Charges relating to any such Service; provided that Newco shall remain obligated to Emerson for the Service Charges and any other fees, costs and expenses owed and payable in accordance with the terms of this Agreement in respect of Services provided prior to the effective date of termination. Upon the effective date of termination of any Service pursuant to this Agreement, Emerson shall reduce for the next monthly billing period the amount of the Service Charge for the category of Services in which the terminated Service was included (such reduction to reflect the elimination of all costs incurred in connection with the terminated Service to the extent the same are not required to provide other Services to Newco), and, upon request of Newco, Emerson shall provide Newco with documentation and/or information regarding the calculation of the amount of the reduction. In connection with termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall survive any such termination. The termination of any license of any Emerson Facility pursuant to this Agreement will be treated in a corresponding manner under this Section 9(c). |
(d) | The failure of either Party to terminate this Agreement for breach of any term or condition shall not constitute a waiver of such breach and shall not affect such Party’s right to terminate this Agreement by reason of subsequent breaches of the same or other terms or conditions. |
(e) | Any termination of this Agreement with respect to any one or more Services shall not terminate this Agreement with respect to any other Service then being provided pursuant to this Agreement, except as otherwise specified on the applicable TSA Schedule. |
10. | Limitation of Liability; Exclusion of Warranties. |
(a) | Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PARTY HERETO SHALL BE LIABLE FOR (I) ANY SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, EXCEPT TO THE EXTENT THAT THE OTHER PARTY IS REQUIRED TO PAY ANY SUCH AMOUNTS TO A THIRD PARTY, IN EACH CASE ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT OR ANY OF THE SERVICES PROVIDED HEREUNDER (INCLUDING DELIVERABLES ASSOCIATED THEREWITH), INCLUDING PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT, OR (II) THE FURNISHING, PERFORMANCE, OR USE OF ANY GOODS OR SERVICES SOLD OR PERFORMED PURSUANT HERETO, WHETHER BASED UPON AN ACTION OR CLAIM IN CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY), BREACH OF WARRANTY, OR OTHERWISE, EXCEPT IN THE CASE OF THIS CLAUSE (II) FOR THE WILLFUL BREACH, GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF SUCH PARTY OR ITS AFFILIATES OR REPRESENTATIVES. FURTHER, THE LIABILITY OF EITHER PARTY TO THE OTHER PARTY FOR ANY LOSS OR DAMAGE ARISING IN CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED FIVE (5) TIMES THE TOTAL AMOUNT BILLED OR BILLABLE TO NEWCO UNDER THIS AGREEMENT. |
(b) | Obligation to Correct. Without limiting any rights or remedies of Newco, in the event of any breach of this Agreement by Emerson with respect to any material error or defect in the provision of any individual Service, Emerson shall promptly, after Emerson’s Service Coordinator becomes aware of such error or defect, notify Newco and, at Newco’s request, correct such error or defect or re-perform such Service in a timely manner as promptly as practical after Newco’s request at the expense of Emerson. |
(c) | Exclusion of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE TSA SCHEDULES, (A) THE SERVICES, (B) THE LICENSES IN SECTION 1(e) AND (C) THE RIGHTS GRANTED HEREUNDER ARE, IN EACH CASE, PROVIDED AND GRANTED “AS-IS” WITH NO OTHER WARRANTIES, AND EMERSON AND NEWCO EACH EXPRESSLY DISCLAIMS ANY OTHER WARRANTIES UNDER OR ARISING AS A RESULT OF THIS AGREEMENT, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT OR ANY OTHER WARRANTY WHATSOEVER; PROVIDED, THAT NEITHER THIS DISCLAIMER NOR ANY OTHER PROVISION OF THIS AGREEMENT SHALL IN ANY WAY LIMIT ANY REPRESENTATIONS AND WARRANTIES OF ANY PERSON UNDER THE TRANSACTION AGREEMENT, STOCKHOLDERS AGREEMENT OR ANY OTHER ANCILLARY AGREEMENT IN EACH CASE RELATED THERETO. |
11. | Access to Records and Properties. Newco shall, during normal business hours and with reasonable prior notice, provide Emerson with access to its books and records pertaining to the Echo Business solely for the purposes of Emerson’s provision of the Services and solely to the extent necessary for Emerson to provide the Services. Newco shall also provide Emerson with physical access to computer and communications equipment at the Echo Business’ facilities in order to maintain or service such equipment and associated software, including such access for a reasonable time following the termination of this Agreement, in each case, to the extent reasonably necessary for the provision of the Services. |
12. | Access to Emerson Facilities. Emerson hereby grants to Newco or an Affiliate thereof a limited right to use and access premises at any facility identified as an “Emerson Facility” on Schedule [A-1] and, without additional charge, to continue to use furniture and equipment at any such facility (an “Emerson Facility”) for substantially the same purposes as used by the Echo Business in the twelve (12) months prior to the Effective Date (all such rights, the “Emerson Facility Services”). Schedule [A-1] sets forth a description of each Emerson Facility and all costs as to which Newco or an Affiliate is required to reimburse Emerson on a proportionate basis based on the metric used to allocate such costs during the twelve (12) months prior to the Effective Date (e.g., headcount or rentable square feet occupied by Newco or its Affiliates). At each Emerson Facility, Emerson shall, in addition to providing access to and the right to use such facility, provide to the personnel of Newco and its Affiliates the facility-related ancillary services reasonably necessary to support Newco’s office work policies with respect to in-office attendance, but in any event, not less than the |
(a) | Newco shall, and shall cause its Affiliates to, permit only Newco and its Affiliates’ respective authorized personnel, contractors, invitees or licensees to use the Emerson Facility, except as otherwise permitted by Emerson in writing; |
(b) | Newco shall, and shall cause its Affiliates and their respective personnel, contractors, invitees or licensees to, vacate the Emerson Facility at or prior to the earliest of (x) the expiration date of the lease relating to the Emerson Facility as set forth in Schedule [A-1], (y) the expiration or termination of this Agreement and (z) the date set forth in Schedule [A-1], unless provided in Schedule [A-1] with respect to such space2, and upon such expiration, Newco or its Affiliate shall deliver over to Emerson any portion of the Emerson Facility utilized by Newco or its Affiliates in substantially the same repair and condition as existed on the Effective Date, ordinary wear and tear and damage by casualty or condemnation excepted; provided, however, that in the event that a third-party lease for an Emerson Facility specifies otherwise, the Party vacating such Emerson Facility shall deliver over such Facility in such repair and condition (taking into account the date that Newco began its occupation of such Emerson Facility such that Newco shall only bear any costs or expenses associated with delivering over such Facility in substantially the same repair and condition as existing on the Effective Date and Emerson shall bear all incremental costs and expenses reasonably incurred by Newco in delivering over such Facility in the repair and condition as set forth in the third-party lease) as set forth in the third-party lease; provided, further, that in the event that Newco shall fail to deliver over such Emerson Facility in such repair and condition as required by this Agreement and/or a third-party lease, Emerson may undertake reasonable actions to establish such condition and repair, and shall be reimbursed for its reasonable costs associated with delivering over such Facility in substantially the same repair and condition as existing on the Effective Date. |
(c) | Newco agrees that Newco or its Affiliates shall not make and shall cause their respective personnel, contractors, invitees and licensees to refrain from making, any alterations or improvements to any Emerson Facility, except as otherwise permitted by Emerson in writing; provided, however, that Newco or its Affiliates shall not require Emerson consent in connection with non-structural cosmetic changes or other immaterial alterations or improvements. |
(d) | Emerson and its Affiliates, and the landlord in respect of the third-party lease in which the applicable Emerson Facility is located, shall have (i) such access as provided in the applicable lease and (ii) otherwise reasonable access to Newco’s and its Affiliates’ space at the Emerson Facility from time to time as reasonably necessary in accordance with past practice; |
(e) | Newco agrees to maintain, and to cause its Affiliates to maintain, commercially appropriate and customary levels (in no event less than what is required by the landlord of the tenant under the relevant third-party lease) of property and liability insurance in respect of the premises occupied in each Emerson Facility and the activities conducted thereon; provided for any Emerson Facility, to the extent Newco reimburses Emerson for an allocable share of property insurance costs in respect of a property insurance policy for such Emerson Facility, Newco shall not be required to maintain a separate policy of property insurance. |
(f) | Newco shall, and shall cause its Affiliates and their respective personnel, contractors, invitees and licensees to, comply with (i) all Applicable Laws relating to their use or occupation of any Emerson Facility including those relating to environmental, health and workplace safety matters, (ii) Emerson’s generally applicable site rules, regulations, policies and procedures (if any) which have been provided in writing to Newco as of the Effective Date and (iii) any applicable requirements of such third-party lease governing any Emerson Facility which have been provided to Newco in writing as of the Effective Date; and |
2 | Note to Draft: Parties to discuss entering into a lease or sublease for certain spaces where a longer term arrangement may be contemplated. |
(g) | The rights granted in this Section 12 shall be in the nature of a limited right and shall not create a leasehold or other estate or possessory right in any of Newco or its Affiliates or their respective representatives, contractors, invitees or licensees, with respect to any Emerson Facility and, except as expressly provided herein, shall not include any right of sub-license or sub-leasehold to any third party. |
(h) | Notwithstanding anything herein to the contrary, where required by local law or otherwise beneficial to the Parties, the provision of Emerson Facility Services or access to an Emerson Facility may be separately documented in a sublease or other document (as reasonably agreed by the Parties) with material terms substantively consistent with those described in this Agreement (with such modifications as are reasonably required to comply with local law requirements). |
13. | Reports. Emerson shall cause to be provided to Newco in connection with the Services being provided by Emerson (in accordance with Section 3 hereof) the same reports (whether generated internally or by any third party) that were provided in the ordinary course prior to the Effective Date in the same form as provided in the ordinary course prior to the Effective Date and at the same frequency, to the extent such report directly relates or directly pertains to a Service and the costs and expenses for the provision of such reports shall be included in the corresponding Service Charge. Upon written request by Newco, Emerson shall provide (consistent with the standards set forth in Section 3 hereof), at Newco’s reasonable cost and expense, any reports necessary for Newco or its Affiliates to satisfy any filing deadlines with Governmental Authorities. |
14. | Record-Keeping. Emerson shall maintain complete and accurate records of the Services performed by or on behalf of Emerson and its Affiliates under this Agreement during the Transition Period and for one (1) year following the Transition Period. Such records may be used by Emerson’s Service Coordinator to resolve any dispute pursuant to Section 18(b). |
15. | Controls and Compliance. Emerson will operate any IT control processes in accordance with Emerson’s internal control standards. If a material IT control deficiency affecting the Services is identified in the normal course of business operations for a previously working internal control administered by Emerson, Emerson and Newco will reasonably cooperate in good faith to determine the root cause and potential remediation of the deficiency, with any such remediation to be at Emerson’s reasonable cost and expense. |
16. | Covenants. Emerson and Newco will not, and will use reasonable efforts to ensure that their respective employees, officers, directors, Affiliates and agents do not, make any use of or attempt to gain access to any part of the other Party’s business systems and communications networks or to any data or information of the other Party or its Affiliates not specifically made available to that Party under this Agreement. Emerson and Newco shall not introduce (i) any code, program, or script (devices) that, upon the occurrence or the non-occurrence of any event, will disable any system or application; (ii) to or through the other Party’s “network,” any worm, virus, trap door, back door or any other contaminant or disabling devices; or (iii) any form of breach of security, data corruption or interruption into the other Party’s “network.” If a Party has violated this covenant, then in addition to any rights and remedies (including damages) to which the non-breaching Party or its Affiliates may be entitled at law or in equity, the breaching Party will, to the non-breaching Party’s reasonable satisfaction, promptly take all commercially reasonable action to implement all necessary procedures to prevent the reoccurrence of any such violation; failing which, the non-breaching Party may terminate this Agreement upon thirty (30) days’ written notice (such notice to describe the breach in reasonable detail); provided, however, that the breaching Party shall have the opportunity to cure during the thirty (30)-day notice period, to the non-breaching Party’s reasonable satisfaction, any such violation. |
17. | Indemnification. Each Party (the “Indemnitor”) shall indemnify, defend and hold harmless the other Party and its Affiliates, and its and their respective directors, officers, agents, employees, successors and assigns (the “Indemnitee”) against, any Damages arising from or relating to third-party claims arising from or relating to the gross negligence, willful misconduct or fraud of the Indemnitor or any of its Affiliates in connection with this Agreement. This Section 17 shall not apply with respect to Taxes other than any Taxes that represent Damages arising from any non-Tax claim. Section 12.03 (Third-Party Claim Procedures) of the Transaction Agreement shall apply, mutatis mutandis, to any indemnification hereunder. |
18. | General Provisions. |
(a) | Notice. All notices, requests and other communications to any Party shall be in writing (including facsimile transmission and electronic mail (“email”) transmission, so long as a receipt of such email is requested and received) and shall be given to the address, facsimile number or email address specified for notices in Section 13.01 of the Transaction Agreement or to such other address or facsimile number as such Party may hereafter specify for the purpose by notice to the other Party. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. Eastern time on a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding business day in the place of receipt. |
(b) | Dispute Resolution. Newco, on the one hand, and Emerson, on the other hand, shall by written notice to the other, appoint respective principal points of contact (each, a “Service Coordinator”) who shall be responsible for the day-to-day implementation or monitoring (as applicable) of the Services, including attempted resolution of any issues that may arise during the performance of the Parties’ obligations under this Agreement. In addition, Emerson will appoint an executive sponsor (the “Emerson Executive Sponsor”) by written notice to Newco, and Newco will appoint an executive sponsor (the “Newco Executive Sponsor”) by written notice to Emerson. In the event that the Service Coordinators are unable to resolve any issues regarding the performance of the Services hereunder after a period of ten (10) days (the “Disputed Issues”), the Disputed Issues may be referred to a separation management committee (the “Separation Management Committee”), which shall be at least four (4) persons and solely comprised of an equal number of members of Emerson’s and Newco’s management teams responsible for acquisition integration. If the Separation Management Committee is unable to reach resolution on any Disputed Issues after a period of seven (7) days, such Disputed Issues shall be submitted to the Emerson Executive Sponsor and Newco Executive Sponsor for resolution within seven (7) days and any unresolved disputes after such seven (7) day period, the Parties may pursue an Action in accordance with Section 18(l); provided, however, that nothing herein shall prevent or limit either Party’s right to seek temporary, preliminary or permanent equitable, including injunctive, relief. Without limiting the foregoing, any resolution of such Disputed Issues agreed to in writing by the Emerson Executive Sponsor and the Newco Executive Sponsor shall be considered final and binding upon the Parties. For the avoidance of doubt, unless otherwise directed in writing by Newco, Emerson shall continue to provide all Services during the pendency of any dispute hereunder. Unless otherwise mutually agreed to by the Parties, all communications relating to the Services shall be directed first, to the Service Coordinators and second, to the Separation Management Committee. The initial Service Coordinators shall be set forth on Exhibit [A] attached hereto and the Parties may replace their respective Service Coordinator(s) at any time by providing written notice to the other Party. Each Party may replace its members on the Separation Management Committee at any time by providing written notice to the other Party, and each of Emerson and Newco may replace the Emerson Executive Sponsor and the Newco Executive Sponsor, respectively, at any time by providing written notice to the other Party. |
(c) | Injunctive Relief. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of Delaware or any Delaware state court, in addition to any other remedy to which they are entitled at law or in equity. Each Party further agrees to waive any requirement for the securing or posting of any bond in connection with such remedy. |
(d) | No Partnership, Joint-Venture Or Agency Created. The relationship of Emerson and Newco shall be that of independent contractors only. Nothing in this Agreement shall be construed as making one Party a partner, joint-venturer, agent or legal representative of the other Party or otherwise as having the power or authority to bind the other Party in any manner. |
(e) | Entire Agreement. The TSA Schedules are incorporated into this Agreement, and this Agreement together with the TSA Schedules, the Transaction Agreement and the other Transaction Documents embody the entire agreement and understanding between the Parties with respect to the subject matter |
(f) | Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. |
(g) | Assignment; Binding Agreement. This Agreement and various rights and obligations arising hereunder shall inure to the benefit of and be binding upon the Parties and their successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be transferred, delegated or assigned by Emerson without the prior written consent of Newco, or by Newco without the prior written consent of Emerson (which consents shall not be unreasonably withheld, conditioned or delayed). |
(h) | Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each Party shall have received a counterpart hereof signed by the other Party. Until and unless each Party has received a counterpart hereof signed by the other Party, this Agreement shall have no effect and no Party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). |
(i) | Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense. |
(j) | Headings; Interpretation. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. Each reference in this Agreement to a Section, Exhibit or Schedule, unless otherwise indicated, shall mean a Section of this Agreement or an Exhibit or a Schedule attached to this Agreement, respectively. All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. References herein to “days,” unless otherwise indicated, are to consecutive calendar days. The words “hereof,” “herein,” “hereto” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions, headings and the division of this Agreement into Sections and other subdivisions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any Contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law,” “laws” or to a particular statute or law shall be deemed also to include any Applicable Law. Both Parties have participated substantially in the negotiation and drafting |
(k) | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such state. |
(l) | Submission to Jurisdiction. The Parties agree that any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by either Party or any of its Affiliates or against either Party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the Parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such Action and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such Action in any such court or that any such Action brought in any such court has been brought in an inconvenient forum. Process in any such Action may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on such Party as provided in Section 18(a) shall be deemed effective service of process on such Party. |
(m) | Amendment and Waiver. Any provision of this Agreement may be amended or waived only if such amendment or waiver is in writing and signed, in the case of an amendment, by each of the Parties, or in the case of a waiver, by the Party against whom the waiver is to be effective. No failure or delay by either Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof. |
(n) | Disclosure Generally. All TSA Schedules attached hereto are incorporated herein and expressly made part of this Agreement as though completely set forth herein. All references to this Agreement herein or in any of the TSA Schedules attached hereto or in any agreement contemplated hereby shall be deemed to refer to this entire Agreement, including all TSA Schedules. |
(o) | No Third-Party Beneficiaries or Other Rights. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any person other than the Parties and their respective successors and assigns. |
(p) | Personal Data. To the extent Emerson is processing any Personal Data (as defined in Exhibit [•]3) on behalf of Newco in connection with the provision of the Services, the terms and conditions of the Data Protection Agreement attached hereto as Exhibit [•] shall apply. |
(q) | Survival. The Parties hereby acknowledge and agree that the obligations of each Party set forth in Sections 1(e), 1(f), 4, 7, 8, 8, 10, 14, 16, 17 hereof and this Section 18 shall survive any termination of this Agreement. |
3 | Note to Draft: Exhibit to be agreed upon prior to Closing. |
| | Emerson Electric Co. | ||||
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| | Title: | | |
| | Emersub CX, Inc. | ||||
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| | By: | | | ||
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| | Title: | | |
(a) | Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word “stockholder” means a holder of record of stock in a corporation; the words “stock” and “share” mean and include what is ordinarily meant by those words; and the words “depository receipt” mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository. |
(b) | Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title: |
(1) | Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation (or, in the case of a merger pursuant to § 251(h), as of immediately prior to the execution of the agreement of merger), were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title. |
(2) | Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except: |
a. | Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; |
b. | Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders; |
c. | Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or |
d. | Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section. |
(3) | In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. |
(4) | [Repealed.] |
(c) | Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent |
(d) | Appraisal rights shall be perfected as follows: |
(1) | If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares; provided that a demand may be delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or |
(2) | If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of giving such notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of giving such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares; provided that a demand may be delivered to the corporation by electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For |
(e) | Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this section hereof, upon request given in writing (or by electronic transmission directed to an information processing system (if any) expressly designated for that purpose in the notice of appraisal), shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation (or, in the case of a merger approved pursuant to § 251(h) of this title, the aggregate number of shares (other than any excluded stock (as defined in § 251(h)(6)d. of this title)) that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to in § 251(h)(2)), and, in either case, with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such statement shall be given to the stockholder within 10 days after such stockholder’s request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the corporation the statement described in this subsection. |
(f) | Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation. |
(g) | At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately before the merger or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of |
(h) | After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder’s certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section. |
(i) | The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state. |
(j) | The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal. |
(k) | From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such |
(l) | The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation. |
1. | This Agreement shall be effective as of the last date of signature by the parties and shall be expressly contingent upon the closing of the transaction and merger pursuant to the Transaction Agreement and Plan of Merger (as amended from time to time, the “Transaction Agreement”) entered into on October 10, 2021 among AspenTech, Emerson Electric Co. (“Emerson Electric”), EMR Worldwide Inc., a wholly owned subsidiary of Emerson Electric, New AspenTech, and Emersub CXI, Inc., a direct wholly owned subsidiary of Emersub CS, Inc. With respect to the foregoing and for the avoidance of doubt, this Agreement shall be considered null and void ab initio in the event the closing of the transaction and merger pursuant to the Transaction Agreement does not occur. |
2. | Effective as of the date of the closing specified in Section 1 above (the “Closing Date”), the following agreements between the parties will be superseded by this Agreement, provided that: (i) amounts payable by one party to the other in connection with end user orders written under such agreements, including commissions payable by Old AspenTech to Emerson and fees payable by Emerson to Old AspenTech, shall remain payable in accordance with the terms of such agreements and (ii) all licensing and distribution rights and duration of licenses granted to Emerson and obligations on the part of Old AspenTech with respect to the ten (10) [***] and the ten (10) Additional [***] under the Channel Sales Agreement (as defined below) (collectively, the “[***]”) shall continue and remain in effect under this Agreement upon such terms and conditions as set forth in the Channel Sales Agreement. For purposes of clarification and notwithstanding anything in this Agreement to the contrary, no payments shall be due or otherwise payable by Emerson to Old AspenTech in connection with the licensing and distribution by Emerson of the [***]). As used herein, the term “Additional [***]” shall have the meaning as defined in the Channel Sales Agreement. |
3. | This Agreement consists of this Cover Page and the exhibits and annexes specified below, which are expressly incorporated in this Agreement and made a part hereof. |
4. | All economic terms of this Agreement shall be reviewed by the parties commencing 60 days prior to January 1, 2023 and annually thereafter, and the parties shall mutually agree upon any necessary modifications thereto (including those based on the parties’ current understanding of applicable markets), which shall be implemented on January 1, 2023 and each January 1 thereafter while this Agreement is in effect; provided that such modifications shall be intended to permit Emerson to be and remain competitive in markets (including markets in which the Software has not previously been marketed or sold). The parties will also review AspenTech’s sales and support organization associated with this arrangement with Emerson to ensure alignment between the parties with respect thereto. |
5. | This Agreement shall continue in effect through the end of the day before the fifth anniversary of the Closing Date unless renewed or terminated earlier in accordance with the terms hereof. |
6. | This Agreement will renew for successive five-year renewal terms unless either party provides at least 90 days’ written notice to the other party prior to the end of the then-current term. |
7. | If following the Closing Date, Emerson Electric Co. holds 40% or less of the voting power in New AspenTech for more than six consecutive months, each of Emerson and AspenTech shall have the right to terminate this Agreement in the sole discretion of the terminating party upon providing written notice to the other party. |
8. | Either party may terminate this Agreement upon 30 days' written notice if the other party breaches its obligations under this Agreement and fails to cure the breach by the end of the notice period. Either party may terminate this Agreement immediately upon written notice if the other party makes an assignment for the benefit of its creditors, becomes insolvent, or is the subject of a voluntary or involuntary petition in bankruptcy, receivership, or similar proceeding and such proceeding is not dismissed within 90 days of filing. Termination hereunder shall have no effect on the timely fulfillment of, and payments due or coming due with respect to, Emerson orders for Software and/or SMS issued pursuant to this Agreement prior to the date of termination or during the Wind-down Period. The termination or expiration of this Agreement shall not affect in any way any licenses granted to clients prior to such termination or expiration or during the Wind-down Period. Understanding fully the risk that this Agreement may be terminated or may expire as provided herein, each party agrees that in the event of termination for any reason other than for cause due to breach, the other party shall not be liable solely by reason of such termination for damages or otherwise, including on account of the loss of present or prospective profits, for expenditures, investments, or opportunities forgone, or for the inability to fulfill contracts under this Agreement, or otherwise. |
9. | Upon the date of any expiration or termination of this Agreement (and regardless of the reason for such expiration or termination and notwithstanding any provision in this Agreement to the contrary): (i) Emerson shall be permitted, and hereby retains the right without any further action on the part of the parties, to continue to exercise all of its license rights under this Agreement (including the ability to |
10. | Notwithstanding anything to the contrary in this Agreement, Software License Agreement identified by Contract ID# 90439 entered into between Old AspenTech and Emerson effective March 31, 2018 (the “Existing Software License Agreement”) (as the same may be amended by the parties in writing from time to time) shall remain in full force and effect. |
1. | Signature of this Cover Page by both parties shall establish conclusive evidence of the arrangement between them regardless of whether either party may issue additional documents, including issuance by Emerson of a purchase order with respect to this Agreement. |
2. | Any Purchase Orders issued by Emerson under this Agreement must contain a specific reference to this Agreement and must satisfy the requirements of Annex 4 - Purchase Order Requirements to Exhibit B - Products, Commissions, Discounts and Fees. |
3. | AspenTech will reference Emerson’s Purchase Order number in invoices issued hereunder; however, (i) AspenTech expressly rejects any terms or conditions in any Emerson Purchase Order that conflict with the terms of this Agreement and (ii) Emerson expressly rejects any terms or conditions in AspenTech documents that conflict with the terms of this Agreement. |
4. | If AspenTech signs and returns to Emerson an Emerson Purchase Order or copy thereof, the parties agree that such AspenTech signature does not signify AspenTech's acceptance of any terms that conflict with those set forth in this Agreement. If Emerson signs and returns to AspenTech any document provided by AspenTech in connection with this Agreement, the parties agree that such Emerson signature does not signify Emerson's acceptance of any terms that conflict with those set forth in this Agreement. For purposes of clarification, any license agreement entered into and executed by both AspenTech and Emerson in connection with the Exception Review Process as provided for in Exhibit G shall not be deemed as having terms that conflict with those set forth in this Agreement. |
5. | The parties’ signatures below, whether manual or electronic and including signatures on counterpart signature pages, establish conclusive evidence of the arrangement, regardless of whether a purchase order is also issued. Executed signature pages sent by email scan, facsimile or otherwise by photocopy are valid means of signature and delivery. |
Aspen Technology, Inc. | | | Fisher-Rosemount Systems, Inc. | ||||||
| | | | An Emerson Automation Solutions company | |||||
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By: | | | | | By: | | | ||
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Name: | | | | | Name: | | | ||
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Title: | | | | | Title: | | | ||
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Date: | | | | | Date: | | | ||
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Emersub CX, Inc. | | | | | |||||
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By: | | | | | | | |||
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Name: | | | | | | | |||
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Title: | | | | | | | |||
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Date: | | | | | | |
(i) | is or becomes publicly known through no wrongful act or failure to act on the part of Emerson; or |
(ii) | is rightfully known by Emerson without any proprietary restrictions at the time of receipt of such information from AspenTech, or becomes rightfully known to Emerson without proprietary restrictions from a source other than AspenTech; or |
(iii) | is required by law to be disclosed by Emerson, provided that Emerson, if legally permissible, promptly notifies AspenTech and takes reasonable steps to limit such disclosure to such legal requirements; or |
(iv) | is independently developed by any employee or agent of Emerson who has not used the Software, seen a demonstration of the Software, received training on the Software, or received or been informed of information about the Software in the course of distributing models developed with the Software, or providing technical support, implementation and/or consulting support and configuration services to AspenTech licensees of the Software pursuant to this Agreement. |
• | aspenONE® Engineering suite |
○ | Account name and address |
○ | Emerson Sales Representative contact information |
○ | Annual Spend and license type |
1) | End customer names, address |
2) | Billing name, address of Emerson or its Affiliate |
3) | Ship to address |
4) | Product detail, quantities, price to be paid by Emerson under this Agreement |
5) | Payment terms corresponding to those required under this Agreement |
6) | Payment amount and schedule (see example payment table below) |
7) | Machine Locking ID (if applicable) |
8) | Start Date |
| Payment Amount (USD) | | | Due Date | |
| $ | | | Net [***] days from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
1. | License fees are payable in annual installments in advance and, unless agreed otherwise by the parties in writing, the license fees [***] per year. Undisputed invoices for license fees are payable on or before the applicable due date specified in the Purchase Order. AspenTech will issue an invoice for the initial installment upon shipment and will invoice each subsequent invoice at least [***] days before the applicable due date. AspenTech will issue invoices to the Emerson address specified in the Purchase Order or to such other address as Emerson may designate upon written notice received by AspenTech. |
2. | All payments must be in U.S. Dollars. Emerson shall make all undisputed payments required under the Purchase Order without setoff, counterclaim or other defense. |
3. | If Emerson fails to make an undisputed payment when due, AspenTech will send the past-due invoice to Emerson with notice of late payment. Late payment charges of the lower of [***] per month and the maximum statutory rate permitted under applicable law will accrue on all invoiced amounts that conform to the Purchase Order commencing [***] days from the date of such notice and will continue to accrue until the undisputed outstanding invoice is paid in full. Late charges are payable in full within [***] days of the invoice date. |
4. | If Emerson fails to pay all outstanding and undisputed license fees within [***] days of the date of a written past-due notice provided by AspenTech to Emerson, AspenTech may terminate the purchase order or may suspend performance of SMS until all outstanding license fees and late charges are paid in full. |
5. | [RESERVED.] |
6. | AspenTech will deliver to Emerson at the location and on the date specified in the Purchase Order (or as otherwise designated by Emerson in writing) one copy of the Software and any license keys or dongles necessary or required for such Software to function. AspenTech will deliver either electronically or via physical shipment. Electronic delivery will be [***] when AspenTech makes access to the Software available to Emerson or the end user, as applicable, and the ship-to party has the ability to use the Software. Physical delivery will be [***] designated in the applicable Purchase Order. All risk of loss during carriage/transportation shall be the responsibility of AspenTech. Emerson has no obligation to obtain insurance while the Software is in transit from AspenTech to Emerson. Software is deemed delivered when made available for download or is shipped. AspenTech is not responsible for installation. |
7. | Either party may terminate the Purchase Order upon [***] days’ written notice if the other party breaches its obligations under the Purchase Order and fails to cure the breach by the end of the notice period. Upon termination of a Purchase Order by AspenTech for cause, the license associated with the terminated Purchase Order shall automatically terminate and all license fees outstanding or due thereunder in the future shall automatically accelerate and be immediately due and payable in full. Upon termination of a Purchase Order by Emerson for cause, the parties will meet and mutually agree upon a remedy, which may include issuance of a credit memo or cash refund. Emerson further reserves any and all damages (both at law and in equity) to which it may entitled. |
8. | [Reserved] |
9. | The term for each license granted under this purchase order commences on the start date indicated in the purchase order and expires at the end of the specified license term. Emerson has no right of refund or return after shipment of the license key(s) unless there is a dispute about AspenTech’s performance, in which case the parties shall meet and mutually agree upon a remedy, [***]. Upon expiration or termination of the license, Emerson shall promptly: (i) use commercially reasonable efforts to return or cause the end user to return to AspenTech all Software and proprietary information and all copies thereof associated with this purchase order; (ii) use commercially reasonable efforts to ensure that all Software has been erased from the memory of the end user’s computer(s) and storage devices or rendered non-readable; (ii) use commercially reasonable efforts to return or cause end user to return all Dongles provided by AspenTech; and (iv) certify in writing that Emerson has satisfied its obligations hereunder. |
1) | [***] |
2) | [***] |
3) | [***] |
4) | [***] |
5) | [***] |
6) | [***] |
4. | All economic terms of this Agreement shall be reviewed by the parties commencing 60 days prior to January 1, 2023 and annually thereafter, and the parties shall mutually agree upon any necessary modifications thereto (including those based on the parties’ current understanding of applicable markets), which shall be implemented on January 1, 2023 and each January 1 thereafter while this Agreement is in effect; provided that such modifications shall be intended to permit Emerson to be and remain competitive in markets (including markets in which the Software has not previously been marketed or sold). The parties will also review AspenTech’s sales and support organization associated with this arrangement with Emerson to ensure alignment between the parties with respect thereto. |
5. | This Agreement shall continue in effect through the end of the day before the fifth anniversary of the Closing Date unless renewed or terminated earlier in accordance with the terms hereof. |
6. | This Agreement will renew for successive five-year renewal terms unless either party provides at least 90 days’ written notice to the other party prior to the end of the then-current term. |
7. | If following the Closing Date, Emerson Electric Co. holds 40% or less of the voting power in New AspenTech for more than six consecutive months, each of Emerson and AspenTech shall have the right to terminate this Agreement in the sole discretion of the terminating party upon providing written notice to the other party. |
8. | Either party may terminate this Agreement upon 30 days' written notice if the other party breaches its obligations under this Agreement and fails to cure the breach by the end of the notice period. Either party may terminate this Agreement immediately upon written notice if the other party makes an assignment for the benefit of its creditors, becomes insolvent, or is the subject of a voluntary or involuntary petition in bankruptcy, receivership, or similar proceeding and such proceeding is not dismissed within 90 days of filing. Termination hereunder shall have no effect on the timely fulfillment of, and payments due or coming due with respect to, Emerson orders for Software and/or SMS issued pursuant to this Agreement prior to the date of termination or during the Wind-down Period. The termination or expiration of this Agreement shall not affect in any way any licenses granted to clients prior to such termination or expiration or during the Wind-down Period. Understanding fully the risk that this Agreement may be terminated or may expire as provided herein, each party agrees that in the event of termination for any reason other than for cause due to breach, the other party shall not be liable solely by reason of such termination for damages or otherwise, including on account of the loss of present or prospective profits, for expenditures, investments, or opportunities forgone, or for the inability to fulfill contracts under this Agreement, or otherwise. |
9. | Upon the date of any expiration or termination of this Agreement (and regardless of the reason for such expiration or termination and notwithstanding any provision in this Agreement to the contrary): (i) Emerson shall be permitted, and hereby retains the right without any further action on the part of the parties, to continue to exercise all of its license rights under this Agreement (including the ability to |
10. | Notwithstanding anything to the contrary in this Agreement, Software License Agreement identified by Contract ID# 90439 entered into between Old AspenTech and Emerson effective March 31, 2018 (the “Existing Software License Agreement”) (as the same may be amended by the parties in writing from time to time) shall remain in full force and effect. |
1. | Signature of this Cover Page by both parties shall establish conclusive evidence of the arrangement between them regardless of whether either party may issue additional documents, including issuance by Emerson of a purchase order with respect to this Agreement. |
2. | Any Purchase Orders issued by Emerson under this Agreement must contain a specific reference to this Agreement and must satisfy the requirements of Annex 4 - Purchase Order Requirements to Exhibit B - Products, Commissions, Discounts and Fees. |
3. | AspenTech will reference Emerson’s Purchase Order number in invoices issued hereunder; however, (i) AspenTech expressly rejects any terms or conditions in any Emerson Purchase Order that conflict with the terms of this Agreement and (ii) Emerson expressly rejects any terms or conditions in AspenTech documents that conflict with the terms of this Agreement. |
4. | If AspenTech signs and returns to Emerson an Emerson Purchase Order or copy thereof, the parties agree that such AspenTech signature does not signify AspenTech's acceptance of any terms that conflict with those set forth in this Agreement. If Emerson signs and returns to AspenTech any document provided by AspenTech in connection with this Agreement, the parties agree that such Emerson signature does not signify Emerson's acceptance of any terms that conflict with those set forth in this Agreement. For purposes of clarification, any license agreement entered into and executed by both AspenTech and Emerson in connection with the Exception Review Process as provided for in Exhibit G shall not be deemed as having terms that conflict with those set forth in this Agreement. |
5. | The parties’ signatures below, whether manual or electronic and including signatures on counterpart signature pages, establish conclusive evidence of the arrangement, regardless of whether a purchase order is also issued. Executed signature pages sent by email scan, facsimile or otherwise by photocopy are valid means of signature and delivery. |
Aspen Technology, Inc. | | | Fisher-Rosemount Systems, Inc. | ||||||
| | | | An Emerson Automation Solutions company | |||||
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By: | | | | | By: | | | ||
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Name: | | | | | Name: | | | ||
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Title: | | | | | Title: | | | ||
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Date: | | | | | Date: | | | ||
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Emersub CX, Inc. | | | | | |||||
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By: | | | | | | | |||
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Name: | | | | | | | |||
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Title: | | | | | | | |||
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Date: | | | | | | |
(ii) | is rightfully known by Emerson |
(iii) | is required by law to be disclosed by Emerson, provided that Emerson, if legally permissible, promptly notifies AspenTech and |
(iv) | is independently developed by any |
“Purchase Order” means any purchase orders issued by Emerson to AspenTech under this Agreement for Software and/or SMS and which, with respect to Sell-Through Orders and Fulfillment Orders, satisfies the requirements of Annex 4 - Purchase Order Requirements to Exhibit B - Products, Commissions, Discounts and Fees. If there is a conflict between the terms of this Agreement and the terms set forth in any Purchase Order, the terms of this Agreement shall control and prevail. |
• | aspenONE® Engineering suite |
○ | Account name and address |
○ | Emerson Sales Representative contact information |
○ | Annual Spend and license type |
2) | Billing name, address of Emerson or its Affiliate |
3) | Ship to |
4) | Product detail, quantities, price to be paid by Emerson under this Agreement |
Start Date |
| | | Due Date | | |
| $ | | | Net [***] days from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
1. | License fees are payable in annual installments in advance and, unless agreed otherwise by the parties in writing, the license fees [***] per year. Undisputed invoices for license fees are payable on or before the applicable due date specified in the Purchase Order. AspenTech will issue an invoice for the initial installment upon shipment and will invoice each subsequent invoice at least [***] days before the applicable due date. AspenTech will issue invoices to the Emerson address specified in the Purchase Order or to such other address as Emerson may designate upon written notice received by AspenTech. |
If Emerson fails to pay all outstanding and undisputed license fees within [***] days of the date of a written past-due notice provided by AspenTech to Emerson, AspenTech may terminate the purchase order or may suspend performance of SMS until all outstanding license fees and late charges are paid in full. |
5. | [RESERVED.] |
6. |
7. | Either party |
1) | [***] |
Annex 5 |
4. | All economic terms of this Agreement shall be reviewed by the parties commencing 60 days prior to January 1, 2023 and annually thereafter, and the parties shall mutually agree upon any necessary modifications thereto (including those based on the parties’ current understanding of applicable markets), which shall be implemented on January 1, 2023 and each January 1 thereafter while this Agreement is in effect; provided that such modifications shall be intended to permit Emerson to be and remain competitive in markets (including markets in which the Software has not previously been marketed or sold). The parties will also review AspenTech’s sales and support organization associated with this arrangement with Emerson to ensure alignment between the parties with respect thereto. |
5. | This Agreement shall continue in effect through the end of the day before the fifth anniversary of the Closing Date unless renewed or terminated earlier in accordance with the terms hereof. |
6. | This Agreement will renew for successive five-year renewal terms unless either party provides at least 90 days’ written notice to the other party prior to the end of the then-current term. |
7. | If following the Closing Date, Emerson Electric Co. holds 40% or less of the voting power in New AspenTech for more than six consecutive months, each of Emerson and AspenTech shall have the right to terminate this Agreement in the sole discretion of the terminating party upon providing written notice to the other party. |
8. | Either party may terminate this Agreement upon 30 days' written notice if the other party breaches its obligations under this Agreement and fails to cure the breach by the end of the notice period. Either party may terminate this Agreement immediately upon written notice if the other party makes an assignment for the benefit of its creditors, becomes insolvent, or is the subject of a voluntary or involuntary petition in bankruptcy, receivership, or similar proceeding and such proceeding is not dismissed within 90 days of filing. Termination hereunder shall have no effect on the timely fulfillment of, and payments due or coming due with respect to, Emerson orders for Software and/or SMS issued pursuant to this Agreement prior to the date of termination or during the Wind-down Period. The termination or expiration of this Agreement shall not affect in any way any licenses granted to clients prior to such termination or expiration or during the Wind-down Period. Understanding fully the risk that this Agreement may be terminated or may expire as provided herein, each party agrees that in the event of termination for any reason other than for cause due to breach, the other party shall not be liable solely by reason of such termination for damages or otherwise, including on account of the loss of present or prospective profits, for expenditures, investments, or opportunities forgone, or for the inability to fulfill contracts under this Agreement, or otherwise. |
9. | Upon the date of any expiration or termination of this Agreement (and regardless of the reason for such expiration or termination and notwithstanding any provision in this Agreement to the contrary): (i) Emerson shall be permitted, and hereby retains the right without any further action on the part of the parties, to continue to exercise all of its license rights under this Agreement (including the ability to |
10. | Notwithstanding anything to the contrary in this Agreement, Software License Agreement identified by Contract ID# 90439 entered into between Old AspenTech and Emerson effective March 31, 2018 (the “Existing Software License Agreement”) (as the same may be amended by the parties in writing from time to time) shall remain in full force and effect. |
1. | Signature of this Cover Page by both parties shall establish conclusive evidence of the arrangement between them regardless of whether either party may issue additional documents, including issuance by Emerson of a purchase order with respect to this Agreement. |
2. | Any Purchase Orders issued by Emerson under this Agreement must contain a specific reference to this Agreement and must satisfy the requirements of Annex 4 - Purchase Order Requirements to Exhibit B - Products, Commissions, Discounts and Fees. |
3. | AspenTech will reference Emerson’s Purchase Order number in invoices issued hereunder; however, (i) AspenTech expressly rejects any terms or conditions in any Emerson Purchase Order that conflict with the terms of this Agreement and (ii) Emerson expressly rejects any terms or conditions in AspenTech documents that conflict with the terms of this Agreement. |
4. | If AspenTech signs and returns to Emerson an Emerson Purchase Order or copy thereof, the parties agree that such AspenTech signature does not signify AspenTech's acceptance of any terms that conflict with those set forth in this Agreement. If Emerson signs and returns to AspenTech any document provided by AspenTech in connection with this Agreement, the parties agree that such Emerson signature does not signify Emerson's acceptance of any terms that conflict with those set forth in this Agreement. For purposes of clarification, any license agreement entered into and executed by both AspenTech and Emerson in connection with the Exception Review Process as provided for in Exhibit G shall not be deemed as having terms that conflict with those set forth in this Agreement. |
5. | The parties’ signatures below, whether manual or electronic and including signatures on counterpart signature pages, establish conclusive evidence of the arrangement, regardless of whether a purchase order is also issued. Executed signature pages sent by email scan, facsimile or otherwise by photocopy are valid means of signature and delivery. |
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(i) | is or becomes publicly known through no wrongful act or failure to act on the part of Emerson; or |
(ii) | is rightfully known by Emerson without any proprietary restrictions at the time of receipt of such information from AspenTech, or becomes rightfully known to Emerson without proprietary restrictions from a source other than AspenTech; or |
(iii) | is required by law to be disclosed by Emerson, provided that Emerson, if legally permissible, promptly notifies AspenTech and takes reasonable steps to limit such disclosure to such legal requirements; or |
(iv) | is independently developed by any employee or agent of Emerson who has not used the Software, seen a demonstration of the Software, received training on the Software, or received or been informed of information about the Software in the course of distributing models developed with the Software, or providing technical support, implementation and/or consulting support and configuration services to AspenTech licensees of the Software pursuant to this Agreement. |
• | aspenONE® Engineering suite |
○ | Account name and address |
○ | Emerson Sales Representative contact information |
○ | Annual Spend and license type |
1) | End customer names, address |
2) | Billing name, address of Emerson or its Affiliate |
3) | Ship to address |
4) | Product detail, quantities, price to be paid by Emerson under this Agreement |
5) | Payment terms corresponding to those required under this Agreement |
6) | Payment amount and schedule (see example payment table below) |
7) | Machine Locking ID (if applicable) |
8) | Start Date |
| Payment Amount (USD) | | | Due Date | |
| $ | | | Net [***] days from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
| $ | | | [***] months from Start Date | |
1. | License fees are payable in annual installments in advance and, unless agreed otherwise by the parties in writing, the license fees [***] per year. Undisputed invoices for license fees are payable on or before the applicable due date specified in the Purchase Order. AspenTech will issue an invoice for the initial installment upon shipment and will invoice each subsequent invoice at least [***] days before the applicable due date. AspenTech will issue invoices to the Emerson address specified in the Purchase Order or to such other address as Emerson may designate upon written notice received by AspenTech. |
2. | All payments must be in U.S. Dollars. Emerson shall make all undisputed payments required under the Purchase Order without setoff, counterclaim or other defense. |
3. | If Emerson fails to make an undisputed payment when due, AspenTech will send the past-due invoice to Emerson with notice of late payment. Late payment charges of the lower of [***] per month and the maximum statutory rate permitted under applicable law will accrue on all invoiced amounts that conform to the Purchase Order commencing [***] days from the date of such notice and will continue to accrue until the undisputed outstanding invoice is paid in full. Late charges are payable in full within [***] days of the invoice date. |
4. | If Emerson fails to pay all outstanding and undisputed license fees within [***] days of the date of a written past-due notice provided by AspenTech to Emerson, AspenTech may terminate the purchase order or may suspend performance of SMS until all outstanding license fees and late charges are paid in full. |
5. | [RESERVED.] |
6. | AspenTech will deliver to Emerson at the location and on the date specified in the Purchase Order (or as otherwise designated by Emerson in writing) one copy of the Software and any license keys or dongles necessary or required for such Software to function. AspenTech will deliver either electronically or via physical shipment. Electronic delivery will be [***] when AspenTech makes access to the Software available to Emerson or the end user, as applicable, and the ship-to party has the ability to use the Software. Physical delivery will be [***] designated in the applicable Purchase Order. All risk of loss during carriage/transportation shall be the responsibility of AspenTech. Emerson has no obligation to obtain insurance while the Software is in transit from AspenTech to Emerson. Software is deemed delivered when made available for download or is shipped. AspenTech is not responsible for installation. |
7. | Either party may terminate the Purchase Order upon [***] days’ written notice if the other party breaches its obligations under the Purchase Order and fails to cure the breach by the end of the notice period. Upon termination of a Purchase Order by AspenTech for cause, the license associated with the terminated Purchase Order shall automatically terminate and all license fees outstanding or due thereunder in the future shall automatically accelerate and be immediately due and payable in full. Upon termination of a Purchase Order by Emerson for cause, the parties will meet and mutually agree upon a remedy, which may include issuance of a credit memo or cash refund. Emerson further reserves any and all damages (both at law and in equity) to which it may entitled. |
8. | [Reserved] |
9. | The term for each license granted under this purchase order commences on the start date indicated in the purchase order and expires at the end of the specified license term. Emerson has no right of refund or return after shipment of the license key(s) unless there is a dispute about AspenTech’s performance, in which case the parties shall meet and mutually agree upon a remedy, [***]. Upon expiration or termination of the license, Emerson shall promptly: (i) use commercially reasonable efforts to return or cause the end user to return to AspenTech all Software and proprietary information and all copies thereof associated with this purchase order; (ii) use commercially reasonable efforts to ensure that all Software has been erased from the memory of the end user’s computer(s) and storage devices or rendered non-readable; (ii) use commercially reasonable efforts to return or cause end user to return all Dongles provided by AspenTech; and (iv) certify in writing that Emerson has satisfied its obligations hereunder. |
1) | [***] |
2) | [***] |
3) | [***] |
4) | [***] |
5) | [***] |
6) | [***] |
1. | Taxes. All amounts payable by Emerson hereunder are exclusive of all withholding, excise, sales, use, value added, consumption, transfer and other taxes and duties, however designated, that may be imposed by any federal, state, municipal or other governmental authority with respect to a transaction. AspenTech shall invoice for all such taxes and Emerson must pay all such taxes except for taxes on AspenTech's net income. If applicable, Emerson shall be responsible for obtaining and providing to AspenTech any certificate of exemption or similar document required to exempt Emerson from sales, use or similar tax liability with respect to a transaction hereunder. Emerson shall be fully responsible for payment of all income taxes, VAT, or other taxes on amounts received by Emerson pursuant to this Agreement. If Emerson is required to withhold tax on any amounts payable under this Agreement, Emerson shall be responsible for the payment of such tax and shall pay AspenTech the full amount invoiced without any deduction for such withholding tax. If AspenTech is required to collect any taxes from Emerson, AspenTech shall invoice for the same, Emerson shall pay such invoiced taxes, and AspenTech will remit amounts collected to the appropriate taxing jurisdiction. |
2. | Payment and Remedies for Late Payment. Unless otherwise mutually agreed upon by the parties in writing, payment terms for all amounts to be paid hereunder shall be as set forth in Exhibits E - OEM Terms and F - Channel Terms. |
3. | Record-Keeping. Emerson shall make and keep accurate books, records and accounts of all transactions executed by Emerson in the course of its appointment pursuant to this Agreement and shall maintain complete records of the disposition of all Software and related technical data under this Agreement, showing at least username, ultimate destination, product number and date of license or other disposition of all Software and related technical data. Emerson shall answer in reasonable detail any questionnaire or other communication from AspenTech, its outside auditors, and/or any accredited representative of the U.S. Government reasonably requested to establish compliance with the representations and warranties undertaken by Emerson hereunder, provided such questionnaire or communication from AspenTech or its auditors is made on a reasonable recurring time basis. AspenTech shall make and keep accurate books, records and accounts of all of the AspenTech Standard List Pricing for the Software and all of AspenTech’s transactions made in the course of this Agreement and shall maintain complete records of the disposition of all Software and related technical data under this Agreement. AspenTech shall answer in reasonable detail any questionnaire or other communication from Emerson, its outside auditors, and/or any accredited representative of the U.S. Government reasonably requested to establish compliance with the representations and warranties undertaken by AspenTech hereunder (including, then current AspenTech Standard List Pricing for the Software), provided such questionnaire or communication from Emerson or its auditors is made on a reasonable recurring time basis. |
4. | Audit Rights. At any time while this Agreement is in effect and for [***] after expiration or termination thereof but not more than once in each consecutive [***], upon ten days’ written notice from AspenTech, Emerson shall provide AspenTech access to relevant Emerson books and records and shall provide data regarding usage of Software or allow AspenTech reasonable access for the purpose of retrieving such data for the sole purpose of verifying compliance with the provisions of this Agreement. Such data may be in the form of usage logs or other discrete data, in electronic or hardcopy format. AspenTech will not disclose such information to any third party, except to enforce AspenTech's rights. Upon reasonable written notice to Emerson but not more than once annually, during normal business hours, at AspenTech's expense, and subject to Emerson security policies, AspenTech or its authorized representative may audit Emerson records relating to compliance with the terms of this Agreement, including payment records, computer names/usernames/departments and location information found on each SLM Server, and other physical and electronic data concerning all Software usage at any or all Emerson or Emerson Affiliate locations worldwide. Any audit or examination shall be performed at the expense of AspenTech and shall be subject to the reasonable security requirements and confidentiality requirements of Emerson and shall be conducted in a manner so as to minimize disruption to the business operations of Emerson. At any time while this Agreement is in effect and for [***] after expiration or termination thereof but not more than once in each consecutive [***] period, upon [***] written notice from Emerson, AspenTech shall provide Emerson |
5. | Force Majeure. Either party's failure to perform its obligations under this Agreement will not be deemed a breach of this Agreement to the extent that such failure is due to a Force Majeure. Failure to perform will be excused by Force Majeure hereunder only during the period that the Force Majeure prevents performance. The time for performance shall be suspended for the duration of such Force Majeure up to [***], upon which the party not relying on the Force Majeure event to avoid performance may elect to terminate this Agreement on [***] prior written notice to the other party. Further, the party seeking to claim excuse from performance shall promptly notify the other party in writing of the Force Majeure event, the anticipated duration of the event, and the actions the party is taking to mitigate the event. |
6. | Assignment/Change in Control. Except for an assignment of this Agreement (including all Purchase Orders) or any one or more Purchase Orders by Emerson to an Emerson Affiliate, neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other party. Except as provided with respect to the transaction and merger specified at Part I, Section 1 of the Cover Page, a change of control of either party shall constitute an assignment of this Agreement by such party; provided that (i) the sale, transfer or other disposition by Emerson Electric or its subsidiaries (other than New AspenTech or its subsidiaries) of any shares or equity interests in New AspenTech or any successor to New AspenTech shall not constitute an assignment of this Agreement; (ii) a change of control of Emerson Electric shall not constitute an assignment of this Agreement; and (iii) a change of control in Emerson in conjunction with a transaction described in clause (i) of this proviso shall not constitute an assignment of this Agreement. |
7. | Injunctive Relief. Any breach of this Agreement that adversely affects either party's intellectual property rights might give rise to irreparable injury to the non-breaching party for which money damages would not be adequate compensation. In addition to any other legal remedies that may be available, the non-breaching party will be entitled to seek injunctive relief against such breach or threatened breach. |
8. | Exclusion of Damages. Neither party shall be liable under the agreement for any special, indirect, punitive, exemplary, incidental or consequential damages, or any damages arising from the loss of use, data or profits, even if THE PARTY has been advised of the possibility of such damages. EXCEPT FOR A PARTY’S INDEMNIFICATION OBLIGATIONS AND DAMAGES ARISING OUT OF BREACH OF THE LICENSE RESTRICTIONS AND PROVISIONS PERTAINING TO OWNERSHIP AND PROPRIETARY RIGHTS AND DAMAGES ARISING OUT OF UNAUTHORIZED DISCLOSURE, MISUSE OR MISAPPROPRIATION OF A PARTY'S INTELLECTUAL PROPERTY, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, EXPENSES, LOST PROFITS, OR ANY OTHER DAMAGES ARISING OUT OF THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. |
9. | Limitation of Liability. Except for any amounts due and payable under the agreement, in no event will either party’s aggregate liability under the agreement exceed [***]. |
10. | Exclusions. Sections 8 and 9 shall not apply with respect to: (i) a breach by either party of its confidentiality obligations under this Agreement; (ii) either party’s indemnification obligations under this Agreement; (iii) infringement, misappropriation or other violations of intellectual property rights; (iv) gross negligence; or (v) willful misconduct. |
11. | Independent Contractor. Emerson acknowledges that it is an independent contractor, and the employees of either party shall not be deemed to be the employees of the other. Nothing in this Agreement shall be construed to create a commercial agency, nor shall Emerson be deemed a franchisee, broker, employee, master or servant of AspenTech. AspenTech and Emerson agree that this Agreement shall not be registered in any commercial agency registry or similar official depository. |
12. | Costs and Expenses. It is expressly understood and agreed that neither party is under any obligation or requirement to reimburse the other party for any expenses or costs incurred by a party in the performance of its responsibilities under this Agreement. Any costs or expenses incurred by a party shall be at such party’s sole risk, and upon its independent business judgment that such costs and expenses are appropriate. |
13. | Compliance with Law. Each party agrees to comply with, and to cause its officers, employees, agents, contractors, subcontractors and consultants to comply with, all applicable laws, regulations, rulings, and executive orders of the United States and any other government(s) with jurisdiction over the party with respect to the matters set forth in this Agreement. |
14. | FCPA. Each party specifically represents and warrants that it is familiar with the U.S. Foreign Corrupt Practices Act, including the anti-bribery provisions thereof, and agrees to comply therewith. Neither party shall make any improper payments, loans, gifts (or promises of any such act) to any government official or employee, or any other person to whom such a payment would be unlawful under the FCPA. |
15. | Export Compliance. The Software may be restricted by U.S. Government export control laws from export to certain countries and certain organizations and individuals. Each party agrees to comply with such restrictions. Each party shall furnish any documents reasonably required by the other party in order to file an application for U.S. export licenses if any are required, and Emerson shall obtain and maintain any required import license, exchange permit or other necessary authorization from or any government(s) for distribution of the Software by Emerson within such jurisdictions. Each party will execute a letter of assurance for export control purposes upon request by the other party. |
16. | Boycotts. Emerson shall refuse any request to comply with, and shall provide to AspenTech information related to, a foreign country's embargo or boycott of Israel. Emerson will comply with the Export Administration Regulations, 15 CFR, Part 760 (Restrictive Trade Practices or Boycotts). |
17. | Dispute Resolution. Any and all disputes arising out of or in connection with this Agreement shall be escalated first to the parties’ senior management. In the event such senior management is unable to resolve such dispute, such dispute shall be escalated to the parties’ respective chief executive officers. In the event the parties’ chief executive officers are unable to resolve such dispute, such dispute shall be resolved through arbitration or litigation in the courts of the State of Delaware. |
18. | Governing Law. Regardless of where any action may be brought, the validity and performance of this Agreement will be governed by the laws of the State of Delaware, USA, without regard to its rules on conflicts of law. The parties exclude application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods. |
19. | Construction. This Agreement shall be construed as a whole in order to harmonize and give effect to all provisions hereof, so that none are rendered meaningless. |
20. | Entire Agreement. This Agreement (i) constitutes the complete and exclusive statement of the terms and conditions between the parties with respect to the matters set forth herein; (ii) is intended by the parties as a final expression of their agreement with respect to the terms hereof; and (iii) except as otherwise expressly provided herein, supersedes all other agreements, purchase orders, negotiations, representations, tender documents, and proposals, written or oral, with respect to the matters set forth herein. With respect to the matters set forth herein, each party expressly rejects any terms or conditions in any document or instrument provided by the other or any other communication from the other party that are additional to, or different from, the terms of this Agreement. For the avoidance of doubt and except as set forth in Part I of this Agreement, this Agreement does not supersede or terminate in any manner: (i) the Existing Software License Agreement and (ii) the Software License Agreement between Emerson and Old AspenTech dated [***]. |
21. | English Language. This Agreement is purposefully written only in the English language, which shall be the official language governing any interpretation hereof. |
22. | Counterpart Originals. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single instrument. |
23. | Amendment. Any modification of this Agreement must be in a writing manually signed by authorized representatives of the parties and specifically identified as a modification hereof. |
24. | No Waiver. Failure or delay of either party to exercise any right or remedy under this Agreement shall not constitute a waiver of rights or remedies hereunder. |
25. | Severability. If any provision of this Agreement is held unenforceable or inoperative by any court of competent jurisdiction, either in whole or in part, the remaining provisions shall be given full force and effect to the extent not inconsistent with the original terms of this Agreement. |
26. | Notices. Any notice given under this Agreement must be sent in writing to the other party's designated representative for formal notices specified in Exhibit I - Designated Representatives or to such other address most recently designated by such party to the other party in writing. Emerson shall promptly notify AspenTech of any change in the Emerson billing address. |
27. | Survival. Notwithstanding any provision of this Agreement to the contrary, the expiration or termination of this Agreement shall not relieve the parties of any obligations that, by their nature, survive such expiration or termination, including warranty, indemnity, audit rights, governing law, and obligations regarding confidential information, taxes, and intellectual property. |
28. | Confidentiality. Except for disclosures to their respective Affiliates and legal and financial advisors, both parties shall maintain the terms and conditions of this Agreement in confidence. Further, all information of a party or its Affiliates furnished or otherwise obtained pursuant to this Agreement shall be subject to the confidentiality terms included in the Stockholders Agreement among Emerson Electric Co., EMR Worldwide Inc. and New AspenTech (regardless of whether such terms are, or such agreement is, terminated or expired). |
29. | Indemnification. (a) AspenTech and its Affiliates shall indemnify and hold harmless Emerson and its Affiliates from and against any and all losses and damages arising from or relating to (i) claims that Software infringes, misappropriates or otherwise violates any third-party intellectual property rights, (ii) third party claims relating to Fulfillment Orders except to the extent the claims arise from Emerson’s negligence, and (iii) AspenTech’s and its Affiliates’ gross negligence, willful misconduct or violation of applicable law. (b) Emerson and its Affiliates shall indemnify and hold harmless AspenTech and its Affiliates from and against any and all losses and damages arising from or relating to Emerson’s and its Affiliates’ gross negligence, willful misconduct or violation of applicable law. |
30. | Software Delivery. The parties shall mutually agree upon the timing and manner of delivery of the Software to Emerson for purposes of the reseller relationship and internal use license granted hereunder. |
31. | Scope of License Rights. Notwithstanding anything in this Agreement to the contrary, each of the following provisions of this Section 31 shall apply: (i) each license granted to Emerson under this Agreement (including all use rights granted therein) shall extend to Emerson, its Affiliates, and their respective contractors and consultants providing services to Emerson or its Affiliates, (ii) all distribution and sub-license rights granted to Emerson under this Agreement shall extend to Emerson and its Affiliates, (iii) Emerson shall be responsible for ensuring that its Affiliates and its and its Affiliates’ permitted contractors and consultants access and use the Software only in accordance with the obligations and restrictions of this Agreement, (iv) in each instance where Emerson has obtained a license to the Software under this Agreement for distribution and use by an end user or for the beneficial use by an end user , Emerson may host (in its discretion and through itself or its contractors provided Emerson or its contractors have obtained AspenTech’s certification to host) and make the Software available for access and use by the end user for the remainder of the term of the license; provided, however, Emerson may only host Software which AspenTech is then making available for use on an on-premise basis; and (v) in each instance where Emerson has obtained a license for an end user under a Sell-Through Order, the term of the license for the Software shall commence upon the date Emerson delivers the Software to the applicable end user. |
32. | Cyber Security; Information Security. |
1. | License Agreements. Pursuant to the terms and conditions of this Agreement (including the terms of this Exhibit D - License Terms), AspenTech will grant and Emerson shall accept non-exclusive licenses to use and to sub-license and distribute the Software as follows. AspenTech specifically reserves all rights not expressly granted under this Agreement. |
2. | Replacement License Keys or Dongles. AspenTech shall issue replacement license keys or dongles so Emerson may use the Software on additional SLM Servers or move the Software from one SLM Server or computer to another, with no change in the license scope. Within [***] of the date a replacement license key or dongle is issued, Emerson must delete the original license key or return the original dongle to AspenTech, as applicable. If Emerson loses a dongle, Emerson must give prompt email notice of the lost dongle to AspenTech Customer Care and must promptly return the dongle if and when it is found. |
3. | SMS. AspenTech will provide all SMS to Emerson for all internal use licenses granted hereunder. Except as provided for in this Agreement, AspenTech will not provide SMS directly to Emerson clients. |
4. | Title. Title to, ownership of, and all rights in patents, copyrights, trade secrets and other intellectual property rights in Software do not transfer to Emerson and (except for the non-exclusive rights granted to Emerson hereunder) shall remain in AspenTech and/or AspenTech's third-party vendors and licensors. |
5. | Benchmarking - Third Parties. Emerson may not engage a third party to perform benchmarking or security testing on the Software unless that third party enters into a written nondisclosure agreement directly with AspenTech. |
6. | [RESERVED] |
7. | Confidentiality. Emerson shall protect Proprietary Information to the same degree Emerson protects its own proprietary information, but with no less than a reasonable degree of care, and in any event shall not use it in any way other than as permitted under this Agreement, or disclose it or permit access thereto to any third party (other than permitted Emerson Affiliates, contractors or consultants or as permitted under this Agreement) without AspenTech's prior written consent, manually signed by an executive officer assigned to AspenTech's headquarters, and subject to the limitations stated herein. If such consent is granted, such third parties shall not be regarded as licensees of AspenTech nor as sublicensees of Emerson. |
8. | Models. Any and all models (including simulation models) created by Emerson or an Emerson Affiliate with the Software shall be owned solely and exclusively by Emerson or the Emerson Affiliate and may, at the discretion of Emerson, be distributed to third parties. |
9. | Emerson Confidential Information. AspenTech acknowledges and agrees that in the course of this Agreement, Emerson may provide AspenTech with confidential information of Emerson or its clients (including clients who are AspenTech licensees). If AspenTech obtains any such confidential Information, AspenTech shall not provide or otherwise disclose it to any third party and shall restrict any and all use of the information solely as necessary to verify compliance by Emerson with the terms of this Agreement. |
10. | Copying. Emerson may make archival or back-up copies of Software as reasonably required by the Emerson network security protocol, provided that all copyright and proprietary notices must be duplicated on each such copy. Emerson shall not make any other copies. Emerson shall not remove any copyright notice of AspenTech or its third-party vendors. |
11. | Interoperability. If applicable law requires that Emerson be able to modify Software to make it inter-operable with other software, AspenTech will, at its option: (i) at the expense of Emerson, use commercially reasonable efforts to make the Software inter-operable with such other software, or license Emerson tools and/or information to make the Software inter-operable; or (ii) grant Emerson the right to make such modifications only to the extent required by law. Any such permitted modifications will constitute Software for purposes of this Agreement. |
12. | Prohibition Against Reverse Engineering. Emerson shall not, nor attempt to, reverse compile, disassemble or otherwise reverse-engineer the Software. The Software may include calculation routines that mimic the operation of plants, processes and/or equipment that Emerson may use to create or augment models of plants, processes or equipment. Such models created or augmented using Software may not be used in machine learning analytics or to reverse-engineer Software in any manner, including by using data processed in Software for the purpose of training any type of third-party artificial intelligence program. |
13. | Restricted Uses. Software may not be used to develop any platforms or programs that have features or functionality similar to the features or functionality of the Software. Emerson may not make any modifications or enhancements to the Software, create any derivative works of Software, or merge or separate Software or any component thereof, including by attempting to train artificial intelligence programs. |
14. | Security. Software may contain license management technology that must be activated in order for the Software to function, and may include a hardware lock device, license administration software, and/or a license authorization key to control access to the Software and identify and deter any use of the Software in violation of this Agreement. Emerson shall not take any action to knowingly modify or avoid or defeat the purpose of any such license management technology. Use of the Software without any required lock device or authorization key is prohibited. AspenTech reserves the right to embed a software security mechanism within the Software to collect, store and transmit to AspenTech or its agent, data relating to the usage of an unauthorized or illegal copy of the Software, including, without limitation, information about the device(s) and location(s) where an unauthorized or illegal copy of the Software is used, the number of times it has been copied, and specific user information of the user of an unauthorized or illegal copy of the Software, such as the username or email address of such unauthorized user. Provided AspenTech complies with all applicable data collection and use laws then in effect, Emerson consents to such collection and transmission of data, as well as its use if an unauthorized or illegal copy is detected. |
15. | Third-Party Software. Emerson shall not (i) separate any embedded third-party software or its components from the Software, (ii) use any such third-party software or its components independently of the Software; (iii) develop and link Emerson's programs with any third-party libraries or classes provided with Software; or (iv) develop or use any runtime configuration tools not provided with Software for the purpose of configuring any third-party runtime components embedded in Software. |
16. | Expiration or Termination. Upon expiration or termination of a license, the right of Emerson to use Software under such expired or terminated license shall end and Emerson shall promptly: (i) return to AspenTech all Software and Proprietary Information and all copies thereof under such expired or terminated license, (ii) except for archival copies, erase all Software under such expired or terminated license from the memory of Emerson's computer(s) and storage devices or render it non-readable, (iii) return all dongles provided by AspenTech for such expired or terminated license, and (iv) certify in writing that Emerson has satisfied its obligations under this Section 16. |
17. | Warranty of No Defects. AspenTech warrants that Software will be free from Defects when delivered. To the maximum extent permitted by applicable law, the exclusive remedy and AspenTech's sole obligation will be to correct or circumvent any Defect reported to AspenTech that causes and continues to cause a system-critical disruption of Emerson business operations; provided, however, that: (i) Emerson must report any Defects to AspenTech promptly after discovery and furnish AspenTech with supporting documentation and details adequate to substantiate the report and assist AspenTech in the identification and detection of such Defect; and (ii) AspenTech is able to reproduce the Defect on properly functioning equipment controlled by AspenTech. This warranty is contingent upon: (x) use of Software in accordance with this Agreement; and (y) no interference from applications, derivative works, or configurations provided by third parties and not specifically recommended by AspenTech. |
18. | Disclaimer. ASPENTECH DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. ASPENTECH DOES NOT WARRANT THAT THE OPERATION OF SOFTWARE WILL BE UNINTERRUPTED OR ERROR-FREE. |
19. | THIRD PARTIES. SOFTWARE MAY CONTAIN FUNCTIONALITY SUPPLIED BY THIRD PARTIES. INCLUDING DEVELOPERS, VENDORS, SUPPLIERS, CONTRACTORS, OR CONSULTANTS. WHILE ASPENTECH SHALL REMAIN RESPONSIBLE FOR ALL OF THE SOFTWARE, INCLUDING ALL FUNCTIONALITY SUPPLIED BY THIRD PARTIES, IN NO EVENT WILL SUCH THIRD PARTIES BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR ANY DAMAGES ARISING FROM THIS AGREEMENT. SUCH THIRD PARTIES ARE BENEFICIARIES OF SOFTWARE LICENSES GRANTED TO Emerson UNDER THIS AGREEMENT. |
20. | Warranty of No Infringement. AspenTech represents and warrants to Emerson that the Software and its use as provided for herein does not, to the knowledge of AspenTech, infringe the intellectual property rights of any third party. |
21. | Infringement Indemnity. AspenTech will defend Emerson, the Emerson Affiliates, and each of their respective successors and assigns, officers, directors, employees, representatives, agents, contractors, customers, and consultants (“Emerson Indemnitees”) against any claims of infringement by any of the Software in the form received from AspenTech of any third party's intellectual property rights and AspenTech will indemnify and hold harmless the Emerson lndemnitees from and against all damages, losses, assessments, penalties, fines, liabilities, costs and expenses awarded against any of the Emerson lndemnitees In any such claim, provided that: (i) Emerson promptly (and in no event more than ten days after receiving written notice of such alleged infringement) notifies AspenTech's General Counsel in writing; (ii) Emerson gives AspenTech the right to control the defense of such claims; and (iii) Emerson fully cooperates with AspenTech (at the cost and expense of AspenTech) in any defense or settlement of such claims. AspenTech has no infringement indemnification obligation except as stated in this Section 21, and this obligation does not apply to infringement arising from: (x) integration or combination of Software together with other software, materials or products not integrated or combined by AspenTech or not specifically recommended by AspenTech in the Software specifications, if the infringement would have been avoided in the absence of such integration or combination; (y) use of the Software for other than its intended purpose; or (z) use of other than the current, unaltered Release if the infringement would have been avoided by the use of such Release and provided AspenTech has made available such Release and Emerson has had a reasonable period of time to implement such Release. |
22. | Remedy. In addition to AspenTech’s indemnification obligations under Section 21, the sole and exclusive remedy of Emerson if a court of competent jurisdiction determines that Software has infringed a third party's U.S. intellectual property rights as specified in Section 21 will be that AspenTech will, in its sole discretion and at its sole cost and expense: (i) replace the infringing Software product with a non-infringing, functionally-compatible product; (ii) modify the product so that it becomes non-infringing, but functionally-compatible; or (iii) obtain a license for Emerson to use the allegedly infringing product. |
23. | Verification. During normal business hours at any time while this Agreement is in effect, AspenTech may, upon reasonable written notice to Emerson and not more than once in each consecutive twelve-month period, examine computer names/usernames/departments and location information found on each SLM Server to confirm and verify that usage of Software by Emerson is in compliance with this Agreement. Such examination shall be performed at AspenTech's expense and conducted in a manner not to impact the business operations of Emerson and subject to Emerson rules and policies for on-site visitation. |
1. | Emerson may, in its sole discretion, embed Software in or include Software with Emerson hardware, software, and systems and distribute and sublicense the combined product to Emerson clients for such amounts, duration, and upon such license terms, as Emerson may elect, provided that such terms must be at least as restrictive as the restrictions and obligations specified at Exhibit K - Form of End User License Terms For Sell-Through Orders and Fulfillment Orders - License Terms with respect to use of Software. |
2. | Emerson shall provide AspenTech access upon request to all documentation between Emerson and its clients establishing the restrictions and obligations with respect to use of Software. |
3. | Emerson will be responsible for providing First-Level Support SMS and Second-Level Support SMS to its clients. |
4. | Emerson and AspenTech will mutually agree on training required to ensure successful deployment and support of OEM Products by Emerson. Training details will be specified in the respective development agreements. |
5. | AspenTech will provide Emerson Third-Level Support SMS. |
6. | Emerson and/or its Affiliates shall, on a quarterly basis and with respect to OEM Transactions, provide AspenTech one or more reports in Microsoft® Excel format identifying the number of Software licenses granted and required SMS from AspenTech; version and configuration; product mix; name of end users; shipment address; and date of shipment (each an “OEM Distribution Report”). The OEM Distribution Reports for each quarter shall be sent to AspenTech within four weeks of the end of the quarter. Each OEM Distribution Report will be accompanied by one or more Purchase Orders issued by Emerson and/or its Affiliates for the Software distributed under each OEM Transaction for the subject OEM Distribution Report. Purchase Orders issued by Emerson and/or its Affiliates shall be provided on a quarterly basis within a commercially reasonable time after the quarter ends. The Purchase Orders will be non-cancelable, only for OEM Products that have been shipped prior to Purchase Order issuance, and contain product details as required by this Agreement. |
7. | AspenTech shall invoice Emerson and its Affiliates on a quarterly basis using the OEM Distribution Reports and applicable Purchase Orders. Such quarterly invoices shall be issued by AspenTech promptly following receipt by AspenTech of such quarterly OEM Distribution Reports. Each such invoice shall be payable as agreed in an applicable development agreement. [***] Emerson will, in its sole discretion, establish the fees payable by the client to Emerson under any OEM Order. For [***] and such other OEM Products as mutually agreed, Purchase Orders will be issued at the time of order and each invoice shall be payable within [***] of the date of the invoice. |
1. | AspenTech hereby appoints Emerson on a non-exclusive basis to promote and solicit Channel Orders on a commission or sell-through basis for the Software and related services on a worldwide basis. This appointment does not limit in any way the right of AspenTech to directly or indirectly market or provide Software or services except as set forth in Exhibit G - Exception Review Process. |
2. | Emerson must register any sales opportunity for the Software that it desires to pursue and which is not a Standard Opportunity, a Fulfillment Order, or an OEM Transaction or otherwise expressly exempted from ERP under this Agreement. Standard Opportunities are excluded from the ERP; provided, however, Emerson shall provide such information as reasonably required by AspenTech on a monthly basis to forecast orders on a non-binding basis. |
3. | [RESERVED.] |
4. | While this Agreement is in effect, Emerson shall receive commissions and/or discounts as specified in Exhibit B - Products, Commissions, Discounts and Fees for Channel Orders that are solicited by Emerson. |
5. | For Commissionable Orders, within [***] of AspenTech's receipt of a commissionable payment from a client for a Commissionable Order, AspenTech will pay Emerson commission at the applicable rate specified in Exhibit B - Products, Commissions, Discounts and Fees. |
6. | For Sell-Through Orders which have been fulfilled by AspenTech pursuant to a Purchase Order issued by Emerson, AspenTech shall invoice Emerson upon fulfillment of each Sell-Through Order based on the applicable pricing and discount specified in Exhibit B - Products, Commissions, Discounts and Fees. Each such invoice shall be payable in full within [***] of the invoice date. [***] Emerson will, in its sole discretion, establish the fees payable by the client to Emerson under any Sell-Through Order. |
7. | No later than [***] after the Closing Date, the parties shall in good faith work with one another to communicate a written description of the ERP as identified in Exhibit G - Exception Review Process to their respective sales channels. Within [***] after the Closing Date, a mutually agreed number of Emerson sales and technical support employees shall complete basic AspenTech sales and technical training and become reasonably proficient in promoting Software. The parties shall further mutually agree upon the amount and type of training AspenTech shall provide to Emerson sales channel and/or service engineers. |
8. | With respect to any client engaged by Emerson under this Agreement, should Emerson know that such client is actively and willfully engaged in the material infringement of the patents, copyrights, trade secrets, trademarks or other proprietary rights of AspenTech in the Software, Emerson shall notify AspenTech of the same. |
9. | Emerson shall not enter into any Sell-Through Order if assignment of the Sell-Through Order by Emerson to AspenTech is not permitted under the terms of the Sell-Through Order or any applicable law. |
10. | Emerson recognizes AspenTech's ownership of and title to its registered and common law trademarks and trade names, and the goodwill attaching thereto, and agrees that any goodwill which accrues because of use by Emerson of the trademarks or trade names of AspenTech in connection with use of the Software by Emerson, or because of any other activity involving the promotion of the Software by Emerson, shall vest in and become the property of AspenTech. Emerson agrees not to contest or take any action to contest AspenTech's registered and common law trademarks or trade names which are not confusingly similar to any registered and common law trademarks or trade names of Emerson, or to use, employ or attempt to register any trademark or any trademark which is confusingly or deceptively similar to AspenTech trademarks or trade names. |
11. | Under this Agreement, Emerson may use AspenTech's name and trade designations only in connection with the promotion of Software and Emerson shall have no other right to use the trademarks and trade names of AspenTech (or of any third parties used in connection with the Software). |
12. | With respect to this Agreement, Emerson shall provide to AspenTech, for prior review and written approval in AspenTech's sole discretion, all promotional or other materials produced by Emerson that use or display AspenTech's trademarks or trade names. |
13. | AspenTech will, at no charge to Emerson, provide Emerson access to marketing materials made available by AspenTech to its channel partners and grant [***] Emerson representatives as designated by Emerson access to the online AspenTech internal sales resource center with download privileges, including access to sales presentations, white papers, videos and brochures and to distribute or otherwise make the same available internally within Emerson and its Affiliates and (with respect to customer facing materials) to the customers and potential customers of Emerson and its Affiliates to facilitate the activities of Emerson under this Agreement. |
14. | Subject at all times to the Wind-down Period, the following consequences will result immediately upon termination or expiration of this Agreement. |
i. | All manner of appointment and license grant by AspenTech to Emerson shall terminate; provided however, for any Channel Order actively being pursued by Emerson as of the date of termination or expiration of this Agreement, the parties must mutually agree whether Emerson may continue to pursue such Channel Order. |
ii. | AspenTech may cease shipping Software under this Agreement, and any outstanding payment obligations of Emerson and/or AspenTech under this Agreement will become immediately due and payable in full. |
iii. | Emerson shall: (i) cease to hold itself out as a representative with respect to Software; (ii) cease all activity related to this Agreement; (iii) advise each client and prospect in writing that Emerson is no longer an authorized representative or distributor with respect to Software, and take no action that could adversely affect AspenTech's reputation or goodwill with such parties; and (iv) cease using and deliver to AspenTech or destroy, at the sole expense of Emerson, all Software, Proprietary Information of AspenTech, and any other materials that display any trademark or trade names of AspenTech, that were received under this Agreement and all copies thereof in the possession of Emerson except for archival copies. An officer or director of Emerson shall promptly certify in writing to AspenTech that Emerson has complied with this provision. |
iv. | Subject to Section 14(i), at AspenTech's request and unless expressly prohibited by applicable law or the terms of a Sell-Through Order, Emerson shall immediately upon termination of this Agreement: (i) assign to AspenTech any Sell-Through Orders in effect between Emerson and any client, including all rights to receive future payments due under any such Sell-Through Order (whereupon AspenTech shall assume all obligations under and full liability for each assigned Sell-Through Order); and (ii) notify any affected client of such assignment. Upon request by AspenTech, Emerson shall remit to AspenTech all prorated fees paid by the client to Emerson in advance for any portion of the license term of the Sell-Through Order following the date of termination. |
1. | For Channel Orders that are not Standard Opportunities or Fulfillment Orders, Emerson shall register the opportunity at the AspenTech Deal Registration portal located at https://esupport.aspentech.com/s_login and provide AspenTech such information as reasonably required by AspenTech to track pipeline and confirm payment and for forecasting and booking purposes. |
2. | If the registered opportunity is accepted by AspenTech (each a “Registered Exception Opportunity” or “REO”), the following process will, unless otherwise mutually agreed by the parties in writing, be followed by AspenTech Partner Operations. |
2.1 | Each REO will remain an REO until the earliest of the following events. |
2.2. | [***] |
3. | If the registered opportunity is rejected by AspenTech, AspenTech will notify Emerson in writing of the rejection and the basis for the rejection, and Emerson will not pursue the opportunity unless it may be pursued as a Standard Opportunity. |
1. | The parties will explore opportunities to work together to develop mutually beneficial new or enhanced solutions or interfaces between their products. The output of a successful exploration will be a separate written joint development agreement having terms and conditions mutually agreed upon by the parties. |
2. | To the extent a new product is developed under any such joint development agreement, and if the parties mutually agree that such new product will be owned by AspenTech, such product will automatically be subject to the terms of this Agreement. |
3. | AspenTech shall own all intellectual property rights in new applications/solutions developed by or on behalf of AspenTech using the Software. For the avoidance of doubt, Emerson shall own all intellectual property rights in new applications/solutions developed by or on behalf of Emerson (i) for use with the Software or (ii) using development or configuration tools or features of the Software (it being understood that AspenTech shall retain ownership of all intellectual property rights in the Software and any derivatives thereof). |
4. | The parties have identified the following additional activities, among others, as potential candidates for consideration, and may agree to pursue other activities under this Agreement. |
i. | [***] |
ii. | [***] |
iii. | [***] |
iv. | [***] |
v. | [***] |
5. | The parties agree that the provisions of this Exhibit H - Joint Development are non-binding and may be cancelled by either party at any time. |
1. | The parties shall work together to establish the details of the governance and execution model under this Agreement, including Executive Business Reviews, peer mapping and cadence of key stakeholder engagements. The model will include, but not be limited to, the following elements. |
i. | [***] Sales Lead Market Reviews will be conducted within [***] while this Agreement is in effect, commencing with the quarter beginning on the first full calendar month after the Closing Date. The parties will mutually agree on any adjustments to Exhibit B - Products, Commissions, Discounts and Fees that may be appropriate based on then-current market conditions. |
ii. | [***] Executive Business Reviews (Joint Steering Committee) will be established to review the status of execution plan rollout, reporting on key performance indicators (the ERP, revenue, wins, etc.), priorities, focus and conflict resolution. |
iii. | Relationship Development Meetings will be conducted with key stakeholders, including representatives from sales, marketing, services, and product management, to address project execution, sales pipeline, enablement activities, issues and opportunities. |
iv. | [***] review will be conducted as specified in Section 4 of Part 1 of the Cover Page. |
2. | Each party shall appoint an executive responsible for the expansion of the embedding, use and resale of the Software by Emerson. Further, each party will make reasonably appropriate investments to support end users as required in the initial sales pursuit and lifecycle support. |
3. | Emerson agrees to (i) include all jointly agreed upon embedded and select additional Software in the Emerson “price book,” (ii) ensure proper incentives for Emerson sales of the Software, (iii) provide Software and allow AspenTech access to [***], and (iv) commit to a comprehensive technical and sales enablement plan. |
Item 20. | Indemnification of Officers and Directors. |
Item 21. | Exhibits and Financial Statement Schedules. |
Exhibit No. | | | Description |
| | Transaction Agreement and Plan of Merger, dated as of October 10, 2021, among Aspen Technology, Inc., Emerson Electric Co., EMR Worldwide Inc., Emersub CX, Inc. and Emersub CXI, Inc., as amended by Amendment No. 1, dated as of March 23, 2022, as it may be further amended from time to time (attached as Annex A to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Form of Amended and Restated Certificate of Incorporation of Aspen Technology, Inc. (attached as Annex B to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Form of Amended and Restated Bylaws of Aspen Technology, Inc. (attached as Annex C to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Legal Opinion of Davis Polk & Wardwell LLP |
Exhibit No. | | | Description |
| | ||
| | Form of Stockholders Agreement, among Emerson Electric Co., EMR Worldwide Inc. and Aspen Technology, Inc. (attached as Annex D to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Form of Registration Rights Agreement, between EMR Worldwide Inc. and Aspen Technology, Inc. (attached as Annex E to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Form of Tax Matters Agreement, between Emerson Electric Co. and Aspen Technology, Inc. (attached as Annex F to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Commercial Agreement Term Sheet, between Emerson Electric Co. and Aspen Technology, Inc. (attached as Annex G to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Form of Transition Services Agreement, between Emerson Electric Co. and Aspen Technology, Inc. (attached as Annex H to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Form of Commercial Agreement, between Emerson Electric Co. and Aspen Technology, Inc. (attached as Annex K to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | List of Subsidiaries | |
| | Consent of Davis Polk & Wardwell LLP (contained in Exhibit 5.1) | |
| | Consent of KPMG LLP (as auditor for AspenTech) | |
| | Consent of KPMG LLP (as auditor for the Emerson Industrial Software Business) | |
| | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (contained in Exhibit 8.1) | |
| | Form of Proxy Card | |
| | Consent of J.P. Morgan Securities LLC | |
| | Fairness Opinion of J.P. Morgan Securities LLC (attached as Annex I to the combined proxy statement/prospectus, which is part of this registration statement and incorporated herein by reference) | |
| | Consent of Jill D. Smith to be named as Director | |
| | Consent of Antonio J. Pietri to be named as Director | |
| | Consent of Karen M. Golz to be named as Director | |
| | Consent of Robert M. Whelan Jr. to be named as Director | |
| | Consent of Ram R. Krishnan to be named as Director | |
| | Consent of Arlen R. Shenkman to be named as Director | |
| | Consent of Thomas F. Bogan to be named as Director | |
| | Consent of Patrick M. Antkowiak to be named as Director | |
| | Calculation of Filing Fee Table |
^ | Schedules and certain exhibits to the Transaction Agreement and Plan of Merger have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant will furnish copies of any such schedules to the U.S. Securities and Exchange Commission upon request. |
* | Previously |
** | Filed herewith. |
# | Executed version to |
† | Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10). |
Item 22. | Undertakings. |
(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 by Section 10(a)(3) of the Securities Act; |
(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 aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective 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; |
(2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment that contains a form of prospectus 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. |
(4) | That, for the purpose of determining liability under the Securities Act to any purchaser: if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(5) | That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser. |
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(6) | That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in 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. |
(7) | That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
(8) | That every prospectus (i) that is filed pursuant to paragraph (7) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, 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. |
(9) | To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of this registration statement through the date of responding to the request. |
(10) | To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this registration statement when it became effective. |
| | EMERSUB CX, INC. | |||||||
| | | | | |||||
| | By: | | | /s/ Mark J. Bulanda | ||||
| | | | Name: | | | Mark J. Bulanda | ||
| | | | Title: | | | President |
Signature | | | Title | | | Date |
| | | | |||
/s/ Mark J. Bulanda | | | Sole Director, Emersub CX, Inc. | | | |
Mark J. Bulanda | | | | |