-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EmKa2hjVjoM/5SKHFvLx3eDgnHkFJ9YsSvbu/DW6APr0dSHFeeCmwyWwN9WmrOOp FdB1/7zyjie7bRIPAcyFXw== 0001012870-01-001465.txt : 20010409 0001012870-01-001465.hdr.sgml : 20010409 ACCESSION NUMBER: 0001012870-01-001465 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASPECT COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000779390 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 953962471 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-18391 FILM NUMBER: 1589459 BUSINESS ADDRESS: STREET 1: 1730 FOX DR CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4083252200 MAIL ADDRESS: STREET 1: 1730 FOX DRIVE CITY: SAN JOSE STATE: CA ZIP: 95131 FORMER COMPANY: FORMER CONFORMED NAME: ASPECT TELECOMMUNICATIONS CORP DATE OF NAME CHANGE: 19940218 10-K405 1 0001.txt FORM 10-K405 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 or [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-18391 --------------- ASPECT COMMUNICATIONS CORPORATION (Exact name of registrant as specified in its charter) California 94-2974062 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.)
1310 Ridder Park Drive, San Jose, California 95131-2312 (Address of principal executive offices and zip code) (408) 325-2200 (Registrant's telephone number) Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value (Title of class) --------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the Registrant as of March 22, 2000, was $240,323,051 based upon the last sale price reported for such date on the Nasdaq Stock Market. For purposes of this disclosure, shares of Common Stock held by persons known to the Registrant (based on information provided by such persons and/or the most recent schedule 13G's filed by such persons) to beneficially own more than 5% of the Registrant's Common Stock and shares held by officers and directors of the Registrant have been excluded because such persons may be deemed to be affiliates. This determination is not necessarily a conclusive determination for other purposes. The number of shares of the Registrant's Common Stock outstanding as of March 22, 2000 was 51,612,450. DOCUMENTS INCORPORATED BY REFERENCE Portions of the 2001 Proxy Statement for the Annual Meeting of Shareholders of Aspect Communications Corporation (Proxy Statement) scheduled to be held on May 16, 2001, are incorporated by reference in Parts I, II, III, and IV of the Report on Form 10-K. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Forward-Looking Statements The matters discussed in this report including, but not limited to, statements relating to expansion of service infrastructure, anticipated spending levels for capital equipment in research and development, and selling, general and administrative expenses, anticipated service margins, adoption of SFAS No. 133, adequacy of our financial resources to meet currently anticipated cash flow requirements for the next twelve months, lack of significant changes in financial market risk exposures to the Company, and general economic conditions are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended; Section 21E of the Securities and Exchange Act of 1934, as amended; and the Private Securities Litigation Reform Act of 1995; and are made under the safe-harbor provisions thereof. Such forward-looking statements, which may be identified by phrases such as "we anticipate," "we believe," and "on a forward-looking basis," are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Specific factors that may cause actual revenue and earnings per share results to differ include the significant percentage of Aspect's quarterly sales consummated in the last few days of the quarter, making financial predictions especially difficult and raising a substantial risk of variance in actual results; fluctuations in our North American and International business levels and/or economic conditions; the hiring and retention of key employees; changes in product line revenues; insufficient, excess, or obsolete inventory and variations in valuation; and foreign exchange rate fluctuations. For a discussion of additional risks, see "Business Environment and Risk Factors," appearing under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Registrant's 2000 Annual Financial Report to Shareholders attached as on appendix to the Registrant's 2001 Proxy Statement, which information is hereby incorporated by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Aspect undertakes no obligation to publicly release any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof. 2 PART I Item 1. Business Background Aspect Communications Corporation (Aspect or the Company) is the leading provider of customer relationship portals, contact servers for managing dynamic customer contact transactions across wired and wireless communication channels. The Aspect Customer Relationship Portal allows businesses to manage customer contacts dynamically and turn them into relationships, opportunities and customer loyalty. The Aspect Customer Relationship Portal synchronizes all customer contact points, including live and self-service, with demonstrated customer return on investment. Aspect's leadership in an electronic customer relationship management (eCRM) solutions is based on more than 15 years of experience and over 7,600 implementations deployed worldwide. Aspect powers approximately 78 percent of the Fortune 50. Aspect was incorporated on August 16, 1985 in California, and is headquartered in San Jose, California, with offices in major cities around the world. In February 2001, the Company announced that as part of its continuing effort to better optimize operations, the workforce would be reduced by 6% and selected facilities will be consolidated. Aspect expects that the reduction will result in a one-time restructuring charge of $4 million to $6 million in the first quarter of 2001. During 1999, the Company initiated a transformation of its business from a telecommunication equipment supplier to a provider of software solutions. The transformation included repackaging and repricing our products and services, developing and launching new software based products and services, changing our internal processes and systems, establishing key systems integration and technology partnerships, enhancing our senior management team, and retaining key employees. While the transformation is not complete, significant progress was made during FY2000. Remaining efforts are focused on completing the sales force transformation and enhancing the internal infrastructure. In August 1998, Aspect completed a private placement of $150 million ($490 million principal amount at maturity) of zero coupon convertible subordinated debentures due 2018. The debentures are priced at a yield to maturity of 6% per annum and are convertible into Aspect common stock anytime prior to maturity at a conversion rate of 8.713 shares per $1,000 principal amount. Acquisitions On February 18, 2000, the Company acquired privately held PakNetX Corporation (PakNetX), an eBusiness software provider based in Salem, New Hampshire. The transaction enables Aspect to integrate multimedia-over-IP technology into its flagship customer relationship portal software and strengthen the Company's eCRM market position. The Company paid $55 million in cash for all the outstanding common and preferred shares and warrants of PakNetX. In addition, Aspect assumed the existing PakNetX stock option plan and converted PakNetX stock options into options to purchase 160,000 shares of Aspect common stock with a fair value of $10 million, and incurred transaction costs of $2 million. The transaction was accounted for as a purchase and resulted in a one-time charge of $5 million related to in-process technology that had not reached technological feasibility in the quarter ended March 31, 2000. The historical operations of PakNetX are not material to the financial position or results of operations of the Company. In May 1998, Aspect acquired Voicetek Corporation (Voicetek), a leading supplier of interactive voice response (IVR) applications. The transaction was accounted for as a purchase. Aspect recorded a one-time charge of $10 million in 1998, or $0.19 per diluted share, for purchased in-process technology related to two development projects that had not reached technological feasibility, had no alternative future use, and for which successful development was uncertain. 3 Industry Backround and Market Trends Many companies today are recognizing that the eCRM strategy is key to continued attraction and retention of customers. With more enterprises having a global presence, providing a consistent level of customer interaction becomes increasingly important, with customers wanting the same service regardless of their location, the time of day, the medium they are using (voice, email, fax or the Web), the location from which the assistance is being supplied, or the individual providing the service. While businesses desire this consistent customer experience, they often find that applications for the Web, voice, e-mail, and fax were developed around a particular department's requirements and are not compatible, do not provide customers with a consistent level of service, and do not retain the history of the customer interactions independent of the media used. The definition of this eCRM market space is evolving and includes many companies with a variety of products and services, including sales force automation vendors, providers of help desk management software, and companies that sell customer workforce management software. Aspect's eCRM products have evolved from the Aspect call center products (Automatic Call Distributor (ACD) and IVR), which had a support role managing customer telephone calls, into the Aspect(R) Customer Relationship Portal which has a central role as a primary server or focal point for all forms of customer contact, regardless of medium. Thus, the Aspect Customer Relationship Portal is positioned to be a strategic part of doing business and a foundation for delivering eCRM solutions. Products Aspect is the leading provider of customer relationship portals, contact servers for managing dynamic customer contact transactions across all wired and wireless communication channels. The Aspect Customer Relationship Portal allows businesses to manage customer contacts dynamically and turn them into relationships, opportunities and customer loyalty. Aspect delivers a complete software-based multi-channel contact center which sits at the core of a company's eCRM strategy. Contact Server Products: Aspect Customer Relationship Portal (Aspect Portal) The Aspect Portal is the center of Aspect's technology and the contact server for an eCRM strategy. It is a platform that integrates front-office, databases, eCommerce and multi-channel contact center resources into one centrally managed system. Aspect Portal also collects and distributes realtime information that enables accurate decisions to be made based on unified business rules. The Aspect Portal also offers an advanced routing option that provides centralized administration and skills-based routing decisions for single channel as well as multi-channel environments. The advanced routing option also offers out-of-the-box sample custom desktop applications that can be used for developing a desktop container. For multi-channel environments, the advanced routing option can match available agent resources with incoming customer interactions across call centers, e-mail response management systems (ERMS) and Web interaction communications channels, to deliver a consistent customer experience. The Aspect Portal software platform is comprised of three main elements: . The eFlow Engine that centrally manages and executes the business rules for eCRM applications; . CMI(TM) open media connectivity that synchronizes all channels (voice, e- mail, the Web, and fax) of customer communications; and . eRouting that routes resources based on information such as business metrics and customer data. 4 Aspect eBusiness Architect The Aspect Portal applications are developed using Aspect eBusiness Architect, a single visual drag-and-drop development environment for defining consistent business rules that are designed to make eCRM applications easier to build and deploy. Aspect eBusiness Architect also includes standard application workflows, or eFlows, for multimedia interactions, data access, front-office, and eBusiness functions that significantly reduce development time and implementation costs for eCRM applications. Aspect Adapters Aspect Adapters offer out-of-the-box integration to third party applications ensuring investment protection for businesses existing eCRM investments. Aspect Adapters include ERMS--eGain and Kana; Front Office-- Siebel, Vantive, Clarify, Kana; Workforce Management--Blue Pumpkin and IEX; Network Services--Cisco ICM and Telera; Telecomm switches--Nortel, Avaya; and eCommerce--Cybersource. Aspect Customer DataMart The Aspect Customer DataMart consolidates information from enterprise resources for single channel and multi-channel contact centers and enables businesses to analyze operations as a single, virtual contact center. Application Solutions: IP and PSTN Call Center Aspect Call Center solutions include voice routing over both IP and PSTN networks, simultaneously queue calls across multiple sites and outbound dialing. This platform offers mission-critical customer call handling and is scalable to provide investment protection as demand and usage grow. Self-Service Aspect Customer Self-Service allows customers to conduct self-service transactions conveniently around the clock for automated customer assistance without the assistance of an agent, using voice prompts, text-to-speech, speech recognition, fax and e-mail, allowing the customer to drive the interaction and self-qualify. Live Web Service Aspect Web Interaction makes the Web an integral part of a contact center by allowing customers to interact directly with customer service representatives through callback or text chat. Customers and Agents are able to push and markup pages as well as joint form fill appropriate pages. Workforce Management Aspect eWorkforce Management software enables efficient management of contact center agent resources across multiple channels, including e-mail, Web, and voice. Aspect eWFM supplies managers with real-time information to predict staffing requirements for agents across all media types, allowing the balancing of staffing demands with customer service levels. Telephony Server Aspect's mission critical Windows NT based Call Center and Aspect Customer Self-Service Telephony Servers provide the platforms on which Aspect applications can run. They handle heavy call volumes and transactions with carrier-grade reliability. 5 Customer Services All Aspect products are supported by our customer support services, including project management, consulting, installation, education, and technical support operations. Our technical support services include on-site and remote access to support personnel which are provided primarily by our support centers located around the world. Pricing of our support services is generally based on the level of support contracted and the number of users authorized to access the products. These contracts generally include update rights for licensed products. Our project management, consulting, installation, and education services are provided by employees or consultants, and are based on per-hour or fixed- quote contracts. Customer services revenues represented approximately 43%, 42%, and 33% of total revenues in 2000, 1999, and 1998, respectively. Product Development The Company has a continuing program of product development directed toward the enhancement of existing products based upon current and anticipated customer needs. The Company's research and product development efforts also emphasize introduction of new products to broaden the Company's product line and to reach a larger segment of the eCRM market. During 2000, 1999, and 1998, the Company spent $109.4 million, $86.9 million, and $67.9 million, respectively on research and development (R&D). We anticipate, on a forward- looking basis, that R&D expenses in absolute dollars will remain relatively flat in 2001, although such expenses as a percentage of net revenues may fluctuate between periods. Manufacturing The Company's manufacturing operations consist primarily of the final assembly and testing of customer contact hardware platforms and software replication. Substantial elements of the Company's manufacturing operations are outsourced to third parties. The Company believes that its approach to design and development has allowed flexibility in the manufacturing process and has allowed the Company to satisfy a wide variety of customer configuration requirements while achieving high quality and reasonable lead times. The Company orders materials with different lead times, generally 30 to 120 days ahead of required date of delivery. Because this is a longer time frame than the average customer order to shipment cycle, the Company acquires materials and builds standard assemblies based on forecasted production requirements. Upon receipt of firm orders from customers, the Company assembles fully configured systems, and performs a number of tests before shipment. The Company's manufacturing procedures are designed to achieve rapid response to customer orders. Markets, Segments, and Customers The Company's operations are reported as one operating segment, thus all financial segment information, as well as geographical information, can be found in the consolidated financial statements and notes thereto in the 2000 Annual Financial Report to Shareholders, an appendix to the 2001 Proxy Statement, which is incorporated by reference in this Annual Report on Form 10-K. The Company markets and sells its products and services primarily to large organizations in diversified industries worldwide. Aspect markets its products in the United States largely through its direct sales force and internationally has a direct sales force supplemented through distribution partners in various countries. The Company anticipates that an increased portion of sales will need to be generated through third party systems integrators to achieve targeted market share goals. 6 Competition The market for our products is intensely competitive, and competition is likely to intensify as companies in our industry consolidate to offer integrated solutions. Our principal competitors currently include companies in the eCRM market and companies that market traditional telephony products and services. As the hardware requirements for a traditional call center diminish due to the emergence of the Internet, local area networks, and other factors, companies in these markets are merging and obtaining significant positions in the eCRM and traditional telephony products market. Many current and potential competitors, including Avaya Inc., Nortel Networks Corporation, Rockwell International Corporation, Alcatel SA, Siemens AG, Cisco Systems Inc., Siebel Systems Inc., and Oracle Corporation, have considerably greater resources, larger customer bases and broader international presence than Aspect. Consequently, the Company expects to encounter substantial competition from these companies and other sources. Intellectual Property and Related Matters The Company's success depends in part upon its internally developed technology. The Company generally enters into confidentiality or license agreements with its employees, consultants, and vendors, and generally controls access to and distribution of its software, documentation, and other proprietary information. Despite these precautions, unauthorized third parties may copy or otherwise obtain and use the Company's technology. In addition, third parties may develop similar technology independently. The Company files patent applications to protect inventions and improvements that are significant to the development of its business. In October 1997, the Company acquired certain rights to two intellectual property portfolios by paying $9.8 million in cash and issuing $10 million in notes payable. In July and September 1998, the Company acquired the remaining rights under these intellectual portfolios by making additional payments of $7.5 million and $3.8 million, respectively. Including these portfolios, the Company currently holds approximately 51 issued United States patents and a lesser number of issued foreign patents and has pending approximately 51 United States patent applications and a lesser number of corresponding foreign patent applications that cover various components of its technology. The Company's issued United States patents expire on dates ranging from 2004 through at least 2017. There can be no assurance that any of the claims in the pending applications will be allowed, or that any issued patents will be upheld, or that our patents will not be circumvented by competitors, or that any patents or licenses will provide competitive advantages for the Company's products. The Company maintains proprietary software that is delivered to its customers. Under certain circumstances, a limited number of the Company's customers have been granted licenses to use certain of the Company's proprietary rights, primarily to ensure the continued maintenance and supply of certain of the Company's products. The Company holds licenses from multiple third parties regarding engineering and manufacturing rights to certain technology that the Company incorporates in its products. Certain of these technology license rights expire at various dates through 2004. The Company has also entered into standard commercial license agreements with several suppliers of operating systems, databases, and other software used for development and implementation of the Company's products. These licenses are ongoing and generally involve the payment of royalties based on the volume of systems the Company ships over periods of time. Employees As of December 31, 2000, the Company employed approximately 2,740 full-time employees. In February 2001, the Company announced that it would reduce its workforce by 6%. 7 Item 2. Properties Aspect's headquarters facility currently consists of four office and manufacturing buildings, totaling approximately 300,000 square feet, in San Jose, California. The Company owns one of the four buildings, which is approximately 107,000 square feet, and occupies the remaining three buildings totaling approximately 193,000 square feet under one lease expiring in 2006. The Company is constructing a fifth building that is 110,000 square feet which will be owned and is expected to be completed in July 2001. The land for both owned buildings, which is 10 acres, is owned fee simple by Aspect and was acquired with the original building in 1996. Aspect also leases a sixth building of approximately 33,000 square feet which has yet to be occupied. Once completed, Aspect will own or lease a total of 443,000 square feet in San Jose, California. Aspect occupies several U.S. regional centers for sales and support, totaling approximately 57,000 square feet under leases through 2006. The Company occupies approximately 90,000 square feet in facilities located near Nashville Tennessee, that are leased through 2006. The Company also occupies 80,000 square foot in Chelmsford, Massachusetts that are leased through 2009. Other North American sales and support functions operate from various leased multi-tenant offices nationwide. Aspect has several facilities to support its European operations. The principal UK operations are located in and near London in facilities totaling approximately 62,000 square feet and are leased under long-term agreements expiring in 2023. Other significant European facilities are located near Paris, France, Amsterdam, The Netherlands, and Frankfurt and Dusseldorf, Germany. The Company planned to consolidate some European facilities into a new 40,000 building in Stockley Park in early 2002; however, with recent Company announcements, we are revisiting this strategy. In Asia, the Company occupies sales and support offices in Japan, Singapore, and Australia. The Company believes its existing facilities are adequate to meet current requirements and that suitable additional or alternative space will be available as needed on commercially reasonable terms. See Note 11 to "Notes to Consolidated Financial Statements," in the 2000 Annual Financial Report to Shareholders, an appendix to the 2001 Proxy Statement, which is incorporated by reference in this Annual Report on Form 10-K. Item 3. Legal Proceedings Reference is made to Note 16, appearing under the caption "Notes To Consolidated Financial Statements" on page F-34 of the Registrant's 2000 Annual Financial Report to Shareholders attached as an appendix to the Registrant's 2001 Proxy Statement, which information is hereby incorporated by reference. Item 4. Submission Of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders during the quarter ended December 31, 2000. 8 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters (a) Reference is made to the information regarding market price range, market, and dividend information appearing under the captions "Quarterly per share stock price," "Stock Listing," and "Dividend Policy" on pages F-36 and the inside back cover of the Registrant's 2000 Annual Financial Report to Shareholders attached as an appendix to the Registrant's 2001 Proxy Statement, which information is hereby incorporated by reference. (b) Reference is made to the information regarding holders of common stock appearing under the caption "Stock Listing" on the inside back cover of the Registrant's 2000 Annual Financial Report to Shareholders attached as an appendix to the Registrant's 2001 Proxy Statement, which information is hereby incorporated by reference. Item 6. Selected Financial Data Reference is made to selected consolidated financial data for fiscal years 1996 through 2000, appearing under the caption "Selected Consolidated Financial Data" on page F-1 of the Registrant's 2000 Annual Financial Report to Shareholders attached as an appendix to the Registrant's 2001 Proxy Statement, which information is hereby incorporated by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Reference is made to the information appearing under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages F-2 through F-12 of the Registrant's 2000 Annual Financial Report to Shareholders attached as an appendix to the Registrant's 2001 Proxy Statement, which information is hereby incorporated by reference. Item 7a. Quantitative and Qualitative Disclosures About Market Risk Reference is made to the information appearing under the caption "Quantitative and Qualitative Disclosures About Financial Market Risk" on pages F-12 through F-13 of the Registrant's 2000 Annual Financial Report to Shareholders attached as an appendix to the Registrant's 2001 Proxy Statement, which information is hereby incorporated by reference. Item 8. Financial Statements and Supplementary Data Reference is made to the following information appearing in the Registrant's 2000 Annual Financial Report to Shareholders attached as an appendix to the Registrant's 2001 Proxy Statement, which information is hereby incorporated by reference:
Description Page(s) ----------- ------------ Consolidated Financial Statements............................. F-14 to F-34 Independent Auditors' Report.................................. F-35 Selected Quarterly Financial Data (unaudited)................. F-36
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosures Not Applicable. 9 PART III Certain information required by Part III is omitted from this report because the Registrant filed a definitive proxy statement within 120 days after the end of its fiscal year pursuant to Regulation 14A for its annual meeting of shareholders to be held May 16, 2001, and the information included therein is incorporated herein by reference to the extent detailed below. Item 10. Directors and Executive Officers of the Registrant Executive Officers of the Company The following sets forth certain information with respect to the executive officers of the Company, and their ages as of February 28, 2001:
Name Age Position ---- --- -------- Beatriz V. 47 Infante........ Chairman, President, and Chief Executive Officer Gary E. 47 Executive Vice President, eCRM Applications, and Chief Barnett........ Technical Officer Rod Butters..... 43 Executive Vice President, Product Strategy and Portal Platform, and Chief Strategy Officer Betsy Rafael.... Executive Vice President, Finance, Chief Financial 39 Officer, and Secretary Gary L. Smith... 55 Chief Operating Officer
Executive officers serve at the election of the Board of Directors of the Company. There are no family relationships among any directors or executive officers of the Company. As Chairman, President, and Chief Executive Officer, Beatriz V. Infante is responsible for leading Aspect's executive team, defining corporate strategies, and setting the standards and vision for the corporate culture. She is the final decision-maker on all corporate, strategic and operational issues and has overall responsibility for the Company's market strategy. Ms. Infante joined Aspect in October 1998 as Executive Vice President, Products and Services, and most recently held the position of Co-President, with responsibility for providing operational direction and leadership for the Company. Prior to joining Aspect, she held several positions at Oracle Corporation, most recently as a Senior Vice President, where she led the development of Oracle's Internet and new enterprise software applications initiatives. She also served as Director of Development at Taligent, co- founded Momenta Corporation and held engineering and management positions at Hewlett-Packard Company. She holds a bachelor's degree in electrical engineering and computer science from Princeton University and a master's degree in computer engineering and computer science from the California Institute of Technology. As Executive Vice President, eCRM Applications, Gary E. Barnett is responsible for directing and overseeing the design, development, documentation, and product management of the Company's line of application products. Mr. Barnett also serves as Chief Technology Officer (CTO), setting policy for the architecture and technology foundation for all the Company's products. This position is also responsible for public evangelism of the Company's products and architecture, and key technology spokesperson for the Company's products. Since graduating from the University of Kentucky, Mr. Barnett has served as one of the original developers of Octel Communications' first voice messaging system and later became one of the main developers of the first Aspect automatic call distributor. In 1987, he founded his own CTI software company, Prospect Software, which was subsequently acquired by Aspect in October 1996. As Executive Vice President, Product Strategy and Portal Platform, Rod Butters is responsible for development of the Company's product strategies and coordination of the Company's technical product development, and for managing the marketing activities of the products and services produced by the Company, including assessment of potential markets, new business development, channel alignment, development of global pricing strategies across all the Company's lines of business, and definition of promotional activities. Mr. Butters also serves as Chief Strategy Officer (CSO), setting policy for corporate strategy and marketing. Before joining 10 Aspect in December 1998, Mr. Butters was Vice President, Product and Program Management, in the Application Server Division at Oracle Corporation. Previously, he served as a Principal Consulting Engineer at Object Design, where he provided direction to developers on the architecture and implementation of object-based systems and applications. Mr. Butters was also an Architect at Mentor Graphics, where he produced the architecture and design for CAD tools, and a Product Manager at Onco, Inc., a company that produces oncology data management products. Mr. Butters holds B.A. and M.A. degrees from the University of Oregon. As Executive Vice President Finance, Chief Financial Officer, and Secretary, Betsy Rafael is responsible for overseeing financial and legal activities for the Company. In the past, Ms. Rafael served as Senior Vice President and Chief Financial Officer at Silicon Graphics, Inc., where she was responsible for global finance, facilities, information systems and investor relations. She came to Aspect from Escalate, a business-to-business eCommerce applications service provider, where she was Senior Vice President and Chief Financial Officer. Ms. Rafael has also held financial management positions at Sun Microsystems Inc., Apple Computer Inc. and Ernst & Young. Ms. Rafael holds a B.S.C. in accounting from the University of Santa Clara and is a Certified Public Accountant. As Chief Operating Officer, Gary L. Smith leads the company's global sales and customer service operations and is responsible for all of Aspect's customer-facing functions, including global sales, service, consulting, education, distribution and business alliance partners. Before joining Aspect in April 2000, Smith was the Chief Sales Officer for Electronic Data Systems Corporation (EDS). He joined EDS in 1994 as Vice President of Sales for the Global Telecommunications Division in the Communications Industry Group (CIG) and was promoted in 1997 to Vice President of Sales and Sales Support for CIG. Prior to joining EDS, Smith was Vice President of Commercial Sales and Division Vice President of National Accounts at Williams Telecommunications. He was Vice President of Division National Account Programs and later Director of Advanced Network Systems at MCI Telecommunications for five years. Before MCI, he was Director of Sales and Marketing for NCR's Office Systems Division and began his sales, marketing and management career at IBM, where he spent 13 years. Information with respect to directors of the Registrant is incorporated by reference to the information under the caption "Election of Directors" in the Registrant's 2001 Proxy Statement. Information required by Item 405 of Regulation S-K is incorporated by reference to the information under the caption "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Registrant's 2001 Proxy Statement. Item 11. Executive Compensation The information required by this Item is incorporated by reference to the information under the caption "Executive Compensation" contained in the Registrant's 2001 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management The information required by this Item is incorporated by reference to the information under the caption "Security Ownership of Principal Shareholders and Management" contained in the Registrant's 2001 Proxy Statement. Item 13. Certain Relationships and Related Transactions The information required by this Item is incorporated by reference to the information under the caption "Certain Relationships and Related Transactions" contained in the Registrant's 2001 Proxy Statement. 11 PART IV Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K (a) 1. Financial Statements The financial statements listed in the accompanying index to financial statements and financial statement schedule are incorporated by reference as part of this Annual Report on Form 10-K. 2. Financial Statement Schedule The financial statement schedule listed in the accompanying index to financial statements and financial statement schedule is filed as part of this Annual Report on Form 10-K. 3. Exhibits The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K. (b) Reports on Form 8-K Not Applicable. 12 ASPECT COMMUNICATIONS CORPORATION INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE (Item 14 (a))
Reference Page(s) ------------------ 2000 Annual Form Report to 10-K Shareholders ----- ------------ Selected Consolidated Financial Data........................ -- F-1 Consolidated Balance Sheets as of December 31, 2000 and 1999....................................................... -- F-14 Consolidated Statements of Operations for the years ended December 31, 2000, 1999, and 1998.......................... -- F-15 Consolidated Statements of Shareholders' Equity for the years ended December 31, 2000, 1999, and 1998.............. -- F-16 Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999, and 1998.......................... -- F-17 Notes to Consolidated Financial Statements.................. -- F-18 to F-34 Independent Auditors' Report................................ -- F-35 Selected Quarterly Financial Data (unaudited)............... -- F-36 Consolidated Financial Statements Schedule for the years ended December 31, 2000, 1999, and 1998: II--Valuation and Qualifying Accounts and Reserves........................... 14 --
All other schedules have been omitted, since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto. 13 ASPECT COMMUNICATIONS CORPORATION SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998 (in thousands)
Beginning Ending Balance Additions Deductions Balance --------- --------- ---------- ------- 2000 Allowance for doubtful accounts........ $7,180 $2,412 $ 533(1) $9,059 Warranty reserve....................... $ 712 $2,387 $1,371(2) $1,728 1999 Allowance for doubtful accounts........ $4,415 $6,722 $3,957(1) $7,180 Warranty reserve....................... $3,347 $ 935 $3,570(2) $ 712 1998 Allowance for doubtful accounts........ $1,716 $3,081 $ 382(1) $4,415 Warranty reserve....................... $3,948 $5,083 $5,684(2) $3,347
- -------- (1) Accounts written off. (2) Warranty costs incurred. 14 ASPECT COMMUNICATIONS CORPORATION INDEX TO EXHIBITS (Item 14 (a))
Exhibit Number Description ------- ----------- 2.1 Agreement and Plan of Merger dated April 1, 1998, among the Registrant, Venus Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of the Registrant, and Voicetek Corporation a Massachusetts corporation. (1) 3.1 Amended and Restated Articles of Incorporation of the Registrant. (2) 3.2 Certificate of Determination of the Rights, Preferences and Privileges of the Series A Participating Preferred Stock, dated May 11, 1999. (3) 3.3 Bylaws of the Registrant, as amended to date. (2) 3.4 Certificate of Amendment to Registrant's Articles of Incorporation, dated September 24, 1999. (2) 4.1 Indenture, dated August 10, 1998, by and among the Registrant and State Street Bank and Trust Company of California, N.A., as Trustee, including the form of Debenture. (4) 4.2 Form of Debenture (included in Exhibit 4.1). (4) 4.3 Registration Rights Agreement, dated August 10, 1998, by and among the Registrant, Morgan Stanley & Co. Incorporated and Credit Suisse First Boston Corporation. (4) 4.4 Preferred Shares Rights Agreement, dated May 11, 1999. (3) 10.2b 1989 Stock Option Plan and forms of option agreements thereunder, as amended, effective May 20, 1993. (2) 10.2c 1999 Equity Incentive Plan, as amended and forms of option agreements thereunder. (2) 10.3a 1989 Directors' Stock Option Plan and forms of option agreements thereunder. (5) 10.3b 1998 Directors' Stock Option Plan, as amended. (2) 10.4a 1990 Employee Stock Purchase Plan and form of subscription agreement thereunder, as amended, effective July 1, 1991. (2) 10.4b 1996 Employee Stock Option Plan, as amended. (2) 10.6 Form of Stock Bonus Agreement for the Registrant's Newborn Stock Bonus Program. (5) 10.7 Form of Indemnification Agreement. (5) 10.39 Lease Agreement between the Registrant and Spieker Partners, dated October 1,1990, as amended. (2) 10.39a Amendment Number One to the Lease Agreement between the Registrant and Spieker Partners, dated October 1, 1990. (2) 10.39b Amendment to the Lease Agreement between the Registrant and Spieker French # 97, L.P., dated August 1, 1993. (2) 10.39c Amendment to the Lease Agreement between the Registrant and Spieker French # 97, L.P., dated October 1, 1993. (2) 10.39d Amendment to the Lease Agreement between the Registrant and Spieker Properties, L.P., dated July 12, 1995. (2) 10.39e Amendment to the Lease Agreement between the Registrant and Spieker Properties, L.P. dated July 12, 1995. (2) 10.55 Agreement of Purchase and Sale between the Registrant and Arrow Electronics, Inc., dated April 22, 1996. (2)
15
Exhibit Number Description ------- ----------- 10.56 Patent License Agreement and Mutual Release with Lucent Technologies Inc., effective as of January 1, 1998. (2) 10.58 Severance Agreement between the Registrant and Dennis L. Haar, dated November 11, 1998. (2) 10.59 Severance Agreement between the Registrant and Robert A. Blatt, dated March 25, 1999. (2) 10.62 Employment Agreement between the Registrant and Kathleen M. Cruz, dated March 1, 1999. (2) 10.69 Employment Agreement between the Registrant and Eric J. Keller, dated May 15, 1999. (2) 10.71 Form of Employment Agreement between the Registrant and certain executive officers of the Registrant. (2) 10.73 Promissory Note between the Registrant and Barry Wright, dated August 9, 1999. (2) 10.74 Cash Bonus Agreement between the Registrant and Barry Wright, dated August 9, 1999. (2) 10.75 Employment Agreement between the Registrant and Gary L. Smith, dated April 6, 2000. 10.76 Severance Agreement between the Registrant and William H. Delevati, dated April 3, 2000. (2) 10.77 Severance Agreement between the Registrant and Barry Wright, dated April 4, 2000. (2) 10.78 Employment Agreement between the Registrant and James R. Carreker, dated April 25, 2000. (2) 10.79 Employment Agreement between the Registrant and Beatriz V. Infante, dated April 26, 2000. (2) 10.80 Employment Agreement between the Registrant and Betsy Rafael, dated February 28, 2001. 10.81 Aspect Incentive Plan, as amended. 21.1 Subsidiaries of the Registrant--Jurisdiction of Incorporation. 23.1 Independent Auditors' Consent and Report on Schedule. 24.1 Power of Attorney (see page 17).
- -------- (1) Incorporated by reference to the Registrant's Report on Form 8-K, dated May 11, 1998. (2) Incorporated by reference to identically numbered exhibits to the Registrant's previously filed Form 10-K's or Form 10-Q's or to exhibits to the Registrant's previously filed Form S-8's. (3) Incorporated by reference to the Registrant's Registration Statement on Form 8-A filed June 25, 1999. (4) Incorporated by reference to Amendment No. 1 to the Registrant's Registration Statement on Form S-3 filed on December 21, 1998. (5) Incorporated by reference to Exhibit 3.3 to the Registrant's Registration Statement on Form S-1 and Amendment No. 1 and Amendment No. 2 thereto (File No. 33-33994), which became effective on April 30, 1990. 16 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on March 30, 2001 on its behalf by the undersigned, thereunto duly authorized. Aspect Communications Corporation /s/ Beatriz V. Infante By: _________________________________ Beatriz V. Infante Chairman, President, and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints jointly and severally Beatriz V. Infante and Betsy Rafael, and each one of them, her attorneys in fact, each with the power of substitution, for her in any and all capacities, to sign any and all amendments to this Report on Form 10-K and to file the same, with exhibits thereunto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or her substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date --------- ----- ---- /s/ Beatriz V. Infante Chairman, President, and March 30, 2001 ____________________________________ Chief Executive Officer (Beatriz V. Infante) /s/ Betsy Rafael Executive Vice President, March 30, 2001 ____________________________________ Finance, Chief Financial (Betsy Rafael) Officer, and Secretary /s/ Norman A. Fogelsong Director March 30, 2001 ____________________________________ (Norman A. Fogelsong) /s/ David B. Wright Director March 30, 2001 ____________________________________ (David B. Wright) /s/ Debra J. Engel Director March 30, 2001 ____________________________________ (Debra J. Engel) /s/ John W. Peth Director March 30, 2001 ____________________________________ (John W. Peth) /s/ Christopher B. Paisley Director March 30, 2001 ____________________________________ (Christopher B. Paisley) /s/ Donald P. Casey Director March 30, 2001 ____________________________________ (Donald P. Casey)
17 ASPECT COMMUNICATIONS CORPORATION INDEX TO EXHIBITS (Item 14 (a))
Exhibit Number Description ------- ----------- 10.75 Employment Agreement between the Registrant and Gary L. Smith, dated April 6, 2000. 10.80 Employment Agreement between the Registrant and Betsy Rafael, dated February 28, 2001. 10.81 Aspect Incentive Plan, as amended. 21.1 Subsidiaries of the Registrant--Jurisdiction of Incorporation. 23.1 Independent Auditors' Consent and Report on Schedule. 24.1 Power of Attorney (see page 17).
EX-10.75 2 0002.txt EMPLOYMENT AGREEMENT GARY L. SMITH EXHIBIT 10.75 April 6, 2000 Mr. Gary L. Smith Chief Operating Officer Aspect Communications San Jose, CA 95131 Dear Gary: This letter agreement (the "Agreement") is to confirm the terms of your ongoing employment with Aspect Communications Corporation (the "Company") and supersedes and replaces all prior oral and/or written agreements regarding the subject matter hereof between you and the Company. 1. This Agreement will commence on the date hereof and continue until February 28, 2002 (the "Original Term"), unless extended for one or more ------------- additional one-year terms upon mutual written agreement between you and the Company or unless terminated pursuant to the terms described herein. Approval by the Company shall be evidenced by the adoption of resolutions by the Compensation Committee of the Board of Directors of the Company (the "Committee"). In the event that the Company has entered into discussions with a --------- third party regarding a Change of Control in the beneficial ownership of the Company (as defined below) and such Change of Control discussions are ongoing at the end of the Original Term or any extension, this Agreement automatically shall be extended until the later of (a) the end of a period of eighteen (18) months following the closing of such Change of Control transaction or (b) at the time that the parties have ceased their discussions. 2. You are employed as Chief Operating Officer of the Company, and as such report to the Company's CEO/President. Your job duties and responsibilities are described on Exhibit A attached hereto. You agree to the best of your --------- ability and experience that you will, to the reasonable satisfaction of the Company and its Board, at all times loyally and conscientiously perform all of the duties and obligations required of you pursuant to the terms of this Agreement; provided, however, that you shall not be precluded from engaging in civic, charitable or religious activities, from devoting a reasonable amount of time to private investments, or from serving on the board of directors of other business entities with the prior written approval of the Board of Directors of the Company (the "Board"), so long as such activities or service do not interfere with your responsibilities to the Company hereunder. You will comply with and be bound by the Company's operating policies, procedures and practices in effect from time to time during the term of your employment. 3. You acknowledge that your employment is and will continue to be at- will, as defined under applicable law, and that your employment with the Company may be terminated by either party at any time for any or no reason, with or without cause, and with or without notice. If your employment terminates for any reason, you will be entitled to any payments, benefits, damages, award or compensation other than as provided in this Agreement. Notwithstanding the foregoing, you still shall have the right to receive (i) payment of regular monthly salary and any bonus that has accrued but is unpaid on the date of termination, (ii) payment of all of your accrued and unused vacation through the date of termination, (iii) following your submission of proper expense reports, reimbursement by the Company for all expenses reasonably and necessarily incurred by you in connection with the business of the Company prior to termination, (iv) vested contributions and earnings from the Company's 401(k) plan, and (v) your rights under any of the Company's employee benefit plans, policies or arrangements in accordance with the terms of such plans, policies and arrangements. Any payments described in this paragraph shall be made promptly upon termination, but in any event in compliance with applicable law and any applicable terms of the Company's plans, policies, and arrangements. The rights and duties created by this paragraph may not be modified in any way except by a written agreement executed by you and the Chief Executive Officer on behalf of the Company. 4. If your employment is involuntarily terminated other than for Cause (as defined below) or terminated by you following a Constructive Termination (as defined below) at any time upon or within twelve (12) months following a Change of Control (the "Coverage Period"), you will be entitled to receive payment of severance benefits equal to 24 months of your regular monthly salary plus your annual target bonus (subject to any applicable tax withholding) in effect on the date of your termination or upon the occurrence of the Change of Control, whichever is greater. (Effective January 1, 2001, the Coverage Period shall be expanded to include the period beginning three (3) months prior to the occurrence of a Change of Control and ending thirteen (13) months following a Change of Control.) Payment will be made in a lump sum not more than thirty (30) days following the date of termination. Provided that you make a timely election to continue coverage under the Company's group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), health insurance benefits with the same coverage provided to you prior to the termination (e.g. medical, dental, optical, mental health) will be provided at the Company's cost for eighteen (18) months following the termination date, but not longer than until you are covered by comparable health insurance benefits from another employer or are otherwise ineligible for COBRA continuation coverage. Nothing in this Section 4 shall restrict the ability of the Company or its successor from changing some or all of the terms of such health insurance benefits, the cost to participants, or other features of such benefits; provided, however, that all similarly situated participants are treated the same. In addition, and except as otherwise determined below, each stock option and share of restricted stock you hold that is not otherwise fully exercisable and/or vested (i.e. released from the Company's repurchase option) as of the termination date shall become immediately exercisable and/or vested in full as of such date. Notwithstanding the foregoing, you shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise nor, except for your eligibility for COBRA continuation coverage, shall the amount of any payment or benefit provided for in this paragraph be reduced or otherwise affected by any compensation or benefits received by you as a result of employment by another employer or self-employment, by any retirement benefits regardless of source, by offset against any amount claimed to be owed by you to the Company, or otherwise. 5. In the event that the severance and other benefits provided to you by this Agreement (i) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or any ---- comparable successor provisions, and (ii) but for this paragraph would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the "Excise Tax"), then your benefits hereunder shall be either (i) provided to you in full, or (ii) provided to you as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax. whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by you, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and you agree otherwise in writing, any determination required under this paragraph shall be made in writing in good faith by a qualified third party (the "Professional Service Firm"). In the event of a reduction of benefits hereunder, ------------------------- you shall be given the choice of which benefits to reduce, in the event that the reduction to zero dollars ($0) of all benefits paid in cash is insufficient to avoid liability under the Excise Tax. For purposes of making the calculations required by this paragraph, the Professional Service Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority. The Company and you shall furnish to the Professional Service Firm such information and documents as the Professional Service Firm may reasonably request in order to make a determination under this Section 5. The Company shall bear all costs the Professional Service Firm may reasonably incur in connection with any calculations contemplated by this paragraph. If, notwithstanding any reduction described in this paragraph, the Internal Revenue Service ("IRS") determines that you are liable for the Excise Tax as a --- result of the receipt of the payment of benefits described above, then you shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that you challenge the final IRS determination, a final judicial determination, a portion of the payment equal to the "Repayment Amount." The Repayment Amount with respect to the payment of benefits shall be the smallest amount, if any, as shall be required to be paid to the Company so that your net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in your net after-tax proceeds with respect to the payment of such benefits being maximized. If the Excise Tax is not eliminated pursuant to this paragraph, you shall pay the Excise Tax. Notwithstanding any other provision of this paragraph, if (i) there is a reduction in the payment of benefits as described in this paragraph, (ii) the IRS later determines that you are liable for the Excise Tax, the payment of which would result in the maximization of your net after-tax proceeds (calculated as if your benefits previously had not been reduced), and (iii) you pay the Excise Tax, then the Company shall pay to you those benefits which were reduced pursuant to this paragraph contemporaneously or as soon as administratively possible after you pay the Excise Tax so that your net after-tax proceeds with respect to the payment of benefits is maximized. 6. For purposes of this Agreement, the following definitions will apply: (a) "Cause" for your termination will exist if the Company terminates ----- your employment for any of the following reasons: (i) you willfully fail to substantially perform your duties hereunder (other than any such failure due to your physical or mental illness), and such willful failure is not remedied within ten (10) business days after written notice from the Company's Chief Executive Officer, which written notice shall state that failure to remedy such conduct may result in an involuntary termination for Cause; (ii) you engage in willful and serious misconduct (including, but not limited to, an act of fraud or embezzlement) that has caused or is reasonably expected to result in material injury to the Company or any of its affiliates, (iii) you are convicted of or enter a plea of guilty or nolo contendere to a crime that constitutes a felony related to your employment with the Company or which materially adversely affects your ability to perform your duties on behalf of the Company, or (iv) you willfully breach any of your obligations hereunder or under any other written agreement or covenant with the Company or any of its affiliates, including, but not limited to, the Confidentiality Agreement, and such willful breach is not remedied within ten (10) business days after written notice from the Company's Chief Executive Officer, which written notice shall state that failure to remedy such conduct may result in an involuntary termination for Cause. (b) "Change of Control" will mean i) a dissolution or liquidation of ----------------- the Company; (ii) a sale, lease or other disposition of all or substantially all of the assets of the Company so long as the Company's stockholders of record immediately prior to such transaction will, immediately after such transaction, hold less than fifty percent (50%) of the voting power of the acquiring entity; (iii) an acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but excluding any merger effected exclusively for the purpose of changing the domicile of the Company), so long as the Company's stockholders of record immediately prior to such transaction or series of related transactions will, immediately after such transaction or series of related transactions, hold less than fifty percent (50%) of the voting power of the surviving or acquiring entity; or (iv) the individuals who, as of the date of this Agreement, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least fifty percent (50%) of the Board. If the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board. Effective January 1, 1001, "Change of Control" will mean (i) a dissolution or liquidation of the Company; (ii) a sale, lease or other disposition of all or substantially all of the assets of the Company so long as the Company's stockholders immediately prior to such transaction will, immediately after such transaction, fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the voting power of the acquiring entity (for purposes of this clause 7(b)(ii), any person who acquired securities of the Company prior to the occurrence of such asset transaction in contemplation of such transaction and who after such transaction possesses direct or indirect ownership of at least ten percent (10%) of the securities of the acquiring entity immediately following such transaction shall not be included in the group of stockholders of the Company immediately prior to such transaction); (iii) either a merger or consolidation in which the Company is not the surviving corporation and the stockholders of the Company immediately prior to the merger or consolidation fail to possess direct or indirect beneficial ownership of more than fifty (50%) of the voting power of the securities of the surviving corporation (or if the surviving corporation is a controlled affiliate of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity which controls the surviving corporation and is not itself a controlled affiliate of any other entity) immediately following such transaction, or a reverse merger in which the Company is the surviving corporation and the stockholders of the Company immediately prior to the reverse merger fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the securities of the Company (or if the Company is a controlled affiliate of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity which controls the Company and is not itself a controlled affiliate of any other entity) immediately following the reverse merger (for purposes of this clause 6(b)(iii), any person who acquired securities of the Company prior to the occurrence of a merger, reverse merger, or consolidation in contemplation of such transaction and who after such transaction possesses direct or indirect beneficial ownership of at least ten percent (10%) of the securities of the Company or the surviving corporation (or if the Company or the surviving corporation is a controlled affiliate, then of the appropriate entity as determined above) immediately following such transaction shall not be included in the group of stockholders of the Company immediately prior to such transaction); (iv) an acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or a subsidiary or other controlled affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors; or (v) the individuals who, as of the date of this Agreement, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least fifty percent (50%) of the Board. If the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board. (c) "Constructive Termination" will be deemed to occur if (A) (i) ------------------------ your duties and responsibilities as Chief Operation Officer of the Company (or a successor corporation) are materially diminished from your duties and responsibilities as in effect at any time from the time immediately prior to the occurrence of a Change of Control or at any time thereafter, without your prior written consent; (ii) any reduction in the total value of your base compensation and benefits occurs; (iii) your new business office location is either (a) more than thirty (30) miles in distance from your current business office location or (b) greater than your current commute to and from your current business office location; and (B) within sixty (60) days immediately following such event described in clauses (i) through (iii) above, you elect to terminate your employment voluntarily. For purposes of this definition and this Agreement, however, a change in title with substantially the same duties and responsibilities shall not be considered a Constructive Termination, should this result solely from an acquisition by a larger company in which you have continuing responsibilities for the acquirer which are substantially the same as those you had for the Company when it was independent. 7. You have signed a document entitled "Employee Agreement" (the "Confidentiality Agreement") substantially in the form attached hereto as - -------------------------- Exhibit B. You hereby represent and warrant to the Company that you have - --------- complied with all obligations under the Confidentiality Agreement and agree to continue to abide by the terms of the Confidentiality Agreement and further agree that the provisions of the Confidentiality Agreement will survive any termination of this Agreement or of your employment relationship with the Company. 8. Upon your involuntary termination of employment other than for Cause or your voluntary termination following a Constructive Termination, and as a condition of the receipt of any benefits under this Agreement, you shall execute an effective release (the "Release") in substantially the form incorporated ------- herein and attached hereto as Exhibit C (or if you are under forty (40) years --------- old at the time of such termination, in substantially the form attached hereto as Exhibit C with appropriate changes to reflect the inapplicability of the Age Discrimination in Employment Act) as shall ultimately be determined by the Company. Such Release shall specifically relate to all of your rights and claims in existence at the time of such execution and shall confirm your obligations under the Confidentiality Agreement. It is understood that you have twenty-one (21) days to consider whether to execute such Release, and you may revoke such Release within seven (7) business days after execution. In the event you do not execute such Release within the twenty-one (21) day period, or if you revoke such Release within the subsequent seven (7) business day period, no benefits shall be payable under this Agreement and this Agreement shall be null and void. Notwithstanding the foregoing, in addition to or in lieu of the Release attached hereto as Exhibit C, you may be required to execute and deliver an effective release in such other form as the Company may, in its sole discretion, determine to be necessary or appropriate in order to comply with the requirements of the laws of any jurisdiction applicable to you in order to make a general release of claims effective and enforceable. 9. You represent that you have not entered into any agreements, understandings, or arrangements with any other person or entity which would be breached by you as a result of, or that would in any way preclude or prohibit you from entering into this Agreement or performing any of the duties and responsibilities provided for herein. 10. Any successor to the Company as a result of the occurrence of a Change of Control (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or otherwise which succeeds to all or substantially all of the Company's business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this paragraph or which becomes bound by the terms of this Agreement by operation of law. The terms of this Agreement and all of your rights hereunder shall inure to the benefit of, and be enforceable by, your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees or legatees. 11. This Agreement, including any Exhibits hereto, constitutes the sole agreement of the parties and supersedes all negotiations and prior agreements with respect to the subject matter hereof, i.e., the rights and responsibilities of you and the Company in the event of certain terminations of your employment with the Company relating to the occurrence of a Change of Control. 12. Any term of this Agreement may be amended or waived only with the written consent of the parties. 13. Any notice required or permitted by this Agreement will be in writing and will be deemed sufficient upon receipt, when delivered personally, by facsimile or by a nationally-recognized delivery service (such as Federal Express or Express Mail), or 72 hours after being deposited in the U.S. mail as certified or registered mail with the postage prepaid, if such notice is addressed to the party to be notified at such party's address as set forth below or as subsequently modified by written notice. 14. The validity, interpretation, construction and performance of this Agreement will be governed by the laws of the State of California, without giving effect to the principles of conflict of laws. 15. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to re-negotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision will be excluded from this Agreement or a legal authority of competent jurisdiction (including an arbitrator) will have the authority to modify or replace the invalid or unenforceable provision with a valid and enforceable provision that most accurately embodies the parties' intention with respect to the invalid or unenforceable provision, (ii) the balance of the Agreement will be interpreted as if such provision were so excluded, modified or replaced and (iii) the balance of the Agreement will be enforceable in accordance with its terms. 16. You and the Company agree to attempt to settle any disputes arising in connection with this Agreement through good faith consultation. In the event that we are not able to resolve any such disputes within fifteen (15) days after notification in writing to the other, we agree that any dispute or claim arising out of or in connection with this Agreement will be finally settled by binding arbitration in Santa Clara County, California in accordance with the rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules. The arbitrator will apply California law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision. You agree that punitive damages will not be awarded. This paragraph will not apply to the Confidentiality Agreement. If there is a termination of your employment with the Company followed by a dispute as to whether you are entitled to the benefits provided under this Agreement, then, during the period of that dispute the Company shall pay you fifty percent (50%) of the amount specified in Section 4 hereof (except that the Company shall pay one hundred percent (100%) of any insurance premiums provided for in Section 4), if, and only if, you agree in writing that if the dispute is resolved against you, you shall promptly refund to the Company all payments you receive plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly. If the dispute is resolved in your favor, promptly after resolution of the dispute the Company shall pay you the sum that was withheld during the period of the dispute plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly. Notwithstanding any other provisions of this Agreement, if you either (i) bring any action to enforce your rights pursuant to this Agreement, or (ii) defend any legal challenge to your rights hereunder, you shall be entitled to recover reasonable attorneys' fees and costs incurred in connection with such action from the Company, payable on a monthly basis, regardless of the outcome of such action; provided, however, that in the event such action is commenced by you, the court finds the claim was brought in good faith. 17. You acknowledge that, in executing this Agreement, you have had the opportunity to seek the advice of independent legal counsel, and have read and understood all of the terms and provisions of this Agreement. Please indicate your agreement with the above terms by signing below. Sincerely, Aspect Communications Corporation /s/Beatriz Infante ----------------------------------- Beatriz Infante Title: Chief Executive Officer and President Address: 1310 Ridder Park Drive San Jose, CA 95131 Facsimile Number: (408) 325-2261 My signature below signifies my agreement with the above terms. By: /s/ Gary L. Smith ----------------------------------------------- Address: 3901 Wood Lake Drive, Plano TX 75093 ------------------------------------------ Facsimile Number: (972) 398-0899 --------------------------------- RELEASE [NOTE: INCLUDES ADEA LANGUAGE] Certain capitalized terms used in this Release are defined in the letter agreement between me and the Company dated ______________, (the "Agreement") which I have executed and of which this Release is a part. I hereby confirm my obligations under the Company's Confidentiality Agreement. Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company's indemnification obligation pursuant to agreement or applicable law. In giving this release, which includes claims that may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." I expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any unknown or unsuspected claims I may have against the Company. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA. I also acknowledge that the consideration given under this Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the parties to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me. By: --------------------------- Date: ------------------------- April 6, 2000 Mr. Gary L. Smith 3901 Wood Lake Drive Plano, TX 75093 Dear Gary: I am pleased to extend this invitation to you to join Aspect Communications Corporation in the capacity of Chief Operating Officer, reporting directly to me, with an anticipated start date of April 7, 2000. This position is an elected corporate executive officer and you will be identified in Aspect's shareholder and other communications as an Executive Officer of the company; hence you are subject to SEC disclosure requirements on your compensation, stock options and ownership position and any financial arrangements between yourself and the company. Your initial job duties will include the following: . Responsible for achieving operating results in line with financial, market share, and growth targets. . Provide direction and tracking on achievement of specific goals in support of operating plan across all company functions. . Together with President/CEO, make final decisions on all operating issues. . Drive services, distribution, and geographic expansion strategies in support of development of company's 3-year plan. . Direct line responsibility for company's sales organizations and service organizations, consisting of customer support, consulting, and customer education functions. . Primary responsibility for customers, distributors, and business alliance partners. . Responsible for all internal and partner training. Your compensation will be composed of three elements: . Your starting salary will be $33,333.34 on a monthly basis ($400,000.00 annual), and will be paid semi-monthly. . You will be eligible to participate in the Aspect Incentive Plan. Under this plan you will be eligible to receive a quarterly cash bonus that is targeted at 100% of your eligible earnings in each quarter. This bonus will be determined as follows: 80% on performance against revenue, profitability and bookings goals approved by the Board of Directors and 20% on performance against pre-established MBO's for that quarter. The payouts on this plan can range from 0%-300%, with no payout for achieving less than 70% on the revenue, profitability and bookings goals. . In addition to your base salary and special and quarterly incentive bonuses, you will be eligible for up to $5,000.00 per year in executive expense reimbursement for any combination or the following: Mr. Gary Smith April 6, 2000 Page 2 . Personal income tax preparation . Financial and estate planning . Personal physical exam As part of our offer, if either the company requires you to move or you elect to move in the first 18 months, we are extending the enclosed relocation package to you to relocate you and your family from Dallas, Texas to the Bay Area, California. Details and maximum spending amounts are controlled by this policy. If you voluntarily terminate your employment with Aspect Communications prior to 2 years of services, you will be required to reimburse the Company for a pro- rated portion of the relocation package. In addition to our standard relocation, the following items will be provided, assuming continued employment: . Rental or leased vehicle not to exceed $1,500.00 per month for 24 months. . Fully furnished executive apartment or small home leased for 24 months, not to exceed $5,000.00 per month. . $25.00 per diem (Monday through Friday only) for 12 months. . One roundtrip airfare per month from Dallas to the Bay Area provided for your spouse. . A secured seven percent (7%), fixed annual interest loan to cover ninety percent (90%) of the cost of a Bay Area California home you purchase with your relocation to the Bay Area for the amount up to $4.5 million. Three percent (3%) of the interest only will be payable monthly. Four percent (4%) of the seven percent (7%) interest will be accrued for up to five years. The principal and accrued interest is due and payable at the end of year five. The loan would be secured by the Bay Area home that you purchase and would be due within thirty (30) days should you leave the company. You will receive a retention bonus for the amount of $17,500.00 for each of 20 quarters following your relocation to your new Bay Area home conditional upon your continued active employment with Aspect. We understand that your current company may require you to reimburse them for relocation costs incurred. Should this happen, Aspect Communications will cover those costs (with provided documentation), not to exceed $200,000.00. Should you decide to voluntarily terminate your employment with Aspect Communications before 1 year of employment, you agree to reimburse Aspect Communications a pro- rated amount of those costs. Gary, I intend to recommend to the Board of Directors of Aspect Communications Corporation that you be granted a stock option to purchase two hundred fifty thousand (250,000) shares of Mr. Gary Smith April 6, 2000 Page 3 Aspect Communications Corporation Common Stock. The stock option will be recommended for the approval to the Board on your actual first day as an Aspect employee. You will receive your stock option package one week after the Board of Directors has approved your option. The grant price will be the closing price on the date the grant is issued as quoted in the Wall Street Journal. The option will vest over four years: twenty-five percent (25%) will become exercisable on the first anniversary of your full time employment, and the balance will vest in equal increments monthly over the remaining three-year period. Should your employment terminate for any reason, your option will cease to continue to vest as of your termination. Complete details of the stock option agreement will be provided to you upon approval of your option. You are also eligible to participate in Aspect's comprehensive benefits plans, including health, dental, vision, life and disability insurance plans in accordance with the terms and conditions of subject plans as outline in the Aspect Personal Choice Benefits brochure which will be provided upon the commencement of your employment. As an inducement to accept this offer, and in acknowledgment that you will forfeit certain elements of value to you in leaving your current employment, you will be eligible to receive a total of $100,000.00 in a special cash bonus, payable in four elements of $25,000.00 each, as you achieve preset milestones during the first nine months with the company. We will discuss and set these milestones within 30 days of your employment with Aspect. Additionally, Aspect will guarantee a minimum of 100% of your quarterly bonus target payout, for your first year of employment, provided the company achieves at least 70% of it's revenue profitability and bookings targets for each quarter. This offer of employment is contingent upon the following: . Your ability to provide and maintain the proper and necessary documentation required for you and Aspect to comply with all applicable United States immigration laws and regulations. Please be prepared on your first day of employment to show specific documentation to certify your legal right to work in the United States. Enclosed is a complete listing of acceptable forms of documentation. If you are a foreign national requiring work authorization to begin employment, you must contact the Aspect Immigration Department at (408) 325-4102 or krista.evanger@aspect.com to initiate the visa process. Aspect will submit a petition on your behalf to obtain employment authorization, and will file visa applications for your immediate dependent family members. Aspect will pay the legal fees and costs related to these filings. Because the number of work visas available each year is limited by the U.S. government, Aspect reserves the right to withdraw or suspend this offer if the Company is not able to obtain work authorization for you in a reasonable period of time. Please note that if you currently have employment authorization such as practical, curricular or academic training (F-1 or J-1), you must contact the Aspect Immigration Department before beginning employment. Mr. Gary Smith April 6, 2000 Page 4 . Your execution (signature) of the Aspect Employee Agreement, which protects the intellectual property and confidential information of Aspect, and prohibits the unauthorized use of the intellectual property and confidential information of any other company. . The satisfactory review and/or verification of background information, including, but not limited to, education, Department of Motor Vehicle, Social Security, and criminal records. A credit check will be conducted due to the Aspect loan provision provided to you in your relocation package. Gary, I am looking forward to working with you at Aspect, being part of a company that provides great value to its customers and employees. I believe that you have much to offer and much to gain -- personally, professionally, and financially -- in joining us. I look forward to a favorable decision and your acknowledgment and assent to the terms of this letter by April 7, 2000. If you have any questions regarding this offer or the enclosed documents, please contact me at (408) 325-2040 or e-mail me at beatriz.infante@aspect.com Please indicate your acceptance of this offer by signing and returning it to Corporate Staffing immediately. This letter is the complete and entire expression of our offer of employment and supersedes all other information, whether written or oral, concerning your employment offer with Aspect Communications Corporation. Sincerely, /s/ Beatriz Infante - --------------------------------- Beatriz Infante President and CEO Mr. Gary Smith April 6, 2000 Page 5 I accept this offer. I understand that my employment by Aspect is for an indefinite term and is on an "at-will" basis, which means that either Aspect or I may terminate the employment relationship at any time for any reason and under no circumstances will I be employed under a contract of employment. While other terms and conditions of my employment contained in various policies and programs are subject to change with or without notice, I understand that this "at-will" relationship can be changed only by written agreement expressly for that purpose, signed by the Company's Chief Executive Officer. I acknowledge and agree that this paragraph constitutes the complete and entire understanding between Aspect and me on the subject of how and when our employment relationship can be terminated, and supersedes any and all prior discussions, agreements and understanding between Aspect and me, whether oral, written or implied. /s/ Gary L. Smith April 7, 2000 - ------------------------ -------------------------- Gary L. Smith Date Start Date: April 7, 2000 Enclosures Mr. Gary Smith April 6, 2000 Page 6 SUMMARY CUSTOMARY PROVISIONS OF EMPLOYMENT FOR EXECUTIVE OFFICERS - ----------------------------------------------------------------- At the inception of your employment, you will be required to sign a statement agreeing to hold the company's proprietary information confidential during and after your employment, and that you have not brought any former employer's proprietary information or any of their clients' proprietary information with you. You will also sign an inventions agreement that assigns to the company any patentable inventions that you create through your work with the company. As an employer based in the United States, Aspect is required to verify that its employees are eligible to work in the United States. On your first day of employment, you will be required to certify that you are a citizen or lawful permanent resident or an alien authorized to work in the U.S. By accepting this letter offer of employment, you will be indicating to the company that you are acknowledging that you will become an Executive Officer of the company, as the Securities and Exchange Commission defines that term. As such, the company may be obligated to publicly report your compensation, your stock options and ownership position, and other facts relating to your employment. Generally, such disclosure would not occur before March 2000 and annually thereafter. You will need to report directly to the SEC any open market Aspect stock purchases, sales, gifts and grant or exercises of options and these reports became a matter of public record. As an officer of the company it is important for you to know that there are certain obligations of all executive officers and directors to avoid trading the company's stock while in possession of material inside information and to avoid combining purchase and sale transactions within a six month period ("short- swing" transactions.) All executive officers and directors have agreed to abide by a standard set of policies to avoid personal liability and potential embarrassment to the company regarding their own stock transactions. A key provision of this policy is a voluntary prohibition against buying or selling Aspect stock during certain windows of time, generally the last month of each quarter through two days following the release of earnings early the following quarter. You will be asked to sign an agreement to uphold this policy. As an officer of the company, you will be offered the opportunity to enter into a change of control employment agreement with the company that would provide you immediate vesting of any unvested Aspect options and salary continuation for up to a two year period if there were a change of control of the company before February 2001 and within one year of the change of control event, your job were eliminated or substantially reduced, you were involuntarily terminated or required to relocate. - --------------------------------- (Initials) Gary L. Smith EX-10.80 3 0003.txt EMPLOYMENT AGREEMENT BETSY RAFAEL EXHIBIT 10.80 Ms. Betsy Rafael Esecutive Vice President, Finance and Chief Financial Officer Aspect Communications San Jose, CA 95131 Dear Betsy: This letter agreement (the "Agreement") is to confirm the terms of your ongoing employment with Aspect Communications Corporation (the "Company") and supersedes and replaces all prior oral and/or written agreements regarding the subject matter hereof between you and the Company. 1. This Agreement will commence on the date hereof and continue until February 28, 2002 (the "Original Term"), unless extended for one or more ------------- additional one-year terms upon mutual written agreement between you and the Company or unless terminated pursuant to the terms described herein. Approval by the Company shall be evidenced by the adoption of resolutions by the Compensation Committee of the Board of Directors of the Company (the "Committee"). In the event that the Company has entered into discussions with a --------- third party regarding a Change of Control in the beneficial ownership of the Company (as defined below) and such Change of Control discussions are ongoing at the end of the Original Term or any extension, this Agreement automatically shall be extended until the later of (a) the end of a period of eighteen (18) months following the closing of such Change of Control transaction or (b) at the time that the parties have ceased their discussions. 2. You are employed as Executive Vice President, Finance and Chief Financial Officer of the Company, and as such report to the Company's Chief Executive Officer. Your job duties and responsibilities are described on Exhibit A attached hereto. You agree to the best of your ability and experience - --------- that you will, to the reasonable satisfaction of the Company and its Board, at all times loyally and conscientiously perform all of the duties and obligations required of you pursuant to the terms of this Agreement; provided, however, that you shall not be precluded from engaging in civic, charitable or religious activities, from devoting a reasonable amount of time to private investments, or from serving on the boards of directors of other business entities with the prior written approval of the Board of Directors of the Company (the "Board"), so long as such activities or service do not interfere with your responsibilities to the Company hereunder. You will comply with and be bound by the Company's operating policies, procedures and practices in effect from time to time during the term of your employment. 3. You acknowledge that your employment is and will continue to be at- will, as defined under applicable law, and that your employment with the Company may be terminated by either party at any time for any or no reason, with or without cause, and with or without notice. If your employment terminates for any reason, you will not be entitled to any payments, benefits, damages, award or compensation other than as provided in this Agreement. Notwithstanding the foregoing, you still shall have the right to receive (i) payment of regular monthly salary and any bonus that has accrued but is unpaid on the date of termination, (ii) payment of all of your accrued and unused vacation through the date of termination, (iii) following your submission of proper expense reports, reimbursement by the Company for all expenses reasonably and necessarily incurred by you in connection with the business of the Company prior to termination, (iv) vested contributions and earnings from the Company's 401(k) plan, and (v) your rights under any of the Company's employee benefit plans, policies or arrangements in accordance with the terms of such plans, policies and arrangements. Any payments described in this paragraph shall be made promptly upon termination, but in any event in compliance with applicable law and any applicable terms of the Company's plans, policies, and arrangements. The rights and duties created by this paragraph may not be modified in any way except by a written agreement executed by you and the chief executive officer on behalf of the Company. 4. If your employment is involuntarily terminated other than for Cause (as defined below) or terminated by you following a Constructive Termination (as defined below) at any time, beginning three (3) months prior to the occurrence of a Change of Control and ending thirteen (13) months following a Change of Control (the coverage period), you will be entitled to receive payment of severance benefits equal to 24 months of your regular monthly salary plus your annual target bonus (subject to any applicable tax withholding) in effect on the date of your termination or upon the occurrence of the Change of Control, whichever is greater Payment will be made in a lump sum not more than thirty (30) days following the date of termination. Provided that you make a timely election to continue coverage under the Company's group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), health insurance benefits with the same coverage provided to you prior to the termination (e.g. medical, dental, optical, mental health) will be provided at the Company's cost for eighteen (18) months following the termination date, but not longer than until you are covered by comparable health insurance benefits from another employer or are otherwise ineligible for COBRA continuation coverage. Nothing in this Section 4 shall restrict the ability of the Company or its successor from changing some or all of the terms of such health insurance benefits, the cost to participants, or other features of such benefits; provided, however, that all similarly situated participants are treated the same. In addition, and except as otherwise determined below, each stock option and share of restricted stock you hold that is not otherwise fully exercisable and/or vested (i.e., released from the Company's repurchase option) as of the termination date shall become immediately exercisable and/or vested in full as of such date. Notwithstanding the foregoing, you shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise nor, except for your eligibility for COBRA continuation coverage, shall the amount of any payment or benefit provided for in this paragraph be reduced or otherwise affected by any compensation or benefits received by you as a result of employment by another employer or self- employment, by any retirement benefits regardless of source, by offset against any amount claimed to be owed by you to the Company, or otherwise. 5. In the event that the severance and other benefits provided to you by this Agreement (i) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or any ---- comparable successor provisions, and (ii) but for this paragraph would be subject to the excise tax imposed by Section 4999 of the Code, or any comparable successor provisions (the "Excise Tax"), then your benefits hereunder shall be either (i) provided to you in full, or (ii) provided to you as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, 2 whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, the Excise Tax, and any other applicable taxes, results in the receipt by you, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. Unless the Company and you agree otherwise in writing, any determination required under this paragraph shall be made in writing in good faith by a qualified third party (the "Professional Service Firm"). In the event of a reduction of benefits - -------------------------- hereunder, you shall be given the choice of which benefits to reduce, in the event that the reduction to zero dollars ($0) of all benefits paid in cash is insufficient to avoid liability under the Excise Tax. For purposes of making the calculations required by this paragraph, the Professional Service Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority. The Company and you shall furnish to the Professional Service Firm such information and documents as the Professional Service Firm may reasonably request in order to make a determination under this Section 5. The Company shall bear all costs the Professional Service Firm may reasonably incur in connection with any calculations contemplated by this paragraph. If, notwithstanding any reduction described in this paragraph, the Internal Revenue Service ("IRS") determines that you are liable for the Excise --- Tax as a result of the receipt of the payment of benefits described above, then you shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that you challenge the final IRS determination, a final judicial determination, a portion of the payment equal to the "Repayment Amount." The Repayment Amount with respect to the payment of benefits shall be the smallest amount, if any, as shall be required to be paid to the Company so that your net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in your net after-tax proceeds with respect to the payment of such benefits being maximized. If the Excise Tax is not eliminated pursuant to this paragraph, you shall pay the Excise Tax. Notwithstanding any other provision of this paragraph, if (i) there is a reduction in the payment of benefits as described in this paragraph, (ii) the IRS later determines that you are liable for the Excise Tax, the payment of which would result in the maximization of your net after-tax proceeds (calculated as if your benefits previously had not been reduced), and (iii) you pay the Excise Tax, then the Company shall pay to you those benefits which were reduced pursuant to this paragraph contemporaneously or as soon as administratively possible after you pay the Excise Tax so that your net after- tax proceeds with respect to the payment of benefits is maximized. 6. For purposes of this Agreement, the following definitions will apply: (a) "Cause" for your termination will exist if the Company terminates ----- your employment for any of the following reasons: (i) you willfully fail to substantially perform your duties hereunder (other than any such failure due to your physical or mental illness), and such willful failure is not remedied within ten (10) business days after written notice from the Company's Chief Executive Officer, which written notice shall state that failure to remedy such conduct may result in an involuntary termination for Cause; (ii) you engage in willful and serious misconduct (including, but not limited to, an act of fraud or embezzlement) that has caused or is reasonably expected to result in material injury to the Company or any of its affiliates, (iii) you are convicted of or enter a plea of guilty or nolo 3 contendere to a crime that constitutes a felony related to your employment with the Company or which materially adversely affects your ability to perform your duties on behalf of the Company, or (iv) you willfully breach any of your obligations hereunder or under any other written agreement or covenant with the Company or any of its affiliates, including, but not limited to, the Confidentiality Agreement, and such willful breach is not remedied within ten (10) business days after written notice from the Company's Chief Executive Officer, which written notice shall state that failure to remedy such conduct may result in an involuntary termination for Cause. (b) "Change of Control" will mean (i) a dissolution or liquidation of ----------------- the Company; (ii) a sale, lease or other disposition of all or substantially all of the assets of the Company so long as the Company's stockholders of record immediately prior to such transaction will, immediately after such transaction, hold less than fifty percent (50%) of the voting power of the acquiring entity; (iii) an acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but excluding any merger effected exclusively for the purpose of changing the domicile of the Company), so long as the Company's stockholders of record immediately prior to such transaction or series of related transactions will, immediately after such transaction or series of related transactions, hold less than fifty percent (50%) of the voting power of the surviving or acquiring entity; or (iv) the individuals who, as of the date of this Agreement, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least fifty percent (50%) of the Board. If the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board. "Change of Control" will mean (i) a dissolution or liquidation of the Company; (ii) a sale, lease or other disposition of all or substantially all of the assets of the Company so long as the Company's stockholders immediately prior to such transaction will, immediately after such transaction, fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the voting power of the acquiring entity (for purposes of this clause 7(b)(ii), any person who acquired securities of the Company prior to the occurrence of such asset transaction in contemplation of such transaction and who after such transaction possesses direct or indirect ownership of at least ten percent (10%) of the securities of the acquiring entity immediately following such transaction shall not be included in the group of stockholders of the Company immediately prior to such transaction); (iii) either a merger or consolidation in which the Company is not the surviving corporation and the stockholders of the Company immediately prior to the merger or consolidation fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the voting power of the securities of the surviving corporation (or if the surviving corporation is a controlled affiliate of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity which controls the surviving corporation and is not itself a controlled affiliate of any other entity) immediately following such transaction, or a reverse merger in which the Company is the surviving corporation and the stockholders of the Company immediately prior to the reverse merger fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the securities of the Company (or if the Company is a controlled affiliate of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity which controls the Company and is not itself a controlled affiliate of any other entity) immediately following the reverse merger (for purposes of this clause 6(b)(iii), any person who acquired securities of the Company prior to the occurrence of a merger, reverse merger, or consolidation in contemplation of such transaction and who after such transaction possesses 4 direct or indirect beneficial ownership of at least ten percent (10%) of the securities of the Company or the surviving corporation (or if the Company or the surviving corporation is a controlled affiliate, then of the appropriate entity as determined above) immediately following such transaction shall not be included in the group of stockholders of the Company immediately prior to such transaction); (iv) an acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or a subsidiary or other controlled affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors; or (v) the individuals who, as of the date of this Agreement, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least fifty percent (50%) of the Board. If the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board. (c) "Constructive Termination" will be deemed to occur if (A)(i) your ------------------------ duties and responsibilities as Executive Vice President, Finance and Chief Financial Officer of the Company (or a successor corporation) are materially diminished from your duties and responsibilities as in effect at any time from the time immediately prior to the occurrence of a Change of Control or at any time thereafter, without your prior written consent; (ii) any reduction in the total value of your base compensation and benefits occurs; (iii) your new business office location is either (a) more than thirty (30) miles in distance from your current business office location or (b) greater than your current commute to and from your current business office location; and (B) within sixty (60) days immediately following such event described in clauses (i) through (iii) above, you elect to terminate your employment voluntarily. For purposes of this definition and this Agreement, however, a change in title with substantially the same duties and responsibilities shall not be considered a Constructive Termination, should this result solely from an acquisition by a larger company in which you have continuing responsibilities for the acquiror which are substantially the same as those you had for the Company when it was independent. 7. You have signed a document entitled "Employee Agreement" (the "Confidentiality Agreement") substantially in the form attached hereto as - -------------------------- Exhibit B. You hereby represent and warrant to the Company that you have - --------- complied with all obligations under the Confidentiality Agreement and agree to continue to abide by the terms of the Confidentiality Agreement and further agree that the provisions of the Confidentiality Agreement will survive any termination of this Agreement or of your employment relationship with the Company. 8. Upon your involuntary termination of employment other than for Cause or your voluntary termination following a Constructive Termination, and as a condition of the receipt of any benefits under this Agreement, you shall execute an effective release (the "Release") in substantially the form incorporated ------- herein and attached hereto as Exhibit C (or if you are under forty (40) years --------- old at the time of such termination, in substantially the form attached hereto as Exhibit C with appropriate changes to reflect the inapplicability of the Age Discrimination in Employment Act) as shall ultimately be determined by the Company. Such Release shall specifically relate to all of your rights and claims in existence at the time of such execution and shall confirm your obligations under the Confidentiality Agreement. It is understood that you have twenty-one (21) days to consider whether to execute such Release, 5 and you may revoke such Release within seven (7) business days after execution. In the event you do not execute such Release within the twenty-one (21) day period, or if you revoke such Release within the subsequent seven (7) business day period, no benefits shall be payable under this Agreement and this Agreement shall be null and void. Notwithstanding the foregoing, in addition to or in lieu of the Release attached hereto as Exhibit C, you may be required to execute and deliver an effective release in such other form as the Company may, in its sole discretion, determine to be necessary or appropriate in order to comply with the requirements of the laws of any jurisdiction applicable to you in order to make a general release of claims effective and enforceable. 9. You represent that you have not entered into any agreements, understandings, or arrangements with any other person or entity which would be breached by you as a result of, or that would in any way preclude or prohibit you from entering into this Agreement or performing any of the duties and responsibilities provided for herein. 10. Any successor to the Company as a result of the occurrence of a Change of Control (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) or otherwise which succeeds to all or substantially all of the Company's business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which executes and delivers the assumption agreement described in this paragraph or which becomes bound by the terms of this Agreement by operation of law. The terms of this Agreement and all of your rights hereunder shall inure to the benefit of, and be enforceable by, your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees or legatees. 11. This Agreement, including any Exhibits hereto, constitutes the sole agreement of the parties and supersedes all negotiations and prior agreements with respect to the subject matter hereof, i.e., the rights and responsibilities of you and the Company in the event of certain terminations of your employment with the Company relating to the occurrence of a Change of Control. 12. Any term of this Agreement may be amended or waived only with the written consent of the parties. 13. Any notice required or permitted by this Agreement will be in writing and will be deemed sufficient upon receipt, when delivered personally, by facsimile or by a nationally-recognized delivery service (such as Federal Express or Express Mail), or 72 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the party to be notified at such party's address as set forth below or as subsequently modified by written notice. 14. The validity, interpretation, construction and performance of this Agreement will be governed by the laws of the State of California without giving effect to the principles of conflict of laws. 15. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to re-negotiate such provision in good faith. In the 6 event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision will be excluded from this Agreement or a legal authority of competent jurisdiction (including an arbitrator) will have the authority to modify or replace the invalid or unenforceable provision with a valid and enforceable provision that most accurately embodies the parties' intention with respect to the invalid or unenforceable provision, (ii) the balance of the Agreement will be interpreted as if such provision were so excluded, modified or replaced and (iii) the balance of the Agreement will be enforceable in accordance with its terms. 16. You and the Company agree to attempt to settle any disputes arising in connection with this Agreement through good faith consultation. In the event that we are not able to resolve any such disputes within fifteen (15) days after notification in writing to the other, we agree that any dispute or claim arising out of or in connection with this Agreement will be finally settled by binding arbitration in Santa Clara County, California in accordance with the rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules. The arbitrator will apply California law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision. You agree that punitive damages will not be awarded. This paragraph will not apply to the Confidentiality Agreement. If there is termination of your employment with the Company followed by a dispute as to whether you are entitled to the benefits provided under this Agreement, then, during the period of that dispute the Company shall pay you fifty percent (50%) of the amount specified in Section 4 hereof (except that the Company shall pay one hundred percent (100%) of any insurance premiums provided for in Section 4), if, and only if, you agree in writing that if the dispute is resolved against you, you shall promptly refund to the Company all payments you receive plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly. If the dispute is resolved in your favor, promptly after resolution of the dispute the Company shall pay you the sum that was withheld during the period of the dispute plus interest at the rate provided in Section 1274(d) of the Code, compounded quarterly. Notwithstanding any other provisions of this Agreement, if you either (i) bring any action to enforce your rights pursuant to this Agreement, or (ii) defend any legal challenge to your rights hereunder, you shall be entitled to recover reasonable attorneys' fees and costs incurred in connection with such action from the Company, payable on a monthly basis, regardless of the outcome of such action; provided, however, that in the event such action is commenced by you, the court finds the claim was brought in good faith. 17. You acknowledge that, in executing this Agreement, you have had the opportunity to seek the advice of independent legal counsel, and have read and understood all of the terms and provisions of this Agreement. 7 Please indicate your agreement with the above terms by signing below. Sincerely, Aspect Communications Corporation By: /s/ JOHN VIERA ------------------------------------------ John Viera Title: Sr. Vice President Human Resources Address: 1310 Ridder Park Drive San Jose, CA 95131 Facsimile Number: (408) 325-4766 My signature below signifies my agreement with the above terms. By: /s/ BETSY RAFAEL ------------------------------------------- Address: -------------------------------------- Facsimile Number: ----------------------------- 8 EXHIBIT A --------- Description of Job Duties And Responsibilities Betsy Rafael - Executive Vice President, Finance & CFO - ------------------------------------------------------- This position is responsible for overseeing the financial functions of an organization, which is an independent corporation. Responsibilities include financial plans and policies, accounting practices and procedures, and the organization's relationship with the financial community. EXHIBIT B --------- CONFIDENTIALITY AGREEMENT -------------------------- EXHIBIT C --------- RELEASE ------- RELEASE [NOTE: INCLUDES ADEA LANGUAGE] Certain capitalized terms used in this Release are defined in the letter agreement between me and the Company dated _____________, (the "Agreement") which I have executed and of which this Release is a part. I hereby confirm my obligations under the Company's Confidentiality Agreement. Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of disputed compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended ("ADEA"); the federal Employee Retirement Income Security Act of 1974, as amended; the federal Americans with Disabilities Act of 1990; tort law; contract law; statutory law; common law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company's indemnification obligation pursuant to agreement or applicable law. In giving this release, which includes claims that may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." I expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any unknown or unsuspected claims I may have against the Company. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under ADEA. I also acknowledge that the consideration given under this Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following the execution of this Release by the parties to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Release is executed by me. By: ____________________________________ Date: __________________________________ EX-10.81 4 0004.txt FY 2001 ASPECT INCENTIVE PLAN EXHIBIT 10.81 FY2001 Aspect Incentive Plan Summary The Aspect Incentive Plan (AIP) is a formula-driven, performance-based incentive plan the performance goals of which for a particular fiscal year are reviewed and approved by the Compensation Committee prior to the start of each fiscal year. Aspect established the AIP beginning in January 2000 for all eligible employees to create one company-wide plan to: . Provide a common framework for managing and rewarding performance across the organization, . Clearly establish and communicate the goals and objectives for the Company and each participating employee, . Motivate and reward performance supporting Aspect's critical business goals, . Link rewards with individual performance, and . Provide upside opportunity along with downside risk The funding for the AIP is determined by the Company's performance against a set of performance goals and measurements as determined by the Compensation Committee. In FY 2001, these goals and measurements include revenue growth and pro forma earnings. The Compensation Committee may also include other metrics as deemed appropriate, including, but not limited to, total shareholder return, stock price, value-added measures, asset turnover, return on investment, earnings per share, customer satisfaction, internal operational criteria and management objectives. Achievement of the goals is substantially uncertain at the time the goals are established and the Compensation Committee certifies the attainment of the goals before any payment is made. The formula specifies the maximum annual payout for any one employee and precludes the Compensation Committee from increasing any amount once determined by the performance against the Company and personal performance. Eligibility All employees are eligible to participate in the AIP, up through and including all 16b elected officers. Excluded from the plan are direct sales, pre-sales and non-executive sales management employees. Customer Service employees are AIP eligible under a special carve-out plan formula in 2001. Performance Period Goals are set annually but they are calibrated, measured and paid quarterly, subject to Compensation Committee certification that the applicable goals have been met. Levels/Types of Goals Two types or levels of measures are used: Corporate and Individual. The annual corporate goals are used to establish the individual goals. Results of goals are measured and incentive payments are paid quarterly based on these results. Corporate: In fy2001, the Compensation Committee has determined Revenue and Pro-forma Earnings to be the appropriate measures. The Compensation Committee will review and approve the Corporate Goals set at the beginning of the measurement period. Company performance against these goals will be determined at the end of the measurement period and can range from 0% to 200% against these pre-established goals. Individuals: Company managers will evaluate individuals on how they performed at the end of the measurement period compared to the goals that were established with their respective management at the beginning of the measurement period. Individual's performance against these pre-established goals can range from 0% to 150%. AIP Payment Amounts The AIP payment amounts for all eligible employees for Fiscal Year 2001 will be calculated by using the following formula : E x T x CP x IP = BA E = Quarterly earnings of the employee T = Target AIP% which is based on grade level CP = Company Performance IP = Individual Performance percentage BA = Bonus Amount Note: While this formula will generally be followed, Aspect's Compensation Committee reserves the right to reduce, but not increase actual payout based on their subjective, but not arbitrary, determination of an employee's contribution during the quarter. Example of AIP Payment E = $20,000 T = 8% CP = 110% IP = 100% BA = $1,760 ($20,000) x (8%) x (110%) x (100%) = $1,760 AIP Payment Maximum and Minimum The maximum AIP payment an individual can receive is 300% of his or her target. For example, if an employee's target is 8% of their quarterly earnings, then the maximum (s)he could receive is 24% of quarterly earnings. The annual maximum payout for any one employee is $5,000,000. The minimum payout can be zero. Terms and Conditions 1. An Individual must be employed at the time the award is paid to receive it. 2. Generally, the AIP payment will be paid within 45 to 60 days from the quarter's end. 3. All required payroll withholdings would be deducted from the gross bonus amount. 4. Employees on a performance improvement plan are not eligible to receive an AIP payment until their performance is satisfactory or better. 5. Aspect management can recommend to the Compensation Committee that the plan be changed or cancelled at any time or for any reason at their sole discretion. 6. Eligibility in the plan does not constitute a contract of employment with Aspect; employees are still employed `at will.' 7. The President & CEO and the Sr. VP of Human Resources will decide any issues with the administration of the plan, exclusive of pool funding decisions; and their decisions will be final and binding. Executive Compensation The Board of Directors revised the Aspect Incentive Plan in January 2001. The AIP was also designed to meet the exclusion requirements of Section 162(m) of the Code as described below. The 1993 Omnibus Budget Reconciliation Act (OBRA) established a $1,000,000 ceiling for deductions for compensation paid to any of the five most highly compensated executive officers identified in the Company's proxy statement (although performance related compensation as defined by COBRA in excess of $1,000,000 will remain deductible). Because none of the cash compensation figures for the five most highly compensated executive officers identified in the Company's proxy statement exceeded the limitation in 2000, there has been no requirement on the part of the Company to use any of the available exemptions from the deduction limit. However, cash compensation levels for the highest paid executives are beginning to approach the threshold of this limitation. The Compensation Committee took steps to ensure that performance-related compensation continues to be deductible by the Company. EX-21.1 5 0005.txt SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21.1 ASPECT COMMUNICATIONS CORPORATION SUBSIDIARIES OF THE REGISTRANT--JURISDICTION OF INCORPORATION Aspect Telecommunications AG Switzerland Aspect Communications A/S Denmark Aspect Communications B.V. The Netherlands Aspect Communications Europe B.V. The Netherlands Aspect Telecommunications Canada Company Canada Aspect Telecommunications GmbH Germany Aspect Communications (HK) Ltd. Hong Kong Aspect Communications Ltd. United Kingdom Aspect Telecommunications NV Belgium Aspect Communications PTE (S) Ltd. Singapore Aspect Communications Pty. Ltd. Australia Applications Specific Solutions for Telecommunications SAS France Aspect Telecommunications Technology Ltd. Cayman Islands Aspect Communications de Mexico S. de R.L. de C.V. Mexico Aspect Telecommunications International Corporation United States Aspect Teleservices Corporation United States Aspect Telecommunications FSC, Inc. United States Aspect Communications K. K. Japan EX-23.1 6 0006.txt INDEPENDENT AUDITORS CONSENT EXHIBIT 23.1 ASPECT COMMUNICATIONS CORPORATION INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE We consent to the incorporation by reference in Registration Statement Nos. 33-36437, 33-36438, 33-39243, 33-69010, 33-50048, 33-94810, 333-07407, 333- 24315, 333-38041, 333-91681, 333-53195, 333-33646, 333-50178 and 333-57545 on Form S-8 and Nos. 333-19893, 333-31381, 333-38909, 333-52093, 333-66461 and 333-74603 on Form S-3 of Aspect Communications Corporation of our report dated January 22, 2001 (February 27, 2001 as to Note 17), incorporated by reference in this Annual Report on Form 10-K of Aspect Communications Corporation for the year ended December 31, 2000. Our audits of the financial statements referred to in our aforementioned report also included the financial statement schedule of Aspect Communications Corporation, listed in Item 14(a)(2). This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ DELOITTE & TOUCHE LLP San Jose, California March 28, 2001 -----END PRIVACY-ENHANCED MESSAGE-----