As filed with the Securities and Exchange Commission on April 28, 1997
Registration No. __________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
CLARIFY INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 77-0259235
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2125 O'Nel Drive
San Jose, California 95131
(Address of principal executive offices) (Zip Code)
---------------
1995 STOCK OPTION/STOCK ISSUANCE PLAN
EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plans)
---------------
David A. Stamm
President and Chief Executive Officer
2125 O'Nel Drive, San Jose, CA 95131
(Name and address of agent for service)
(408) 573-3000
(Telephone number, including area code, of agent for service)
---------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
====================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Offering Price Aggregate Amount of
Securities to be Registered be Registered (1) Per Share (2) Offering Price (2) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 Stock Option/Stock Issuance Plan:
Options to purchase Common Stock 1,158,475 N/A N/A N/A
Common Stock, $0.0001 par value 1,158,475 shares $7.0313 $8,145,585.27 $2,468.36
Employee Stock Purchase Plan:
Common Stock, $0.0001 par value 820,000 shares $7.0313 $5,765,666 $1,747.17
====================================================================================================================================
<FN>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Clarify Inc. 1995 Stock
Option/Stock Issuance Plan and Employee Stock Purchase Plan by reason
of any stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which results
in an increase in the number of the outstanding shares of Common Stock
of Clarify Inc.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of
the high and low selling prices per share of Common Stock of Clarify
Inc. as reported on the Nasdaq National Market on April 21, 1997.
</FN>
</TABLE>
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
Clarify Inc. (the "Registrant") hereby incorporates by reference into
this Registration Statement the following documents previously filed with the
Securities and Exchange Commission ("SEC"):
(a) The Registrant's report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) The Registrant's Registration Statement No. 00-26776 on Form 8-A
filed with the SEC on September 15, 1995, pursuant to Section
12(b) of the Securities Exchange Act of 1934 (the "1934 Act"), in
which there is described the terms, rights and provisions
applicable to the Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court
to award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933
(the "1933 Act"), Article VII, Section 6, of the Registrant's Bylaws provides
for mandatory indemnification of its directors and officers and permissible
indemnification of employees and other agents to the maximum extent permitted by
the Delaware General Corporation Law. The Registrant's Certificate of
Incorporation provides that, pursuant to Delaware law, its directors shall not
be liable for monetary damages for breach of the directors' fiduciary duty as
directors to the Registrant and its stockholders. This provision in the
Certificate of Incorporation does not eliminate the directors' fiduciary duty,
and in appropriate circumstances equitable remedies such as injunctive of other
forms on non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for actions leading to improper personal benefit of the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law.
<PAGE>
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit Number Exhibit
- -------------- -------
4 Instrument Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statement No. 00-26776 on Form
8-A, which is incorporated herein by reference pursuant to
Item 3(b) of this Registration Statement.
5 Opinion and consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP.
23.1 Consent of Coopers & Lybrand LLP - Independent Accountants.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-3 of this
Registration Statement.
99.1 Employee Stock Purchase Plan.
Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Registrant's 1995
Stock Option/Stock Issuance and/or the Employee Stock Purchase Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the SEC, such indemnification is
against public policy as expressed in the 1933 Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Jose, State of California, on this 25th day
of April, 1997.
Clarify Inc.
By: /s/ David A Stamm
-----------------------------------
David A. Stamm
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Clarify Inc., a Delaware
corporation, do hereby constitute and appoint David A. Stamm and Ray M. Fritz,
and each of them, the lawful attorneys-in-fact and agents with full power and
authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents determine may be necessary or
advisable or required to enable said corporation to comply with the Securities
Act of 1933, as amended, and any rules or regulations or requirements of the
Securities and Exchange Commission in connection with this Registration
Statement. Without limiting the generality of the foregoing power and authority,
the powers granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this
Registration Statement, to any and all amendments, both pre-effective and
post-effective, and supplements to this Registration Statement, and to any and
all instruments or documents filed as part of or in conjunction with this
Registration Statement or amendments or supplements thereof, and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents, or
any one of them, shall do or cause to be done by virtue hereof. This Power of
Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ David A. Stamm
- ------------------------ President, Chief Executive April 25, 1997
David A. Stamm Officer (Principal Executive
Officer) and Director
/s/ Ray M. Fritz
- ------------------------ Chief Financial Officer (Principal April 25, 1997
Ray M. Fritz Financial and Accounting Officer)
II-3
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ James L. Patterson
- ------------------------
James L. Patterson Chairman of the Board April 25, 1997
/s/ Thomas H. Bredt
- ------------------------
Thomas H. Bredt Director April 25, 1997
/s/ Mary Jane Elmore
- ------------------------
Mary Jane Elmore Director April 25, 1997
/s/ Frederick Fluegel
- ------------------------
Frederick Fluegel Director April 25, 1997
II-4
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
CLARIFY INC.
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Exhibit
- -------- -------
4 Instrument Defining Rights of Stockholders. Reference is made
to Registrant's Registration Statement No. 00-26776 on Form
8-A, which is incorporated herein by reference pursuant to
Item 3(b) of this Registration Statement.
5 Opinion and consent of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP.
23.1 Consent of Coopers & Lybrand LLP - Independent Accountants.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-3 of this
Registration Statement.
99.1 Employee Stock Purchase Plan.
EXHIBIT 5
Opinion and consent of Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
<PAGE>
April 25, 1997
Clarify Inc.
2125 O'Nel Drive
San Jose, CA 95131
Re: Clarify Inc. (the "Company")
Registration Statement for an aggregate
of 1,978,475 Shares of Common Stock
-----------------------------------
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of the (i) 1,158,475
shares of Common Stock available for issuance under the Company's 1995 Stock
Option/Stock Issuance Plan and (ii) 820,000 shares of Common Stock available for
issuance under the Company's Employee Stock Purchase Plan. We advise you that,
in our opinion, when such shares have been issued and sold pursuant to the
applicable provisions of the Company's 1995 Stock Option/Stock Issuance Plan and
the Employee Stock Purchase Plan and in accordance with the Registration
Statement, such shares will be validly issued, fully paid and nonassessable
shares of the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of our reports dated January 14, 1997, on our audits of
the consolidated financial statements and financial statement schedule of
Clarify Inc. as of December 31, 1996 and 1995, and for each of the three years
in the period ended December 31, 1996, which reports are included in the Annual
Report on Form 10-K for the year ended December 31, 1996.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
San Jose, California
April 25, 1997
EXHIBIT 99.1
Employee Stock Purchase Plan
<PAGE>
CLARIFY INC.
EMPLOYEE STOCK PURCHASE PLAN
(As amended on April 9, 1997)
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests
of Clarify Inc. by providing eligible employees with the opportunity to acquire
a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such terms
in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock including
shares of Common Stock purchased on the open market. The
maximum number of shares of Common Stock which may be issued
over the term of the Plan shall not exceed 1,370,000
shares. (1)
B. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and class of securities
issuable under the Plan, (ii) the maximum number and class of
securities purchasable per Participant on any one Purchase
Date and (iii) the number and class of securities and the
price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of
benefits thereunder.
- --------
(1) All share numbers have been adjusted to reflect a 2 for 1 stock dividend
approved by the Board on September 18, 1996 for stockholders of record on
September 30, 1996.
<PAGE>
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive offering periods until
such time as (i) the maximum number of shares of Common Stock
available for issuance under the Plan shall have been
purchased (ii) the Plan shall have been sooner terminated.
B. Each offering period shall be of such duration (not to exceed
twenty-four (24) months) as determined by the Plan
Administrator prior to the start date. The initial offering
period shall commence at the Effective Time and terminate on
the last business day in October 1997. The next offering
period shall commence on the first business day in November
1997, and subsequent offering periods shall commence as
designated by the Plan Administrator.
C. Each offering period shall be comprised of a series of one or
more successive Purchase Periods. Purchase Periods shall begin
on the first business day in May and November each year and
terminate on the last business day in October and the
following April, respectively, each year. However, the first
Purchase Period under the initial offering period shall
commence at the Effective Time and terminate on the last
business day in April 1996.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee at the Effective
Time shall be eligible to enter the initial offering period
and any subsequent offering period under the Plan on the start
date of any Purchase Period within that offering period,
provided he or she remains an Eligible Employee on such start
date.
B. Each individual who becomes an Eligible Employee after the
Effective Time shall be eligible to enter an offering period
under the Plan on the start date of any Purchase Period within
that offering period, provided such individual (i) has
completed thirty (30) days of service with the Corporation or
any Corporate Affiliate prior to such start date and (ii)
remains an Eligible Employee on such start date.
C. The date an individual enters an offering period shall be
designated his or her Entry Date for purposes of that offering
period.
D. To participate in the Plan for a particular offering period,
the Eligible Employee must complete the enrollment forms
prescribed by the Plan Administrator (including a stock
purchase agreement and a payroll deduction authorization form)
and file such forms with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date.
2
<PAGE>
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock under the Plan
may be any multiple of one percent (1%) of the Eligible
Earnings paid to the Participant during each Purchase Period
within that offering period, up to a maximum of fifteen
percent (15%) but in no event to exceed Twelve Thousand five
Hundred Dollars ($12,500) per Purchase Period. The deduction
rate so authorized shall continue in effect for the remainder
of the offering period, except to the extent such rate is
changed in accordance with the following guidelines:
1. The Participant may, at any time during the offering
period, reduce his or her rate of payroll deduction
to become effective as soon as possible after filing
the appropriate form with the Plan Administrator. The
Participant may not, however, effect more than one
(1) such reduction per Purchase Period.
2. The Participant may, prior to the commencement of any
new Purchase Period within the offering period,
increase the rate of his or her payroll deduction by
filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the
fifteen percent (15%) or Twelve Thousand Five Hundred
Dollars ($12,500) maximum) shall become effective as
of the start date of the Purchase Period following
the filing of such form.
B. Payroll deductions shall begin on the first pay day following
the Participant's Entry Date into the offering period and
shall (unless sooner terminated by the Participant) continue
through the pay day ending with or immediately prior to the
last day of that offering period. The amounts so collected
shall be credited to the Participant's book account under the
Plan, but no interest shall be paid on the balance from time
to time outstanding in such account. The amounts collected
from the Participant shall not be held in any segregated
account or trust fund and may be commingled with the general
assets of the Corporation and used for general corporate
purposes.
C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance
with the provisions of the Plan.
D. The Participant's acquisition of Common Stock under the Plan
on any Purchase Date shall neither limit nor require the
Participant's acquisition of Common Stock on any subsequent
Purchase Date, whether within the same or a different offering
period.
3
<PAGE>
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a
separate purchase right for each offering period in which he
or she participates. The purchase right shall be granted on
the Participant's Entry Date into the offering period and
shall provide the Participant with the right to purchase
shares of Common Stock, in a series of successive installments
over the remainder of such offering period, upon the terms set
forth below. The Participant shall execute a stock purchase
agreement embodying such terms and such other provisions (not
inconsistent with the Plan) as the Plan Administrator may deem
advisable.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would,
immediately after the grant, own (within the meaning of Code
Section 424(d)) or hold outstanding options or other rights to
purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock
of the Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall be
automatically exercised in installments on each successive
Purchase Date within the offering period, and shares of Common
Stock shall accordingly be purchased on behalf of each
Participant (other than any Participant whose payroll
deductions have previously been refunded in accordance with
the Termination of Purchase Right provisions below) on each
such Purchase Date. The purchase shall be effected by applying
the Participant's payroll deductions for the Purchase Period
ending on such Purchase Date (together with any carryover
deductions from the preceding Purchase Period) to the purchase
of whole shares of Common Stock (subject to the limitation on
the maximum number of shares purchasable per Participant on
any one Purchase Date) at the purchase price in effect for the
Participant for that Purchase Date.
C. Purchase Price. The purchase price per share at which Common
Stock will be purchased on the Participant's behalf on each
Purchase Date within the offering period shall not be less
than eighty-five percent (85%) of the lower of (i) the Fair
Market Value per share of Common Stock on the Participant's
Entry Date into that offering period or (ii) the Fair Market
Value per share of Common Stock on that Purchase Date.
However, for each Participant whose Entry Date is other than
the start date of the offering period, the clause (i) amount
shall in no event be less than the Fair Market Value per share
of Common Stock on the start date of that offering period. The
Plan Administrator shall determine the percentage for each
Purchase Period prior to the start date.
D. Number of Purchasable Shares. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date
during the offering period shall be the number of whole shares
obtained by dividing the amount collected
4
<PAGE>
from the Participant through payroll deductions during the
Purchase Period ending with that Purchase Date (together with
any carryover deductions from the preceding Purchase Period)
by the purchase price in effect for the Participant for that
Purchase Date. However, the maximum number of shares of Common
Stock purchasable per Participant on any one Purchase Date
shall not exceed 1,000 shares, subject to periodic adjustments
in the event of certain changes in the Corporation's
capitalization.
E. Excess Payroll Deductions. Any payroll deductions not applied
to the purchase of shares of Common Stock on any Purchase Date
because they are not sufficient to purchase a whole share of
Common Stock shall be held for the purchase of Common Stock on
the next Purchase Date. However, any payroll deductions not
applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the
Participant on the Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions shall
govern the termination of outstanding purchase rights:
1. A Participant may, at any time prior to the next
Purchase Date in the offering period, terminate his
or her outstanding purchase right by filing the
appropriate form with the Plan Administrator (or its
designate), and no further payroll deductions shall
be collected from the Participant with respect to the
terminated purchase Right. Any payroll deductions
collected during the Purchase Period in which such
termination occurs shall be immediately refunded.
2. The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently
rejoin the offering period for which the terminated
purchase right was granted. In order to resume
participation in any subsequent offering period, such
individual must re-enroll in the Plan (by making a
timely filing of the prescribed enrollment forms) on
or before his or her scheduled Entry Date into that
offering period.
3. Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability
or change in status) while his or her purchase right
remains outstanding, then that purchase right shall
immediately terminate, and all of the Participant's
payroll deductions for the Purchase Period in which
the purchase right so terminates shall be immediately
refunded. However, should the Participant cease to
remain in active service by reason of an approved
unpaid leave of absence, then the Participant shall
have the election, exercisable up until the last
business day of the Purchase Period in which such
leave commences, to (a) withdraw all the funds in the
Participant's payroll account at the time of the
commencement of such leave or (b) have such funds
held for the
5
<PAGE>
purchase of shares at the end of such Purchase
Period. In no event, however, shall any further
payroll deductions be added to the Participant's
account during such leave. Upon the Participant's
return to active service, his or her payroll
deductions under the Plan shall automatically resume
at the rate in effect at the time the leave began,
provided the Participant returns to service prior to
the expiration date of the offering period in which
such leave began.
G. Corporate Transaction. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective
date of any Corporate Transaction, by applying the payroll
deductions of each Participant for the Purchase Period in
which such Corporate Transaction occurs to the purchase of
whole shares of Common Stock at a purchase price per share
equal to eighty-five percent (85%) of the lower of (i) the
Fair Market Value per share of Common Stock ------ on the
Participant's Entry Date into the offering period in which
such Corporate Transaction occurs or (ii) the Fair Market
Value per share of Common Stock immediately prior to the
effective date of such Corporate Transaction. However, the
applicable limitation on the number of shares of Common Stock
purchasable per Participant shall continue to apply to any
such purchase, and the clause (i) amount above shall not, for
any Participant whose Entry Date for the offering period is
other than the start date of that offering period, be less
than the Fair Market Value per share of Common Stock on such
start date.
The Corporation shall use its best efforts to provide at least
ten (10)-days prior written notice of the occurrence of any
Corporate Transaction, and Participants shall, following the
receipt of such notice, have the right to terminate their
outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. Proration of Purchase Rights Should the total number of shares
of Common Stock which are to be purchased pursuant to
outstanding purchase rights on any particular date exceed the
number of shares then available for issuance under the Plan,
the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and
the payroll deductions of each Participant, to the extent in
excess of the aggregate purchase price payable for the Common
Stock pro-rated to such individual, shall be refunded.
I. Assignability. During the Participant's lifetime, the purchase
right shall be exercisable only by the Participant and shall
not be assignable or transferable by the Participant.
J. Stockholder Rights. A Participant shall have no stockholder
rights with respect to the shares subject to his or her
outstanding purchase right until the shares are purchased on
the Participant's behalf in accordance with the provisions of
the Plan and the Participant has become a holder of record of
the purchased shares.
6
<PAGE>
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under
this Plan if and to the extent such accrual when aggregated
with (i) rights to purchase Common Stock accrued under any
other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans
(within the meaning of Code Section 423) of the Corporation or
any Corporate Affiliate, would otherwise permit such
Participant to purchase more than Twenty-Five Thousand Dollars
($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value of
such stock on the date or dates such rights are granted) for
each calendar year such rights are at any time outstanding.
B. For purposes of applying such accrual limitations, the
following provisions shall be in effect:
1. The right to acquire Common Stock under each
outstanding purchase right shall accrue in a series
of installments on each successive Purchase Date
during the offering period on which such right
remains outstanding.
2. No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent
the Participant has already accrued in the same
calendar year the right to acquire Common Stock under
one (1) or more other purchase rights at a rate equal
to Twenty-Five Thousand Dollars ($25,000) worth of
Common Stock (determined on the basis of the Fair
Market Value of such stock on the date or dates of
grant) for each calendar year such rights were at any
time outstanding.
C. If by reason of such accrual limitations, any purchase right
of a Participant does not accrue for a particular Purchase
Period, then the payroll deductions which the Participant made
during that Purchase Period with respect to such purchase
right shall be promptly refunded.
D. In the event there is any conflict between the provisions of
this Article and one or more provisions of the Plan or any
instrument issued thereunder, the provisions of this Article
shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on September 14, 1995 and
became effective on November 3, 1995. The Plan was amended on
April 29, 1996 to increase the number of shares issuable by
160,000 shares. The stockholders approved the amendment on
June 25, 1996. The Plan was amended again on April 4, 1997 to
increase the number of shares issuable thereunder by 500,000
shares, provided no purchase rights granted under the Plan on
the basis of the share increase shall be exercised, and no
shares of Common Stock shall be
7
<PAGE>
issued hereunder, until (i) the Plan amendment shall have been
approved by the stockholders of the Corporation and (ii) the
Corporation shall have complied with all applicable
requirements of the 1933 Act (including the registration of
the shares of Common Stock issuable under the Plan on a Form S
registration statement filed with the Securities and Exchange
Commission), all applicable listing requirements of any stock
exchange (or the Nasdaq National Market, if applicable) on
which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In
the event such stockholder approval is not obtained, or such
compliance is not effected, within twelve (12) months after
the date on which the Plan amendment is adopted by the Board,
then the share increase shall not take effect and the Plan
shall terminate when all shares authorized by the Board and
stockholders have been issued pursuant to purchase rights
under the Plan. Upon issuance of all authorized shares, the
Plan shall have no further force or effect and all sums
collected from Participants which cannot be applied to the
purchase of shares hereunder shall be refunded.
B. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) the last business day in
October 2005, (ii) the date on which all shares available for
issuance under the Plan shall have been sold pursuant to
purchase rights exercised under the Plan or (iii) the date on
which all purchase rights are exercised in connection with a
Corporate Transaction. No further purchase rights shall be
granted or exercised, and no further payroll deductions shall
be collected, under the Plan following its termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any time
to become effective immediately following the close of any Purchase Period.
However, the Board may not, without the approval of the Corporation's
stockholders, (i) materially increase the number of shares of Common Stock
issuable under the Plan or the maximum number of shares purchasable per
Participant on any one Purchase Date, except for permissible adjustments in the
event of certain changes in the Corporation's capitalization, (ii) alter the
purchase price formula so as to reduce the purchase price payable for the shares
of Common Stock purchasable under the Plan, or (iii) materially increase the
benefits accruing to Participants under the Plan or materially modify the
requirements for eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the
Plan shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any
right to continue in the employ of the Corporation or any
Corporate Affiliate for any period of specific duration or
interfere with or otherwise restrict in any way the rights of
the
8
<PAGE>
Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly
reserved by each, to terminate such person's employment at any
time for any reason, with or without cause.
C. The provisions of the Plan shall be governed by the laws of
the State of California without resort to that State's
conflict-of-laws rules.
9
<PAGE>
Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
Clarify Inc.
<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Code shall mean the Internal Revenue Code of 1986, as amended.
C. Common Stock shall mean the Corporation's common stock.
D. Corporate Affiliate shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance
with Code Section 424), whether now existing or subsequently
established.
E. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is
a party:
1. a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's
outstanding securities are transferred to a person or
persons different from the persons holding those
securities immediately prior to such transaction, or
2. the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in
complete liquidation or dissolution of the
Corporation.
F. Corporation shall mean Clarify Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the
assets or voting stock of Clarify Inc. which shall by
appropriate action adopt the Plan.
G. Effective Time shall mean the time at which the Underwriting
Agreement is executed and finally priced. Any Corporate
Affiliate which becomes a Participating Corporation after such
Effective Time shall designate a subsequent Effective Time
with respect to its employee-Participants.
H. Eligible Earnings shall mean the (i) regular base salary paid
to a Participant by one or more Participating Companies during
such individual's period of participation in the Plan, plus
(ii) any pre-tax contributions made by the Participant to any
Code Section 401(k) salary deferral plan or any Code Section
125 cafeteria benefit program now or hereafter established by
the Corporation or any Corporate Affiliate, plus (iii) all of
the following amounts to the extent paid in cash: overtime
payments, bonuses, commissions, profit-sharing distributions
and other incentive-type payments. However, Eligible Earnings
shall not include any contributions (other than Code Section
401(k) or Code Section 125 contributions) made on the
Participant's behalf by the Corporation or any Corporate
Affiliate to
A-1
<PAGE>
any deferred compensation plan or welfare benefit program now
or hereafter established.
I. Eligible Employee shall mean any person who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per
week for more than five (5) months per calendar year, in the
rendition of personal services to any Participating
Corporation as an employee for earnings considered wages under
Code Section 3401(a).
J. Entry Date shall mean the date an Eligible Employee first
commences participation in the offering period in effect under
the Plan. The earliest Entry Date under the Plan shall be the
Effective Time.
K. Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following
provisions:
1. If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value
shall be the closing selling price per share of
Common Stock on the date in question, as such price
is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any
successor system. If there is no closing selling
price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing
selling price on the last preceding date for which
such quotation exists.
2. If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be
the closing selling price per share of Common Stock
on the date in question on the Stock Exchange
determined by the Plan Administrator to be the
primary market for the Common Stock, as such price is
officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists.
3. For purposes of the initial offering period which
begins at the Effective Time, the Fair Market Value
shall be deemed to be equal to the price per share at
which the Common Stock is sold in the initial public
offering pursuant to the Underwriting Agreement.
L. 1933 Act shall mean the Securities Act of 1933, as amended.
M. Participant shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the
Plan.
N. Participating Corporation shall mean the Corporation and such
Corporate Affiliate or Affiliates as may be authorized from
time to time by the Board to extend the
A-2
<PAGE>
benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan as of the Effective
Time are listed in attached Schedule A.
O. Plan shall mean the Corporation's Employee Stock Purchase
Plan, as set forth in this document.
P. Plan Administrator shall mean the committee of two (2) or more
Board members appointed by the Board to administer the Plan.
Q. Purchase Date shall mean the last business day of each
Purchase Period. The initial Purchase Date shall be April 30,
1996.
R. Purchase Period shall mean each successive period within the
offering period at the end of which there shall be purchased
shares of Common Stock on behalf of each Participant.
S. Stock Exchange shall mean either the American Stock Exchange
or the New York Stock Exchange.
T. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the
initial public offering of the Common Stock.
A-3
