SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
Clarify Inc.
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(Name of Corporation)
Common Stock, par value $0.0001 per share
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(Title of Class of Securities)
180492100
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(CUSIP Number)
Deborah J. Noble
Vice President, Corporate Secretary and Associate General Counsel
Nortel Networks Corporation
8200 Dixie Road, Suite 100
Brampton, Ontario L6T 5P6
Canada
(905) 863-1103
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
October 18, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. |_|
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 180492100
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Nortel Networks Corporation
62-12-62580
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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3
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
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NUMBER OF 7 SOLE VOTING POWER
SHARES ---------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,175,569** (See Items 4 and 5.)
EACH REPORTING ---------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH ---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER 2,175,569*** (See
Items 4 and 5.)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,175,569 (See Items 4 and 5.)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |X|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.8%**** (See Items 4 and 5.)
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14 TYPE OF REPORTING PERSON*
CO
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<PAGE>
SCHEDULE 13D
** Pursuant to a stockholders agreement (the "Stockholders Agreement"), dated as
of October 18, 1999, among certain holders of the securities of Clarify Inc. (as
listed on Schedule A thereto) (the "Stockholder Parties") and Nortel Networks
Corporation, the Stockholder Parties have agreed to vote in favor of the Merger
Agreement and the Merger (each as defined in the response to Item 4) (i) the
1,122,446 shares of Clarify Common Stock over which they currently have voting
power and (ii) any of the 1,053,123 shares of Clarify Common Stock they acquire
through the exercise of currently exercisable stock options, which the
Stockholder Parties are deemed to beneficially own pursuant to Exchange Act Rule
13-d3(d)(1)(i). The Stockholder Parties have granted Nortel Networks Corporation
an irrevocable proxy with respect to such shares.
*** Pursuant to the Stockholders Agreement (but subject to certain exceptions),
the Stockholder Parties may not dispose of either (i) the 1,122,446 shares of
Clarify Common Stock that are currently held by them or (ii) any of the
1,053,123 shares of Clarify Common Stock they acquire through the exercise of
currently exercisable stock options, which the Stockholder Parties are deemed to
beneficially own pursuant to Exchange Act Rule 13-d3(d)(1)(i).
**** Calculated, pursuant to Exchange Act Rule 13-d3(d)(1)(i), by including
1,053,123 shares of Clarify Common Stock that are subject to currently
exercisable stock options held by the Stockholder Parties, which the Stockholder
Parties are deemed to beneficially own pursuant to Exchange Act Rule
13-d3(d)(1)(i), in both the number of shares of Clarify Common Stock
beneficially owned by Nortel Networks and the total number of shares of Clarify
Common Stock outstanding.
<PAGE>
SCHEDULE 13D
RELATING TO THE COMMON STOCK OF
CLARIFY INC.
Item 1. Security and Issuer.
This Statement on Schedule 13D (this "Statement") relates to the common
stock, par value $.0001 per share ("Clarify Common Stock"), of Clarify Inc., a
Delaware corporation ("Clarify"). The principal executive offices of Clarify are
located at 2560 Orchard Parkway, San Jose, CA 95131.
Item 2. Identity and Background.
This Statement is being filed by Nortel Networks Corporation, a Canadian
corporation ("Nortel Networks"). The principal business and principal office of
Nortel Networks are located at 8200 Dixie Road, Suite 100, Brampton, Ontario L6T
5P6, Canada. Nortel Networks is a leading global supplier of data and telephony
network solutions and services. Its business consists of the design,
development, manufacture, marketing, sale, financing, installation, servicing
and support of data and telephony networks for public and private institutions;
local, long-distance, personal communications services and cellular mobile
communications companies; cable television companies; Internet service
providers; and utilities.
BCE Inc. ("BCE"), a Canadian corporation, and Canada's largest
telecommunications company, holds directly or indirectly, approximately 39.6% of
the issued and outstanding common shares of Nortel Networks. Four directors who
sit on BCE's Board of Directors, one of whom is an officer of BCE, serve as
directors of Nortel Networks. The information concerning BCE and its directors
and executive officers is included solely because, by virtue of the
relationships described above, BCE may be deemed to control Nortel Networks.
(a)-(c); (f) The name, business address, present principal occupation or
employment, and the name and principal business of any corporation or other
organization in which such employment is conducted of each of the directors and
executive officers of Nortel Networks and BCE is set forth in Schedule I and
Schedule II hereto, respectively, which are incorporated herein by reference.
The citizenship of each person listed in Schedule I and Schedule II are
indicated thereon.
(d)-(e) During the last five years, neither Nortel Networks nor, to the
knowledge of Nortel Networks, BCE or any of the persons listed on Schedule I and
Schedule II hereto (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described below, pursuant to the terms of the Stock Option
Agreement (as defined in the response to Item 4), Nortel Networks will have the
right, upon the occurrence of certain events specified therein, to purchase from
time to time up to 4,707,333 shares of Clarify Common Stock (subject to
adjustment as provided in the Stock Option Agreement) at a price of $68.09 per
share. If Nortel Networks purchases Clarify Common Stock pursuant to the Stock
Option Agreement, Nortel Networks anticipates that the funds to finance such
purchase would come from working capital, although no definitive determination
has been made at this time as to the source of such funds. However, pursuant to
the terms of the Stock Option Agreement, Nortel Networks can choose to perform a
cashless exercise of the Option (as defined in the response to Item 4),
requiring no funds to gain the benefits of the Option.
As described in the response to Item 4, the Stockholder Parties (as defined
in the response to Item 4) have entered into the Stockholders Agreement with
Nortel Networks pursuant to which the Stockholder Parties have agreed to vote
the 1,122,446 shares of Clarify Common Stock over which they have voting power
in favor of adoption of the Merger Agreement and approval of the Merger, and
have granted to Nortel Networks an irrevocable proxy with respect to such shares
for such purpose. In addition, subject to certain exceptions, the Stockholder
Parties have agreed not to dispose of the shares of Clarify Common Stock held by
them. Any shares acquired by any Stockholder Party subsequent to the date of the
Stockholders Agreement, including by exercise of any of the Stockholder Parties'
1,053,123 vested options, would be subject to the same restrictions on voting
and disposition.
Item 4. Purpose of Transaction.
Merger and Merger Agreement
On October 18, 1999, Nortel Networks, Clarify and Northern Crown
Subsidiary, Inc., a Delaware corporation and a wholly-owned subsidiary of Nortel
Networks ("Merger Sub"), entered into an Agreement and Plan of Merger, dated as
of October 18, 1999 (the "Merger Agreement"), a copy of which is incorporated
herein by reference to Clarify Inc.'s Current Report on Form 8-K dated October
18, 1999, filed with the Securities Exchange Commission on October 26, 1999. The
Merger Agreement provides, among other things, for the merger (the "Merger") of
Merger Sub with and into Clarify with Clarify being the corporation surviving
the merger (the "Surviving Corporation").
Pursuant to the Merger Agreement, at the Effective Time (as defined in the
Merger Agreement), each share of Clarify Common Stock issued and outstanding
immediately prior to the Effective Time (excluding those held in the treasury of
Clarify, by any subsidiary of Clarify or by Nortel Networks or any subsidiaries
of Nortel Networks (collectively, the "Excluded Shares")) will cease to exist
and be converted into the right to receive 1.3 common shares, without par value,
of Nortel Networks (the "Nortel Networks Common Shares"). The Merger Agreement
defines the number of Nortel Networks Common Shares to be exchanged for each
share of Clarify Common Stock as the "Exchange Ratio," and provides that the
Exchange Ratio shall be subject to adjustment in the event of a stock split,
stock dividend or similar transaction with respect to the Nortel Networks Common
Shares. The Merger Agreement also provides that each Excluded Share will be
canceled and retired without the payment of any consideration therefor.
At the Effective Time, Clarify will become a wholly-owned subsidiary of
Nortel Networks. As a consequence of the Merger, Nortel Networks will own 100%
of the Clarify Common Stock. The Clarify Common Stock will be delisted from
trading on the Nasdaq National Market of The Nasdaq Stock Market, Inc. and
Clarify will no longer be required to file periodic reports under Section 12(b)
of the Securities Exchange Act of 1934 (the "Exchange Act").
Consummation of the Merger is subject to the satisfaction or waiver at or
prior to the Effective Time of certain conditions, including, but not limited
to, approval of the Merger and the Merger Agreement by the holders of shares of
Clarify Common Stock, expiration or termination of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), approval of listing of the Nortel Networks Common Shares on the New
York, Toronto and Montreal Stock Exchanges and other customary conditions.
Pursuant to the Merger Agreement, (i) the certificate of incorporation and
the by-laws of Merger Sub as in effect immediately prior to the Effective Time
will be the certificate of incorporation and by-laws of the Surviving
Corporation, (ii) the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation until their successors
have been duly elected and qualified or until their resignation or removal and
(iii) the officers of Clarify immediately prior to the Effective Time shall
continue to serve as the officers of the Surviving Corporation until their
successors have been duly elected and qualified or appointed or until their
resignation or removal.
The Merger Agreement contains certain customary restrictions on the conduct
of the business of Clarify pending the Merger, including, without limitation,
not declaring, setting aside or paying any dividend or distribution on any
capital stock.
Stock Option Agreement
As a condition and inducement to Nortel's entering into the Merger
Agreement, concurrently with the execution of the Merger Agreement, Nortel
Networks and Clarify entered into a Stock Option Agreement, dated as of October
18, 1999 (the "Stock Option Agreement"), a copy of which is incorporated herein
by reference to Clarify Inc.'s Current Report on Form 8-K dated October 18,
1999, filed with the Securities Exchange Commission on October 26, 1999.
Pursuant to the Stock Option Agreement, Clarify granted Nortel Networks an
irrevocable option (the "Option") to purchase, pursuant to the terms and
conditions thereof, up to 4,707,333 (subject to adjustment as provided in the
Stock Option Agreement) fully paid and nonassessable shares of Clarify Common
Stock at a price of $68.09 per share (the "Option Price"). The Stock Option
Agreement provides that Nortel Networks may exercise the Option in whole or in
part at any time from time to time following the occurrence of a Triggering
Event (as defined below) by delivering a written notice to Clarify in accordance
with the terms of the Stock Option Agreement. The right to exercise the Option
shall terminate upon the occurrence of an Exercise Termination Event, which
shall mean each of the following: (i) the Effective Time, (ii) termination of
the Merger Agreement in accordance with the provisions of Section 8.01(a),
8.01(d)(i), 8.01(d)(ii) or 8.01(d)(iii) of the Merger Agreement, or termination
of the Merger Agreement by the Issuer in accordance with the provisions of
Section 8.01(b) thereof, or termination of the Merger Agreement by Nortel
Networks in accordance with the provisions of Section 8.01(b) thereof by reason
solely of non-willful breaches of representations warranties or covenants by
Clarify, or termination of the Merger Agreement by Nortel Networks in accordance
with the provisions of Section 8.01(c); (iii) termination of the Merger
Agreement by Clarify in accordance with the provisions of Section 8.01(c), or
termination of the Merger Agreement pursuant to Section 8.01(d)(iv) thereof, or
termination of the Merger Agreement by Nortel Networks in accordance with the
provisions of Section 8.01(b) thereof under circumstances where clause (ii)
above is inapplicable, in each case only if such termination occurs prior to the
occurrence of an Initial Triggering Event; (iv) the passage of 12 months (or
such later period as provided in Section 10 of the Stock Option Agreement) after
termination of the Merger Agreement other than as set forth in clauses (ii) and
(iii) above; or (v) the receipt by Nortel Networks (pursuant to its request) of
the Termination Fee (as defined in the Merger Agreement).
"Initial Triggering Event" means any of the following events or
transactions: (i) Clarify or any of its subsidiaries, without having received
Nortel Networks' prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as defined below) with any person other
than Nortel Networks or any of its subsidiaries or the Board of Directors of
Clarify shall have recommended that the stockholders of Clarify approve or
accept any Acquisition Transaction; (ii) Clarify or any of its subsidiaries,
without having received Nortel Networks' prior written consent, shall have
authorized, recommended, proposed or publicly announced its intention to
authorize, recommend or propose, to engage in an Acquisition Transaction with
any person other than Nortel Networks or a subsidiary thereof or shall have
authorized or engaged in, or announced its intention to authorize or engage in,
any negotiations regarding an Acquisition Transaction with any person other than
Nortel Networks or a subsidiary thereof, or the Board of Directors of Clarify
shall have failed to recommend or shall have publicly withdrawn or modified, or
publicly announced its intention to withdraw or modify, in any manner adverse to
Nortel Networks, its recommendation that the stockholders of Clarify approve the
Merger; (iii) the stockholders of Clarify shall have voted and failed to approve
the Merger at a meeting which has been held for that purpose or any adjournment
or postponement thereof, or such meeting shall not have been held in violation
of the Merger Agreement or shall have been canceled prior to termination of the
Merger Agreement if, prior to such meeting (or if such meeting shall not have
been held or shall have been canceled, prior to such termination), any person
(other than Nortel Networks or a subsidiary thereof) shall have made a proposal
to Clarify or its stockholders by public announcement or written communication
that is or becomes the subject of public disclosure to engage in an Acquisition
Transaction; (iv)(a) any person other than Nortel Networks or any subsidiary of
Nortel Networks shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 20% or more of the then outstanding shares of Common
Stock of Clarify or (b) any group (the term "group" having the meaning assigned
in Section 13(d)(3) of the Exchange Act), other than a group of which Nortel
Networks or any subsidiary thereof is a member, shall have been formed that
beneficially owns 20% or more of the shares of the then outstanding Common Stock
of Clarify; (v) any person other than Nortel Networks or any subsidiary thereof
shall have made a bona fide proposal to Clarify or its stockholders to engage in
an Acquisition Transaction and such proposal shall have become publicly known,
or shall have commenced, or publicly announced its intention to commence, a
tender or exchange offer to acquire beneficial ownership of 20% or more of the
then outstanding shares of Common Stock of Clarify; (vi) Clarify shall have
willfully breached any representation, warranty, covenant or obligation
contained in the Merger Agreement and such breach (x) would entitle Nortel
Networks to terminate the Merger Agreement and (y) shall not have been cured
prior to the Notice Date (as defined in the Stock Option Agreement); or (vii)
any person other than Nortel Networks or any subsidiary thereof, other than in
connection with a transaction to which Nortel Networks has given its prior
written consent, shall have filed with any federal or state regulatory or
governmental authority an application for approval or notice of intention to
engage in an Acquisition Transaction.
"Acquisition Transaction" means (w) a merger or consolidation, or any
similar transaction, involving Clarify or a Significant Subsidiary (as defined
in Rule 1-02 of Regulation S-X promulgated by the SEC) of Clarify, (x) a
purchase, lease or other acquisition or assumption of all or more than 20% of
the consolidated assets of Clarify (including by way of merger, consolidation,
share exchange or otherwise involving any subsidiary of Clarify), (y) a purchase
or other acquisition (including by way of merger, consolidation, share exchange
or otherwise) of beneficial ownership of securities representing 20% or more of
the voting power of Clarify or a Significant Subsidiary (as defined in Rule 1-02
of Regulation S-X promulgated by the SEC) of Clarify, or (z) any substantially
similar transaction; provided, however, that in no event shall any merger,
consolidation, purchase or similar transaction involving only Clarify and one or
more of its wholly-owned subsidiaries or involving only any two or more of such
wholly-owned subsidiaries, be deemed to be an Acquisition Transaction, if such
transaction is not entered into in violation of the terms of the Merger
Agreement.
An Initial Triggering Event together with a Subsequent Triggering Event
causes a "Triggering Event." "Subsequent Triggering Event" means either of the
following events or transactions: (i) the acquisition by any person or by a
group other than Nortel Networks or any subsidiary of Nortel Networks of
beneficial ownership of 25% or more of the then outstanding Common Stock of
Clarify; or (ii) the occurrence of the Initial Triggering Event described in
clause (iv) of the above paragraph, except that the references to 20% in clause
(x) and clause (y) shall each be deemed to be a reference to 25%.
Upon the occurrence of any Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, Clarify shall, subject to Section 6(d) of the
Stock Option Agreement, at the request of Nortel Networks delivered within
twelve (12) months of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of the Option (or part thereof) or
any of the shares of Common Stock of Clarify issued pursuant to the Stock Option
Agreement), promptly prepare, file and keep current a shelf registration
statement under the Securities Act of 1933 covering any shares issued and
issuable pursuant to the Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock of
Clarify issued upon total or partial exercise of the Option ("Option Shares") in
accordance with any plan of disposition requested by Nortel Networks. Clarify
will use its reasonable best efforts to cause such registration statement
promptly to become effective and then to remain effective for a period not in
excess of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary, in the judgment
of Nortel Networks or the Holder, to effect such sales or other dispositions.
Nortel Networks shall have the right to demand two such registrations.
Clarify has agreed that upon the occurrence of a Repurchase Event (as
defined below) and ending 12 months thereafter, (i) at the written request of a
Holder (as defined in the Stock Option Agreement) delivered prior to an Exercise
Termination Event, to repurchase the Option from such Holder at a price equal to
the amount by which (A) the market/offer price (as defined in the Stock Option
Agreement) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised, and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered in writing prior to an
Exercise Termination Event, Clarify shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price equal to the
market/offer price multiplied by the number of Option Shares so designated. A
"Repurchase Event" shall be deemed to have occurred (i) upon the consummation of
any merger, consolidation or similar transaction involving Clarify or any
purchase, lease or other acquisition of all or substantially all of the assets
of Clarify on a consolidated basis, other than any such transaction which would
not constitute an Acquisition Transaction (as defined in the Stock Option
Agreement) pursuant to the proviso to Section 2(c)(i) of the Stock Option
Agreement or (ii) upon the acquisition by any person of beneficial ownership of
50% or more of the then outstanding shares of Common Stock of Clarify; provided
that no such event shall constitute a Repurchase Event unless a Subsequent
Triggering Event shall have occurred prior to an Exercise Termination Event.
Notwithstanding any other provision of the Stock Option Agreement, the
Option may not be exercised so as to result in a Total Profit (as defined in the
Stock Option Agreement) derived from shares acquired pursuant to the Option that
exceeds $70 million.
Stockholders Agreement
As a further condition and inducement to Nortel's entering into the Merger
Agreement, concurrently with the execution of the Merger Agreement and the Stock
Option Agreement, Nortel Networks entered into the Stockholders Agreement with
the stockholders listed on Schedule A thereto (the "Stockholder Parties"), a
copy of which is incorporated herein by reference to Clarify Inc.'s Form 8-K
dated October 18, 1999, filed with the Securities Exchange Commission on October
26, 1999. Pursuant to the Stockholders Agreement, the Stockholder Parties have
agreed to vote in favor of the Merger Agreement and the Merger, or if
applicable, give consents with respect to, (i) the 1,122,446 shares of Clarify
Common Stock currently held by them and (ii) any shares of Clarify Common Stock
subsequently acquired by them, including through the exercise of stock options.
The Stockholder Parties have granted to Nortel Networks an irrevocable proxy
with respect to such shares. In addition, the Stockholder Parties have agreed
not to dispose any shares of Clarify Common Stock (subject to certain
exceptions). The Stockholders Agreement will terminate on the earliest of: (a)
the Effective Time (as defined in the Merger Agreement); (b) termination of the
Merger Agreement in accordance with the provisions of Section 8.01(a),
8.01(d)(i), 8.01(d)(ii) or 8.01(d)(iii) of the Merger Agreement, or termination
of the Merger Agreement by Clarify in accordance with the provisions of Section
8.01(b) thereof, or termination of the Merger Agreement by Nortel in accordance
with the provisions of Section 8.01(b) thereof by reason solely of non-willful
breaches of representations warranties or covenants by Clarify, or termination
of the Merger Agreement by Nortel in accordance with the provisions of Section
8.01(c); (c) termination of the Merger Agreement by Clarify in accordance with
the provisions of Section 8.01(c), or termination of the Merger Agreement
pursuant to Section 8.01(d)(iv) thereof, or termination of the Merger Agreement
by Nortel in accordance with the provisions of Section 8.01(b) thereof under
circumstances where clause (b) above is inapplicable, in each case only if at
the time of such termination the conditions to payment of the Termination Fee
set forth in Section 8.02(b)(i), 8.02(b)(ii) or 8.02(b)(iii), other than the
condition set forth in clause (z) of the relevant section, have not been met;
and (d) 120 days following termination of the Merger Agreement (if otherwise
terminated).
The foregoing summaries of the Merger Agreement, the Stock Option Agreement
and the Stockholders Agreement do not purport to be complete and are qualified
in their entirety by reference to the text of such agreements incorporated by
reference as Exhibits 1, 2 and 3 hereto, respectively.
Except as set forth in this Statement, the Merger Agreement, the Stock
Option Agreement or the Stockholders Agreement, neither Nortel Networks nor, to
the best of Nortel Networks' knowledge, BCE or any of the individuals named in
Schedule I or Schedule II hereto has any plans or proposals which relate to or
which would result in or relate to any of the actions specified in subparagraphs
(a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) - (b) By reason of its execution of the Stock Option Agreement, Nortel
Networks may be deemed to have beneficial ownership of, and sole voting and
dispositive power with respect to, the shares of Clarify Common Stock subject to
the Option and, accordingly, might be deemed as a result of the Stock Option
Agreement to beneficially own 4,707,333 shares of Clarify Common Stock
(approximately 16.6% of the outstanding Clarify Common Stock, based upon (i) the
23,654,944 shares of Clarify Common Stock outstanding on October 14, 1999, as
represented to Nortel Networks by Clarify in the Merger Agreement, plus (ii) an
additional 4,707,333 shares that Clarify will issue to Nortel Networks in the
event that the Option is exercised). However, Nortel Networks expressly
disclaims any beneficial ownership of the shares of Clarify Common Stock which
are purchasable by Nortel Networks upon exercise of the Option on the grounds
that the Option is not currently exercisable and only becomes exercisable upon
the occurrence of the events referred to in Item 4 above. If the Option were
exercised, Nortel Networks would have the sole right to vote and to dispose of
the shares of Clarify issued as a result of such exercise.
In addition, Nortel Networks may as a result of the Stockholders Agreement
be deemed to beneficially own the shares of Clarify Common Stock that are held
by the Stockholder Parties and, pursuant to Exchange Act Rule 13-d3(d)(1)(i),
the shares of Clarify Common Stock that are subject to currently exercisable
stock options held by such parties (together, the "Beneficially Owned Shares").
Based on the aggregate number of Beneficially Owned Shares (2,175,569), Nortel
Networks may as a result of the Stockholders Agreement be deemed to beneficially
own approximately 8.8% of the outstanding Clarify Common Stock (based on the
24,708,067 shares of Clarify Common Stock outstanding on October 14, 1999, as
represented to Nortel Networks by Clarify in the Merger Agreement, plus the
1,053,123 shares of Clarify Common Stock subject to currently exercisable stock
options held by the Stockholder Parties, as represented to Nortel Networks by
Clarify). The Stockholder Parties and Nortel Networks may be deemed to have
shared power to vote or to direct the vote with respect to the Beneficially
Owned Shares. The Stockholders Agreement also provides that, subject to certain
exceptions, the Stockholder Parties may not dispose of the Beneficially Owned
Shares and, because this provision may be waived by Nortel Networks, the
Stockholder Parties and Nortel Networks may be deemed to have shared power to
dispose or direct the disposition of the Beneficially Owned Shares.
Except as set forth in this Item 5, none of Nortel Networks or, to the best
of Nortel Networks' knowledge, BCE or any of the individuals named in Schedule I
or Schedule II hereto beneficially owns any shares of Clarify Common Stock.
(c) Except for entering into the agreements described above, neither Nortel
Networks nor, to the best of Nortel Networks' knowledge, BCE or any of the
individuals named in Schedule I or Schedule II hereto, has effected any
transaction in Clarify Common Stock during the past 60 days.
(d) So long as Nortel Networks has not exercised the Option (and prior to
the consummation of the Merger), Nortel Networks does not have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, any shares of Clarify Common Stock.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships with Respect to
Securities of Clarify.
Except as provided in the Merger Agreement, the Stock Option Agreement or
the Stockholders Agreement or as set forth in this Statement, neither Nortel
Networks nor, to the best of Nortel Networks' knowledge, BCE or any of the
individuals named in Schedule I or Schedule II hereto has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of Clarify, including, but not limited to,
transfer or voting of any of the securities, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material To Be Filed as Exhibits.
Exhibit 1 -- Agreement and Plan of Merger, dated as of October 18, 1999, among
Nortel Networks Corporation, Northern Crown Subsidiary, Inc. and
Clarify Inc. Incorporated herein by reference to Exhibit 2.1 of
the Clarify Inc. Current Report on Form 8-K, dated October 18,
1999 (filed October 26, 1999).
Exhibit 2 -- Stock Option Agreement, dated as of October 18, 1999, between
Nortel Networks Corporation and Clarify Inc. Incorporated herein
by reference to Exhibit 99.1 of the Clarify Inc. Current Report
on Form 8-K, dated October 18, 1999 (filed October 26, 1999).
Exhibit 3 -- Stockholders Agreement, dated as of October 18, 1999, between
Nortel Networks Corporation and the stockholders listed on
Schedule A thereto. Incorporated herein by reference to Exhibit
99.2 of the Clarify Inc. Current Report on Form 8-K, dated
October 18, 1999 (filed October 26, 1999).
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: October 27, 1999
Nortel Networks Corporation
By: /s/ Deborah J. Noble
---------------------
Name: Deborah J. Noble
Title: Vice President, Corporate Secretary and
Associate General Counsel
By: /s/ Blair F. Morrison
---------------------
Name: Blair F. Morrison
Title: Assistant General Counsel
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
NORTEL NETWORKS CORPORATION
The name, citizenship, present principal occupation or employment, and the
name of any corporation or other organization in which such employment is
conducted, of each of the directors and executive officers of Nortel Networks
Corporation is set forth below. Unless otherwise indicated below, the business
address of each director and executive officer is Nortel Networks Corporation,
8200 Dixie Road, Suite 100, Brampton, Ontario L6T 5P6, Canada.
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT
Directors
<S> <C>
Barford, Ralph M. President
Canadian Valleydene Corporation Limited
20 Eglinton Avenue West, Ste. 1903
P.O. Box 2026
Toronto, Ontario M4R 1R8
Canada
Blanchard, James J. Verner, Liipfert, Bernhard,
American McPherson and Hand
901-15th Street, N.W., Suite 700
Washington, DC 20005-2301 USA
Carlucci, Frank C. Chairman
American The Carlyle Group
1001 Pennsylvania Avenue N.W.
Washington, DC 20004 USA
(non-executive Chairman of
Nortel Networks Corporation)
Currie, Richard J. President
Canadian George Weston Limited
and Loblaw Companies Limited
22 St. Clair Avenue East
Suite 1901
Toronto, Ontario M4T 2S7
Canada
Fortier, L. Yves Chairman & Senior Partner
Canadian Ogilvy Renault
1981 McGill College Avenue
12th Floor
Montreal, Quebec H3A 3C1
Canada
House, David L. 13340 Old Oak Way
American Saratoga, CA 95070
Ingram, Robert A. Chairman
American Glaxo Wellcome Inc.
5 Moore Drive
Research Triangle Park, NC 27709
USA
Monty, Jean C. President and Chief Executive Officer
Canadian BCE Inc.
1000 rue de la Gauchetiere Ouest
Suite 3700
Montreal, Quebec H3B 4Y7
Canada
Pilkington, Sir Antony Retired Chairman
British Pilkington plc
Group Headquarters
Prescot Road, St. Helens
Merseyside, England WA10 3TT
United Kingdom
Roth, John A. President and Chief Executive Officer
Canadian Nortel Networks Corporation
Saucier, Guylaine Chairman of the Board
Canadian Canadian Broadcasting Corporation
1321 Sherbrooke Street West
Suite C-61
Montreal, Quebec H3G 1J4
Canada
Smith, Jr., Sherwood H. Chairman of the Board
American Emeritus
Carolina Power & Light Company
One Hanover Square Building
411 Fayetteville Street Mall
Raleigh, North Carolina 27601-1748
USA
Wilson, Lynton R. Chairman (non-executive)
Canadian BCE Inc.
181 Bay Street, Suite 4700
P.O. Box 794
Toronto, Ontario M5J 2T3
Canada
Officers
- --------
Beatty, Douglas C. Vice-President and Controller
Canadian
Buechner, Klaus M. Senior Vice-President, Mergers and Canadian
Acquisitions, Carrier Packet Solutions
Burn, David L. Vice-President, Taxation
Canadian
Chandran, Clarence J. Executive Vice-President and President,
Canadian Service Provider and Carrier Group
4006 E. Chapel Hill-Nelson Hwy
Research Triangle Park, North Carolina
27709 USA
Conner, William F. Executive Vice-President and
American Chief Marketing Officer
2375 Glenville Drive
Building B
Richardson, Texas 75082
USA
Craig, John A. Executive Vice-President and President,
Canadian Wireless and Carrier Solutions
5405 Windward Parkway
Alpharetta, Georgia 30004
USA
DeRoma, Nicholas J. Senior Vice-President and General Counsel
American
Desch, Matthew J. Executive Vice-President and President,
American Service Provider Solutions
Maidenhead Office Park
Westacott Way
Maidenhead, Berkshire
England SL6 3QH
Donahee, Gary R. Senior Vice-President and President, Service
Canadian Provider Solutions
221 Lakeside Blvd.
Richardson, Texas 75082-4399
USA
Doolittle, John M. Vice-President and Assistant Treasurer
Canadian
Dunn, Frank A. Senior Vice-President and Chief Financial Officer
Canadian
Hunt, Daniel J. Senior Vice-President and President, Nortel CALA
American 1500 Concord Terrace
Sunrise, Florida 33323
USA
Huret, Jerome P. Senior Vice-President, Corporate Development
French One Curzon Street
London, England W1Y 7FN
United Kingdom
Kaye, Robert B. Vice-President and General Auditor
Canadian
Kerr, Margaret G. Senior Vice-President, Human Resources Strategy
Canadian
Kerr, William R. Senior Vice-President, Finance and Business
Canadian Development
Long, James R. Executive Vice-President and President,
American Enterprise Solutions
Galatyn North
23745A Glenville Drive
Richardson, Texas 75082
USA
MacDonald, Arthur A. Senior Vice-President, Corporate Services
Canadian
Mao, Robert Y.L. Senior Vice-President and President and Chief
American Executive Officer, Nortel
China
3/F Beijing Tower
#10 East Chang'an Avenue
Beijing, Peoples Republic of China
100006
Morrison, Blair F. Assistant Secretary
Canadian
Noble, Deborah J. Vice-President, Corporate Secretary and Associate
Canadian General Counsel
Pahapill, Mary Anne E. Vice-President, Corporate Reporting and Assistant
Canadian Controller
Powell, Keith I. Senior Vice-President, Information Systems and
Canadian Chief Information Officer
Roth, John A. President and Chief Executive Officer
Canadian
Stevenson, Katharine B. Vice-President and Treasurer
Canadian/American
</TABLE>
<PAGE>
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF
BCE INC.
The name, citizenship, present principal occupation or employment, and the
name of any corporation or other organization in which such employment is
conducted, of each of the directors and executive officers of BCE Inc. is set
forth below.
<TABLE>
<CAPTION>
NAME AND CITIZENSHIP PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT
Directors
<S> <C>
Barford, Ralph M. President
Canadian Valleydene Corporation Limited
20 Eglinton Avenue W.
Suite 1903
P.O. Box 2026
Toronto, Ontario M4R 1K8
Canada
Charest, Micheline Chairman & Co - CEO
Canadian CINAR Corporation
1055 Rene-Levesque Blvd. East
Suite 800
Montreal, Quebec H2L 4S5
Canada
Currie, Richard J., C.M. President
Canadian George Weston Limited
22 St. Clair Avenue East
Suite 2001
Toronto, Ontario M4T 2S7
Canada
Guillevin Wood, Jeannine, O.C. Chairman of the Board
Canadian Banque Laurentienne
1981, Avenue McGill College, 20e
Montreal, Quebec, H3A 3K3
Canada
Kaufman, Donna S. Lawyer and Corporate Director
Canadian 2 St. Clair Avenue East
Suite 800
Toronto, Ontario M4T 2T5
Canada
Kierans, Thomas E. Director
Canadian Clarkson Center for Business Ethics
and Holder of the Geofrrey R. Conway
Chair at the Joseph L. Rotman
School of Management
University of Toronto
Suite 331
100 Richmond Street West
Toronto, Ontario
M5H 3K6
Levitt, Brian M. President and Chief Executive Officer
Canadian Imasco Limited
600, boul. de Maisonneuve Ouest
19e etage
Montreal, Quebec H3A 3K7
Canada
McArthur, John H. Dean Emeritus
Canadian Harvard University Graduate School of Business
Administration
Soldiers Field
Boston, Massachusetts 02163
U.S.A.
Monty, Jean C., C.M. President and Chief Executive Officer
Canadian BCE Inc.
1000, rue de La Gauchetiere Ouest
Bureau 3700
Montreal, Quebec H3B 4Y7
Canada
Newall, J. Edward, O.C. Chairman
Canadian Newall & Associates
#2015 Bankers Hall
855 - 2nd Street S.W.
Calgary, Alberta T2P 4J7
Canada
Saint-Pierre, Guy, O.C. President du Conseil
Canadian Groupe SNC-Lavalin Inc.
455, boul. Rene-Levesque Ouest
21e etage
Montreal, Quebec H2Z 1Z3
Canada
Tellier, Paul M., P.C., C.C., C.R. President and Chief Executive Officer
Canadian Canadian National Railway Company
935, rue de La Gauchetiere Ouest
16e etage
Montreal, Quebec H3B 2M9
Canada
Wilson, Lynton R., O.C. Chairman (non-executive)
Canadian BCE Inc.
181 Bay Street, Suite 4700
P.O. Box 794
Toronto, Ontario M5J 2T3
Canada
Young, Victor L., O.C. Chairman and Chief Executive Officer
Canadian Fishery Products International Limited
70 O'Leary Avenue
P.O. Box 550
St. John's, Newfoundland A1C 5L1
Canada
Officers
- --------
Anderson, William D. Chief Financial Officer
Canadian 1000, rue de La Gauchetiere Ouest
Suite 3700
Montreal, Quebec H3B 4Y7
Canada
Lessard, Pierre N. Vice-President and Treasurer
Canadian 1000, rue de La Gauchetiere Ouest
Suite 3700
Montreal, Quebec H3B 4Y7
Canada
Monty, Jean C. President and Chief Executive Officer
Canadian 1000, rue de La Gauchetiere Ouest
Suite 3700
Montreal, Quebec H3B 4Y7
Canada
Nicholson, Peter J. M. Chief Strategy Officer
Canadian 1000, rue de La Gauchetiere Ouest
Suite 3700
Montreal, Quebec H3B 4Y7
Canada
Pickford, Barry W. Vice-President -- Taxation
Canadian 1000, rue de La Gauchetiere Ouest
Suite 3700
Montreal, Quebec H3B 4Y7
Canada
Ryan, Marc J. Corporate Secretary
Canadian 1000, rue de La Gauchetiere Ouest
Suite 3700
Montreal, Quebec H3B 4Y7
Canada
Turcotte, Martine Chief Legal Officer
Canadian 1000, rue de La Gauchetiere Ouest
Suite 3700
Montreal, Quebec H3B 4Y7
Canada
</TABLE>
