<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
CLARUS CORPORATION
__________________________________________________________________
(Name of Registrant as Specified In Its Charter)
__________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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<PAGE>
3970 Johns Creek Court
Suwanee, Georgia 30024
Dear Stockholder:
You are cordially invited to attend the Annual Stockholders' Meeting (the
"Meeting") of Clarus Corporation ("Clarus"), to be held at the Atlanta
Athletic Club, 123 Bobby Jones Drive, Duluth, Georgia 30097 on Thursday, May
27, 1999 at 9:00 a.m., local time, notice of which is enclosed.
The following proposals are to be presented at the Meeting: (i) to elect
three directors to serve until the 2002 Annual Stockholders' Meeting; (ii) to
ratify the selection of Arthur Andersen LLP as our independent public
accountants for the year ending December 31, 1999; and (iii) to amend our 1998
Stock Incentive Plan to increase the number of shares of our common stock
available for grant thereunder from 1,000,000 to 1,500,000 shares.
The proposals listed above have been approved unanimously by your Board of
Directors and are recommended by the Board to you for approval. Each member of
the Board of Directors has agreed to vote all shares of Clarus common stock
owned by such member in favor of the proposals.
A plurality of our outstanding common stock present in person or
represented by proxy at the Meeting will be required to elect three directors
to serve until the 2002 Annual Stockholders' Meeting. The affirmative vote of
a majority of Clarus' common stock present in person or represented by proxy
will be required to approve the remainder of the proposals.
We hope that you will be able to join us and let us give you a review of
1998. Whether you own a few or many shares of stock and whether or not you
plan to attend in person, it is important that your shares be voted on matters
that come before the meeting. To make sure your shares are represented, we
urge you to complete and mail the enclosed proxy card promptly.
Thank you for helping us make our first year as a public company a success.
We look forward to your continued support in 1999.
Sincerely,
/s/ Stephen P. Jeffery
------------------------------------
Stephen P. Jeffery, Chairman of the
Board, President
and Chief Executive Officer
Atlanta, Georgia
April 23, 1999
<PAGE>
3970 Johns Creek Court
Suwanee, Georgia 30024
(770) 291-3900
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD MAY 27, 1999
Notice is hereby given that the Annual Stockholders' Meeting (the
"Meeting") of Clarus Corporation ("Clarus") will be held at the Atlanta
Athletic Club, 123 Bobby Jones Drive, Duluth, Georgia 30097 on Thursday, May
27, 1999 at 9:00 a.m., local time, for the following purposes:
1. Election of Directors. The election of three nominees for Class I
Directors of Clarus to serve until the 2002 Annual Stockholders' Meeting;
2. Amendment to 1998 Stock Incentive Plan. The amendment of our 1998 Stock
Incentive Plan to increase the number of shares available for grant thereunder
from 1,000,000 to 1,500,000 shares;
3. Ratification of Auditors. To ratify the selection of Arthur Andersen LLP
as our independent public accountants for the year ending December 31, 1999;
and
4. Other Business. The transaction of such other business as may properly
come before the Meeting, including adjourning the Meeting to permit, if
necessary, further solicitation of proxies.
A plurality of our outstanding common stock present in person or
represented by proxy at the Meeting will be required to elect the Class I
directors. The affirmative vote of a majority of the shares of our common
stock present in person or represented by proxy will be required to approve
proposals 2 and 3 listed above. Only stockholders of record at the close of
business on April 9, 1999 are entitled to receive notice of and to vote at the
Meeting or any adjournment or postponement thereof.
The Board of Directors unanimously recommends that holders of our common
stock vote "FOR" the proposals listed above.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Meeting in person. You may revoke your
proxy by filing with our Secretary an instrument of revocation or a duly
executed proxy bearing a later date or by electing to vote in person at the
Meeting.
By Order of the Board of Directors
/s/ Arthur G. Walsh, Jr.
-----------------------------------
Arthur G. Walsh, Jr., Secretary
Atlanta, Georgia
April 23, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Voting Information.......................................................... 1
Election of Directors....................................................... 2
Executive Officers.......................................................... 4
Stock Ownership of Directors and Executive Officers......................... 6
Executive Compensation...................................................... 7
Stock Performance Graph..................................................... 9
Compensation Committee Report on Executive Compensation..................... 9
Certain Relationships and Related Transactions.............................. 11
Proposal to Amend 1998 Stock Incentive Plan................................. 12
Ratification of Arthur Andersen LLP......................................... 15
Principal Stockholders...................................................... 16
Section 16(a) Beneficial Ownership Compliance............................... 17
General Information......................................................... 17
</TABLE>
<PAGE>
PROXY STATEMENT FOR
1999 ANNUAL STOCKHOLDERS' MEETING
VOTING INFORMATION
Purpose
This Proxy Statement is being furnished to the holders of our common stock
in connection with the solicitation by and on behalf of our Board of Directors
of proxies for use at the 1999 Annual Stockholders' Meeting, at which you will
be asked to vote upon proposals to elect three directors to serve as Class I
directors until our 2002 Annual Stockholders' Meeting, to approve an amendment
to our 1998 Stock Incentive Plan to increase the number of shares available
for grant under such plan from 1,000,000 to 1,500,000 shares, and to ratify
the selection of Arthur Andersen LLP as our independent public accountants for
the year ended December 31, 1999. The Meeting will be held at 9:00 a.m., local
time, on May 27, 1999, at the Atlanta Athletic Club, 123 Bobby Jones Drive,
Duluth, Georgia 30097.
This Proxy Statement and the enclosed Proxy are first being mailed to
stockholders on or about April 23, 1999.
Proxy Card and Revocation
You are requested to promptly sign, date, and return the accompanying proxy
card to us in the enclosed postage-paid envelope. Any stockholder who has
delivered a proxy may revoke it at any time before it is voted by giving
notice of revocation in writing or submitting to us a signed proxy bearing a
later date, provided that such notice or proxy is actually received by us
prior to the taking of the stockholder vote or by electing to vote in person
at the Meeting. Any notice of revocation should be sent to Clarus Corporation,
3970 Johns Creek Court, Suwanee, Georgia 30024, Attention: Arthur G. Walsh,
Jr., Corporate Secretary. The shares of our common stock represented by
properly executed proxies received at or prior to the Meeting and not
subsequently revoked will be voted as directed in such proxies. If
instructions are not given, shares represented by proxies received will be
voted FOR approval of the proposals. As of the date of this Proxy Statement,
we are unaware of any other matter to be presented at the Meeting.
Who Can Vote; Voting of Shares
Our Board of Directors has established the close of business on April 9,
1999, as the record date for determining our stockholders entitled to notice
of and to vote at the Meeting. Only our stockholders of record as of the
record date will be entitled to vote at the Meeting. A plurality of our
outstanding common stock present in person or represented by proxy at the
Meeting will be required to elect three directors to serve until the 2002
Annual Stockholders' Meeting. The affirmative vote of a majority of our
outstanding common stock present in person or represented by proxy at the
Meeting will be required to amend our 1998 Stock Incentive Plan, ratify the
selection of Arthur Andersen LLP as our independent auditors for 1999, and
approve any other proposals considered at the Meeting. Under certain
circumstances, brokers are prohibited from exercising discretionary authority
for beneficial owners who have not returned proxies to the brokers (so-called
"broker non-votes"). In such cases, and in cases where the stockholder
abstains from voting on a matter, those shares will be counted for the purpose
of determining if a quorum is present but will not be included in the vote
totals with respect to those matters and, therefore, will have no effect on
the vote.
As of the Record Date, there were 144 holders of record of shares of our
common stock outstanding and entitled to vote at the Meeting, with each share
entitled to one vote.
The presence, in person or by proxy, of a majority of the outstanding
shares of our common stock entitled to vote at the Meeting is necessary to
constitute a quorum of the stockholders in order to take action at the
meeting. For these purposes, shares of our common stock that are present, or
represented by proxy, at the
1
<PAGE>
Meeting will be counted for quorum purposes regardless of whether the holder
of the shares or proxy fails to vote on any matter or whether a broker with
discretionary authority fails to exercise its discretionary voting authority
with respect to any matter.
Our directors and executive officers beneficially owned, as of the record
date, 2,268,456 shares (or approximately 20.7% of the outstanding shares) of
our common stock.
How You Can Vote
You may vote your shares by marking the appropriate boxes on the enclosed
proxy card. You must sign and return the proxy card promptly in the enclosed
self-addressed envelope. Your vote is important. Please return your marked
proxy card promptly so your shares can be represented, even if you plan to
attend the Meeting in person.
ELECTION OF DIRECTORS
Number and Classification
Our Board of Directors currently consists of seven directors. Our bylaws
provide that our Board of Directors will consist of not less than two, nor
more than seven members, the precise number to be determined from time to time
by the Board of Directors. The number of directors has been set at seven by
the Board. The seven members who comprise our Board of Directors are divided
into three classes of directors: Class I directors, Class II directors and
Class III directors, with each such class of directors serving staggered
three-year terms.
Nominees
We have selected three nominees that we propose for election to our Board
as Class I directors. The nominees for Class I directors will be elected to
serve a three year term that will expire at our 2002 Annual Stockholders'
Meeting. The three nominees for our Class I directors are: Norman N. Behar,
Mark A. Johnson and William S. Kaiser, all of whom are currently our
directors. Proxies cannot be voted at the meeting for a greater number of
persons than the number of nominees named.
Each of the nominees has consented to being named in this Proxy Statement
and to serve as a director of Clarus if elected. In the event that any nominee
withdraws or for any reason is not able to serve as a director, the proxy will
be voted for such other person as may be designated by the Board of Directors,
but in no event will the proxy be voted for more than three nominees. A
plurality of all votes cast at the meetings by the holders of our common stock
is required for the election of the nominees standing for election. Our
management has no reason to believe that any nominee will not serve if
elected.
The Board of Directors unanimously recommends that you vote FOR each nominee.
2
<PAGE>
Board of Directors
The following table sets forth the name and age of each of the three
nominees for election as Class I directors and the remaining directors who
will continue to serve on our Board of Directors, as well as his director
classification and length of service on our board.
<TABLE>
<CAPTION>
Director Year First
Name Age Classification Elected
---- --- -------------- ----------
<S> <C> <C> <C>
Norman N. Behar................................ 35 I 1999
Mark A. Johnson................................ 46 I 1998
William S. Kaiser.............................. 43 I 1992
Tench Coxe..................................... 40 II 1993
Donald L. House................................ 57 II 1993
Stephen P. Jeffery............................. 43 III 1997
Said Mohammadioun.............................. 51 III 1998
</TABLE>
Meetings and Committees of the Board
Our Board of Directors held 14 meetings during 1998. Each director attended
75% or more of the aggregate number of meetings held by the Board of Directors
and the committees on which he served. Our Board of Directors has two standing
committees: the Audit Committee and the Compensation Committee. During 1998,
the Board of Directors did not have a standing nominating committee, the
functions of such a committee were reserved to the full Board of Directors.
The Audit Committee presently consists of Messrs. Coxe and Kaiser. The
Audit Committee has been assigned the principal functions of:
. appointing the independent auditors;
. reviewing and approving the annual report of the independent
auditors;
. approving the annual financial statements; and
. reviewing and approving summary reports of the auditor's findings and
recommendations.
The Audit Committee held one meeting during 1998.
The Compensation Committee also presently consists of Messrs. Coxe and
Kaiser. The Compensation Committee has been assigned the functions of
approving and monitoring the remuneration arrangements for senior management
and equity compensation awards under our stock-based plans. The Compensation
Committee held eight meetings during 1998. In addition, the Stock Option
Committee whose responsibilities were assumed by the Compensation Committee
after May 26, 1998, held three meetings during 1998.
Director Compensation
Directors who are not our employees (also referred to as "Outside
Directors") currently include Messrs. Behar, Coxe, House, Johnson, Kaiser and
Mohammadioun. Our Directors do not receive an annual retainer or any fees for
attending regular meetings of the Board of Directors. Outside Directors may
participate in our 1998 Stock Incentive Plan. Effective March 9, 1998, we
granted to Mr. Mohammadioun an option to acquire 11,250 shares of our common
stock at an exercise price of $8.00 per share. On June 2, 1998,
Messrs. Coxe, House, Kaiser and Mohammadioun were each granted options to
purchase 7,500 shares of our common stock at an exercise price of $7.63 per
share. On July 1, 1998, we granted Mark A. Johnson options to purchase 18,750
shares of our common stock at an exercise price of $9.13 per share. Other than
the option granted to Mr. Mohammadioun all options granted to our directors
have an exercise price equal to the fair market value of our common stock on
the date of grant. The options granted to our Outside Directors vest over a
one-year period except that the option granted to Mr. Mohammadioun vested
immediately.
3
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the name, age at February 15, 1999, and
position of each executive officer.
<TABLE>
<CAPTION>
Name Age Positions
---- --- ---------
<C> <C> <S>
Chairman, President and Chief Executive
Stephen P. Jeffery........ 43 Officer
Joseph E. Bibler.......... 39 Vice President, Customer Services
William M. Curran, Jr..... 36 Vice President, Sales and Marketing
Vice President, Chief Financial Officer and
William A. Fielder III.... 40 Treasurer
Sally M. Foster........... 44 Vice President, Operations
Vice President, Strategy and Business
Steven M. Hornyak......... 33 Development
David A. Spicer........... 52 Vice President, Research and Development
Vice President, Corporate Affairs and
Arthur G. Walsh, Jr....... 51 Secretary
</TABLE>
Our executive officers are elected by the Board of Directors and serve until
their successors are duly elected and qualified. There is no family
relationships among any of the executive officers or directors.
Biographies of Directors and Executive Officers
Stephen P. Jeffery joined us in November 1994 as Vice President of
Marketing and was elected Vice President of Sales and Marketing in June 1995.
He was elected President in October 1995, a Director in October 1997, Chairman
of the Board in December 1997 and Chief Executive Officer in February 1998.
Prior to joining us, Mr. Jeffery was employed by Hewlett-Packard Company,
where he served as the manager of Hewlett-Packard's client/server solutions
and partner programs, as well as in a variety of sales and marketing
management positions in the U.S. and Europe for 15 years. Mr. Jeffery also
served in sales with International Business Machines ("IBM") prior to joining
Hewlett-Packard.
Joseph E. Bibler joined us in February 1997 as Vice President of Clarus
Professional Services, L.L.C. (formerly SQL Financial Services, L.L.C.) (the
"Services Subsidiary") and was elected President of our Services Subsidiary in
February 1998. In January 1999 he was elected a Vice President of Clarus,
responsible for customer services. Prior to joining us, Mr. Bibler spent 15
years with Andersen Consulting, most recently as an Associate Partner. At
Andersen Consulting, he served in a variety of roles, including leadership of
one of Andersen's regional software implementation practices.
William M. Curran, Jr. joined us in February 1996 as a Regional Sales
Manager for the Southern Region. In August 1997, Mr. Curran was elected Vice
President of Sales for the Eastern region. In January 1999 he was elected Vice
President, and is currently responsible for all sales and marketing. Prior to
joining us, Mr. Curran was employed by Geac Computer Corp. Ltd (formerly Dun &
Bradstreet Software) ("Geac") from November 1989 until February 1996 as a
Senior Account Executive. From June 1984 until November 1989, Mr. Curran
served in a variety of sales positions with Unisys Corporation.
William A. Fielder III joined us in March 1998 as Chief Financial Officer
and Treasurer. In January 1999 he was also elected Vice President. Prior to
joining us, Mr. Fielder served as Vice President and Chief Financial Officer
of Gray Communications Systems, Inc. from July 1993 to March 1998. From April
1991 to July 1993, Mr. Fielder served as Controller of Gray Communications
Systems, Inc. which was the chief financial officer position of that company.
From November 1984 to March 1991, Mr. Fielder was employed with Ernst & Young
LLP where he served a variety of roles in the Columbus, Georgia, office, most
recently as audit manager and computer auditor for a variety of clients in the
Atlanta and West Georgia area.
Sally M. Foster joined us in March 1997 as Vice President of Customer
Service. In January 1999 she was elected Vice President, and is currently
responsible for operations. Prior to joining us, Ms. Foster served in several
positions at Geac from August 1988 until March 1997, most recently as Vice
President/Director of Global Business Operations. From August 1985 until
August 1988, Ms. Foster served as the Division Operations Manager for the
General Motors Corporation, Electronic Data Systems Ltd. based in London,
England.
4
<PAGE>
Steven M. Hornyak joined us in December 1994 as an Account Executive and
was promoted in 1997 to Regional Sales Manager for the Northeast region. In
August 1997, Mr. Hornyak was elected Vice President of Marketing. In January
1999, Mr. Hornyak was elected as Vice President and is currently responsible
for strategy and business development. Prior to joining us, Mr. Hornyak served
in a variety of sales and consulting roles for Oracle Corporation from June
1992 until December 1994. Prior to that, he was employed by Price Waterhouse
in its management consulting services group.
David A. Spicer joined us in August 1998 as Vice President of Development.
In January 1999, he was elected Vice President, and is currently responsible
for research and development. Prior to joining us, Mr. Spicer served as Vice
President for Development for Arbor Software from February 1998 to July 1998.
From April 1992 to February 1998, Mr. Spicer served as Vice President of
Financial Application Development at Oracle Corporation.
Arthur G. Walsh, Jr. joined us in November 1992 as Chief Operating Officer
and Secretary. In October 1995, Mr. Walsh was elected Vice President of
Customer Service and Operations and Secretary/Treasurer. From April 1997 to
October 1997, he served as Vice President and Secretary/Treasurer. In October
1997, Mr. Walsh was elected Vice President of Human Resources and
Secretary/Treasurer. From December 1997 until March 1998, he also served as
acting Chief Financial Officer. In April 1998, Mr. Walsh was elected Vice
President of Human Resources and Secretary, serving in that role until January
1999, when he was elected to his current positions of Vice President,
responsible for corporate affairs, and Secretary. From September 1989 until
November 1992, Mr. Walsh was Chief Operating Officer for Wilson & McIlvaine, a
general business Chicago law firm, where he was responsible for overall
management of the firm's business operations. Before that, he was employed
with Andersen Consulting from July 1974 until September 1989, where he served
in a variety of roles in Atlanta and Chicago, lastly as Director of Finance
and Administration for the Technical Services Organization in Chicago World
Headquarters.
Norman N. Behar has served as an Executive Vice President of Clarus CSA,
one of our wholly-owned subsidiaries, from November 1998 to March 31, 1999.
Mr. Behar was appointed to our Board of Directors in January 1999. Prior to
joining us and Clarus CSA, Mr. Behar served as President and Chief Executive
Officer of ELEKOM Corporation. Prior to joining ELEKOM in January 1998, Mr.
Behar served from January 1996 to December 1997 as President and Chief
Executive Officer of Catapult, Inc., a provider of personal computer training
services. From April 1991 to December 1995, Mr. Behar was Chief Operating
Officer of Catapult, Inc.
Tench Coxe has served as a member of our Board of Directors since September
1993. Mr. Coxe has served as a managing director of Sutter Hill Ventures, a
venture capital company located in Palo Alto, California, since 1989. From
1984 to 1987, Mr. Coxe served as Director of Marketing and in other management
positions with Digital Communications Associates. Mr. Coxe is currently on the
Board of Directors of Edify Corporation and Nvidia Corporation and several
privately held companies.
Donald L. House has served as a member of our Board of Directors since
January 1993. Mr. House served as our Chairman of the Board of Directors from
January 1994 through December 1997, and as President and a Director from
January 1993 through December 1993. From September 1991 until December 1992,
Mr. House served as President of Prentice Hall Professional Software, Inc., a
subsidiary of Simon and Schuster, Inc. From 1968 through 1987, Mr. House
served in a number of senior executive positions with Management Science
America, Inc. Mr. House is a director of Melita International Corporation,
where he serves as Chairman of the Audit Committee and a member of the
Compensation Committee, and is a director of Carreker-Antinori, Inc., where he
is a member of its Audit Committee. Mr. House also serves as a member of the
Board of Directors of BT Squared Technologies, Inc., Intellimedia Commerce,
Inc., Telinet Technologies, LLC and TransNexus, LLC which are privately held
companies.
William S. Kaiser has served on our Board of Directors since November 1992.
Mr. Kaiser joined Greylock Management Corporation, a venture capital company
located in Boston, Massachusetts in 1986 and became a general partner in 1988.
From 1983 to 1986, Mr. Kaiser served in a variety of marketing management
positions with Apollo Computer, working primarily with Apollo's third-party
suppliers. Mr. Kaiser is also on the Board of Directors of Open Market, Inc.
and several privately held companies.
5
<PAGE>
Mark A. Johnson has served as a member of our Board of Directors since July
1998. Mr. Johnson has served as the Vice Chairman of CheckFree Corporation, a
supplier of financial electronic commerce services, software and related
products since 1997. He also serves on the Board of Directors of CheckFree
Corporation. From 1982 to 1997 Mr. Johnson has served in various capacities
with CheckFree including as President of its Business Services Division in
1996 and as Executive Vice President of Corporate Development of CheckFree
Corporation from 1990 to 1996.
Said Mohammadioun has served as a member of our Board of Directors since
March 1998. Mr. Mohammadioun has served as Chairman and Chief Executive
Officer of Synchrologic, Inc. since October 1996. From March 1995 to September
1996, he was a private investor in small technology companies.
Mr. Mohammadioun was Vice President of Lotus Development Corp. from December
1990 to February 1995.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth ownership of shares of our common stock by
each director, nominee for director, and by each executive officer named in
"Executive Compensation--Summary Compensation Table" on page 7, and by all
executive officers and directors as a group, as of February 15, 1999.
<TABLE>
<CAPTION>
Number of
Shares Percentage of
Beneficially Common Stock
Name Position Owned(1) Outstanding(2)
- ---- -------- ------------ --------------
<S> <C> <C> <C>
Stephen P. Jeffery (3).. Chairman, President and Chief Executive Officer 201,299 1.8%
William M. Curran, Jr.
(4).................... Vice President, Sales and Marketing 23,100 *
Sally M. Foster (5)..... Vice President, Operations 14,000 *
Steven M. Hornyak (6)... Vice President, Strategy and Business Development 16,260 *
Arthur G. Walsh, Jr.
(7).................... Vice President, Corporate Affairs and Secretary 70,254 *
Norman N. Behar (8)..... Director 282,543 2.9
Tench Coxe (9).......... Director 584,909 5.3
Donald L. House (10).... Director 81,874 *
Mark A. Johnson (11).... Director 5,625 *
William S. Kaiser (12).. Director 992,006 9.1
Said Mohammadioun (13).. Director 39,875 *
Directors and executive
officers as a group
(14 persons)........... 2,357,989 21.5%
</TABLE>
- --------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, we include shares of common
stock issuable by us pursuant to options held by the respective person or
group which may be exercised within 60 days after February 15, 1999
("Presently Exercisable Options"). Except as otherwise indicated, each
beneficial owner named in the table has sole voting and investment power
with respect to the shares set forth opposite such beneficial owner's
name.
(2) Presently Exercisable Options are deemed to be outstanding and to be
beneficially owned by the person or group holding such options for the
purpose of computing the percentage ownership of such person or group but
are not treated as outstanding for the purpose of computing the
percentage ownership of any other person or group.
(3) Includes 131,999 shares subject to Presently Exercisable Options.
(4) Consists of shares of common stock issuable upon the exercise of
Presently Exercisable Options.
(5) Includes 9,000 shares of common stock issuable upon the exercise of
Presently Exercisable Options.
(6) Consists of common stock issuable upon the exercise of Presently
Exercisable Options.
(7) Includes 7,500 shares of common stock issuable upon the exercise of
Presently Exercisable Options.
(8) Includes 15,000 shares of common stock issuable upon the exercise of
Presently Exercisable Options.
6
<PAGE>
(9) Includes 5,625 shares of common stock issuable upon the exercise of
Presently Exercisable Options and 559,157 shares of common stock held by
Sutter Hill Ventures, a California Limited Partnership ("Sutter Hill")
and its affiliates. Mr. Coxe, a member of our Board of Directors, is a
managing director of the general partner of Sutter Hill and shares voting
and investment power with respect to the shares of common stock held by
Sutter Hill. Mr. Coxe disclaims beneficial ownership of the shares held
by Sutter Hill and its affiliates, except as to the shares held of record
in his name and as to his partnership interest in Sutter Hill.
(10)Includes 5,625 shares of common stock issuable upon the exercise of
Presently Exercisable Options.
(11)Consists of common stock issuable upon the exercise of Presently
Exercisable Options
(12) Includes 5,625 shares of common stock issuable upon the exercise of
Presently Exercisable Options and includes 986,381 shares held by
Greylock Limited Partnership, with which Mr. Kaiser is affiliated.
(13)Includes 16,875 shares of common stock issuable upon the exercise of
Presently Exercisable Options.
EXECUTIVE COMPENSATION
The following table provides certain summary information for 1998, 1997 and
1996 concerning compensation paid or accrued by us to or on behalf of our
Chief Executive Officer and our other four most highly compensated executive
officers during 1998 (the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation(1) Awards
--------------------------- -----------------------
Name and Principal Securities Underlying All Other
Position Year Salary ($) Bonus ($) Options Granted (#) (2) Compensation
- ------------------ ---- ---------- --------- ----------------------- ------------
<S> <C> <C> <C> <C> <C>
Stephen P. Jeffery,
President and.......... 1998 $240,672 $129,843 112,499 --
Chief Executive Officer 1997 175,000(3) 92,621 75,000 --
1996 166,250(4) 139,535 112,500 --
William M. Curran, Jr.,
Vice................... 1998 142,586 388,512 80,500 --
President, Sales and
Marketing 1997 111,748 197,910 45,000 --
1996 69,436 117,085 15,000 --
Steven M. Hornyak,
Vice................... 1998 156,177 90,143 40,000 --
President, Strategy and 1997 111,760 130,822 51,000 $53,394(5)
Business Development 1996 67,500 151,262 6,300 --
Arthur G. Walsh, Jr.,
Vice................... 1998 152,586 60,125 -- --
President, Corporate 1997 150,900 -- 30,000 --
Affairs and Secretary 1996 150,000 -- -- --
Sally M. Foster, Vice... 1998 147,112 50,715 -- --
President, Operations 1997 101,893 24,275 60,000 --
1996 -- -- -- --
</TABLE>
- --------
(1) In accordance with the rules of the SEC, the compensation set forth in the
table does not include medical, group life insurance or other benefits,
securities or property that do not exceed the lesser of $50,000 or 10% of
the person's salary and bonus shown in the table.
(2) We did not make any restricted stock awards, grant any stock appreciation
rights or make any long-term incentive payments during 1998, 1997 or 1996
to our executive officers. Options granted to the Named Executive
Officers, other than the grant to Mr. Jeffery in 1998, were granted at
fair market value on the date of grant as determined by the Board of
Directors.
(3) Includes $14,583 in deferred compensation earned in 1996.
(4) Includes $51,214 in deferred compensation earned in 1995.
(5) Represents a one-time payment for relocation expenses.
7
<PAGE>
Stock Options Grants, Exercises and Year End Values
The following table provides certain information concerning individual
grants of stock options made during 1998 to the Named Executive Officers.
Option Grants in 1998
<TABLE>
<CAPTION>
Potential
Realizable Value At
Assumed Annual
Number of % of Total Rates Of Stock
Securities Options Price Appreciation
Underlying Granted to For Option Term (1)
Options Employees in Exercise Price Expiration -------------------
Name Granted (#) Fiscal Year ($ Per Share) Date 5% 10%
- ---- ----------- ------------ -------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen P. Jeffery...... 112,499 11.21% $ 4.83 02/05/05 $723,009 $1,210,460
William M. Curran, Jr... 40,500 4.03 10.00 05/26/05 164,876 384,230
40,000 3.98 9.13 07/21/05 176,876 385,056
Steven M. Hornyak....... 40,000 3.98 9.13 07/21/05 176,876 384,230
Arthur G. Walsh, Jr..... -- -- -- -- -- --
Sally M. Foster......... -- -- -- -- -- --
</TABLE>
- --------
(1) All options were granted pursuant to our 1992 Stock Option Plan or our
1998 Stock Incentive Plan at an exercise price not less than fair market
value on the date of grant (other than the grant in February 1998 to Mr.
Jeffery) as determined by the Board of Directors for grants prior to May
26, 1998, or based on our closing sales price as reported on NASDAQ for
grants after May 26, 1998. Options vest in installments over a period of
four years (other than the grant to Mr. Jeffery) with 20% of the options
vested 12 months from the date of grant, 40% vested 24 months after the
date of grant, 70% vested 36 months after the date of grant and 100%
vested 48 months after the date of grant. The options expire seven years
after the date of grant.
(2) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming that the stock price on the date of grant
appreciates at the specified annual rates of appreciation, compounded
annually over the term of the option. These numbers are calculated based
on rules promulgated by the SEC.
The following table provides certain information concerning the options
exercised in 1998 by the Named Executive Officers and the number and value of
exercised and unexercised options held by the Named Executive Officers as of
December 31, 1998.
Aggregated Option Exercises in 1998
And Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities Under- In-the-Money Options
Number of Dollar lying Unexercised Options at Fiscal Year End ($)
Shares Value at Fiscal Year End (#) (2)
Acquired on Realized ------------------------------ -------------------------
Name Exercise (#) ($)(1) Unexercisable Exercisable Unexercisable
- ------------------------ ------------ -------- Exercisable -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen P. Jeffery...... 67,500 $354,825 127,499 180,000 $166,574 $907,425
William M. Curran, Jr... -- -- 15,000 125,500 56,772 150,108
Steven M. Hornyak....... -- -- 14,610 85,390 58,050 163,731
Arthur G. Walsh, Jr..... -- -- 6,000 24,000 17,985 71,940
Sally M. Foster......... 3,000 39,000 9,000 48,000 20,970 143,880
</TABLE>
- --------
(1) Dollar values were calculated by determining the difference between the
fair market value of the underlying securities on the date of exercise and
the exercise price of the options.
(2) Dollar values were calculated by determining the difference between the
fair market value of the underlying securities at December 31,1998 ($6.00
per share) and the exercise price of the options.
8
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on our common stock to the cumulative
total return of the Russell 2000 Index and the Media General Financial
Services Index for the period commencing on May 27, 1998, and ending December
31, 1998 (the "Measuring Period"). The graph assumes that the value of the
investment in our common stock and each index was $100 on May 27, 1998. The
yearly change in cumulative total return is measured by dividing (1) the sum
of (i) the cumulative amount of dividends for each fiscal year, assuming
dividend reinvestment, and (ii) the change in share price between the
beginning and end of the Measuring Period, by (2) the share price at the
beginning of the Measuring Period.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG CLARUS, RUSSELL 2000 INDEX AND MG GROUP INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
05/27/98 06/30/98 07/31/98 08/31/98 09/30/98 10/31/98 11/30/98 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S CORPOR 100.00 107.35 100.74 62.50 41.54 66.91 70.59 70.59
GROUP IND 100.00 119.61 115.42 97.47 115.66 110.40 126.12 142.41
ELL 2000 IN 100.00 100.21 92.10 74.21 80.02 83.29 87.55 92.83
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1998, the Compensation Committee of the Board of Directors was
comprised of two non-employee members of the Board. The Compensation Committee
is responsible for
. setting our compensation philosophy and policies;
. establishing the compensation of our Chief Executive Officer, Stephen
P. Jeffery; and
. administering and awarding options and other awards under our stock
incentive plans.
Our compensation policies have been designed to align the financial
interests of our management with those of our stockholders, and to take into
account our operating environment and expectations for continued growth and
enhanced profitability. Compensation for each of our executive officers
consists of a base salary, an annual bonus based on an executive incentive
plan which outlines revenue, profit and other financial goals for each
quarter, and stock options. We do not currently provide executive officers
with other long-term incentive compensation other than the ability to
contribute their earnings to our 401(k) Plan.
9
<PAGE>
The Compensation Committee's current philosophy is that the predominate
portion of an executive's compensation should be based directly upon the value
of long-term incentive compensation in the form of cash bonuses and stock
option awards. The Compensation Committee believes that providing executives
with the opportunity to acquire significant interests in our growth and
prosperity (through grants of stock options), while maintaining our base
salaries at competitive levels, will enable us to attract and retain
executives with the outstanding management abilities and entrepreneurial
spirit which are essential to our success. Furthermore, the Compensation
Committee believes that this approach to compensation motivates executives to
perform to their full potential.
At least annually, the Compensation Committee reviews salary
recommendations for our executives and then approves such recommendations,
with any modifications it considers appropriate. The annual salary
recommendations for such persons are made under the ultimate direction of the
Chief Executive Officer, based on total compensation packages for comparable
companies in our industry, as well as evaluations of the individual
executive's past and expected future performance. Similarly, the Compensation
Committee fixes the base salary of the Chief Executive Officer based on its
review of competitive compensation data from companies in our industry, the
Chief Executive Officer's overall compensation package, and the Compensation
Committee's assessment of his past performance and its expectation as to his
future performance in leading Clarus.
The Compensation Committee determined the annual bonus in 1998 to be paid
to our Chief Executive Officer based upon our 1998 bonus plan which outlines
certain revenue, profitability and other financial-related goals, as well as
other criteria designed to assess the Chief Executive Officer's contribution
to our performance.
Stock options represent a substantial portion of compensation for our
executive officers, including the Chief Executive Officer. Stock options
typically are granted at the fair market value on the date of grant, and will
only have value if our stock price increases. Generally, stock option grants
vest in installments over a period of four years, with 20% of the options
vesting 12 months from the date of grant, 40% vesting 24 months from the date
of grant, 70% vesting 36 months after the date of grant, and 100% vesting 48
months after the date of grant (although certain special types of grants may
vest either immediately or over a shorter period), and executives must be
employed by Clarus at the time of vesting in order to exercise the options. In
special circumstances, however, the Compensation Committee has authority to
accelerate vesting or modify other restrictions on exercise. Grants of stock
options generally are based upon the level of the executive's position and an
evaluation of the executive's past and expected future performance. The
Compensation Committee believes that dependence on stock options for a
significant portion of an executive's compensation more closely aligns such
executive's interests with those of our stockholders, since the ultimate value
of such compensation is linked directly to stock price.
The base salary paid to Mr. Jeffery is reviewed annually by the
Compensation Committee and may be adjusted based on competitive compensation
information available to the Compensation Committee, his overall compensation
package and the Compensation Committee's assessment of his past experience and
its expectation as to his future contributions in leading Clarus and our
businesses. On February 5, 1998, the Compensation Committee reviewed the
compensation of our Chief Executive Officer and increased the annual base
salary of Mr. Jeffery from $175,000 to $225,000. On February 5, 1998, Mr.
Jeffery was granted a stock option to purchase 112,499 shares of our common
stock at a price of $4.83 per share. The increase in Mr. Jeffery's base salary
was based on past performance and his appointment as our Chief Executive
Officer in February 1998.
The Compensation Committee evaluates our compensation policies and
procedures with respect to executives on an ongoing basis. Although the
Compensation Committee believes that current compensation policies have been
successful in aligning the financial interests of executive officers with
those of our stockholders and with our performance, it continues to examine
what modifications, if any, should be implemented to further link executive
compensation with both individual and Clarus' performance.
COMPENSATION COMMITTEE
Tench Coxe
William S. Kaiser
10
<PAGE>
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the foregoing
Compensation Committee Report on Executive Compensation and the Stockholder
Return Performance Graph shall not be incorporated by reference into any such
filings.
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee reviews and approves compensation and benefits
for our key executive officers, administers our stock option plans and makes
recommendations to the Board regarding such matters. No member of the
Compensation Committee serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of our Board or Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996 and 1997, McCall Consulting Group, Inc. ("MCG"), an entity
owned by Technology Ventures, L.L.C. ("Tech Ventures") and controlled by our
former Chief Executive Officer and director, Joseph S. McCall, provided to us:
.temporary services by administrative employees;
. third-party consulting services in connection with several product
development projects;
.the lease of office equipment and office space in our prior
headquarters facility; and
.services in connection with the our sales process.
We paid MCG approximately $1.6 million and $1.4 million, respectively, during
1997 and 1996 for these services. In February 1998, we entered into an
Independent Contractor Agreement with MCG providing for the performance of
services by MCG for us and the assignment to us of the intellectual property
rights associated with the performance of such services. In addition, in
February 1998, we granted to Tech Ventures and MCG a royalty-free license to
use our current products as well as certain of our future products, and agreed
to provide to MCG without charge ongoing support services as long as Tech
Ventures owns at least 100,000 shares of our common stock and has not modified
the software. We may terminate this license agreement if a competitor acquires
any interest in either MCG or Tech Ventures.
On February 5, 1998, Tech Ventures sold its 20% interest in our Services
Subsidiary to us in exchange for 225,000 shares of our common stock, a warrant
to purchase an additional 300,000 shares of common stock at an exercise price
of $3.67 per share and a non-interest bearing two-year promissory note in the
principal amount of $1.1 million, giving us 100% ownership of the Services
Subsidiary. We granted Tech Ventures certain registration rights and agreed to
register in our initial public offering 497,700 shares of our common stock
owned by Tech Ventures (comprised of 272,700 of the 450,000 shares originally
issued to Tech Ventures in March 1995 and 225,000 shares issued on February 5,
1998) and to maintain the effectiveness of such registration for a period of
two years. In addition, immediately prior to the purchase and sale, the
Services Subsidiary distributed approximately $241,000 to Tech Ventures as
their portion of accumulated unpaid profits earned by the Services Subsidiary
prior to February 5, 1998. All of the material terms of the purchase were
agreed upon by Tech Ventures and us in January 1998, including the number of
shares to be issued to Tech Ventures. The transaction was approved by our
Board of Directors and consummated on February 5, 1998.
In February 1998, the Services Subsidiary also paid Tech Ventures
approximately $33,000 as consideration for the termination of the Management
Services Agreement entered into between the parties in March 1995, and Tech
Ventures paid in full to the Services Subsidiary the remaining principal
balance and accrued interest of approximately $33,000 due under the Tech
Ventures Note.
11
<PAGE>
In February 1998, we entered into certain severance and related agreements
with Joseph S. McCall in connection with his resignation as our Chief
Executive Officer. In connection therewith, we paid Mr. McCall $225,000,
severance in the amount of $75,000 payable over a one-year period beginning on
May 26, 1998, and entered into an independent contractor agreement whereby Mr.
McCall will serve as a consultant to us for one year for $125,000 in
compensation, with the ability to earn an additional $100,000 in incentive
compensation. Tech Ventures provided recruiting services to us from January
1996 through January 1997 in the amount of $339,302. In addition, pursuant to
a Management Services Agreement, Tech Ventures received $25,000 for certain
administrative services rendered to the Services Subsidiary during each of
1997 and 1996.
We believe that all transactions set forth above were made on terms no less
favorable to us than would have been obtained from unaffiliated third parties.
PROPOSAL TO AMEND 1998 STOCK INCENTIVE PLAN
Purpose and Operation of 1998 Stock Incentive Plan.
In February 1998, the Board of Directors adopted and the stockholders
approved, our 1998 Stock Incentive Plan (the "1998 Stock Incentive Plan"). As
discussed below, the Board has proposed the 1998 Stock Incentive Plan be
amended to increase the number of shares authorized for issuance under the
Plan from 1,000,000 to 1,500,000 shares. Under the 1998 Stock Incentive Plan,
the Board of Directors, or the Compensation Committee of the Board of
Directors, has the flexibility to determine the type and amount of awards to
be granted to eligible participants. The 1998 Stock Incentive Plan is intended
to secure for us and our stockholders the benefits arising from ownership of
our common stock by individuals we employ or retain who will be responsible
for the future growth of the enterprise. The 1998 Stock Incentive Plan is
designed to help attract and retain superior personnel for positions of
substantial responsibility with us (including advisory relationships where
appropriate), and to provide individuals with an additional incentive to
contribute to our success.
The Board or the Compensation Committee may make the following types of
grants under the 1998 Stock Incentive Plan, each of which is referred to as an
"award": (i) incentive stock options ("ISOs"); (ii) nonqualified stock options
("NSOs"); (iii) restricted stock awards ("restricted stock awards"); (iv)
stock appreciation rights ("SARs"); and (v) restricted units ("restricted
units"). Our officers, key employees, employee directors, consultants and
other independent contractors or agents who are responsible for or contribute
to the management, growth or profitability of Clarus will be eligible for
selection by the Board of Directors or the Compensation Committee to
participate in the 1998 Stock Incentive Plan, provided, however, that ISOs may
be granted only to a person we employ. As of April 23, 1999, the approximate
number of persons in each class of participants were as follows: key employees
(approximately 315 persons); employee directors (one person); nonemployee
directors (six persons); and, no consultants or other independent contractors.
We have authorized and reserved for issuance an aggregate of 1,000,000
shares of our common stock under the 1998 Stock Incentive Plan. The exercise
price of an option is established by the Committee, and ISOs must have an
option price at least equal to the fair market value at the time of grant. The
Committee also may, in its discretion, determine if any payment is required in
connection with restricted stock awards. The Committee also has authority to
establish the other terms and conditions of awards, subject to the terms of
the 1998 Stock Incentive Plan.
As of February 28, 1999, options to purchase 845,512 shares of common stock
were outstanding under the 1998 Stock Incentive Plan with exercise prices
ranging from $3.50 to $10.00 per share and a weighted average exercise price
of $7.24 per share. We have accelerated the vesting of certain options granted
during January 1998 through March 1998 under the 1998 Stock Incentive Plan.
The aggregate number of shares of common stock that may be granted through
Awards under the 1998 Stock Incentive Plan to any employee in any calendar
year may not exceed 200,000 shares. The shares of common stock or treasury
shares issuable under the 1998 Stock Incentive Plan are authorized but
unissued shares. If any of the Awards granted under the 1998 Stock Incentive
Plan expire, terminate or are forfeited for any reason before they have been
exercised, vested or issued in full,
12
<PAGE>
the unused shares subject to those expired, terminated or forfeited awards
will again be available for grant under the 1998 Stock Incentive Plan. The
1998 Stock Incentive Plan will continue in effect until February 2008 unless
sooner terminated under the provisions of the 1998 Stock Incentive Plan.
The 1998 Stock Incentive Plan is administered by the Compensation Committee
as delegated by the Board of Directors.
The 1998 Stock Incentive Plan may be amended or terminated at any time by
the Board, although stockholder approval is required if required by applicable
law, rule or regulation, and the request of a recipient is required if his or
her rights with respect to an outstanding award would be adversely affected by
the amendment or termination. The 1998 Stock Incentive Plan also provides that
the number of shares underlying the 1998 Stock Incentive Plan be adjusted in
the event of a change in the shares of common stock as a result of a merger,
consolidation, reorganization, a stock dividend or stock split or other
similar change in the capital structure.
As of April 9, 1999, the closing sales price of our common stock was
$5.125.
Proposal to Increase Shares Issuable Under the 1998 Stock Incentive Plan
On March 11, 1999, our Board adopted an amendment to the 1998 Stock
Incentive Plan which would increase the number of shares of Clarus common
stock issuable under the plan from 1,000,000 to 1,500,000 shares. As of
February 28, 1999, 154,488 shares remained available for grant under the 1998
Stock Incentive Plan. A copy of the Amendment is attached hereto as Appendix
A.
In order for the 1998 Stock Incentive Plan to continue to provide an
incentive for highly qualified individuals to serve or continue service with
us, to more closely align the interests of such individuals with our
stockholders, and to provide stock-based compensation comparable to that
offered by other similar companies, our Board believes that the number of
shares of common stock authorized for issuance should be increased as
described herein.
Except as proposed to be amended to increase the number of shares issuable
under the plan, the 1998 Stock Incentive Plan would continue in effect in its
current form. Our Board believes that the amendment to increase the number of
shares available for issuance under the 1998 Stock Incentive Plan is necessary
in order for the plan to continue to serve as a strong stock-based incentive
for employees and other eligible individuals in service to Clarus in the
future.
New Plan Benefits
The amount of compensation that will be paid pursuant to the grant of
awards under the 1998 Stock Incentive Plan in the current year to the
following persons is not yet determinable due to vesting and other
requirements. However, the following table sets forth the number of options
that were granted in 1998 under the 1998 Stock Incentive Plan, at exercise
prices ranging from $3.81 to $10.00 per share, to each of the following:
1998 Stock Incentive Plan
New Plan Benefits
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) Number of Shares
----------------- ---------------- ----------------
<S> <C> <C>
Stephen P. Jeffery, President and Chief
Executive Officer.......................... -- --
William M. Curran, Jr., Vice President,
Sales and Marketing........................ $ 362,250 80,500
Steven M. Hornyak, Vice President, Strategy
and Business Development................... 180,000 40,000
Arthur G. Walsh, Jr., Vice President,
Corporate Affairs and Secretary............ -- --
Sally M. Foster, Vice President,
Operations................................. -- --
Executive officers group.................... 1,746,000 388,000
Nonexecutive director group................. 303,750 67,500
Nonexecutive officer employee group......... 1,568,475 348,550
</TABLE>
13
<PAGE>
The dollar value is based on a per share price of $4.50 (the closing sales
price of our common stock as reported on the Nasdaq Stock Market on February
26, 1999).
Certain Federal Income Tax Consequences.
The following summary generally describes the principal federal (and not
state and local) income tax consequences of awards granted under the 1998
Stock Incentive Plan. The summary is general in nature and is not intended to
cover all tax consequences that may apply to a particular participant or to
Clarus. The provisions of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder relating to these matters are
complicated and their impact in any one case may depend upon the particular
circumstances.
Incentive Stock Options. Incentive stock options granted under the 1998
Stock Incentive Plan are intended to qualify as incentive stock options under
Section 422 of the Code. Pursuant to Section 422, the grant and exercise of an
incentive stock option will generally not result in taxable income to the
optionee (with the possible exception of alternative minimum tax liability) if
the optionee does not dispose of shares received upon exercise of such option
less than one year after the date of exercise and two years after the date of
grant, and if the optionee has continuously been an employee of Clarus or a
related corporation from the date of grant to three months before the date of
exercise (or 12 months in the event of death or disability). We will not be
entitled to a deduction for income tax purposes in connection with the
exercise of an incentive stock option. Upon the disposition of shares acquired
pursuant to exercise of an incentive stock option, the optionee will be taxed
on the amount by which the amount realized upon such disposition exceeds the
option exercise price, and such amount will be treated as long-term capital
gain or loss. If the holding period requirements for incentive stock option
treatment described above are not met, the option will be treated as a
nonqualified stock option.
Pursuant to the Code and the terms of the 1998 Stock Incentive Plan, in no
event can there first become exercisable by an optionee in any one calendar
year incentive stock options granted by Clarus or any related corporation with
respect to shares having an aggregate fair market value (determined at the
time an option is granted) greater than $100,000. To the extent an incentive
stock option exceeds the foregoing limitation, it will be treated for all
purposes under the 1998 Stock Incentive Plan as a nonqualified stock option.
In addition, no incentive stock option may be granted to an individual who
owns, immediately before the time that the option is granted, stock possessing
more than 10% of the total combined voting power of all classes of stock of
Clarus or a related corporation (unless certain requirements are met,
including an option exercise price greater than or equal to 110% of the fair
market value of the shares and an option period of five years or less).
Nonqualified Stock Options. If an optionee receives a nonqualified stock
option, the difference between the market value of the stock on the date of
exercise and the option exercise price will constitute taxable ordinary income
to the optionee on the date of exercise. Clarus will be entitled to a
deduction in the same year in an amount equal to the income taxable to the
optionee. The optionee's basis in shares of our common stock acquired upon
exercise of an option will equal the option exercise price plus the amount of
income taxable at the time of exercise. Any subsequent disposition of the
stock by the optionee will be taxed as a capital gain or loss to the optionee,
and will be long-term capital gain or loss if the optionee has held the stock
for more than one year at the time of sale.
Pursuant to the terms of the 1998 Stock Incentive Plan, we will require any
recipient of shares of our common stock pursuant to exercise of a nonqualified
stock option to pay us in cash the amount of any tax or other amount required
by any governmental authority to be withheld and paid over by us to such
authority for the account of such recipient.
The affirmative vote of a majority of the outstanding shares of our common
stock represented in person or by proxy at the meeting is necessary for the
approval of the amendment to the 1998 Stock Incentive Plan. Any shares not
voted (whether by absence, broker nonvote or otherwise) will have no effect.
The Board of Directors recommends that the stockholders vote FOR the
proposed amendment to the 1998 Stock Incentive Plan.
14
<PAGE>
Other Stock Incentive Plans
SQL 1992 Stock Plan. In addition to our 1998 Stock Incentive Plan, we have
the SQL 1992 Stock Plan. We adopted the SQL 1992 Stock Plan (the "1992 Stock
Option Plan") on November 22, 1992. The aggregate number of shares reserved
for issuance under the 1992 Stock Option Plan is 1,633,938 shares. As of
February 28, 1999, options to purchase 1,362,881 shares of common stock were
outstanding under the 1992 Stock Option Plan at exercise prices ranging from
$0.67 to $10.00 per share and a weighted average exercise price of $3.01 per
share. Options granted under the 1992 Stock Option Plan generally vest in
installments over a period of four years with 20% of the options vesting 12
months from the date of grant, 40% vesting 24 months from the date of grant,
70% vesting 36 months from the date of grant and 100% vesting 48 months after
the date of grant. We have accelerated the vesting of options granted from
January through March 1998 under the 1992 Stock Option Plan. As of February
28, 1999, 251,471 shares of common stock have been issued pursuant to the
exercise of options granted under the 1992 Stock Option Plan. The purpose of
the 1992 Stock Option Plan is to provide incentive for key employees,
officers, consultants and directors to promote our success, and to enhance our
ability to attract and retain the services of such persons. The majority of
all options granted under the 1992 Stock Option Plan are intended to qualify
as "incentive stock options" under Section 422 of the Code.
The 1992 Stock Option Plan is administered by the Compensation Committee of
the Board of Directors. The Compensation Committee has the authority to
determine exercise prices applicable to the options, the eligible officers,
directors, consultants or employees to whom options may be granted, the number
of shares of our common stock subject to each option and the extent to which
options may be exercisable.
RATIFICATION OF ARTHUR ANDERSEN LLP
The selection of our independent public accountants for 1999 is not
required to be submitted to the vote of the stockholders, but the Audit
Committee believes the stockholders should have the opportunity to ratify the
Audit Committee's selection of Arthur Andersen LLP. Arthur Andersen LLP has
served as our independent auditors for the seven years ended December 31,
1998. A representative of Arthur Andersen LLP will be present at our Meeting
and will have the opportunity to make a statement if he or she so desires and
is expected to be available to respond to appropriate questions.
The affirmative vote of a majority of the shares of our outstanding common
stock represented in person or by proxy at the Meeting is necessary for
ratification of the appointment of Arthur Andersen LLP as our independent
public accountants. Any shares not voted (whether by abstention, broker non-
vote or otherwise) will have no effect.
The Board of Directors recommends that the stockholders vote FOR the
appointment of Arthur Andersen LLP as our independent public accountants for
the year ended December 31, 1999.
15
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of our common stock as
of February 15, 1999, owned by the only known holders of more than 5% of our
outstanding common stock.
<TABLE>
<CAPTION>
Number of
Shares Percentage of
Beneficially Common Stock
Name of Beneficial Owner Owned (1) Outstanding
------------------------ ------------ -------------
<S> <C> <C>
Technology Crossover Management, L.L.C. (2)..... 1,710,934 15.6%
Joseph S. McCall (3)............................ 999,713 9.1
Greylock Limited Partnership (4)................ 986,381 9.0
NationsBank Corporation (5)..................... 925,201 8.5
HarbourVest Partners IV -- Direct Fund L.P.
(6)............................................ 870,155 7.9
Sutter Hill Ventures, a California Limited
Partnership (7)................................ 741,805 6.8
Highland Capital Partners II Limited Partnership
(8)............................................ 594,683 5.4
HumWin Venture Partners III, L.P. (9)........... 590,119 5.4
</TABLE>
- --------
(1) Beneficial ownership is determined in accordance with the rules of the
SEC. Except as otherwise indicated, each beneficial owner named in the
table has sole voting and investment power with respect to the shares set
forth opposite such beneficial owner's name.
(2) Includes (i) 74,866 shares of common stock owned by Technology Crossover
Ventures II, L.P.; (ii) 647,675 shares of common stock owned by Technology
Crossover Ventures I, L.P. ("TCVLP"); (iii) 51,292 shares of common stock
owned by Technology Crossover Ventures, C.V. ("TCVCV"); (iv) 57,558 shares
of common stock owned by Technology Crossover Ventures (Q), L.P.; (v)
10,215 shares of common stock owned by Technology Crossover Ventures II
Strategic Partners, L.P.; (vi) 11,430 shares of common stock owned by
Technology Crossover Ventures II, C.V.; (vii) 2,431 shares of common stock
owned by Technology Crossover Ventures II, V.O.F.; (viii) 156,500 shares
of common stock owned by Technology Crossover Management II, L.L.C., and
(ix) 698,967 shares of common stock owned by Technology Crossover
Management, L.L.C. Technology Crossover Management, L.L.C. is the sole
general partner of TCVLP and the sole investment general partner of TCVCV.
The managing members of Technology Crossover Management, L.L.C. are Jay C.
Hoag and Richard H. Kimball. Technology Crossover Ventures' address is 575
High Street, Suite 400, Palo Alto, California 94301. Information with
respect to Technology Crossover Management, L.L.C. is provided in reliance
upon information included in an amendment to Schedule 13G dated June 17,
1998, filed with the SEC on February 3, 1999.
(3) Includes 45,000 shares of common stock held in trust. As the sole manager,
Mr. McCall is also deemed to be the beneficial owner of Technology
Ventures LLC, which owns 628,950 shares of our common stock.
(4) Mr. Kaiser, one of our directors, has voting control over our securities
held by Greylock Limited Partnership. The managing partners of Greylock
Limited Partnership are Robert P. Henderson and Henry McCance. Greylock
Limited Partnership's address is One Federal Street, Boston, Massachusetts
02110.
(5) Consists of 312,501 shares owned by MS Spitfire LLC, 312,501 shares owned
by Spitfire Capital Partners LP and 393,001 shares owned by NationsBanc
Montgomery Securities LLC. Information with respect to NationsBank
Corporation ("NationsBank") is provided in reliance upon information
included in a Schedule 13G dated September 10, 1998, filed with the SEC by
NationsBank. NationsBank's address is 101 South Tryon Street, NationsBank
Plaza, Charlotte, North Carolina 28255.
(6) Includes 43,507 shares of common stock owned by Falcon Ventures II, L.P.
("Falcon"). Falcon is an affiliate of HarbourVest Partners IV Direct Fund
L.P. ("HarbourVest"). Both Falcon and HarbourVest are beneficially owned
by Edward W. Kane, D. Brooks Zug, George R. Anson, Kevin Delbridge,
William A. Johnston, Frederick C. Maynard, Ofer Nemirovsky and Robert M.
Wadsworth. HarbourVest's address is One Financial Center, Boston,
Massachusetts 02111. Information with respect to HarbourVest is provided
on reliance upon information included in a Schedule 13G dated December 31,
1998, filed with the SEC on February 3, 1999.
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(7) Includes (i) 498,474 shares of common stock owned by Sutter Hill Ventures,
a California Limited Partnership ("Sutter Hill"); (ii) 46,412 shares of
common stock held by TOW Partners, a California Limited Partnership; (iii)
196,919 shares of common stock held of record for other individuals or
entities affiliated with Sutter Hill and (iv) 21,810 shares owned by Mr.
Coxe, a member of our Board of Directors, who is a Managing Director of
the General Partner of Sutter Hill and shares voting and investment power
with respect to the shares of common stock held by Sutter Hill. Sutter
Hill's address is 755 Page Mill Road, Suite A-200, Palo Alto, California
94304-1005. Information with respect to Sutter Hill is provided in
reliance upon information included in a Schedule 13G dated December 31,
1998 filed with the SEC on February 9, 1999.
(8) Includes 594,683 shares of common stock owned by Highland Capital Partners
II Limited Partnership ("Highland Capital"). The general partner of
Highland Capital is Highland Management Partners II. The general partners
of Highland Management Partners II are Robert F. Higgins, Paul A. Maeder,
Daniel J. Nova and Wycliff K. Grousbeck. Highland Capital's address is One
International Place, Boston, Massachusetts 02110. Information with respect
to Highland Capital is provided on reliance upon information included in a
Schedule 13G dated December 31, 1998, filed on February 11, 1999.
(9) Includes 29,506 shares owned by HumWin Tech. Fund III, L.P. HumWin Venture
Partners, L.P.'s address is Two South Park, San Francisco, California
94107.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and persons who own more than 10% of our
outstanding common stock, to file with the SEC reports of changes in ownership
of our common stock held by such persons. Officers, directors and greater than
10% stockholders are also required to furnish us with copies of all forms they
file under this section. To our knowledge, based solely on a review of the
copies of such reports furnished to us and representations that no other
reports were required, during 1998, all Section 16(a) filing requirements
applicable to our officers, directors and greater than 10% stockholders were
complied with other than David A. Spicer, Vice President, Research and
Development, who inadvertently did not timely file his initial beneficial
ownership report on Form 3 upon his employment with us in August 1998.
Although it is not our obligation to make filings pursuant to Section 16 of
the Exchange Act, we have adopted a policy requiring all Section 16 reporting
persons to report monthly to our Corporate Secretary regarding whether any
transactions in our common stock occurred during the previous month.
GENERAL INFORMATION
Stockholder Proposals for 2000 Annual Meeting
In order to be considered for inclusion in the Proxy Statement and Form of
Proxy to be used in connection with our 2000 Annual Meeting of Stockholders,
stockholder proposals must be received by our Secretary no later than December
25, 1999.
Our bylaws contain procedures that stockholders must follow in order to
present business at an annual meeting of stockholders. A stockholder may
obtain a copy of these procedures from our Secretary. In addition to other
applicable requirements, for business to be properly brought before the 2000
Annual Meeting, a stockholder must have given timely notice of the matter to
be presented at the meeting in a proper written form to our Secretary. To be
timely, the Secretary must receive the notice at our principal offices not
less than 60 nor more than 90 days prior to the anniversary date of the
Meeting. In the case where an annual meeting is called for a date that is not
within 30 days before or after the anniversary date of the immediately
preceeding annual meeting of stockholders, or in the case of a special meeting
of stockholders, the Secretary must receive notice not later than the close of
business on the tenth day following the day on which the notice of the meeting
was mailed or public disclosure of the date of the meeting was made, whichever
first occurs.
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Financial Information
Detailed financial information regarding Clarus is included in our 1998
Annual Report that is being mailed to our stockholders together with this
Proxy Statement.
Form 10-K
Our Annual Report on Form 10-K for the fiscal year ended December 31,1998,
which was filed with the SEC, is available to stockholders who make written
request therefor to Clarus at 3970 Johns Creek Court, Suwanee, Georgia 30024,
Attention: Investor Relations. Copies of exhibits and documents filed with
that report or referenced therein will be furnished to stockholders of record
upon request. All documents subsequently filed by us pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the
date of the Meeting will be deemed to be incorporated by reference.
Solicitations of Proxies
The cost of soliciting proxies will be paid by us. This solicitation is
being made by mail, but may also be made by telephone or in person by our
officers and employees. We will reimburse brokerage firms, nominees,
custodians, and fiduciaries for their out-of-pocket expenses for forwarding
proxy materials to beneficial owners.
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APPENDIX A
1999 DECLARATION OF AMENDMENT TO
CLARUS CORPORATION
1998 STOCK INCENTIVE PLAN
THIS DECLARATION OF AMENDMENT is made on this 11th day of March, 1999, by
Clarus Corporation (the "Company"), a corporation duly organized and existing
under the laws of the State of Delaware.
W I T N E S S E T H :
WHEREAS, the Company maintains the Clarus Corporation 1998 Stock Incentive
Plan (the "Plan"); and
WHEREAS, the purpose of the Plan is to encourage selected individuals in
the service of the Company to increase their ownership of the common stock of
the Company (the "Common Stock") and thereby to enhance the efficiency,
soundness, profitability and stockholder value of the Company; and
WHEREAS, the Plan as adopted authorizes the issuance and sale of up to
1,000,000 shares; and
WHEREAS, the Company desires to amend the Plan to increase the number of
shares of Common Stock that may be issued and sold pursuant to the Plan from
1,000,000 shares to 1,500,000 shares;
NOW, THEREFORE, the Plan is hereby amended, as follows:
1. By deleting Section 4(a) of the Plan and inserting the following
Section 4(a) in lieu thereof:
"The number of shares of Common Stock that
may be issued pursuant to Awards shall be
1,500,000 shares of authorized but unissued
shares or treasury shares of the Company,
subject to adjustments and increases as
provided in this Section 4."
Except as specifically amended hereby, the Plan shall remain in full force
and effect as prior to this Declaration of Amendment.
IN WITNESS WHEREOF, the Company has caused this Declaration of Amendment to
be executed on the day and year first above written.
CLARUS CORPORATION
/s/ Stephen P. Jeffery
--------------------------
Stephen P. Jeffery,
President and Chief Executive
Officer
ATTEST:
/s/ Arthur G. Walsh, Jr.
_____________________
Arthur G. Walsh, Jr., Secretary
[CORPORATE SEAL]
<PAGE>
7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7
FOLD AND DETACH HERE
PROXY
For 1999 Clarus Corporation Annual Stockholders' Meeting
The undersigned holder of shares of Common Stock of Clarus hereby constitutes
and appoints Stephen P. Jeffery and William A. Fielder III or either of them,
the lawful attorneys and proxies of the undersigned, each with full power and
substitution, for and on behalf of the undersigned, to vote as specified all
the shares of Clarus common stock held of record by the undersigned on April 9,
1999 at the Annual Meeting of Stockholders of Clarus to be held on Thursday,
May 27, 1999 at 9:00 a.m. at the Atlanta Athletic Club, 123 Bobby Jones Drive,
Duluth, Georgia 30097, and at any adjournments or postponements thereof (the
"Meeting").
This proxy is solicited on behalf of the Board of Directors of Clarus. This
proxy when properly executed will be voted in accordance with the
specifications made herein by the undersigned stockholder. If no direction is
made, this proxy will be voted FOR the election of the nominees for director
listed below and all the other proposals.
1. ELECTION OF CLASS I DIRECTORS
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name below)
[_] FOR all nominees Norman N. Behar [_] WITHHOLD authority to
listed to the right Mark A. Johnson vote for all nominees
(except as marked to William S. Kaiser
the contrary)
2. AMENDMENT TO THE 1998 STOCK INCENTIVE PLAN TO INCREASE NUMBER OF SHARES
AVAILABLE FOR GRANT THEREUNDER TO 1,500,000 SHARES
FOR [_] AGAINST [_] ABSTAIN [_]
3. RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS OF CLARUS CORPORATION FOR THE YEAR ENDING DECEMBER 31, 1999
FOR [_] AGAINST [_] ABSTAIN [_]
<PAGE>
7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7
FOLD AND DETACH HERE
In their discretion, the proxies are authorized to vote on such other business
as may properly come before the Meeting or adjournment(s), including adjourning
the Meeting to permit, if necessary, further solicitation of proxies. This
proxy may be revoked at any time prior to voting hereof.
This proxy, when properly executed, duly returned and not revoked will be
voted. It will be voted in accordance with the directions given by the
undersigned stockholder. If no direction is made, it will be voted in favor of
the election of nominees for director listed above and the other proposals
listed on this proxy.
Dated: _____________, 1999
--------------------------
Signature(s)
--------------------------
Signature(s)
NOTE: Joint owners should
each sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give
full title as such. If
the signatory is a
corporation, sign the
full corporate name by a
duly authorized officer.
