<PAGE>
SCHEDULE 14A
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials.
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)).
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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF CLARUS]
3970 Johns Creek Court
Suwanee, Georgia 30024
Dear Stockholder:
You are cordially invited to attend the Annual Stockholders' Meeting of
Clarus Corporation, to be held at Atlanta Marriott Alpharetta, 5750 Windward
Parkway, Alpharetta, Georgia 30005, on Tuesday, June 13, 2000 at 9:00 a.m.,
local time, notice of which is enclosed.
The following proposals are to be presented at the meeting:
. to elect two Directors to serve until the 2003 Annual Stockholders'
Meeting;
. to amend our Certificate of Incorporation to increase our authorized
common stock from 25,000,000 shares of common stock to 100,000,000
shares;
. to amend and restate our Stock Incentive Plan to incorporate prior
amendments and to increase the total number of shares of our common
stock that may be issued under the Plan from 1,500,000 shares to
3,000,000 shares and make other minor revisions designed to facilitate
plan administration; and
. to adopt an Employee Stock Purchase Plan.
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 our common stock owned
by such director in favor of the proposals.
A plurality of our outstanding common stock present in person or
represented by proxy and entitled to vote at the meeting will be required to
elect two Directors to serve until the 2003 Annual Stockholders' Meeting. The
affirmative vote of a majority of our common stock present in person or
represented by proxy and entitled to vote 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
1999. 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 1999 a success. We look forward to your
continued support in 2000.
Sincerely,
/s/ Stephen P. Jeffery
Stephen P. Jeffery, Chairman of the
Board, President and Chief
Executive Officer
Atlanta, Georgia
May 15, 2000
<PAGE>
[LOGO OF CLARUS]
3970 Johns Creek Court
Suwanee, Georgia 30024
(770) 291-3900
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD JUNE 13, 2000
Notice is hereby given that the Annual Stockholders' Meeting of Clarus
Corporation will be held at Atlanta Marriott Alpharetta, 5750 Windward
Parkway, Alpharetta, Georgia 30005, on Tuesday, June 13, 2000 at 9:00 a.m.,
local time, for the following purposes:
1. Election of Directors. The election of two nominees for Class II
Directors of Clarus to serve until the 2003 Annual Stockholders' Meeting;
2. Amendment to Certificate of Incorporation to Increase Authorized Common
Stock. The amendment of our Certificate of Incorporation to increase our
authorized shares of common stock;
3. Amendment and Restatement of Stock Incentive Plan. The amendment and
restatement of our Stock Incentive Plan to incorporate prior amendments and to
increase the total number of shares of our common stock that may be issued
under the Plan, and make certain other changes described to facilitate plan
administration;
4. Adoption of an Employee Stock Purchase Plan. The adoption of our
Employee Stock Purchase Plan; and
5. 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 II
Directors. The affirmative vote of a majority of the shares of our common
stock present in person or represented by proxy and entitled to vote will be
required to approve proposals 2, 3 and 4 listed above. Only stockholders of
record at the close of business on April 25, 2000 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/ Mark D. Gagne
Mark D. Gagne, Secretary
Atlanta, Georgia
May 15, 2000
<PAGE>
[LOGO OF CLARUS]
Proxy Statement For
2000 Annual Stockholders' Meeting
TABLE OF CONTENTS
<TABLE>
<S> <C>
Voting Information.......................................................... 1
Proposal 1--Election of Directors........................................... 2
Executive Officers.......................................................... 4
Executive Compensation...................................................... 6
Stock Performance Graph..................................................... 8
Compensation Committee Report on Executive Compensation..................... 9
Proposal 2--Amendment To Our Certificate Of Incorporation................... 10
Proposal 3--Amendment and Restatement of Our Stock Incentive Plan........... 12
Proposal 4--Adoption of Employee Stock Purchase Plan........................ 17
Security Ownership of Principal Stockholders and Management................. 20
Section 16(a) Beneficial Ownership Reporting Compliance..................... 21
General Information......................................................... 21
</TABLE>
<PAGE>
[LOGO OF CLARUS]
PROXY STATEMENT FOR
2000 ANNUAL STOCKHOLDERS' MEETING
VOTING INFORMATION
Purpose
This Proxy Statement is being furnished to you in connection with the
solicitation by and on behalf of our Board of Directors of proxies for use at
our 2000 Annual Stockholders' Meeting, at which you will be asked to vote upon
proposals to:
. elect two Directors to serve as Class II Directors until our 2003
Annual Stockholders' Meeting (see Proposal 1);
. approve an amendment to our Certificate of Incorporation to increase
the number of authorized shares of common stock (see Proposals 2);
. approve the amendment and restatement of our Stock Incentive Plan to
increase the number of shares available for grant under the plan,
incorporate prior amendments and make certain other changes designed
to facilitate plan administration (see Proposal 3); and
. adopt an Employee Stock Purchase Plan (see Proposal 4).
The meeting will be held at 9:00 a.m., local time, on Tuesday, June 13,
2000, at Atlanta Marriott Alpharetta, 5750 Windward Parkway, Alpharetta,
Georgia 30005. This Proxy Statement and the enclosed proxy are first being
mailed to stockholders on or about May 15, 2000.
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: Mark D. Gagne,
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 election of
the nominees for Director and 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 25,
2000, 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. The affirmative vote of a
plurality of our outstanding common stock present in person or represented by
proxy and entitled to vote at the meeting will be required to elect two
Directors to serve until the 2003 Annual Stockholders' Meeting. The
affirmative vote of a majority of our outstanding common stock present in
person or represented by proxy and entitled to vote at the meeting will be
required to amend our Amended and Restated Certificate of Incorporation to
increase our authorized shares of common stock, to amend and restate our Stock
Incentive Plan, to adopt our Employee Stock Purchase Plan and to 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, 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 for
1
<PAGE>
which the broker cannot vote. If a stockholder abstains from voting on a
mater, those shares will be counted for the purpose of determining if a quorum
is present and will be counted as a vote against such proposals.
As of the record date, there were 14,132,841 shares of our common stock
outstanding and 134 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 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.
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.
PROPOSAL 1 -- 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.
Messrs. Coxe and House serve in the class having a term that expires in
2000; Messrs. Jeffery and Mohammadioun serve in the class having a term that
expires in 2001; and Messrs. Behar, Kaiser and Johnson serve in the class
having a term that expires in 2002. Upon the expiration of the term of each
class of Directors, Directors comprising the class of Directors if nominated
will be eligible to be elected for a three-year term at the next succeeding
annual meeting of stockholders.
Nominees
We have selected two nominees that we propose for election to our Board as
Class II Directors. The nominees for Class II Directors will be elected to
serve a three-year term that will expire at our 2003 Annual Stockholders'
Meeting. The two nominees for our Class II Directors are: Tench Coxe and
Donald L. House, both of whom currently serve as 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
(or to reduce the number of persons to be elected by the number of persons
unable to serve), but in no event will the proxy be voted for more than two
nominees.
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 two nominees
for election as Class II 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................................ 37 I 1999
Mark A. Johnson................................ 47 I 1998
William S. Kaiser.............................. 44 I 1992
Tench Coxe..................................... 42 II 1993
Donald L. House................................ 58 II 1993
Stephen P. Jeffery............................. 44 III 1997
Said Mohammadioun.............................. 52 III 1998
</TABLE>
Meetings and Committees of the Board
Our Board of Directors held 18 meetings during 1999. 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 1999,
the Board of Directors did not have a standing nominating committee, although
the functions of such committee were performed by the full Board of Directors.
See "General Information--Stockholder Proposals for 2001 Annual Meeting."
The Audit Committee presently consists of Messrs. Coxe, House and Johnson.
The Audit Committee has been assigned the principal functions of:
. appointing and meeting with the independent auditors;
. reviewing and approving the annual report of the independent
auditors;
. meeting with management regarding audit matters;
. 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 1999.
The Compensation Committee presently consists of Messrs. Behar, Kaiser and
Mohammadioun. 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 18 meetings during 1999.
The functions of a nominating committee are performed by the full Board.
The Board will consider stockholder nominations for Director which are
presented in accordance with established procedures. See "General
Information--Stockholder Proposal for 2001 Annual Meeting," below.
Director Compensation
Directors who are not our employees ("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. Directors may participate in our Stock Incentive Plan.
On January 28, 1999, Mr. Behar was granted an option to purchase 18,750 shares
of our common stock at an exercise price of $3.50 per share, and on May 27,
1999, he was granted an option to purchase 2,500 shares of our common stock at
any exercise price of $5.41 per share. In addition, on May 27, 1999, each of
our other Directors at that time, other than Mr. Behar and Mr. Jeffery, was
granted options to purchase 7,500 shares of our common stock at an exercise
price of $5.41 per share. The options granted on May 27, 1999 vest in
installments over a period of four years with 25% of the options vesting 12
months from the date of grant and the remaining 75% of the options vesting in
equal amounts monthly over the remaining 36 months.
3
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the name, age at April 25, 2000, and
position of each executive officer.
<TABLE>
<CAPTION>
Name Age Positions
---- --- ---------
<S> <C> <C>
Stephen P. Jeffery...... 44 Chairman, President and Chief Executive Officer
Joseph E. Bibler........ 40 Vice President, Client Services
Robert L. Clay.......... 40 Vice President, Products
William M. Curran, Jr... 37 Vice President, Sales
Mark D. Gagne........... 39 Executive Vice President, Chief Financial Officer,
Secretary and Treasurer
Steven M. Hornyak....... 34 Vice President, Strategy and Business Development
Julie K. Smith.......... 39 Vice President, Marketing
</TABLE>
Our executive officers are appointed by the Board of Directors and serve
until their successors are duly elected and qualified. There are no family
relationships among any of our 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 United States and Europe for 15 years. Mr. Jeffery
also served in sales with International Business Machines prior to joining
Hewlett-Packard.
Joseph E. Bibler joined us in February 1997 as Vice President of our former
services subsidiary and was elected President of our former services
subsidiary in February 1998. In January 1999 he was elected as our Vice
President, responsible for client 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
leading of one of Andersen's regional software implementation practices.
Robert L. Clay joined us in October 1996 as Director of Product Marketing
and became Assistant Vice President of Products in August 1999. Mr. Clay was
elected Vice President of Products in December 1999. Prior to joining us, Mr.
Clay served in various positions from 1994 to 1996 with Attachmate, formerly
DCA, most recently as vice president of client/server and Internet products
and director of product marketing of client/server and Internet products.
William M. Curran, Jr. joined us in February 1996 as a Regional Sales
Manager for our southern region. In August 1997, Mr. Curran was elected Vice
President of Sales for our eastern region. In January 2000 he was elected Vice
President, and is currently responsible for our entire sales organization.
Prior to joining us, Mr. Curran was employed by Geac from November 1989 until
February 1996 as a senior account executive.
Mark D. Gagne joined us in January 2000 as Executive Vice President, Chief
Financial Officer, Secretary and Treasurer. Prior to joining us, Mr. Gagne
served from January 1997 to December 1999 as chief financial officer,
treasurer and chief acquisitions officer for BridgeStreet Accommodations,
Inc., which provides long-term lodging for corporate executives. From February
1992 to December 1995, Mr. Gagne served as chief financial officer, treasurer
and division chief operating officer for CMG Information Systems, Inc., a
developer and operator of Internet and direct marketing companies.
Steven M. Hornyak joined us in December 1994 as an Account Executive and
was promoted to Regional Sales Manager for our Northeast region in 1996. In
August 1997, Mr. Hornyak was elected Vice President of
4
<PAGE>
Marketing. In January 2000, Mr. Hornyak was elected as Vice President and is
currently responsible for our strategy and business development organization.
Prior to joining us, Mr. Hornyak served in a variety of sales and consulting
roles for Oracle Corporation from June 1992 until December 1994. Mr. Hornyak
served as management consultant with PricewaterhouseCoopers from 1990 to 1992.
Julie K. Smith joined us in 1993 as a Senior Account Executive. She joined
our marketing organization in May 1996 as Product Marketing Manager and was
promoted to Director of Marketing Communications in September 1997. Ms. Smith
was elected Vice President of Marketing in December 1999. Prior to joining us,
Ms. Smith was employed by Oracle Corporation, where she served as an
application sales representative for the client/server applications. Ms. Smith
also served in a variety of software sales and professional services positions
with Dun & Bradstreet Software and Computron for 11 years.
Norman N. Behar has served as a member of our Board of Directors since
January 1999. Mr. Behar has served as the President and Chief Executive
Officer of employeesaving.com since July 1999. From November 1998 through
March 1999, Mr. Behar served as Executive Vice President of Clarus CSA
following our acquisition of ELEKOM Corporation. Mr. Behar was ELEKOM's
president and chief executive officer from January 1998 to November 1998. From
January 1996 to December 1997, Mr. Behar was president and chief executive
officer of Catapult, a provider of personal computer training services. From
April 1991 until December 1995, Mr. Behar was chief operating officer of
Catapult.
Tench Coxe has served as a member of our Board of Directors since September
1993. Mr. Coxe has served as a managing director of the general partner of
Sutter Hill Ventures, a venture capital company located in Palo Alto,
California, since 1989. Mr. Coxe also serves on the board of directors of
Alteon WebSystems, Copper Mountain Networks and Nvidia Corporation and on the
boards of directors of several privately-held companies.
Donald L. House has served as a member of our Board of Directors since
January 1993. Mr. House served as Chairman of our Board of Directors from
January 1994 until December 1997 and as our President from January 1993 until
December 1993. Mr. House also serves on the boards of directors of eShare
Technologies, where he serves as chairman of its audit committee and as a
member of its compensation committee, and Carreker Corporation where he serves
on the audit committee. Mr. House is chairman of Ockham Technologies Inc. and
he also serves on the board of directors of several privately-held technology
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. Mr. Kaiser also serves on the board of directors of Open Market, Inc.,
Red Hat, Student Advantage and several privately held companies.
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 e-commerce services, software and related products,
since 1997. He also serves on the board of directors of CheckFree. From 1982
to 1997 Mr. Johnson served in various capacities with CheckFree, including as
president in 1996 and as executive vice president of corporate development
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 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.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information for 1999, 1998 and
1997 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 1999 (our "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation Awards(2)
-------------------------- ----------------------
Name and Principal Securities Underlying All Other
Position Salary($) Bonus($) Options Granted(#) Compensation($)
- ------------------ Year --------- -------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
Stephen P. Jeffery....... 1999 $225,666 $ 93,257 110,000 --
Chairman, Chief 1998 240,672 129,843 112,499 --
Executive Officer 1997 160,417(3) 77,192 75,000 --
and President
Joseph E. Bibler......... 1999 209,027 158,376 20,000 --
Vice President, 1998 180,451 130,187 40,000 --
Client Services 1997 142,826 41,479 60,000 --
William M. Curran, Jr.... 1999 142,223 244,578 -- --
Vice President, Sales 1998 142,586 388,512 80,500 --
1997 111,748 181,388 45,000 --
Steven M. Hornyak........ 1999 175,666 94,558 100,000 --
Vice President, 1998 156,177 90,143 40,000 --
Strategy and 1997 123,776 135,252 51,000 $ 53,394(4)
Business Development
Arthur G. Walsh, Jr. .... 1999 94,917 30,563 6,000(6) 202,433(7)
Vice President, 1998 152,586 60,215 -- --
Chief Financial Officer 1997 150,900 -- 30,000(8) --
and Secretary (5)
</TABLE>
- --------
(1) In accordance with the rules of the Securities and Exchange Commission,
the compensation set forth in the table does not include medical
insurance, 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 to our executive officers
during 1999, 1998 or 1997. Options granted to the Named Executive
Officers, other than to Mr. Jeffery in February 1998, were granted at fair
market value on the date of grant as determined by our Compensation
Committee.
(3) Includes $14,583 in deferred compensation earned in 1996.
(4) Represents a one-time payment for relocation expenses.
(5) Resigned as Vice President, Chief Financial Officer and Secretary in
January 2000.
(6) These options were forfeited in July 1999.
(7) Represents consulting fees and other payments paid in 1999.
(8) Of these options, 22,500 were forfeited in July 1999.
6
<PAGE>
Option Grants in 1999
The following table provides certain information concerning individual
grants of stock options made during 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------
Potential Realizable Value
Number of Percent of at Assumed Annual Rates
Securities Total Options of Stock Price Appreciation
Underlying Granted to Exercise Price for Option Term (2)
Options Employees In Per Share Expiration ---------------------------
Name Granted (#)(1) Fiscal Year ($/sh) Date 5% 10%
---- -------------- ------------- -------------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Stephen P. Jeffery...... 110,000 7.6% $ 5.41 05/27/06 $ 242,265 $ 564,582
Joseph E. Bibler........ 20,000 1.4% 47.75 12/16/06 388,781 906,025
William M. Curran,
Jr. ................... -- -- -- -- -- --
Steven M. Hornyak....... 15,000 1.0% 3.50 01/28/06 21,373 49,808
35,000 2.4% 5.56 04/29/06 79,222 184,620
50,000 3.5% 47.75 12/16/06 971,952 2,265,062
Arthur G. Walsh, Jr..... 6,000 * 3.50 07/31/99(3) -- --
</TABLE>
- --------
* Less than 1%
(1) All options were granted pursuant to our SQL 1992 Stock Plan or our Stock
Incentive Plan (formerly, the 1998 Stock Incentive Plan) at an exercise
price not less than fair market value on the date of grant based on our
closing sales prices as reported on the Nasdaq National Market. Options
granted prior to December 16, 1999 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 after the date of grant, 70% vesting 36
months after the date of grant and 100% vesting 48 months after the date
of grant. Options granted on or after December 16, 1999 vest in 48 monthly
installments. 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 of the Securities and Exchange Commission.
(3) These options were forfeited on July 31, 1999.
Aggregated Option Exercises in 1999
And Year-End Option Values
The following table provides certain information concerning the options
exercised in 1999 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, 1999.
<TABLE>
<CAPTION>
Number of Securities
Number of Underlying Unexercised Value of Unexercised
Shares Dollar Options at In-the-Money Options
Acquired On Value Fiscal Year End (#) at Fiscal Year End ($)(2)
Exercise Realized ------------------------- -------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen P. Jeffery...... 37,500 $668,827 153,749 226,650 $9,482,714 $14,101,000
Joseph E. Bibler........ 3,000 32,640 26,000 88,000 1,576,900 4,452,750
William M. Curran, Jr... 44,600 533,727 -- 95,900 -- 5,625,274
Steven M. Hornyak....... 15,510 144,781 20,000 164,490 1,202,920 7,751,047
Arthur G. Walsh, Jr..... 7,500 122,085 -- -- -- --
</TABLE>
- --------
(1) Dollar values were calculated based on the difference between the fair
market value of the underlying common stock on the date of exercise and
the exercise price per share.
(2) Dollar values were calculated determining the difference between the fair
market value of the underlying securities at December 31, 1999, and the
exercise price of the options.
7
<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, the Chase H&Q Internet Index and the
Media General Financial Services Index for application software. ("MG Group
Index") for the period commencing on May 27, 1998, and ending December 31,
1999 (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. We selected the Chase H&Q Internet Index, a
different index from the MG Group Index that we used in 1998, because we sold
substantially all of the assets and technology of our enterprise resource
planning business in October 1999 and completely switched our business to
business-to-business electronic procurement.
[Comparison of 19 Month Cumulative Total Return]
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES,K PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
FISCAL YEAR ENDING
-----------------------------------------------------
5/27/98 6/30/98 7/31/98 8/31/98 9/30/98 10/30/98
Clarus Corporation 100.00 107.35 100.74 62.50 41.54 66.91
Application Software 100.00 119.61 115.42 97.47 115.66 110.40
Russell 2000 Index 100.00 100.21 92.10 74.21 80.02 83.29
Chase H & Q Internet 100 100.00 118.28 107.13 75.59 95.03 99.60
FISCAL YEAR ENDING
------------------------------------------------------
11/30/98 12/31/98 1/29/99 2/26/99 3/31/99 4/30/99
Clarus Corporation 70.59 70.59 41.18 52.94 64.71 67.65
Application Software 126.12 142.41 173.58 152.38 166.72 156.58
Russell 2000 Index 87.55 92.83 94.00 86.28 87.49 95.24
Chase H & Q Internet 100 136.15 164.14 243.89 218.54 277.70 314.31
FISCAL YEAR ENDING
-----------------------------------------------------
5/28/99 6/30/99 7/30/99 8/31/99 9/30/99 10/29/99
Clarus Corporation 64.71 58.82 126.47 139.71 111.03 220.59
Application Software 158.41 180.69 171.88 183.42 188.99 195.98
Russell 2000 Index 96.53 100.76 97.91 94.18 94.07 94.36
Chase H & Q Internet 100 264.58 286.01 252.28 265.59 294.00 325.07
FISCAL YEAR ENDING
------------------------------------------------------
11/30/99 12/31/99
Clarus Corporation 525.74 776.47
Application Software 210.07 282.90
Russell 2000 Index 99.87 111.01
Chase H & Q Internet 100 409.70 569.12
8
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1999, the Compensation Committee of the Board of Directors was
comprised of three 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 and
approving the compensation of the other executive officers; and
. administering and awarding options and other awards under our stock
incentive plans.
Our compensation policies are 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, and the opportunity to receive stock options and an annual bonus.
We do not currently provide executive officers with other long-term incentive
compensation.
The Compensation Committee's current philosophy is that the predominate
portion of an executive's compensation should be based directly upon the value
of incentive compensation in the form of cash bonuses and stock option awards.
The Compensation Committee believes that providing executives with the
opportunity to acquire interests in our company 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 who are essential to our success.
Furthermore, the Compensation Committee believes that this approach to
compensation, as well as the opportunity to receive annual cash bonuses based
on performance, motivates executives to perform to their fullest potential.
Base Salary. 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 us.
Annual Bonuses. The Compensation Committee determined the annual bonus in
1999 to be paid to our Chief Executive Officer based upon our 1999 bonus plan
which outlines certain revenue, profitability and other financial-related
goals, as well as other criteria designed to assess his contribution to our
performance. Annual bonus recommendations for Named Executive Officers, other
than the Chief Executive Officer, were made under the direction of the Chief
Executive Officer and were reviewed and approved by the Compensation
Committee.
Stock Awards. 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. Historically, stock
option grants have been structured to 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 generally must be employed by us at the time of
vesting in order to exercise the options. Options granted after December 16,
1999 vest in 48 monthly installments. 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.
9
<PAGE>
Compensation of Chief Executive Officer. 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 us and our businesses. On December 16, 1999, the
Compensation Committee reviewed the compensation of our Chief Executive
Officer and increased the annual base salary of Mr. Jeffery from $225,000 to
$250,000. On May 27, 1999, Mr. Jeffery was granted a stock option to purchase
110,000 shares of our common stock at a price of $5.41 per share. The increase
in Mr. Jeffery's base salary was based on past performance, including his
efforts to transition us to a business-to-business electronic procurement
company.
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.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally limits amounts that can be deducted for compensation paid
to certain executives to $1,000,000 unless certain requirements are met. No
executive officer receives compensation in excess of $1,000,000 and therefore
there are no compensation amounts that are nondeductible at present. The
Compensation Committee will continue to monitor the applicability of Section
162(m) to the Company's compensation program.
COMPENSATION COMMITTEE
From January 1, 1999 to May 27, 1999 the Compensation Committee consisted
of Tench Coxe and William S. Kaiser. Currently, the Compensation Committee
consists of:
Norman N. Behar
William S. Kaiser
Said Mohammadioun
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
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.
PROPOSAL 2--AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO
INCREASE OUR AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors proposes that the stockholders approve an amendment
to our Amended and Restated Certificate of Incorporation that would increase
the number of authorized shares of our common stock from 25,000,000 shares to
100,000,000 shares (Proposal 2). For the reasons discussed below, our Board
believes it is in our best interests to amend our Amended and Restated
Certificate of Incorporation to effect such increase in our authorized common
stock, and on April 19, 2000, our Board unanimously approved such amendment.
10
<PAGE>
As amended and restated, Article 4 of our Amended and Restated Certificate
of Incorporation would provide as follows:
"This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the Corporation is authorized to issue is 105,000,000
shares, of which 100,000,000 shares are Common Stock, $.0001 par value per
share, and 5,000,000 shares are Preferred Stock, $.0001 par value per share.
The rights and preferences of all outstanding shares of Common Stock shall be
identical. The holders of outstanding shares of Common Stock shall have the
right to vote on all matters submitted to a vote of the stockholders of the
Corporation, on the basis of one vote per share of Common Stock owned."
If adopted, the amendment would become effective upon filing of a
Certificate of Amendment in accordance with Delaware law. The remainder of our
Amended and Restated Certificate of Incorporation will not change. The full
text of the proposed Amendment to our Amended and Restated Certificate of
Incorporation is attached to this Proxy Statement as Appendix A.
On April 25, 2000, we had 14,132,841 shares of common stock outstanding. On
that date, an additional 2,027,592 shares of common stock were reserved for
issuance in connection with our stock-based plans, stock option agreements and
warrants. The Board does not consider the number of shares of common stock
available to be adequate for Clarus' future possible requirements.
The Board of Directors believes that it is prudent to increase the number
of authorized shares of common stock to the proposed level in order to provide
a reserve of shares available for issuance in connection with possible future
actions. We are not seeking an increase in our authorized shares of common
stock so that we may issue them in a pending transaction. Rather, the
additional authorized shares of common stock would give us flexibility in our
corporate planning and in responding to future business developments,
including but not limited to possible financings through the issuance of
equity securities and acquisition transactions, stock splits or dividends,
establishing strategic relationships with corporate partners, issuances under
stock-based plans and other general corporate purposes. Although we
continually evaluate potential acquisitions of businesses, as of the date of
this Proxy Statement, we had no agreements with regard to the acquisition of
another business. However, if we decided to acquire other businesses, the
issuance of shares of our common stock would be one of the primary means by
which we would fund such acquisitions. Depending on the size of an
acquisition, we may not be required to seek stockholder approval in order to
issue our common stock to fund the acquisition. If the additional authorized
common stock is available for any issuance, in appropriate circumstances, we
could avoid the delays and expense that would be occasioned by the necessity
of obtaining stockholder approval at the time of the action and would be
better positioned to engage in these actions. We believe that increasing our
authorized common shares to 100,000,000 shares will provide us with sufficient
shares available for issuance for the foreseeable future.
Under some circumstances, issuance of additional shares of common stock
could dilute the voting rights, equity and earnings per share of existing
stockholders. This increase in authorized but unissued common stock also could
be considered an anti-takeover measure because the additional authorized but
unissued shares of common stock could be used by the Board to make a change in
control of us more difficult. The Board's purpose in recommending this
proposal is not as an anti-takeover measure, but for the reasons discussed
above.
Authorized shares of our common stock may be issued by the Board of
Directors from time to time without further stockholder approval, except in
situations where stockholder approval is required by Delaware law or the rules
of the Nasdaq Stock Market. Our stockholders have no preemptive rights to
acquire additional shares of common stock, which means that current
stockholders do not have a right to purchase any new issue of shares of common
stock in order to maintain their proportionate ownership interests in Clarus.
The issuance of any additional shares of common stock likely would dilute the
voting power of the outstanding shares of common stock and reduce the portion
of the dividends and liquidation proceeds payable to the holders of the
outstanding shares of common stock.
11
<PAGE>
Our Board of Directors believes that the proposed increase in the number of
authorized shares of common stock is necessary for us to continue to carry out
our business strategy. Accordingly, the Board recommends a vote FOR approval
of Proposal 2 to amend our Certificate of Incorporation to increase the
authorized shares of common stock.
PROPOSAL 3--AMENDMENT AND RESTATEMENT OF OUR STOCK INCENTIVE PLAN
Purpose and Administration of Stock Incentive Plan.
In February 1998, the Board of Directors adopted, and our stockholders
approved, our Stock Incentive Plan (formerly named the 1998 Stock Incentive
Plan). The purpose of our Stock Incentive Plan is to encourage and enable our
employees, directors and independent contractors and those of our related
corporations to acquire or increase their holdings of our common stock and
other proprietary interests in order to promote a closer identification of
their interests with those of us and our stockholders, thereby further
stimulating their efforts to enhance our efficiency, soundness, profitability,
growth and stockholder value.
Our Board of Directors recommends that our stockholders approve the
amendment and restatment of our Stock Incentive Plan in substantially the form
attached hereto as Appendix B. The discussion that follows is qualified in its
entirety by reference to the Stock Incentive Plan.
The Stock Incentive Plan is administered by the Compensation Committee or
by our Board of Directors (both the Board and the Compensation Committee are
referred to in this discussion as the "Committee"). The Committee may make the
following types of grants under the Stock Incentive Plan, each of which is
referred to as an "award":
. incentive stock options ("ISOs");
. nonqualified stock options ("NQSOs");
. restricted stock awards ("restricted stock awards");
. stock appreciation rights ("SARs"); and
. restricted units ("restricted units").
The material terms of each type of award is discussed below. See "Awards."
Our officers, employees, employee directors, consultants and other
independent contractors or agents are eligible for selection by the Committee
to participate in the Stock Incentive Plan, provided, however, that ISOs may
be granted only to our employees. As of April 25, 2000, the approximate number
of persons in each class of participants were as follows: employees
(approximately 248 persons); employee directors (one person); nonemployee
directors (six persons); and, consultants or other independent contractors (38
persons).
We have authorized and reserved for issuance an aggregate of 1,500,000
shares of our common stock under the Stock Incentive Plan, although, as
discussed below, that number is proposed to be increased. See "Summary of
Proposed Amendment and Restatement of the Stock Incentive Plan." In addition,
under the current terms of the Stock Incentive Plan, the aggregate number of
shares of common stock that may be granted through awards to any employee in
any calendar year may not exceed 200,000 shares.
As of April 25, 2000, options to purchase 1,190,841 shares of common stock
were outstanding under the Stock Incentive Plan with exercise prices ranging
from $3.50 to $136.00 per share and a weighted average exercise price of
$18.15 per share. No other types of awards other than options have been
granted to date under the Stock Incentive Plan.
The shares of common stock or treasury shares issuable under the Stock
Incentive Plan may be authorized but unissued shares, treasury shares or
shares purchased in the open market by private purchase. If any of the awards
granted under the Stock Incentive Plan expire, terminate or are forfeited for
any reason before they have
12
<PAGE>
been exercised, vested or issued in full, the unused shares subject to those
expired, terminated or forfeited awards will again be available for grant
under the Stock Incentive Plan.
Our Board may amend or terminate the Stock Incentive Plan at any time,
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 amendment
or termination. The Stock Incentive Plan will continue in effect until
February 2008 unless sooner terminated under the provisions of the Stock
Incentive Plan. The Stock Incentive Plan also provides that the number of
shares underlying the 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 and that the terms of awards may also be adjusted.
As of April 25, 2000, the closing sales price of our common stock was
$37.44.
Awards
As noted above, our Stock Incentive Plan authorizes the granting of ISOs,
NQSOs, SARs, restricted stock awards and restricted units. A summary of the
material terms of each type of award is provided below.
Options. Our Stock Incentive Plan authorizes the grant of both ISOs and
NQSOs, both of which are exercisable for shares of common stock. The Committee
will determine at the time of grant the option price at which an option may be
exercised. In the case of ISOs, which may only be granted to our employees,
the option price must be at least equal to 100% of the fair market value per
share of the common stock on the date of grant. The Committee will determine
at the time of grant the term of an option and the periods and conditions for
exercise. In the case of ISOs, the option term may not exceed 10 years. Unless
an individual agreement provides otherwise, payment of the option price may be
made by cash or check and, if permitted by the Committee, by delivery of
shares of common stock, "cashless exercise" or a combination of these methods.
Options are subject to certain restrictions on exercise if the participant
terminates employment or service. The Committee also has authority to
establish other terms and conditions related to options.
Stock Appreciation Rights. Under the terms of our Stock Incentive Plan,
SARs may be granted to an optionee of an option (a "related option") with
respect to all or a portion of the shares of common stock subject to the
related option (a "tandem SAR") or may be granted separately (a "freestanding
SAR"). The consideration to be received by the holder of an SAR may be paid in
cash, shares of common stock (valued at fair market value on the date of the
SAR exercise), or a combination of cash and shares of common stock, as the
Committee may determine. The Committee may establish a maximum value payable
for an SAR. The consideration we pay upon exercise of an SAR may be paid
currently or on a deferred basis.
SARs are exercisable according to the terms stated in the related
agreement. No SAR may be exercised more than 10 years after it was granted, or
such shorter period as may apply to related options in the case of tandem
SARs. SAR holders are subject to the same restrictions on exercise during
employment and following termination of employment or service as optionees.
Restricted Awards. Subject to the limitations of the Stock Incentive Plan,
the Committee may in its sole discretion grant restricted awards to such
eligible individuals in such numbers, upon such terms and at such times as the
Committee determines. A restricted award may consist of a restricted stock
award or a restricted unit, or both. Restricted awards may be payable in cash
or whole shares of common stock (including restricted stock), or partly in
cash and partly in whole shares of common stock, in accordance with the terms
of the Stock Incentive Plan and the Committee's discretion.
The Committee has authority to determine the nature, length and starting
date of the period, if any, during which the restricted award may be earned
(the "restricted period") for each restricted award, and will determine the
conditions that must be met in order for a restricted award to be granted or
to vest or be earned in whole or
13
<PAGE>
in part. These conditions may include, but are not limited to, attainment of
performance objectives, completion of the restriction period (or a combination
of attainment of performance objectives and completion of the restriction
period), retirement, displacement, disability, death or any combination of
these conditions. In the case of restricted awards based upon performance
criteria, or a combination of performance criteria and continued service, the
Committee will determine the performance objectives to be used in valuing
restricted awards and determine the extent to which such awards have been
earned. Performance objectives may vary from participant to participant and
between groups of participants and will be based upon those company, business
unit or individual performance factors and criteria as the Committee in its
sole discretion may deem appropriate, including but not limited to sales
targets, earnings per share, return on equity, return on assets, total
revenues, total return to stockholders or any combination of these factors.
The Committee has authority to determine whether and to what degree
restricted awards have been earned and are payable, as well as to determine
the forms and terms of restricted awards. If a participant's employment or
service is terminated before the participant has earned all or part of a
restricted award, the unearned portion of the award will be forfeited, unless
the Committee elects to accelerate vesting of the award or his individual
agreement provides otherwise.
Summary of Proposed Amendment and Restatement of the Stock Incentive Plan
On April 19, 2000, our Board approved the amendment and restatement of the
Stock Incentive Plan that would increase the number of shares of Clarus common
stock issuable under the plan from 1,500,000 to a number of shares equal to
the sum of:
. 3,000,000 shares of common stock;
. any shares of common stock available for future awards under the SQL
1992 Stock Plan, a predecessor plan, as of June 13, 2000; and
. any shares of common stock that are represented by awards granted under
the SQL 1992 Stock Plan or the Stock Incentive Plan which are forfeited,
expire or are canceled without delivery of shares of common stock or
which result in the forfeiture of the shares of common stock back to
Clarus.
As of April 25, 2000, 63,394 shares remained available for grant under the
Stock Incentive Plan.
The Stock Incentive Plan, as amended and restated, also will incorporate
prior amendments previously adopted by our Board or our stockholders, as
appropriate, and will make certain additional revisions designed to facilitate
plan administration, such as modifying option payment methods and other
similar matters.
In order for the 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 and the annual participant awarded limitation under
the Stock Incentive Plan should be increased as described herein.
Our Board believes that the amendment to increase the number of shares
available for issuance under the Stock Incentive Plan is necessary in order
for the Stock Incentive Plan to continue to serve as a strong stock-based
incentive for our employees and other eligible individuals now and in the
future. The Stock Incentive Plan as amended and restated is intended to be
effective as of June 13, 2000.
Performance-Based Compensation--Section 162(m) Requirements
The Stock Incentive Plan is intended to preserve our tax deduction for
certain awards paid under the Stock Incentive Plan by complying with the terms
of Section 162(m) of the Code and related regulations. Section 162(m) of the
Code denies an employer a deduction for compensation paid to covered employees
(generally, the
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<PAGE>
Named Executive Officers) of a publicly-held corporation in excess of
$1,000,000 unless the compensation is exempt from the $1,000,000 limitation
because it is performance-based compensation or paid on a commission basis.
Although the $1,000,000 deduction limitation is not applicable at this time to
any of our Named Executive Officers, the Stock Incentive Plan is structured to
comply with the requirements imposed by Section 162(m) of the Code in order to
preserve, to the extent practicable, our tax deduction for awards made under
the Stock Incentive Plan.
In order to qualify as performance-based compensation, the compensation
paid to covered employees must be paid under pre-established objective
performance goals determined and certified by a committee comprised of outside
directors. In addition to other requirements for the performance-based
exception, stockholders must be advised of, and must approve, the material
terms or change in material terms of the performance goal under which
compensation is to be paid. Material terms include the individuals eligible to
receive compensation, a description of the business criteria on which the
performance goal is based, and either the maximum amount of the compensation
to be paid or the formula used to calculate the amount of compensation if the
performance goal is met.
As described above, the Stock Incentive Plan provides that the aggregate
number of shares of common stock that may be granted under awards to any
employee in any calendar year may not exceed 200,000 shares (or the equivalent
value thereof, based on the fair market value of the common stock on the date
of grant). This award limitation is not proposed to be changed.
Restricted awards that are performance-based will be based upon such
company, business unit or individual performance factors and criteria as the
Committee determines, including but not limited to sales targets, earnings per
share, return on equity, return on assets, total revenue, total return to
stockholders or any combination of these factors. See "Awards--Restricted
Awards," above.
New Plan Benefits
The amount of compensation that will be paid pursuant to the grant of
awards under the Stock Incentive Plan in the current year to the following
persons is not yet determinable due to vesting, performance and other
requirements. However, the following table sets forth the number of options
that were granted in 1999 under the Stock Incentive Plan, at exercise prices
ranging from $3.50 to $136.00 per share, to each of the following:
Stock Incentive Plan
New Plan Benefits
<TABLE>
<CAPTION>
Number of
Shares
Dollar Subject to
Name and Position Value ($) Options (#)
----------------- ----------- -----------
<S> <C> <C>
Stephen P. Jeffery, President and Chief Executive
Officer........................................... $ 4,118,400 110,000
Joseph E. Bibler, Vice President, Client Services.. 748,800 20,000
William P. Curran, Jr., Vice President, Sales...... -- --
Steven M. Hornyak, Vice President, Strategy and
Business Development.............................. 3,744,000 100,000
Executive Group.................................... 12,665,952 338,300
Non-Executive Director Group....................... 2,199,600 58,750
Non-Executive Officer Employee Group............... 38,910,268 1,039,270
</TABLE>
The dollar value is based on a per share price of $37.44 (the closing sales
price of our common stock as reported on the Nasdaq Stock Market on April 25,
2000).
15
<PAGE>
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 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 us. The
provisions of the Code and related regulations are complicated and their
impact in any one case may depend upon the particular circumstances.
Incentive Stock Options. ISOs granted under the 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 our employee or an employee of 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 Stock Incentive Plan, in no event
can there first become exercisable by an optionee in any one calendar year
ISOs we grant any related corporation grants 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 ISO exceeds the foregoing limitation,
it will be treated under the Stock Incentive Plan as a nonqualified stock
option. In addition, no ISO 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 our stock or
that of 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 an NQSO, 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. We 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 Stock Incentive Plan, we will require any
recipient of shares of our common stock to pay us 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. We also will
withhold all required taxes from any amount payable with respect to an award.
Stock Appreciation Rights. For federal income tax purposes, the grant of an
SAR will not result in taxable income to the holder or a tax deduction to us.
At the time of exercise of an SAR, the SAR holder will forfeit the right to
benefit from any future appreciation of the stock subject to the SAR.
Accordingly, taxable income to the SAR holder is deferred until the SAR is
exercised. Upon exercise, the amount of cash and fair market value of shares
received by the SAR holder, less cash or other consideration paid (if any), is
taxed to the SAR holder as ordinary income and we will receive a corresponding
income tax deduction to the extent the amount represents reasonable
compensation and an ordinary and necessary business expense, subject to any
required income tax withholding.
16
<PAGE>
Restricted Stock Subject to Restricted Awards. Similar to SARs, awards for
restricted stock generally will not result in taxable income to the employee
or a tax deduction to us for federal income tax purposes. Upon expiration of
the restricted period applicable to the restricted stock award, the fair
market value of such shares at such date and any cash amount awarded, less
cash or other consideration paid (if any), will be included in the recipient's
ordinary income as compensation, except that, in the case of restricted stock
issued at the beginning of the restriction period, the recipient may elect to
include in his ordinary income as compensation at the time the restricted
stock is awarded, the fair market value of such shares at such time, less any
amount paid therefor. We will be entitled to a corresponding income tax
deduction to the extent that the amount represents reasonable compensation and
an ordinary and necessary business expense, subject to any required income tax
withholding.
Restricted Units and Restricted Awards Other Than Restricted Stock. The
federal income tax consequences of the award of restricted units and other
restricted awards other than restricted stock will depend on the conditions of
the award. Generally, the transfer of cash or property will result in ordinary
income to the recipient and a tax deduction to us. If there is a substantial
risk that the property transferred will be forfeited (for example, because
receipt of the property is conditioned upon the performance of substantial
future services), the taxable event is deferred until the risk of forfeiture
lapses. However, the recipient may generally elect to accelerate the taxable
event to the date of transfer, even if the property is subject to a
substantial risk of forfeiture. If this election is made, subsequent
appreciation is not taxed until the property is sold or exchanged (and the
lapse of the forfeiture restriction does not create a taxable event).
Generally, any deduction to us occurs only when ordinary income in respect of
an award is recognized by the employee (and then the deduction is subject to
reasonable compensation and withholding requirements). Because restricted
stock awards will be subject to such conditions as the Committee may
determine, the federal income tax consequences to the recipient and to us will
depend on the specific conditions of the award.
Our Board has unanimously approved the amendment and restatement of the
Stock Incentive Plan as described herein. Our Board of Directors recommends
that the stockholders vote FOR the proposed amendment and restatement of the
Stock Incentive Plan.
PROPOSAL 4--ADOPTION OF EMPLOYEE STOCK PURCHASE PLAN
On April 19, 2000, our Board adopted the Clarus Corporation Employee Stock
Purchase Plan (the "ESPP"), subject to stockholder approval at the meeting.
The ESPP is intended to enable eligible employees to acquire shares of our
common stock at a discount and to encourage them to remain our employees and
thus to promote our best interests and enhance our long-term performance. The
ESPP is intended to qualify as an "employee stock purchase plan" under Section
423 of the Code and to permit participants to receive favorable tax treatment
with respect to shares acquired under the ESPP, as described below.
The following summary describes the material terms of the ESPP and is
qualified in all respects by reference to the terms of the ESPP, which is
attached as Appendix C to this Proxy Statement. You should refer to the ESPP
for more complete and detailed information.
Shares Reserved for the Employee Stock Purchase Plan
The aggregate number of shares of common stock which may be purchased under
the ESPP shall not exceed 750,000 shares, although the number of shares
issuable under the ESPP and the terms of the options are subject to adjustment
in the event of mergers, consolidations, stock dividends, stock splits or
other changes in our outstanding common stock in accordance with Plan terms.
Shares issued under the ESPP may be authorized but unissued shares, treasury
shares or shares purchased on the open market or by private purchase.
Administration; Amendment and Termination
The ESPP will be administered by our Board, or, upon its delegation, by the
Committee. (For the purposes of this summary, references to the "Committee"
include the Committee and the Board.) The Committee may
17
<PAGE>
adopt rules and procedures consistent with the ESPP for its administration and
may delegate certain administrative functions as it considers appropriate. The
Committee's interpretation and construction of the ESPP will be final and
conclusive.
The Committee has full authority to take any action with respect to the
ESPP, including, without limitation, the authority to: (1) establish, amend
and rescind rules and regulations for the administration of the ESPP; (2)
prescribe the form or forms of any agreements or other instruments used in
connection with the ESPP; (3) determine the terms and provisions of the
options granted hereunder; and (4) construe and interpret the ESPP, the
options, the rules and regulations, and the agreements or other written
instruments, and to make all other determinations deemed necessary or
advisable for administering the ESPP.
The ESPP and options may be amended or terminated at any time by the Board,
subject to the following: (1) stockholder approval is required of any ESPP
amendment to the extent required under Section 423 of the Code or other
applicable law, rule or regulation; and (2) no amendment may materially and
adversely affect any outstanding option without the participant's consent
(except to the extent otherwise provided in the ESPP).
Effective Date
If adopted by the stockholders, the effective date of the ESPP will be June
13, 2000 and the ESPP will have a 10-year term unless terminated earlier
pursuant to plan terms.
Eligible Participants
Generally, our employees are eligible to participate in the ESPP if they
have been employed 90 days or more, they customarily work at least 20 hours
per week and at least five months per year, and are employed on the offer date
for the purchase period. Approximately 196 employees would have been eligible
to participate as of April 25, 2000.
Material Features of the Employee Stock Purchase Plan
If the ESPP is approved by our stockholders, beginning on or about July 1,
2000, we will grant options on January 1 and July 1 of each year that the ESPP
is in effect or on such other date as we may designate. Each purchase period
will last for six months, ending on June 30 or December 31 immediately
following the grant of options, or on such date as the Committee determines.
Each eligible employee who has elected to participate in the ESPP will be
entitled on the purchase date (the last day of the purchase period) to
purchase shares of our common stock at an option price equal to the lesser of
85% of the fair market value on the date of grant or 85% of the fair market
value on the date of exercise.
Payment for shares of our common stock purchased under the ESPP will be
made by authorized payroll deductions from a participant's compensation or by
other methods authorized by the Committee. Compensation generally means a
participant's regular base pay (excluding commissions, bonuses and incentive
compensation), as determined as of each pay day.
An eligible employee who elects to participate in the ESPP will designate a
stated whole percentage between 1% and 15% of compensation to be credited to
the participant's account under the ESPP. On the offer date for each purchase
period, a participant will be granted an option to purchase such number of
shares as is determined by dividing the amount of the participant's payroll
deductions which had accumulated on the purchase date by the applicable option
price. Unless a participant withdraws or terminates employment before the
purchase date in accordance with the ESPP terms, the option will be exercised
automatically for the purchase of the full number of shares subject to the
option.
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<PAGE>
We will maintain an account for each participant to reflect the shares of
our common stock purchased under the ESPP by each participant. No participant
in the ESPP is permitted to purchase our common stock under the ESPP at a rate
that exceeds $25,000 in fair market value of our common stock, determined at
the time options are granted, for each calendar year, or $12,500 in fair
market value of our common stock during any six-month purchase period.
Additional restrictions may apply to the purchase of shares based on the terms
of the ESPP and Section 423 of the Code.
We may use funds we receive from the sale of our common stock under the
ESPP for any corporate purpose.
New Plan Benefits
It is impossible to determine how many eligible employees will participate
in the ESPP. Therefore, it is impossible to determine the dollar value or
number of shares of our common stock that will be distributed under the ESPP.
Based on a per share price of $37.44, the closing sales price of our common
stock on the Nasdaq Stock Market on April 25, 2000, the benefits of the ESPP
during 1999 would have been as follows:
Employee Stock Purchase Plan
New Plan Benefits
<TABLE>
<CAPTION>
Number of Shares
Dollar Subject to
Name and Position Value ($) Options (#)
----------------- ---------- ----------------
<S> <C> <C>
Stephen P. Jeffery, Chairman, Chief Executive
Officer and President........................ $ 28,750 768
Joseph Bibler................................. 28,750 768
William Curran................................ 28,750 768
Steven Hornyak................................ 28,750 768
Executive Group............................... 201,250 5,375
Non-Executive Officer Employee Group.......... 2,716,875 72,566
</TABLE>
Federal Tax Consequences
As noted above, the ESPP is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Code. Under the Code,
an employee who elects to participate in the ESPP will not realize income and
we will not receive a deduction at the time an option is granted or when the
shares purchased under the ESPP are transferred to him, although participants
will receive the benefit of the discounted price at the time of purchase.
Participants will, however, recognize income when they sell or dispose of
the shares. If an employee disposes of such shares at least two years after
the date of grant of the option and one year after the date the purchase of
such shares, the employee will recognize ordinary income for the year in which
such disposition occurs in an amount equal to the lesser of:
. the excess of the fair market value of such shares at the time of
disposition over the purchase price, or
. the excess of the fair market value of the stock at the time of the
grant of the option over the option price (that is, the option price
discount).
The employee's basis in the shares disposed of will be increased by an
amount equal to the amount so includable in his income as compensation. Any
additional gain or loss will be a capital gain or loss either short-term or
long-term, depending on the holding period for such shares.
If any employee disposes of the shares purchased under the ESPP within such
two-year or one-year periods, the employee will recognize ordinary income for
the year in which such disposition occurs in an amount equal to the excess of
the fair market value of such shares on the date of purchase over the purchase
price. The employee's basis in such shares disposed of will be increased by an
amount equal to the amount includable in
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<PAGE>
his income as compensation, and any gain or loss computed with reference to
such adjusted basis which is recognized at the time of disposition will be a
capital gain or loss, either short-term or long-term, depending on the holding
period for such shares. In the event of a disposition within such two-year or
one-year periods, the participant's employer will be entitled to a tax
deduction equal to the amount the employee is required to include in income as
a result of such disposition.
The discussion above is only a summary of federal income consequences to us
and participating employees and does not cover the tax consequences that might
arise in every individual circumstance.
Our Board has unanimously approved the adoption of the Employee Stock
Purchase Plan and recommends that you vote FOR the approval of the ESPP.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table provides information concerning beneficial ownership of
our common stock as of April 25, 2000, by:
. each stockholder that we know owns more than 5% of our outstanding
common stock;
. each of our Named Executive Officers;
. each of our Directors; and
. all of our Directors and executive officers as a group.
The following table lists the applicable percentage of beneficial ownership
based on 14,132,841 shares of common stock outstanding as of April 25, 2000.
Except where noted, the persons or entities named have sole voting and
investment power with respect to all shares shown as beneficially owned by
them.
The second column shows separately shares which may be acquired by exercise
of stock options or warrants within 60 days after April 25, 2000, by the
Directors and executive officers individually and as a group. These shares are
included in the numbers shown in the first column. Shares of common stock that
may be acquired by exercise of stock options or warrants are deemed
outstanding for purposes of computing the percentage beneficially owned by the
persons holding these options but are not deemed outstanding for purposes of
computing the percentage beneficially owned by any other person.
<TABLE>
<CAPTION>
Number of
Shares
Subject
to
Number of Options Percentage
Shares of or of Common
Name Common Stock Warrants Stock
---- ------------ --------- ----------
<S> <C> <C> <C>
Stephen P. Jeffery......................... 254,549 153,749 2.9
Joseph E. Bibler........................... 37,832 26,832 *
William M. Curran, Jr. .................... 44,600 2,691 *
Steven M. Hornyak.......................... 42,392 26,882 *
Arthur G. Walsh, Jr. ...................... 40,254 -- *
Norman N. Behar............................ 142,543 34,375 1.2
Tench Coxe(1).............................. 120,939(1) 13,392 *
Donald L. House............................ 89,374 13,125 *
Mark A. Johnson............................ 33,075 24,375 *
William S. Kaiser.......................... 21,721 29,865 *
Said Mohammadioun.......................... 47,375 5,625 *
Directors and executive officers as a group
(11 persons).............................. 915,904 382,870 8.9
</TABLE>
- --------
* Less than one percent.
(1) Includes 61,078 shares held individually by Mr. Coxe, 807 shares of our
common stock issuable upon the exercise of a warrant held by Mr. Coxe and
45,929 shares held by Sutter Hill Ventures, a California Limited
Partnership over which Mr. Coxe has sole voting and investment control.
20
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING 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 Securities and Exchange Commission
reports of their ownership and changes in ownership of our common stock held
by such persons. Officers, Directors and stockholders owning more than 10% of
our common stock are also required to furnish us with copies of all forms they
file under this provision. 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 1999, all Section 16(a) filing requirements
applicable to our officers, Directors and principal stockholders were met.
GENERAL INFORMATION
Stockholder Proposals for 2001 Annual Meeting
In order to be considered for inclusion in the Proxy Statement and Proxy to
be used in connection with our 2001 Annual Meeting of Stockholders,
stockholder proposals must be received by our Secretary no later than January
16, 2001.
Our bylaws contain procedures that stockholders must follow in order to
present business at an annual or special 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 2001 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 preceding 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. Only stockholder proposals which are
timely presented in accordance with established procedures will be eligible
for consideration at a meeting.
Financial Information
Detailed financial information regarding Clarus is included in our 1999
Annual Report that is being mailed to our stockholders together with this
Proxy Statement.
Form 10-K
Our Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended
December 31, 1999, which was filed with the Securities and Exchange
Commission, is available to stockholders who make written request therefor to
us 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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<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
CLARUS CORPORATION
The undersigned, being the Chairman, Chief Executive Officer and President
of CLARUS CORPORATION, a Delaware corporation, hereby certifies that:
1.
(a) The name of the Corporation is CLARUS CORPORATION (the
"Corporation").
(b) The date of filing the original Certificate of Incorporation of the
Corporation with the Secretary of State of Delaware was November 20, 1991.
2.
The following amendment to the Corporation's Certificate of
Incorporation was duly adopted by stockholders of the Corporation at the
2000 annual meeting of the Corporation in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware (the
"Code"), and written notice of such meeting was given to all stockholders
in accordance with Section 222 of the Code.
3.
Article 4 of the Amended and Restated Certificate of Incorporation of
the Corporation shall be amended by striking paragraph (a) of Article 4 in
its entirety and replacing said paragraph with the following:
This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The
total number of shares which the Corporation is authorized to issue is
105,000,000 shares, of which 100,000,000 shares are Common Stock,
$.0001 par value per share, and 5,000,000 shares are Preferred Stock,
$.0001 par value per share. The rights and preferences of all
outstanding shares of Common Stock shall be identical. The holders of
outstanding shares of Common Stock shall have the right to vote on all
matters submitted to a vote of the stockholders of the Corporation, on
the basis of one vote per share of Common Stock owned.
IN WITNESS WHEREOF, CLARUS CORPORATION, has caused this Certificate to be
signed and attested by its duly authorized officers, this 13th day of June,
2000.
CLARUS CORPORATION
By: /s/ Stephen P. Jeffery
---------------------------------
Stephen P. Jeffery,
Chairman, Chief Executive Officer
and President
ATTEST:
By: /s/ Mark D. Gagne
------------------------
Mark D. Gagne, Secretary
[CORPORATE SEAL]
<PAGE>
APPENDIX B
STOCK INCENTIVE PLAN
OF
CLARUS CORPORATION
(As Amended and Restated Effective as of June 13, 2000)
<PAGE>
STOCK INCENTIVE PLAN
OF
CLARUS CORPORATION
(As Amended and Restated Effective as of June 13, 2000)
1. Purpose
The purpose of the Stock Incentive Plan of Clarus Corporation, as amended
and restated (formerly, the 1998 Stock Incentive Plan of Clarus Corporation)
(the "Plan"), is to encourage and enable selected employees, directors and
independent contractors of Clarus Corporation (the "Corporation") and its
related corporations to acquire or to increase their holdings of common stock
of the Corporation (the "Common Stock") and other proprietary interests in the
Corporation in order to promote a closer identification of their interests
with those of the Corporation and its stockholders, thereby further
stimulating their efforts to enhance the efficiency, soundness, profitability,
growth and stockholder value of the Corporation. This purpose will be carried
out through the granting of benefits (collectively referred to herein as
"Awards") to selected employees, independent contractors and directors,
including the granting of incentive stock options ("Incentive Options")
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonqualified stock options ("Nonqualified Options"),
stock appreciation rights ("SARs"), restricted stock awards ("Restricted Stock
Awards"), and restricted units ("Restricted Units") to such participants.
Incentive Options and Nonqualified Options shall be referred to herein
collectively as "Options." Restricted Stock Awards and Restricted Units shall
be referred to herein collectively as "Restricted Awards."
2. Administration of the Plan
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Corporation (the "Board");
provided, however, that the Board may, in its sole discretion, assume
administration of the Plan in whole or in part. (For the purposes herein,
references to the "Committee" shall also include the Board if it is acting in
its administrative capacity.) Unless the Board shall determine otherwise, the
Committee shall be comprised solely of "non-employee directors," as such term
is defined in Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or as may otherwise be permitted by
Rule 16b-3. Further, to the extent required by Section 162(m) of the Code or
related regulations, the Plan shall be administered by a committee comprised
of "outside directors" (as such term is defined in Section 162(m) or related
regulations) or as may otherwise be permitted under Section 162(m) and related
regulations.
(b) Any action of the Committee with respect to the Plan may be taken by a
written instrument signed by all of the members of the Committee and any such
action so taken by written consent shall be as fully effective as if it had
been taken by a majority of the members at a meeting duly held and called.
Subject to the provisions of the Plan, the Committee shall have full and final
authority in its discretion to take any action with respect to the Plan
including, without limitation, the authority (i) to determine all matters
relating to Awards, including selection of individuals to be granted Awards,
the types of Awards, the number of shares of the Common Stock, if any, subject
to an Award, and all terms, conditions, restrictions and limitations of an
Award; (ii) to prescribe the form or forms of the agreements evidencing any
Awards granted under the Plan; (iii) to establish, amend and rescind rules and
regulations for the administration of the Plan; and (iv) to construe and
interpret the Plan and agreements evidencing Awards granted under the Plan, to
establish and interpret rules and regulations for administering the Plan and
to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee shall also have authority, in its sole
discretion, to accelerate the date that any Award which was not otherwise
exercisable or vested shall become exercisable or vested in whole or in part
without any obligation to accelerate such date with respect to any other Award
granted to any recipient. In addition, the Committee shall have the authority
and discretion to establish terms and conditions of Awards as the Committee
B-2
<PAGE>
determines to be necessary or appropriate to conform to the applicable
requirements or practices of jurisdictions outside of the United States.
(c) Notwithstanding Section 2(b), the Committee may delegate to the chief
executive officer or president of the Corporation the authority to grant
Awards, and to make any or all of the determinations reserved for the
Committee in the Plan and summarized in Section 2(b) herein with respect to
such Awards, to any individual who, at the time of said grant or other
determination, (i) is not deemed to be an officer or director of the
Corporation within the meaning of Section 16 of the Exchange Act; (ii) is not
deemed to be a Covered Employee; and (iii) is otherwise eligible under Section
5. To the extent that the Committee has delegated authority to grant Awards
pursuant to this Section 2(c) to the chief executive officer or president,
references to the Committee shall include references to such person, subject,
however, to the requirements of the Plan, Rule 16b-3 and other applicable law.
3. Effective Date
The effective date of the Plan shall be February 5, 1998 (the "Effective
Date"). The Plan was amended and restated effective as of June 13, 2000.
Awards may be granted under the Plan on and after the Effective Date, but no
Awards will be granted after February 4, 2008.
4. Shares of Stock Subject to the Plan; Award Limitations
(a) Subject to adjustment as provided in Section 4(c), the number of shares
of Common Stock that may be issued pursuant to Awards shall equal the sum of
(i) three million (3,000,000) shares of Common Stock; (ii) any shares of
Common Stock available for future awards under the SQL 1992 Stock Plan (the
"Prior Plan") as of June 13, 2000; and (iii) any shares of Common Stock that
are represented by awards granted under the Plan or the Prior Plan which are
forfeited, expire or are canceled or terminated without delivery of shares of
Common Stock or which result in the forfeiture of the shares of Common Stock
back to the Corporation. Shares issued pursuant to the Plan may be authorized
but unissued shares, treasury shares or shares purchased on the open market or
by private purchase.
(b) The Corporation hereby reserves sufficient authorized shares of Common
Stock to meet the grant of Awards hereunder. To the extent that any shares of
Common Stock subject to an Award are not delivered to a Participant (or his
beneficiary) because the Award is forfeited, canceled, settled in cash or used
to satisfy applicable tax withholding obligations, such shares shall not be
deemed to have been issued for purposes of determining the maximum number of
shares of Common Stock available for issuance under the Plan. If the purchase
price of an Option granted under the Plan is satisfied by tendering shares of
Common Stock, only the number of shares issued net of the shares of Common
Stock tendered shall be deemed issued for purposes of determining the maximum
number of shares of Common Stock available for issuance under the Plan.
(c) If there is any change in the shares of Common Stock because of a
merger, consolidation or reorganization involving the Corporation or a related
corporation, or if the Board of Directors of the Corporation declares a stock
dividend stock split distributable in shares of Common Stock, or reverse stock
split, or if there is a change in the capital stock structure of the
Corporation or a related corporation affecting the Common Stock, the number of
shares of Common Stock reserved for issuance under the Plan shall be
correspondingly adjusted, and the Committee shall make such adjustments to
Awards or to any provisions of this Plan as the Committee deems equitable to
prevent dilution or enlargement of Awards.
(d) In no event shall an employee be granted Awards under the Plan for more
than 200,000 shares of Common Stock (or the equivalent value thereof based on
the Fair Market Value of the Common Stock on the date of grant of the Award)
during any calendar year, subject to adjustment as provided in Section 4(c)
herein.
B-3
<PAGE>
5. Eligibility
An Award may be granted only to an individual who satisfies the following
eligibility requirements on the date the Award is granted:
(a) The individual is either (i) an employee of the Corporation or a
related corporation, (ii) a director of the Corporation or a related
corporation, or (iii) an independent contractor, consultant or advisor
(collectively, "independent contractors") providing services to the
Corporation or a related corporation. For this purpose, an individual shall
be considered to be an "employee" only if there exists between the
individual and the Corporation or a related corporation the legal and bona
fide relationship of employer and employee.
(b) With respect to the grant of Incentive Options, the individual does
not own, immediately before the time that the Incentive Option is granted,
stock possessing more than ten percent of the total combined voting power
of all classes of stock of the Corporation. Notwithstanding the foregoing,
an individual who owns more than ten percent of the total combined voting
power of the Corporation may be granted an Incentive Option if the option
price (as determined pursuant to Section 6(b) herein, is at least 110% of
the Fair Market Value of the Common Stock (as defined in Section 6(b)
herein), and the option period (as defined in Section 6(c) herein) does not
exceed five years. For this purpose, an individual will be deemed to own
stock which is attributable to him under Section 424(d) of the Code.
(c) The individual, being otherwise eligible under this Section 5, is
selected by the Committee as an individual to whom an Award shall be
granted (a "Participant").
6. Options
(a) Grant of Options: Subject to the limitations of the Plan, the Committee
may in its sole and absolute discretion grant Options to such eligible
individuals in such numbers, upon such terms and at such times as the
Committee shall determine. Both Incentive Options and Nonqualified Options may
be granted under the Plan; provided, however, that Incentive Options may only
be granted to employees of the Corporation or a related corporation. To the
extent necessary to comply with Section 422 of the Code and related
regulations, if an Option is designated as an Incentive Option but does not
qualify as such under Section 422 of the Code, the Option (or portion thereof)
shall be treated as a Nonqualified Option.
(b) Option Price; Date of Grant; Fair Market Value: The price per share at
which an Option may be exercised (the "option price") shall be established by
the Committee at the time the Option is granted and shall be set forth in the
terms of the agreement evidencing the grant of the Option; provided, that (i)
in the case of an Incentive Option, the option price shall be no less than
100% of the Fair Market Value per share of the Common Stock on the date the
Option is granted; and (ii) in no event shall the option price per share of
any Option be less than the par value per share of the Common Stock. In
addition, the following rules shall apply:
(i) An Incentive Option shall be considered to be granted on the date
that the Committee acts to grant the Option, or on any later date specified
by the Committee as the effective date of the Option. A Nonqualified Option
shall be considered to be granted on the date the Committee acts to grant
the Option or any other date specified by the Committee as the date of
grant of the Option.
(ii) For the purposes of the Plan, the Fair Market Value of the shares
shall be determined in good faith by the Committee in accordance with the
following provisions: (A) if the shares of Common Stock are listed for
trading on the New York Stock Exchange or the American Stock Exchange, the
Fair Market Value shall be the closing sales price of the shares on the New
York Stock Exchange or the American Stock Exchange (as applicable) on the
date immediately preceding the date the Option is granted, or, if there is
no transaction on such date, then on the trading date nearest preceding the
date the Option is granted for which closing price information is
available, and, provided further, if the shares are quoted on the Nasdaq
National Market or the Nasdaq SmallCap Market of the Nasdaq Stock Market
but are not listed for trading on the New York Stock Exchange or the
American Stock Exchange, the Fair Market Value shall be the closing sales
price for
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<PAGE>
such stock (or the closing bid, if no sales were reported or if there is no
transaction on such date, then on the trading date nearest preceding the
date the Option is granted) as quoted on such system on the date
immediately preceding the date the Option is granted for which such
information is available; or (B) if the shares of Common Stock are not
listed or reported in any of the foregoing, then the Fair Market Value
shall be determined by the Committee in accordance with the applicable
provisions of Section 20.2031-2 of the Federal Estate Tax Regulations, or
in any other manner consistent with the Code and accompanying regulations.
(iii) In no event shall there first become exercisable by an employee in
any one calendar year Incentive Options granted by the Corporation or any
related corporation with respect to shares having an aggregate Fair Market
Value (determined at the time an Incentive Option is granted) greater than
$100,000.
(c) Option Period and Limitations on the Right to Exercise Options
(i) The term of an Option (the "option period") shall be determined by
the Committee at the time the Option is granted. With respect to Incentive
Options, such period shall not extend more than ten years from the date on
which the Option is granted. Any Option or portion thereof not exercised
before expiration of the option period shall terminate. The period or
periods during which and the terms and conditions pursuant to which an
Option may be exercised shall be determined by the Committee at the time
the Option is granted.
(ii) An Option may be exercised by giving written notice to the
Corporation at such place as the Corporation or its designee shall direct.
Such notice shall specify the number of shares to be purchased pursuant to
an Option and the aggregate purchase price to be paid therefor, and shall
be accompanied by the payment of such purchase price. Unless an individual
option agreement provides otherwise, such payment shall be in the form of
(A) cash; (B) delivery (by either actual delivery or attestation) of shares
of Common Stock owned by the Participant at the time of exercise for a
period of at least six months and otherwise acceptable to the Committee;
(C) delivery of written notice of exercise to the Corporation and delivery
to a broker of written notice of exercise and irrevocable instructions to
promptly deliver to the Corporation the amount of sale or loan proceeds to
pay the option price; or (D) a combination of the foregoing methods, as
elected by the Participant. Shares tendered in payment on the exercise of
an Option shall be valued at their Fair Market Value on the date of
exercise, as determined by the Committee by applying the provisions of
Section 6(b)(ii).
(iii) Unless an individual option agreement provides otherwise, and
notwithstanding Section 6(c)(i) herein, no Option granted to a Participant
who was an employee at the time of grant shall be exercised unless the
Participant is, at the time of exercise, an employee as described in
Section 5(a), and has been an employee continuously since the date the
Option was granted, subject to the following:
(A) An Option shall not be affected by any change in the terms,
conditions or status of the Participant's employment, provided that the
Participant continues to be an employee of the Corporation or a related
corporation.
(B) The employment relationship of a Participant shall be treated as
continuing intact for any period that the Participant is on military or
sick leave or other bona fide leave of absence, provided that the
period of such leave does not exceed ninety days, or, if longer, as
long as the Participant's right to reemployment is guaranteed either by
statute or by contract. The employment relationship of a Participant
shall also be treated as continuing intact while the Participant is not
in active service because of disability. The Committee shall determine
whether a Participant is disabled, and, if applicable, the date of a
participant's termination of employment or service for any reason (the
"termination date").
(C) Unless an individual option agreement provides otherwise, if the
employment of a Participant is terminated because of disability within
the meaning of subparagraph (B), or if the Participant dies while he is
an employee or dies after the termination of his employment because of
disability, the
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<PAGE>
Option may be exercised only to the extent exercisable on his
termination date, except that the Committee may in its discretion
accelerate the date for exercising all or any part of the Option which
was not otherwise exercisable on the termination date. The Option must
be exercised, if at all, prior to the first to occur of the following,
whichever shall be applicable: (X) the close of the period of twelve
months next succeeding the termination date; or (Y) the close of the
option period. In the event of the Participant's death, such Option
shall be exercisable by such person or persons as shall have acquired
the right to exercise the Option by will or by the laws of intestate
succession.
(D) Unless an individual option agreement provides otherwise, if the
employment of the Participant is terminated for any reason other than
disability (as defined in subparagraph (B)), death or for "cause," his
Option may be exercised to the extent exercisable on the date of such
termination of employment, except that the Committee may in its
discretion accelerate the date for exercising all or any part of the
Option which was not otherwise exercisable on the date of such
termination of employment. The Option must be exercised, if at all,
prior to the first to occur of the following, whichever shall be
applicable: (X) the close of the period of three (3) months next
succeeding the termination date; or (Y) the close of the option period.
If the Participant dies following such termination of employment and
prior to the earlier of the dates specified in (X) or (Y) of this
subparagraph (D), the Participant shall be treated as having died while
employed under subparagraph (C) immediately preceding (treating for
this purpose the Participant's date of termination of employment as the
termination date). In the event of the Participant's death, such Option
shall be exercisable by such person or persons as shall have acquired
the right to exercise the Option by will or by the laws of intestate
succession.
(E) Unless an individual option agreement provides otherwise, if the
employment of the Participant is terminated for "cause," his Option
shall lapse and no longer be exercisable as of the effective time of
his termination of employment, as determined by the Committee. For
purposes of the Plan, the Participant's termination shall be for
"cause" if such termination results from the Participant's (W) (with
respect to Options granted on or after June 13, 2000) termination for
"cause" under the Participant's employment, consulting or other
agreement with the Corporation or a related corporation; (X) dishonesty
or conviction of a crime; (Y) failure to perform his duties to the
satisfaction of the Corporation; or (Z) engaging in conduct that could
be materially damaging to the Corporation without a reasonable good
faith belief that such conduct was in the best interest of the
Corporation. The determination of "cause" shall be made by the
Committee and its determination shall be final and conclusive.
(F) Notwithstanding the foregoing, the Committee shall have
authority, in its discretion, to extend the period during which an
Option may be exercised; provided that, in the event that any such
extension shall cause an Incentive Option to be designated as a
Nonqualified Option, no such extension shall be made without the prior
written consent of the Participant.
(iv) Unless an individual agreement provides otherwise, an Option
granted to a Participant who was an independent contractor or director of
the Corporation or a related corporation at the time of grant (and who does
not thereafter become an employee, in which case he shall be subject to the
provisions of Section 6(c)(iii) herein) may be exercised only to the extent
exercisable on the date of the Participant's termination of service to the
Corporation or a related corporation (unless the termination was for
cause), and must be exercised, if at all, prior to the first to occur of
the following, as applicable: (X) the close of the period of three (3)
months next succeeding the termination date; or (Y) the close of the option
period. If the services of such a Participant are terminated for cause (as
defined in Section 6(c)(iii)(E) herein), his Option shall lapse and no
longer be exercisable as of the effective time of his termination of
services, as determined by the Committee. Notwithstanding the foregoing,
the Committee may in its discretion accelerate the date for exercising all
or any part of an Option which was not otherwise exercisable on the
termination date or extend the period during which an Option may be
exercised, or both.
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<PAGE>
(v) A Participant or his legal representative, legatees or distributees
shall not be deemed to be the holder of any shares subject to an Option and
shall not have any rights of a stockholder unless and until certificates
for such shares are delivered to him or them under the Plan.
(vi) Nothing in the Plan shall confer upon the Participant any right to
continue in the service of the Corporation or a related corporation as an
employee, director, or independent contractor or to interfere in any way
with the right of the Corporation or a related corporation to terminate the
Participant's employment or service at any time.
(vii) A certificate or certificates for shares of Common Stock acquired
upon exercise of an Option shall be issued in the name of the Participant
(or his beneficiary) and distributed to the Participant (or his
beneficiary) as soon as practicable following receipt of notice of exercise
and payment of the purchase price.
(d) Nontransferability of Options
(i) Incentive Options shall not be transferable other than by will or
the laws of intestate succession. Nonqualified Options shall not be
transferable other than by will or the laws of intestate succession, except
as may be permitted by the Committee in a manner consistent with the
registration provisions of the Securities Act of 1933, as amended (the
"Securities Act"). Except as may be permitted by the preceding sentence, an
Option shall be exercisable during the Participant's lifetime only by him
or by his guardian or legal representative. The designation of a
beneficiary does not constitute a transfer.
(ii) If a Participant is subject to Section 16 of the Exchange Act,
shares of Common Stock acquired upon exercise of an Option may not, without
the consent of the Committee, be disposed of by the Participant until the
expiration of six months after the date the Option was granted.
7. Stock Appreciation Rights
(a) Grant of SARs: Subject to the limitations of the Plan, the Committee
may in its sole and absolute discretion grant SARs to such eligible
individuals, in such numbers, upon such terms and at such times as the
Committee shall determine. SARs may be granted to an optionee of an Option
(hereinafter called a "Related Option") with respect to all or a portion of
the shares of Common Stock subject to the Related Option (a "Tandem SAR") or
may be granted separately to an eligible key employee (a "Freestanding SAR").
Subject to the limitations of the Plan, SARs shall be exercisable in whole or
in part upon notice to the Corporation upon such terms and conditions as are
provided in the agreement relating to the grant of the SAR.
(b) Tandem SARs: A Tandem SAR may be granted either concurrently with the
grant of the Related Option or (if the Related Option is a Nonqualified
Option) at any time thereafter prior to the complete exercise, termination,
expiration or cancellation of such Related Option. Tandem SARs shall be
exercisable only at the time and to the extent that the Related Option is
exercisable (and may be subject to such additional limitations on
exercisability as the Committee may provide in the agreement), and in no event
after the complete termination or full exercise of the Related Option. For
purposes of determining the number of shares of Common Stock that remain
subject to such Related Option and for purposes of determining the number of
shares of Common Stock in respect of which other Awards may be granted, upon
the exercise of Tandem SARs, the Related Option shall be considered to have
been surrendered to the extent of the number of shares of Common Stock with
respect to which such Tandem SARs are exercised. Upon the exercise or
termination of the Related Option, the Tandem SARs with respect thereto shall
be canceled automatically to the extent of the number of shares of Common
Stock with respect to which the Related Option was so exercised or terminated.
Subject to the limitations of the Plan, upon the exercise of a Tandem SAR, the
Participant shall be entitled to receive from the Corporation, for each share
of Common Stock with respect to which the Tandem SAR is being exercised,
consideration equal in value to the excess of the Fair Market Value of a share
of Common Stock on the date of exercise over the Related Option price per
share; provided, that the Committee may, in any agreement granting Tandem
SARs, establish a maximum value payable for such SARs.
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<PAGE>
(c) Freestanding SARs: Unless an individual agreement provides otherwise,
the base price of a Freestanding SAR shall be not less than 100% of the Fair
Market Value of the Common Stock (as determined in accordance with Section
6(b)(ii) herein) on the date of grant of the Freestanding SAR. Subject to the
limitations of the Plan, upon the exercise of a Freestanding SAR, the
Participant shall be entitled to receive from the Corporation, for each share
of Common Stock with respect to which the Freestanding SAR is being exercised,
consideration equal in value to the excess of the Fair Market Value of a share
of Common Stock on the date of exercise over the base price per share of such
Freestanding SAR; provided, that the Committee may, in any agreement granting
Freestanding SARs, establish a maximum value payable for such SARs.
(d) Exercise of SARs:
(i) Subject to the terms of the Plan, SARs shall be exercisable in whole
or in part upon such terms and conditions as are provided in the agreement
relating to the grant of the SAR. The period during which an SAR may be
exercisable shall not exceed ten years from the date of grant or, in the
case of Tandem SARs, such shorter option period as may apply to the Related
Option. Any SAR or portion thereof not exercised before expiration of the
period stated in the agreement relating to the grant of the SAR shall
terminate.
(ii) SARs may be exercised by giving written notice to the Corporation
at such place as the Committee shall direct. The date of exercise of the
SAR shall mean the date on which the Corporation shall have received notice
from the Participant of the exercise of such SAR.
(iii) No SAR may be exercised unless the Participant is, at the time of
exercise, an eligible Participant, as described in Section 5, and has been
a Participant continuously since the date the SAR was granted, subject to
the provisions of Sections 6(c)(iii) and (iv) herein.
(e) Consideration; Election: The consideration to be received upon the
exercise of the SAR by the Participant shall be paid in cash, shares of Common
Stock (valued at Fair Market Value on the date of exercise of such SAR in
accordance with Section 6(b)(ii) herein) or a combination of cash and shares
of Common Stock, as elected by the Participant, subject to the terms of the
Plan and the applicable agreement. The Corporation's obligation arising upon
the exercise of the SAR may be paid currently or on a deferred basis with such
interest or earnings equivalent as the Committee may determine. A certificate
or certificates for shares of Common Stock acquired upon exercise of an SAR
for shares shall be issued in the name of the Participant (or his beneficiary)
and distributed to the Participant (or his beneficiary) as soon as practicable
following receipt of notice of exercise. No fractional shares of Common Stock
will be issuable upon exercise of the SAR and, unless otherwise provided in
the applicable agreement, the Participant will receive cash in lieu of
fractional shares.
(f) Limitations: The applicable SAR agreement shall contain such terms,
conditions and limitations consistent with the Plan as may be specified by the
Committee. Unless otherwise so provided in the applicable agreement or the
Plan, any such terms, conditions or limitations relating to a Tandem SAR shall
not restrict the exercisability of the Related Option.
(g) Nontransferability:
(i) SARs shall not be transferable other than by will or the laws of
intestate succession (except to the extent, if any, that a Related Option
is a Nonqualified Option and is transferable pursuant to Section 6(d)
herein). The designation of a beneficiary does not constitute a transfer.
SARs may be exercised during the Participant's lifetime only by him or by
his guardian or legal representative.
(ii) If the Participant is subject to Section 16 of the Exchange Act,
shares of Common Stock acquired upon exercise of an SAR may not, without
the consent of the Committee, be disposed of by the Participant until the
expiration of six months after the date the SAR was granted.
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<PAGE>
8. Grant and Earning of Restricted Awards
(a) Grant and Earning of Restricted Awards: Subject to the limitations of
the Plan, the Committee may in its sole and absolute discretion grant
Restricted Awards to such individuals in such numbers, upon such terms and at
such times as the Committee shall determine. A Restricted Award may consist of
a Restricted Stock Award or a Restricted Unit, or both. Restricted Awards
shall be payable in cash or whole shares of Common Stock (including Restricted
Stock), or partly in cash and partly in whole shares of Common Stock, in
accordance with the terms of the Plan and the sole and absolute discretion of
the Committee. The Committee shall determine the conditions which must be met
in order for a Restricted Award to be granted or to vest or be earned (in
whole or in part), which conditions may include, but are not limited to, the
continued service of the Participant for a certain period of time, attainment
of such performance objectives as the Committee may determine, a combination
of continued service and performance objectives, retirement, displacement,
disability, death or a combination of such conditions. The Committee shall
determine the nature, length and starting date of the period, if any, during
which the Restricted Award may be earned (the "Restriction Period") for each
Restricted Award, which shall be as stated in the agreement to which the Award
relates. In the case of Restricted Awards based upon performance criteria, or
a combination of performance criteria and continued service, the Committee
shall determine the performance objectives to be used in valuing Restricted
Awards and determine the extent to which such Awards have been earned.
Performance objectives may vary from participant to participant and between
groups of participants and shall be based upon such Corporation, business unit
and/or individual performance factors and criteria as the Committee in its
sole discretion may deem appropriate, including, but not limited to, sales
targets, earnings per share, return on equity, return on assets, total
revenue, total return to stockholders, or any combination of the foregoing.
The Committee shall determine the terms and conditions of each Restricted
Award, including the form and terms of payment of Awards. The Committee shall
have sole authority to determine whether and to what degree Restricted Awards
have been earned and are payable and to interpret the terms and conditions of
Restricted Awards and the provisions herein. The Committee, in its sole and
absolute discretion, may accelerate the date that any Restricted Award granted
to a Participant shall be deemed to be earned in whole or in part, without any
obligation to accelerate such date with respect to other Restricted Awards.
(b) Forfeiture of Restricted Awards: Unless an individual agreement
provides otherwise, if the employment or service of a Participant shall be
terminated for any reason and the Participant has not earned all or part of a
Restricted Award pursuant to the terms herein, such Award to the extent not
then earned shall be forfeited immediately upon such termination and the
Participant shall have no further rights with respect thereto.
(c) Dividend and Voting Rights; Share Certificates: Unless an individual
agreement provides otherwise, (i) a Participant shall have no dividend rights
or voting rights or other rights as a stockholder with respect to shares
reserved in his name pursuant to a Restricted Award payable in shares but not
yet earned, and (ii) a certificate or certificates for shares of Common Stock
representing a Restricted Award payable in shares shall be issued in the name
of the Participant and distributed to the Participant (or his beneficiary) as
soon as practicable following the date that the shares subject to the Award
are earned. No certificate shall be issued hereunder in the name of the
Participant (or his beneficiary) except to the extent the shares represented
thereby have been earned.
(d) Nontransferability:
(i) The recipient of a Restricted Award shall not sell, transfer,
assign, pledge or otherwise encumber shares subject to the Award until the
Restriction Period has expired or until all conditions to vesting have been
met.
(ii) Restricted Awards shall not be transferable other than by will or
the laws of intestate succession. The designation of a beneficiary does not
constitute a transfer.
(iii) If a Participant of a Restricted Award is subject to Section 16 of
the Exchange Act, shares of Common Stock subject to such Award may not,
without the consent of the Committee, be sold or otherwise disposed of
within six months following the date of grant of such Award.
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<PAGE>
9. Withholding
The Corporation shall withhold all required local, state and federal taxes
from any amount payable in cash with respect to an Award. The Corporation
shall require any recipient of an Award payable in shares of the Common Stock
to pay to the Corporation in cash the amount of any tax or other amount
required by any governmental authority to be withheld and paid over by the
Corporation to such authority for the account of such recipient.
Notwithstanding the foregoing, the recipient may satisfy such obligation in
whole or in part, and any other local, state or federal income tax obligations
relating to such an Award, by electing (the "Election") to have the
Corporation withhold shares of Common Stock from the shares to which the
recipient is entitled. The number of shares to be withheld shall have a Fair
Market Value as of the date that the amount of tax to be withheld is
determined (the "Tax Date") as nearly equal as possible to (but not exceeding)
the amount of such obligations being satisfied. Each Election must be made in
writing to the Committee in accordance with election procedures established by
the Committee.
10. Performance-Based Compensation
To the extent that Section 162(m) of the Code is applicable, the Committee
shall have discretion to determine the extent, if any, that Awards conferred
under the Plan to Covered Employees, as such term is defined in Section 19(b)
herein, shall comply with the qualified performance-based compensation
exception to employer compensation deductions set forth in Section 162(m) of
the Code.
11. Section 16(b) Compliance
It is the general intent of the Corporation that transactions under the
Plan which are subject to Section 16 of the Exchange Act shall comply with
Rule 16b-3 under the Exchange Act. Notwithstanding anything in the Plan to the
contrary, the Committee, in its sole and absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers or directors subject to Section 16 of
the Exchange Act without so restricting, limiting or conditioning the Plan
with respect to other participants.
12. No Right or Obligation of Continued Employment or Service
Nothing contained in the Plan shall require the Corporation or a related
corporation to continue the employment or service of a Participant, nor shall
any such individual be required to remain in the employment or service of the
Corporation or a related corporation. Except as otherwise provided in the
Plan, (i) all rights of a Participant with respect to an Award shall terminate
upon the termination of the Participant's employment or service; and (ii)
Awards granted under the Plan to employees of the Corporation or a related
corporation shall not be affected by any change in the duties or position of
the participant, as long as such individual remains an employee of, or in
service to, the Corporation or a related corporation.
13. Unfunded Plan; Retirement Plans
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Corporation or any related corporation including, without limitation, any
specific funds, assets or other property which the Corporation or any related
corporation, in their discretion, may set aside in anticipation of a liability
under the Plan. A participant shall have only a contractual right to the
Common Stock or amounts, if any, payable under the Plan, unsecured by any
assets of the Corporation or any related corporation. Nothing contained in the
Plan shall constitute a guarantee that the assets of such corporations shall
be sufficient to pay any benefits to any person.
(b) In no event shall any amounts accrued, distributable or payable under
the Plan be treated as compensation for the purpose of determining the amount
of contributions or benefits to which any person shall be entitled under any
retirement plan sponsored by the Corporation or a related corporation that is
intended to be a qualified plan within the meaning of Section 401(a) of the
Code.
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<PAGE>
14. Amendment and Termination of the Plan
The Plan and any Award may be amended or terminated at any time by the
Board of Directors of the Corporation; provided, that (i) amendment or
termination of an Award shall not, without the consent of the recipient of an
Award, adversely affect the rights of the recipient with respect to an
outstanding Award; and (ii) approval of an amendment to the Plan by the
stockholders of the Corporation shall only be required in the event such
stockholder approval of any such amendment is required by applicable law, rule
or regulation.
15. Restrictions on Awards and Shares
The Corporation may impose such restrictions on any Awards and shares
representing Awards hereunder as it may deem advisable, including without
limitation restrictions under the Securities Act. Under the requirements of
any stock exchange or similar organization and under any blue sky or state
securities laws applicable to such shares. Notwithstanding any other Plan
provision to the contrary, the Corporation shall not be obligated to issue or
deliver shares of Common Stock under the Plan or make any other distribution
of benefits under the Plan, or take any other action, unless such delivery,
distribution or action is in compliance with all applicable laws, rules and
regulations (including but not limited to the requirements of the Securities
Act). The Corporation may cause a restrictive legend to be placed on any
certificate issued pursuant to an Award hereunder in such form as may be
prescribed from time to time by applicable laws and regulations or as may be
advised by legal counsel.
16. Applicable Law
The Plan shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to the conflict of laws provisions of
any state.
17. Stockholder Approval
The Plan is subject to approval by the stockholders of the Corporation,
which approval must occur, if at all, within 12 months of the effective date
of the Plan. Awards granted prior to such stockholder approval shall be
conditioned upon and shall be effective only upon approval of the Plan by such
stockholders on or before such date.
18. Change of Control
(a) With respect to Awards granted on and after the Effective Date of the
Plan and before October 28, 1999, notwithstanding any other provision of the
Plan to the contrary, in the event of a Change of Control (as defined in
Section 18(c) herein):
(i) All Options and SARs outstanding as of the date of such Change of
Control shall become fully exercisable, whether or not then otherwise
exercisable.
(ii) Any restrictions including but not limited to the Restriction
Period applicable to any Restricted Award shall be deemed to have expired,
and such Restricted Awards shall become fully vested and payable to the
fullest extent of the original grant of the applicable Award.
(iii) Notwithstanding the foregoing, in the event of a merger, share
exchange, reorganization or other business combination affecting the
Corporation or a related corporation, the Committee may, in its sole and
absolute discretion, determine that any or all Awards granted pursuant to
the Plan shall not vest or become exercisable on an accelerated basis, if
the Corporation or the board of directors of the surviving or acquiring
corporation, as the case may be, shall have taken such action, including
but not limited to the assumption of Awards granted under the Plan or the
grant of substitute awards (in either case, with substantially similar
terms as Awards granted under the Plan), as in the opinion of the Committee
is equitable or appropriate to protect the rights and interests of
participants under the Plan. For the purposes herein, the Committee
authorized to make the determinations provided for in this Section
18(a)(iii) shall be appointed by the Board
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<PAGE>
of Directors, two-thirds of the members of which shall have been directors
of the Corporation prior to the merger, share exchange, reorganization or
other business combinations affecting the Corporation or a related
corporation.
(b) Notwithstanding anything to the contrary herein, with respect to Awards
granted on or after October 28, 1999, the following provisions shall apply in
lieu of the provisions of Section 18(a) (unless an individual agreement
provides otherwise):
(i) Any Options and SARs outstanding as of the date of such Change of
Control which are not otherwise exercisable on that date shall immediately
become exercisable with respect to 50% of that portion of such outstanding
Award which was not otherwise exercisable as of such date; and
(ii) Any Restricted Awards outstanding as of the date of such Change of
Control which had not otherwise vested shall be deemed to be vested and
payable with respect to 50% of that portion of such outstanding Award which
was not otherwise vested on such date.
(iii) Notwithstanding the foregoing, in the event of a Change of
Control, the Committee may, in its sole and absolute discretion, determine
that any or all Awards granted pursuant to the Plan shall not vest or
become exercisable on an accelerated basis, if the Board of Directors of
the Corporation or the surviving or acquiring corporation, as the case may
be, shall have taken such action, including, but not limited to, the
assumption or continuation of Awards granted under the Plan or the grant of
substitute awards (in either case, with substantially similar terms as
Awards granted under the Plan), as in the opinion of the Committee is
equitable or appropriate to protect the rights and interests of
participants under the Plan. For the purposes herein, the Committee
authorized to make the determinations provided for in this Section
18(b)(iii) shall be appointed by the Board of Directors, two-thirds of the
members of which shall have been directors of the Corporation prior to the
merger, share exchange, reorganization or other business combinations
affecting the Corporation or a related corporation.
(c) For the purposes herein, a "Change of Control" shall be deemed to have
occurred on the earliest of the following dates:
(i) The date any entity or person shall have become the beneficial owner
of, or shall have obtained voting control over, (A) fifty-one percent (51%)
or more of the outstanding Common Stock of the Corporation if the
Corporation's stock is not then registered with the SEC and publicly traded
or (B) forty percent (40%) or more of the outstanding Common Stock of the
Corporation if the Corporation has consummated its initial public offering;
(ii) The date the stockholders of the Corporation approve a definitive
agreement (A) to merge or consolidate the Corporation with or into another
corporation or other business entity (each, a "corporation"), in which the
Corporation is not the continuing or surviving corporation or pursuant to
which any shares of Common Stock of the Corporation would be converted into
cash, securities or other property of another corporation, other than (x) a
merger or consolidation of the Corporation in which holders of Common Stock
immediately prior to the merger or consolidation have the same
proportionate ownership of Common Stock of the surviving corporation
immediately after the merger as immediately before and (y) with respect to
Awards granted on or after October 28, 1999, any merger or consolidation of
the Corporation in which holders of Common Stock immediately prior to the
merger or consolidation continue to own at least a majority of the combined
voting securities of the Corporation (or the surviving entity) outstanding
immediately after such merger or consolidation, or (B) to sell or otherwise
dispose of all or substantially all the assets of the Corporation; or
(iii) The date there shall have been a change in a majority of the Board
of Directors of the Corporation within a 12-month period unless the
nomination for election by the Corporation's stockholders of each new
director was approved by the vote of two-thirds of the directors then still
in office who were in office at the beginning of the 12-month period.
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(For purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such term
is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act,
other than the Corporation, a subsidiary of the Corporation or any employee
benefit plan(s) sponsored or maintained by the Corporation or any
subsidiary thereof, and the term "beneficial owner" shall have the meaning
given the term in Rule 13d-3 under the Exchange Act.)
19. Certain Definitions
For purposes of the Plan, the following terms shall have the meaning
indicated:
(a) "Agreement" means any written agreement or agreements between the
Corporation and the recipient of an Award pursuant to the Plan relating to
the terms, conditions and restrictions of Options, SARs, Restricted Awards
and any other Awards conferred herein.
(b) "Covered Employee" shall have the meaning given the term in Section
162(m) of the Code or the regulations thereunder.
(c) "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or which has lasted or
can be expected to last for a continuous period of not less than twelve
months.
(d) "Parent" or "parent corporation" shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations ending with the
Corporation if each corporation other than the Corporation owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in another corporation in the chain.
(e) "Predecessor" or "predecessor corporation" means a corporation which
was a party to a transaction described in Section 424(a) of the Code (or
which would be so described if a substitution or assumption under that
Section had occurred) with the Corporation, or a corporation which is a
parent or subsidiary of the Corporation, or a predecessor of any such
corporation.
(f) "Related corporation" means any parent, subsidiary or predecessor of
the Corporation.
(g) "Restricted Stock" shall mean shares of Common Stock which are
subject to Restricted Awards payable in shares, the vesting of which is
subject to restrictions set forth in the Plan or the agreement relating to
such Award.
(h) "Subsidiary" or "subsidiary corporation" means any corporation
(other than the Corporation) in an unbroken chain of corporations beginning
with the Corporation if each corporation other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in another corporation in the chain.
IN WITNESS WHEREOF, this Stock Incentive Plan of Clarus Corporation, as
amended and restated, has been executed on behalf of the Corporation effective
as of the 13th day of June, 2000.
CLARUS CORPORATION
By: /s/ Stephen P. Jeffery
-------------------------------
Name:Stephen P. Jeffery
Title:Chairman, Chief Executive
Officer and President
ATTEST:
By: /s/ Mark D. Gagne
---------------------------------
Mark D. Gagne, Secretary
[CORPORATE SEAL]
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APPENDIX C
EMPLOYEE STOCK PURCHASE PLAN
OF
CLARUS CORPORATION
<PAGE>
CLARUS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose
The purpose of the Clarus Corporation Employee Stock Purchase Plan (the
"Plan") is to give eligible employees of Clarus Corporation, a Delaware
corporation (the "Corporation"), and its designated Subsidiaries an
opportunity to acquire shares of the common stock of the Corporation (the
"Common Stock") and to continue to promote the Corporation's best interests
and enhance its long-term performance. This purpose will be carried through
the granting of options ("options") to purchase shares of the Corporation's
Common Stock through payroll deductions or other means permitted under the
Plan. The Plan is intended to comply with the requirements of Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code"), applicable to
employee stock purchase plans. The provisions of the Plan shall be construed
so as to comply with the requirements of Section 423 of the Code.
2. Certain Definitions
In addition to terms defined elsewhere in the Plan, the following words and
phrases shall have the meanings given below unless a different meaning is
required by the context:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Compensation Committee of the Board.
(d) "Common Stock" means shares of the common stock of the Corporation.
(e) "Corporation" means Clarus Corporation, a Delaware corporation.
(f) "Eligible Employee" means any employee of the Corporation or a
designated Subsidiary except for (i) any employee whose customary
employment is less than 20 hours per week or (ii) any employee whose
customary employment is for not more than five months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Corporation; provided that, where the period of
leave exceeds 90 days and the individual's right to reemployment is not
guaranteed either by statute or by contract, the employment relationship
shall be deemed to have terminated on the 91st day of such leave.
(g) "Fair Market Value" of the Common Stock on a given date (the
"valuation date") shall be determined in good faith by the Committee in
accordance with the following provisions:
(i) if the shares of Common Stock are listed for trading on the New
York Stock Exchange or the American Stock Exchange, the Fair Market
Value shall be the closing sales price of the shares on the New York
Stock Exchange or the American Stock Exchange (as applicable) on the
date immediately preceding the valuation date, or, if there is no
transaction on such date, then on the trading date nearest preceding
the valuation date for which closing price information is available,
and, provided further, if the shares are quoted on the Nasdaq National
Market or the Nasdaq SmallCap Market of the Nasdaq Stock Market but are
not listed for trading on the New York Stock Exchange or the American
Stock Exchange, the Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as
quoted on such system on the date immediately preceding the valuation
date for which such information is available; or
(ii) if the shares of Common Stock are not listed or reported in any
of the foregoing, then Fair Market Value shall be determined by the
Committee in any other manner consistent with the Code and accompanying
regulations.
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Notwithstanding any provision of the Plan to the contrary, no
determination made with respect to the Fair Market Value of Common Stock
subject to an option shall be inconsistent with Section 423 of the Code or
regulations thereunder.
(h) "Offer Date" means the date of grant of an option pursuant to the
Plan. The Offer Date shall be the first date of each Purchase Period.
(i) "Option" means an option granted hereunder which will entitle a
participant to purchase shares of Common Stock in accordance with the terms
of the Plan.
(j) "Option Price" means the price per share of Common Stock subject to
an option, as determined in accordance with Section 8(b).
(k) "Participant" means an Eligible Employee who is a participant in the
Plan.
(l) "Plan" means the Clarus Corporation Employee Stock Purchase Plan, as
it may be hereafter amended.
(m) "Purchase Date" means the date of exercise of an option granted
under the Plan. The Purchase Date shall be the last day of each Purchase
Period.
(n) "Purchase Period" means each six-month period during which an
offering to purchase Common Stock is made to Eligible Employees pursuant to
the Plan. There shall be two Purchase Periods in each fiscal year of the
Corporation, with the first Purchase Period in a fiscal year commencing on
or about January 1 and ending on June 30, and the second Purchase Period in
a fiscal year commencing on or about July 1 and ending on December 31 of
that year. Notwithstanding the foregoing, however, the first Purchase
Period after the effective date of the Plan shall begin on or as soon as
practicable following July 1, 2000 and end on December 31, 2000 and,
accordingly, may extend for a period of less than six months. The Committee
shall have the power to change the duration of Purchase Periods (including
the commencement date thereof) with respect to future offerings without
shareholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Purchase Period to be
affected thereafter.
(o) "Subsidiary" means any present or future corporation which (i) would
be a "subsidiary corporation" of the Corporation as that term is defined in
Section 424 of the Code and (ii) is at any time designated as a corporation
whose employees may participate in the Plan.
3. Effective Date
The Effective Date of the Plan shall be June 13, 2000. The Plan shall have
a term of 10 years unless sooner terminated in accordance with Section 16
herein.
4. Administration
(a) The Plan shall be administered by the Board or, upon its delegation, by
the Committee. References to the "Committee" shall include the Committee, the
Board if it is acting in its administrative capacity with respect to the Plan,
and any delegates appointed by the Committee pursuant to Section 4(b) herein.
(b) Any action of the Committee may be taken by a written instrument signed
by all of the members of the Committee and any action so taken by written
consent shall be as fully effective as if it had been taken by a majority of
the members at a meeting duly held and called. Subject to the provisions of
the Plan, the Committee shall have full and final authority, in its
discretion, to take any action with respect to the Plan, including, without
limitation, the following: (i) to establish, amend and rescind rules and
regulations for the administration of the Plan; (ii) to prescribe the form(s)
of any agreements or other written instruments used in connection with the
Plan; (iii) to determine the terms and provisions of the options granted
hereunder; and (iv) to construe and interpret the Plan, the options, the rules
and regulations, and the agreements or other written instruments, and to make
all other determinations necessary or advisable for the administration of the
Plan. The determinations of
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the Committee on all matters regarding the Plan shall be conclusive. Except to
the extent prohibited by the Plan or applicable law or rule, the Committee may
appoint one or more agents to assist in the administration of the Plan and may
delegate all or any part of its responsibilities and powers to any such person
or persons appointed by it. No member of the Board or Committee, as
applicable, shall be liable while acting as administrator for any action or
determination made in good faith with respect to the Plan or any option
granted thereunder.
5. Shares Subject to Plan
The aggregate number of shares of Common Stock which may be purchased under
the Plan shall not exceed 750,000 shares, subject to adjustment pursuant to
Section 13(a) herein.
Shares of Common Stock distributed pursuant to the Plan shall be authorized
but unissued shares, treasury shares or shares purchased on the open market or
by private purchase. The Corporation hereby reserves sufficient authorized
shares of Common Stock to provide for the exercise of options granted
hereunder. In the event that any option granted under the Plan expires
unexercised or is terminated, surrendered or canceled without being exercised,
in whole or in part, for any reason, the number of shares of Common Stock
subject to such option shall again be available for grant as an option and
shall not reduce the aggregate number of shares of Common Stock available for
the grant of options as set forth herein. If, on a given Purchase Date, the
number of shares with respect to which options are to be exercised exceeds the
number of shares then available under the Plan, the Corporation shall make a
pro rata allocation of the shares remaining available for purchase in as
uniform a manner as shall be practicable and as it shall determine to be
equitable.
6. Eligibility
(a) Initial Eligibility. Any Eligible Employee who shall have completed 90
days' employment and shall be employed by the Corporation or a designated
Subsidiary on any given Offer Date for a Purchase Period shall be eligible to
be a Participant during such Purchase Period.
(b) Certain Limitations. Any provisions of the Plan to the contrary
notwithstanding:
(i) No Eligible Employee shall be granted an option under the Plan to
the extent that, immediately after the option was granted, the individual
would own stock or hold outstanding options to purchase stock (or both)
possessing 5% or more of the total combined voting power or value of all
classes of stock of the Corporation or of any parent or subsidiary of the
Corporation. For purposes of this Section 6(b)(i), stock ownership of an
individual shall be determined under the rules of Section 424(d) of the
Code, and stock which the employee may purchase under outstanding options
shall be treated as stock owned by the employee.
(ii) No Eligible Employee shall be granted an option under the Plan to
the extent that his rights to purchase stock under all employee stock
purchase plans (as defined in Section 423 of the Code) of the Corporation
and any parent or subsidiary of the Corporation would accrue at a rate
which exceeds $25,000 of fair market value of such stock (determined at the
time of the grant of such option) for each calendar year in which such
option is outstanding at any time. Any option granted under the Plan shall
be deemed to be modified to the extent necessary to satisfy this Section
6(b)(ii).
7. Participation; Payroll Deductions
(a) Commencement of Participation. An Eligible Employee shall become a
Participant by completing a subscription agreement authorizing payroll
deductions on the form provided by the Corporation and filing it with the
Corporation or its designee at least five business days prior to the Offer
Date for the applicable Purchase Period. Following the filing of a valid
subscription agreement, payroll deductions for a Participant shall commence on
the first payroll period which occurs on or after the Offer Date for the
applicable Purchase Period and shall continue for successive Purchase Periods
during which the Participant is eligible to participate in the Plan, unless
withdrawn or terminated as provided in Section 10 or Section 11 herein.
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(b) Amount of Payroll Deduction; Determination of Compensation. At the time
a Participant files his subscription agreement authorizing payroll deductions,
he shall elect to have payroll deductions made on each payday that he is a
Participant during a Purchase Period at a rate of not less than 1% nor more
than 15% (or such other percentage as the Committee may establish from time to
time before an Offer Date) of his compensation. For the purposes herein, a
Participant's "compensation" during any Purchase Period means his regular base
pay (all base straight time gross earnings and commissions, exclusive of
payments for overtime, shift premiums, incentive compensation, incentive
payments, bonuses and other similar compensation) determined as of each pay
day or as of such other date or dates as may be determined by the Committee;
provided, however, that the method of determining compensation shall be
applied uniformly and consistently to all Participants. In the case of an
hourly employee, the Participant's compensation (as defined above) during a
pay period shall be determined by multiplying such employee's regular hourly
rate of pay in effect on the date of such payroll deduction by the number of
regularly scheduled hours actually worked by such employee (excluding
overtime) during such period. Such compensation rates shall be determined by
the Committee in a nondiscriminatory manner consistent with the provisions of
Section 423 of the Code and the regulations thereunder.
(c) Participant's Account; No Interest. All payroll deductions made for a
Participant shall be credited to his account under the Plan and shall be
withheld in whole percentages only. In no event shall interest accrue on any
payroll deductions made by a Participant.
(d) Changes in Payroll Deductions. A Participant may discontinue his
participation in the Plan as provided in Section 10 or Section 11, but no
other change may be made during a Purchase Period and, specifically, a
Participant may not otherwise increase or decrease the amount of his payroll
deductions for that Purchase Period.
(e) Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 6(b) herein, a Participant's payroll
deductions may be decreased to zero percent (0%) at any time during a Purchase
Period. Payroll deductions shall recommence at the rate provided in such
Participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the Participant pursuant to Section 10 or Section 11 herein.
(f) Participation During Leave of Absence. If a Participant goes on a leave
of absence, such Participant shall have the right to elect (i) to withdraw the
balance in his account pursuant to Section 10 or (ii) to discontinue
contributions to the Plan but remain a Participant in the Plan.
(g) Other Methods of Participation. The Committee may, in its discretion,
establish additional procedures whereby Eligible Employees may participate in
the Plan by means other than payroll deduction, including, but not limited to,
delivery of funds by Participants in a lump sum or automatic charges to
Participants' bank accounts. Such other methods of participation shall be
subject to such rules and conditions as the Committee may establish, subject
to the provisions of Section 423 of the Code and related regulations. The
Committee may at any time amend, suspend or terminate any participation
procedures established pursuant to this Section 7(g) without prior notice to
any Participant or Eligible Employee.
8. Grant of Options
(a) Number of Option Shares. On the Offer Date of each Purchase Period, a
Participant shall be granted an option to purchase on the Purchase Date of
such Purchase Period, at the applicable option price, such number of shares of
Common Stock as is determined by dividing the amount of the Participant's
payroll deductions accumulated on the Purchase Date and retained in the
Participant's account as of the Purchase Date by the applicable option price
(as determined in accordance with Section 8(b) herein); provided, however,
that no Participant may purchase, during a single Purchase Period, shares of
Common Stock with an aggregate Fair Market Value (based on the Option Price)
in excess of $12,500 or in excess of the limitations set forth in Section
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6(b) herein, and the number of shares subject to an option shall be adjusted
as necessary to conform to such limitations. Exercise of the option shall
occur as provided in Section 9 herein, unless the Participant has withdrawn
pursuant to Section 10 herein or terminated employment pursuant to Section 11
herein.
(b) Option Price. The option price per share of Common Stock purchased with
payroll deductions made during such a Purchase Period for a Participant shall
be the lesser of:
(i) 85% of the Fair Market Value per share of the Common Stock on the
Offer Date for the Purchase Period; or
(ii) 85% of the Fair Market Value per share of the Common Stock on the
Purchase Date for the Purchase Period.
9. Exercise of Options
(a) Automatic Exercise. Unless a Participant gives written notice of
withdrawal to the Corporation as provided in Section 10 or terminates
employment as provided in Section 11, his option for the purchase of Common
Stock shall be exercised automatically on the Purchase Date applicable to such
Purchase Period, and the maximum number of whole shares of Common Stock
subject to the option shall be purchased for the Participant at the applicable
option price with the accumulated payroll deductions in his account at that
time (subject to the limitations set forth in Section 6(b) and Section 8(a)
herein).
(b) Termination of Option. An option granted during any Purchase Period
shall expire at the end of the last day of the Purchase Period, except as
otherwise provided in Sections 10 and 11.
(c) Fractional Shares. Fractional shares will not be issued under the Plan.
Any excess payroll deductions in a Participant's account which are not
sufficient to purchase a whole share will be automatically reinvested in a
subsequent Purchase Period unless the Participant withdraws his payroll
deductions pursuant to Section 10 herein or terminates employment pursuant to
Section 11 herein.
(d) Delivery of Stock. The shares of Common Stock purchased by each
Participant shall be credited to such Participant's account maintained by the
Corporation, a stock brokerage or other financial services firm designated by
the Corporation (the "Designated Broker") or other designee of the Corporation
on, or as soon as practicable following the Purchase Date for a Purchase
Period. A Participant will be issued a certificate for his shares when his
participation in the Plan is terminated, the Plan is terminated, or upon
request. After the close of each Purchase Period, a report will be sent to
each Participant stating the entries made to such Participant's account, the
number of shares of Common Stock purchased and the applicable option price.
(e) Rights as a Shareholder. No Participant or other person shall have any
rights as a shareholder unless and until certificates for shares of Common
Stock have been issued to him or credited to his account.
10. Withdrawal
A Participant may withdraw all but not less than all payroll deductions and
shares credited to his account during a Purchase Period at any time prior to
the applicable Purchase Date by giving written notice to the Corporation in
form acceptable to the Corporation. In the event of such withdrawal, (i) all
of the Participant's payroll deductions credited to his account will be paid
to him promptly (without interest) after receipt of his notice of withdrawal,
(ii) certificates for shares held in the Participant's account shall be
distributed to him, (iii) such Participant's option for the Purchase Period
shall be automatically terminated, and (iv) no further payroll deductions will
be made during such Purchase Period. The Corporation may, at its option, treat
any attempt to borrow by an employee on the security of his accumulated
payroll deductions as an election to withdraw. A Participant's withdrawal from
any Purchase Period will not have any effect upon his eligibility to
participate in any succeeding Purchase Period or in any similar plan, which
may hereafter be adopted by the Corporation. Notwithstanding the foregoing,
however, if a Participant withdraws during a Purchase Period, payroll
deductions
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shall not resume at the beginning of a succeeding Purchase Period unless the
Participant delivers to the Corporation a new subscription agreement and
otherwise complies with the terms of the Plan.
11. Termination of Employment
Upon termination of a Participant's employment for any reason (including
death), or in the event that a Participant ceases to be an Eligible Employee,
he shall be deemed to have withdrawn from the Plan. In such event, all payroll
deductions credited to his account during the Purchase Period (without
interest) but not yet used to exercise an option and a certificate(s) for
shares if shares are held in Participant's account rather than distributed
shall be delivered to him, or, in the case of his death, to such person or
persons entitled to receive such benefits pursuant to Section 17 herein. Any
unexercised options granted to a Participant during such Purchase Period shall
be deemed to have expired on the date of the Participant's termination of
employment (unless terminated earlier pursuant to Sections 9(b) or 10 herein),
and no further payroll deductions will be made for the individual's account.
12. Transferability
No option (or right attendant to an option) granted pursuant to the Plan
shall be transferable (including by assignment, pledge or hypothecation),
except as provided by will or the applicable laws of intestate succession. No
option shall be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition of
an option, or levy of attachment or similar process upon the option not
specifically permitted herein, shall be null and void and without effect,
except that the Corporation may treat such act as an election to withdraw
funds during a Purchase Period in accordance with Section 10 hereof. During a
Participant's lifetime, his option(s) may be exercised only by him.
13. Dilution and Other Adjustments
(a) General. If there is any change in the outstanding shares of Common
Stock of the Corporation as a result of a merger, consolidation,
reorganization, stock dividend, stock split distributable in shares, reverse
stock split, or other change in the capital stock structure of the
Corporation, the number of shares of Common Stock reserved for issuance under
the Plan shall be correspondingly adjusted, and the Committee shall make such
adjustments to options (including but not limited to the option price and the
number of shares of Common Stock covered by each unexercised option), and to
any provisions of this Plan as the Committee deems equitable to prevent
dilution or enlargement of options or otherwise advisable to reflect such
change.
(b) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Corporation, or the merger of the
Corporation with or into another corporation, each outstanding option shall be
assumed or an equivalent option substituted (in either case under terms
substantially similar to the terms of the Plan) by the successor corporation
or a parent or subsidiary of the successor corporation. In the event that the
successor corporation fails to agree to assume or substitute the option, the
Purchase Period then in progress shall be shortened by setting a new Purchase
Date (the "New Purchase Date") and the Purchase Period then in progress shall
end on the New Purchase Date. The New Purchase Date shall be before the date
of the Corporation's proposed sale or merger. The Corporation shall notify
each Participant in writing, at least ten (10) business days prior to the New
Purchase Date, that the Purchase Date for the Participant's option has been
changed to the New Purchase Date and that the Participant's option shall be
exercised automatically on the New Purchase Date, unless prior to such date
the Participant has withdrawn from the Purchase Period as provided in Section
10 or terminated employment as provided in Section 11.
14. Shareholder Approval of Adoption of Plan
The Plan is subject to the approval of the Plan by the stockholders of the
Corporation within 12 months of the date of adoption of the Plan by the Board.
The Plan shall be null and void and of no effect if the foregoing condition is
not fulfilled.
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15. Limitations on Options
Notwithstanding any other provisions of the Plan:
(a) The Corporation intends that options granted and Common Stock issued
under the Plan shall be treated for all purposes as granted and issued
under an employee stock purchase plan within the meaning of Section 423 of
the Code and regulations issued thereunder. Any provisions required to be
included in the Plan under Section 423 and regulations issued thereunder
are hereby included as fully as though set forth in the Plan.
(b) All employees shall have the same rights and privileges under the
Plan, except that the amount of Common Stock which may be purchased by any
employee pursuant to payroll deductions under the Plan shall bear a uniform
relationship to the compensation of employees. All rules and determinations
of the Committee in the administration of the Plan shall be uniformly and
consistently applied to all persons in similar circumstances.
16. Amendment and Termination of the Plan
The Board may at any time and from time to time modify, amend, suspend or
terminate the Plan or any option granted hereunder, provided that (i)
shareholder approval shall be required of any amendment to the Plan to the
extent required under Section 423 of the Code or other applicable law, rule or
regulation; and (ii) no amendment to an option may materially and adversely
affect any option outstanding at the time of the amendment without the consent
of the holder thereof, except to the extent otherwise provided in the Plan.
Upon termination of the Plan, certificate(s) for the full number of whole
shares of Common Stock held for each Participant's benefit, the cash
equivalent of any fractional shares held for each Participant and the cash, if
any, credited to such Participant's account shall be distributed promptly to
such Participant.
17. Designation of Beneficiary
The Committee, in its sole discretion, may authorize Participants to
designate a person or persons as each such Participant's beneficiary, which
beneficiary shall be entitled to the rights of the Participant in the event of
the Participant's death to which the Participant would otherwise be entitled.
The Committee shall have sole discretion to approve the form or forms of such
beneficiary designations, to determine whether such beneficiary designations
will be accepted, and to interpret such beneficiary designations. If a
deceased Participant fails to designate a beneficiary, or if the designated
beneficiary does not survive the Participant, any rights that would have been
exercisable by the Participant and any benefits distributable to the
Participant shall be exercised by or distributed to the legal representative
of the estate of the Participant.
18. Other Restrictions on Options and Shares
The Corporation may impose such restrictions on any options and shares of
Common Stock acquired upon exercise of options as it may deem advisable,
including without limitation restrictions under the federal securities laws,
the requirements of any stock exchange or similar organization and any blue
sky or state securities laws applicable to such shares. Notwithstanding any
other Plan provision to the contrary, the Corporation shall not be obligated
to issue, deliver or transfer shares of Common Stock under the Plan or make
any other distribution of benefits under the Plan, or take any other action,
unless such delivery, distribution or action is in compliance with all
applicable laws, rules and regulations (including but not limited to the
requirements of the Securities Act of 1933, as amended). The Corporation may
cause a restrictive legend to be placed on any certificate issued pursuant to
an award hereunder in such form as may be prescribed from time to time by
applicable laws and regulations or as may be advised by legal counsel.
19. Unfunded Plan; Retirement Plan
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Corporation or any related corporation, including, without limitation, any
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specific funds, assets or other property which the Corporation or any related
corporation, in their discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual right to the
Common Stock or amounts, if any, payable under the Plan, unsecured by any
assets of the Corporation or any related corporation. Nothing contained in the
Plan shall constitute a guarantee that the assets of such corporations shall
be sufficient to pay any benefits to any person.
(b) In no event shall any amounts accrued, distributable or payable under
the Plan be treated as compensation for the purpose of determining the amount
of contributions or benefits to which any person shall be entitled under any
retirement plan sponsored by the Corporation or a related corporation that is
intended to be a qualified plan within the meaning of Section 401(a) of the
Code.
20. No Obligation To Exercise Options
The granting of an option shall impose no obligation upon a Participant to
exercise such option.
21. Use of Funds
The proceeds received by the Corporation from the sale of Common Stock
pursuant to options will be used for general corporate purposes, and the
Corporation shall not be obligated to segregate such payroll deductions.
22. Withholding Taxes
Upon the exercise of any option under the Plan, in whole or in part, or at
the time of disposition of some or all of the Common Stock acquired pursuant
to exercise of an option, a Participant must make adequate provision for the
federal, state or other tax withholding obligations, if any, which arise from
the exercise of the option or the disposition of the Common Stock. The
Corporation shall have the right to require the Participant to remit to the
Corporation, or to withhold from the Participant (or both) amounts sufficient
to satisfy all federal, state and local withholding tax requirements prior to
the delivery or transfer of any certificate or certificates for shares of
Common Stock.
23. No Right of Continued Employment
Nothing in the Plan or any option shall confer upon an employee the right
to continue in the employment of the Corporation or any Subsidiary or affect
any right, which the Corporation or any Subsidiary may have to terminate the
employment of such employee. Except as otherwise provided in the Plan, all
rights of a Participant with respect to options granted hereunder shall
terminate upon the termination of employment of the Participant.
24. Notices
Every direction, revocation or notice authorized or required by the Plan
shall be deemed delivered to the Corporation (i) on the date it is personally
delivered to the Corporation at its principal executive offices or (ii) three
business days after it is sent by registered or certified mail, postage
prepaid, addressed to the Secretary at such offices, and shall be deemed
delivered to an Eligible Employee (i) on the date it is personally delivered
to him or (ii) three business days after it is sent by registered or certified
mail, postage prepaid, addressed to him at the last address shown for him on
the records of the Corporation or of any Subsidiary.
25. Applicable Law
To the extent not inconsistent with Section 423 of the Code and regulations
thereunder, all questions pertaining to the validity, construction and
administration of the Plan and options granted hereunder shall be determined
in conformity with the laws of Delaware, without regard to the conflict of
laws provisions of any state.
C-9
<PAGE>
IN WITNESS WHEREOF, this Clarus Corporation Employee Stock Purchase Plan has
been executed on behalf of the Corporation effective as of the 13th day of
June, 2000.
Clarus Corporation
By: /s/ Stephen P. Jeffery
-------------------------------
Name:Stephen P. Jeffery
Title:Chairman, Chief Executive
Officer and President
Attest:
/s/ Mark D. Gagne
- -------------------------------
Mark D. Gagne, Secretary
[Corporate Seal]
C-10
<PAGE>
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Clarus Corporation
Annual Meeting of Shareholders
To be held on June 13, 2000
Proxy
This proxy is solicited on behalf of our Board of Directors. The
undersigned hereby constitutes and appoints Stephen P. Jeffery and Mark
D. Gagne, and each of them, the true and lawful attorneys and proxies
for the undersigned, to act and vote all of the undersigned's capital
stock of Clarus Corporation, a Delaware corporation, at the Annual
Meeting of Stockholders to be held at Atlanta Marriot Alpharetta, 5750
Windward Parkway, Alpharetta, Georgia 30005, at 9:00 a.m. on June 13,
2000, and at any and all adjournments thereof, for the purposes of
considering and acting upon the matters proposed by Clarus Corporation
that are identified below. 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 II Directors
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name below)
[_FOR]all nominees listed to the right (except as marked to the contrary)
Tench Coxe Donald L. House
[_WITHHOLD]authority to vote for all nominees
2.Amendment to our Certificate of Incorporation to increase the shares of
Common Stock we are authorized to issue
[_] FOR [_] AGAINST [_] ABSTAIN
3.Amendment to and restatement of our Stock Incentive Plan
[_] FOR [_] AGAINST [_] ABSTAIN
4. Adoption of an Employee Stock Purchase Plan
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
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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 Annual 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 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: ________________, 2000
_____________________________
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.
