Exhibit (a)(1)
OFFER TO EXCHANGE OUTSTANDING OPTIONS
TO PURCHASE SHARES OF COMMON STOCK OF CLARUS CORPORATION
GRANTED ON OR AFTER NOVEMBER 1, 1999
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, PACIFIC TIME ON MAY 7, 2001,
UNLESS THE OFFER IS EXTENDED BY CLARUS
Clarus Corporation, which we refer to as "we," "the company" or "Clarus,"
is offering employees the opportunity to exchange certain outstanding stock
options to purchase shares of our common stock granted under the Amended and
Restated Stock Incentive Plan of Clarus Corporation (the "Incentive Plan"), the
Stock Incentive Plan of Software Architects International, Limited (the "SAI
Plan") and the SQL 1992 Stock Option Plan (the "SQL Plan" and with the Incentive
Plan and the SAI Plan, the "stock incentive plans") that were granted on or
after November 1, 1999 for new options we will grant under the stock incentive
plans. We are making this offer upon the terms and subject to the conditions set
forth in this offer to exchange and in the letter of transmittal (which
together, as they may be amended from time to time, constitute the "offer"). The
number of shares of common stock subject to new options to be granted to each
option holder will be equal to the number of shares subject to the options
tendered by such option holder and accepted for exchange by us. We will grant
the new options on or about the first business day which is at least six months
and one day following the date we cancel the options accepted by us for
exchange. You may tender options for all or part of the shares of common stock
subject to your options as long as you tender options, and a partial tender must
include at least 200 shares of common stock and may be made only in increments
of 100 shares of common stock. In addition, if you tender any of your options
for exchange, you will be required to also tender all options granted to you
during the six months immediately prior to the date we accept the tendered
options for exchange which have an exercise price lower than the exercise price
of any other options being tendered.
We intend to offer employees another opportunity to exchange outstanding
options granted under the stock incentive plans that were granted on or after
November 1, 1999 (the "second offer"). The period of the second offer will begin
on or around July 9, 2001 and end on or around August 6, 2001. The terms of the
second offer will generally be the same as the terms of the offer as described
in this offer to exchange, and we will grant new options on the first business
day which is at least six months and one day following the date we cancel the
options accepted by us for exchange in the second offer. OPTION HOLDERS WHO
ELECT TO EXCHANGE OPTIONS PURSUANT TO THIS OFFER WILL NOT BE ELIGIBLE TO
EXCHANGE OPTIONS PURSUANT TO THE SECOND OFFER.
This offer is not conditioned upon a minimum number of options being
tendered. This offer is subject to conditions which we describe in Section 6 of
this offer to exchange.
If you tender options for exchange as described in the offer, we will grant
you new options under the Incentive Plan or the SAI Plan and a new option
agreement between us and you. The exercise price of the new options will be
equal to the fair market value on the date of grant, as determined by the last
reported sale price during regular trading hours of our common stock on the
Nasdaq National Market on the grant date. The new options, unlike the options
you tender for exchange (which generally vest 25% on the first anniversary of
the date of grant and monthly thereafter over the next three years until fully
vested), will vest in thirty-six equal monthly installments over the next three
years until fully vested.
ALTHOUGH OUR BOARD OF DIRECTORS HAS APPROVED THIS OFFER, NEITHER WE NOR OUR
BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER OR
REFRAIN FROM TENDERING YOUR OPTIONS FOR EXCHANGE. YOU MUST MAKE YOUR OWN
DECISION WHETHER TO TENDER YOUR OPTIONS. CLARUS IS NOT MAKING THIS OFFER TO ANY
OF ITS DIRECTORS OR EMPLOYEES DEFINED AS OFFICERS FOR PURPOSES OF SECTION 16(B)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND, THEREFORE, THEY WILL NOT
TENDER THEIR OPTIONS PURSUANT TO THIS OFFER TO EXCHANGE.
Shares of our common stock are quoted on the Nasdaq National Market under
the symbol "CLRS." On April 6, 2001, the last reported sale price of the common
stock on the Nasdaq National Market was $5.5625 per share. WE RECOMMEND THAT YOU
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OBTAIN CURRENT MARKET QUOTATIONS FOR OUR COMMON STOCK BEFORE DECIDING WHETHER TO
TENDER YOUR OPTIONS.
You should direct questions about this offer or requests for assistance or
for additional copies of the offer to exchange or the letter of transmittal to
Clarus Corporation, Attention: Pam Ellis, 3970 Johns Creek Court, Suite 100,
Suwanee, Georgia 30024 (telephone: (770) 291-5394, facsimile: (770) 291-4775 and
e-mail: ellisp@claruscorp.com).
IMPORTANT
If you wish to tender your options for exchange, you must complete and sign
the attached letter of transmittal in accordance with its instructions, and mail
or otherwise deliver it and any other required documents to us at Clarus
Corporation, Attention: Pam Ellis, 3970 Johns Creek Court, Suite 100, Suwanee,
Georgia 30024 or fax it and any required documents to us at (770) 291-4775.
Delivery by e-mail will not be accepted. Due to restrictions under the
securities laws of Ireland, Irish employees should obtain the letter of
transmittal on our intranet.
We are not making this offer to, nor will we accept any tender of options
from or on behalf of, option holders in any jurisdiction in which the offer or
the acceptance of any tender of options would not be in compliance with the laws
of such jurisdiction. However, we may, at our discretion, take any actions
necessary for us to make this offer to option holders in any such jurisdiction.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR OPTIONS PURSUANT
TO THE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT
OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER OTHER
THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT OR IN THE
RELATED LETTER OF TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR
REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT
RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.
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TABLE OF CONTENTS
SUMMARY TERM SHEET....................................................... 4
CERTAIN RISKS OF PARTICIPATING IN THE OFFER.............................. 9
ECONOMIC RISKS........................................................... 9
TAX-RELATED RISKS FOR U.S. RESIDENTS .................................... 9
BUSINESS-RELATED RISKS................................................... 10
INTRODUCTION............................................................. 10
THE OFFER................................................................ 11
1.Number of Options; Expiration Date.................................... 11
2.Purpose of the Offer.................................................. 12
3.Procedures for Tendering Options...................................... 13
4.Withdrawal Rights..................................................... 14
5.Acceptance of Options for Exchange and Issuance of New Options........ 15
6.Conditions of the Offer............................................... 15
7.Price Range of Common Stock Underlying the Options.................... 16
8.Source and Amount of Consideration; Terms of New Options.............. 17
9.Information Concerning Clarus Corporation............................. 20
10Interests of Directors and Officers; Transactions and Arrangements
Concerning the Options................................................. 21
11.Status of Options Acquired by Us in the Offer; Accounting
Consequences of the Offer.............................................. 21
12.Legal Matters; Regulatory Approvals.................................. 22
13.Material U.S. Federal Income Tax Consequences........................ 22
14.Certain Tax Consequences for Non-U.S. Based Employees................ 24
15.Extension of Offer; Termination; Amendment........................... 26
16.Fees and Expenses.................................................... 27
17.Additional Information............................................... 27
18.Forward looking statements; Miscellaneous............................ 28
SCHEDULE A--Information Concerning the Directors and Executive Officers of
Clarus Corporation......................................................... A-1
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SUMMARY TERM SHEET
The following are answers to some of the questions that you may have about
this offer. We urge you to read carefully the remainder of this offer to
exchange and the accompanying letter of transmittal because the information in
this summary is not complete, and additional important information is contained
in the remainder of this offer to exchange and the letter of transmittal. We
have included references to the relevant sections in this offer to exchange
where you can find a more complete description of the topics in this summary.
WHAT SECURITIES ARE WE OFFERING TO EXCHANGE?
We are offering to exchange all stock options held by eligible employees
that were granted on or after November 1, 1999 which are outstanding under our
Incentive Plan, SAI Plan and SQL Plan or any lesser number of options that
option holders properly tender in the offer, for new options under the stock
incentive plans. (Section 1).
WHY ARE WE MAKING THE OFFER?
Retention of our employees is one of the keys to our continued growth and
success. The offer provides an opportunity for us to offer these employees a
valuable incentive to stay with our company. Many of our outstanding options,
whether or not they are currently exercisable, have exercise prices that are
significantly higher than the current market price of our common stock. We
believe these options are unlikely to be exercised in the foreseeable future. By
making this offer to exchange outstanding options for new options that will (1)
have an exercise price equal to the fair market value of our common stock on the
grant date, and (2) vest in thirty-six equal monthly installments over the
following three years, we intend to provide our employees with the benefit of
owning options that over time may have a greater potential to increase in value,
create better performance incentives for employees and thereby maximize
stockholder value. (Section 2).
WHY DON'T WE SIMPLY REPRICE THE CURRENT OPTIONS?
"Repricing" existing options would result in variable accounting for such
options, which may require us for financial reporting purposes to record
additional compensation expense each quarter until such repriced options are
exercised, cancelled or expired.
WHAT ARE THE CONDITIONS TO THE OFFER?
The offer is not conditioned upon a minimum number of options being
tendered. However, the offer is subject to a number of other conditions with
regard to events that could occur prior to the expiration of the offer. These
events include, among other things, a change in accounting principles, a lawsuit
challenging the tender offer, a third-party tender offer for our common stock or
other acquisition proposal or a change in your employment status with us. These
and various other conditions are more fully described in Section 6.
WHO IS ELIGIBLE TO PARTICIPATE IN THE OFFER?
The offer is available to employees who had options that were granted on or
after November 1, 1999. Members of the board of directors and all employees who
are defined as officers for purposes of Section 16(b) of the Securities Exchange
Act of 1934, as amended (those officers listed in Schedule A to this Offer to
Exchange) are not eligible to participate. As of April 4, 2001, outstanding
options to purchase 2,180,797 shares of our common stock granted on or after
November 1, 1999 were held by non-Section 16(b) officer employees.
ARE THERE ANY ELIGIBILITY REQUIREMENTS I MUST SATISFY AFTER THE EXPIRATION DATE
OF THE OFFER TO RECEIVE THE NEW OPTIONS?
To receive a grant of new options pursuant to the offer and under the terms
of the stock incentive plans, you must be an employee of Clarus or one of its
subsidiaries from the date you tender options through the date we grant the new
options. As discussed below, we will not grant the new options until the first
business day which is at least six months and one day following the date we
cancel the options accepted for exchange. IF, FOR ANY REASON, YOU ARE NOT AN
EMPLOYEE OF
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CLARUS CORPORATION OR ONE OF OUR SUBSIDIARIES FROM THE DATE YOU TENDER OPTIONS
THROUGH THE DATE WE GRANT THE NEW OPTIONS, YOU WILL NOT RECEIVE ANY NEW OPTIONS
OR ANY OTHER CONSIDERATION IN EXCHANGE FOR YOUR TENDERED OPTIONS THAT HAVE BEEN
ACCEPTED FOR EXCHANGE. (Section 5).
HOW MANY NEW OPTIONS WILL I RECEIVE IN EXCHANGE FOR MY TENDERED OPTIONS?
Subject to the terms of this offer, we will grant you new options to
purchase the number of shares of our common stock which is equal to the number
of shares of common stock subject to the options you tender that we accept for
exchange. Options granted under our Incentive Plan and exchanged for new options
will be replaced with options granted under our Incentive Plan, unless prevented
by law or applicable regulations. Options granted under our SAI Plan and
exchanged for new options will be replaced with options granted under our SAI
Plan, unless prevented by law or generally applicable regulations and except
that some options may be replaced with incentive stock options granted under the
Incentive Plan to the extent permitted by applicable law and regulations.
Options granted under the SQL Plan and exchanged for new options will be
replaced with options granted under our Incentive Plan, unless prevented by law
or applicable regulations. All new options will be subject to a new option
agreement which will be in substantially the same form as the option agreement
or agreements attached as Exhibits (d)(2) and (d)(4) to the Tender Offer
Statement on Schedule TO to be filed by us with the Securities and Exchange
Commission on April 9, 2001. You must execute the new option agreement prior to
receiving new options.
IF I CHOOSE TO TENDER OPTIONS FOR EXCHANGE, DO I HAVE TO TENDER ALL MY OPTIONS?
You may tender options for all or part of the shares of common stock
subject to your options as long as any partial tender includes options for at
least 200 shares of common stock subject to your options and is made in
increments of 100 shares of common stock. In addition, you will be required to
tender all option grants that you received during the six months immediately
prior to the date we accept options for exchange that have an exercise price
lower than the exercise price of any other options to be tendered. For example,
if you received an option grant in July 2000 with an exercise price of $20.00
per share and a grant in December 2000 at an exercise price of $10.00 per share
and you want to tender your July 2000 option grant, you will also be required to
tender your December 2000 grant for exchange. (Section 1).
We intend to offer employees another opportunity to exchange outstanding
stock options granted under the stock incentive plans that were granted on or
after November 1, 1999 (the "second offer"). The second offer will begin on or
about July 9, 2001 and end on or about August 6, 2001. The terms of the second
offer will generally be the same as the terms of the offer as described in this
offer to exchange, and we will grant new options on the first business day which
is at least six months and one day following the date we cancel the options
accepted by us for exchange in the second offer. OPTION HOLDERS WHO ELECT TO
EXCHANGE OPTIONS PURSUANT TO THIS OFFER WILL NOT BE ELIGIBLE TO EXCHANGE OPTIONS
PURSUANT TO THE SECOND OFFER.
WHEN WILL I RECEIVE MY NEW OPTIONS?
We will grant the new options on the first business day that is at least
six months and one day after the date that we cancel the options accepted for
exchange. For example, if we cancel the tendered options accepted for exchange
on May 8, 2001, the business day following the scheduled expiration date, the
grant date of the new options will be on or about November 9, 2001. HOWEVER, IF
YOU ARE NOT AN EMPLOYEE OF CLARUS CORPORATION OR ONE OF OUR SUBSIDIARIES FROM
THE DATE YOU TENDER OPTIONS THROUGH THE DATE WE GRANT THE NEW OPTIONS, YOU WILL
NOT RECEIVE ANY NEW OPTIONS OR ANY OTHER CONSIDERATION IN EXCHANGE FOR YOUR
TENDERED OPTIONS THAT HAVE BEEN ACCEPTED FOR EXCHANGE. (Section 5).
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WHY WON'T I RECEIVE MY NEW OPTIONS IMMEDIATELY AFTER THE EXPIRATION DATE OF THE
OFFER?
If we were to grant the new options on any date which is earlier than six
months and one day after the date we cancel the options tendered for exchange,
we would be required for financial reporting purposes to record compensation
expense against our earnings. (Section 5). By deferring the grant of the new
options for at least six months and a day, we believe we will not have to record
such a compensation expense.
IF I TENDER OPTIONS IN THE OFFER, WILL I BE ELIGIBLE TO RECEIVE OTHER OPTION
GRANTS BEFORE I RECEIVE MY NEW OPTIONS?
No. If we accept eligible options you tender in the offer, you will not
receive any new options, such as annual, bonus or promotional options, for which
you may otherwise be eligible, until the date we grant the replacement options
for those tendered in the offer. We will defer the grant to you of these other
options because we have determined that doing so is necessary to avoid incurring
compensation expense against our earnings because of accounting rules that could
apply to any interim option grants as a result of the offer. (Section 5)
WILL I BE REQUIRED TO GIVE UP ALL MY RIGHTS TO THE CANCELLED OPTIONS?
Yes. Once we have accepted options tendered by you, your options will be
cancelled and you will no longer have any rights under those options. (Section
5)
WHAT WILL THE EXERCISE PRICE OF THE NEW OPTIONS BE?
The exercise price of the new options will equal the fair market value of
our common stock on the date we grant the new options, as determined based upon
the last reported sale price of our common stock on the Nasdaq National Market
on the date we grant the new options. Accordingly, we cannot predict the
exercise price of the new options. HOWEVER, BECAUSE WE WILL NOT GRANT NEW
OPTIONS UNTIL AT LEAST SIX MONTHS AND ONE DAY AFTER THE DATE WE CANCEL TENDERED
OPTIONS ACCEPTED FOR EXCHANGE, THE NEW OPTIONS MAY HAVE A HIGHER EXERCISE PRICE
THAN SOME OR ALL OF YOUR CURRENT OPTIONS. WE RECOMMEND THAT YOU OBTAIN CURRENT
MARKET QUOTATIONS FOR OUR COMMON STOCK BEFORE DECIDING WHETHER TO TENDER YOUR
OPTIONS. (Section 8).
WHEN WILL THE NEW OPTIONS VEST?
The new options, unlike the outstanding options (which generally vest 25%
on the first anniversary of the date of grant and monthly thereafter over the
next three years until fully vested), will vest in thirty-six equal monthly
installments over the next three years under the terms of the stock incentive
plans and a new option agreement. The vesting schedule of the new options will
not begin until the grant date of those options. Therefore, even if the options
you tender are fully or partially vested, the new options you receive will be
subject to the new thirty-six month vesting period described above.
DOES THE COMMENCEMENT OF A NEW VESTING PERIOD UNDER THE NEW OPTIONS MEAN THAT I
WOULD HAVE TO WAIT A LONGER PERIOD BEFORE I CAN PURCHASE COMMON STOCK UNDER MY
OPTIONS?
Yes. Because any new options you receive will not be vested, you will lose
the benefits of any vesting under eligible options you tender in the offer. As
described above, no portion of the new options we grant will be immediately
vested, even if the eligible options you tender for exchange are fully or
partially vested. The three-year vesting schedule of the new options will not
begin until the grant date of those options. Because the new options will not
begin vesting until the grant date, which is at least six months and a day after
the date we cancel tendered options, you will not be able to purchase our common
stock upon exercise of any of the new options until at least seven months and a
day after the cancellation date.
WHAT IF WE ENTER INTO A CHANGE OF CONTROL OR SIMILAR TRANSACTION?
We are reserving the right to take any actions we deem necessary or
appropriate to complete a change of control transaction that our board of
directors believes is in the best interest of our company and our shareholders.
This could include terminating your right to receive new options under this
offer to exchange. If we were to terminate your right to receive new options
under this offer in
Page 6
connection with such a transaction, employees who have tendered options for
cancellation pursuant to this offer would not receive options to purchase
securities of the acquiror or any other consideration for their tendered
options. (Section 2)
WILL I HAVE TO PAY TAXES IF I EXCHANGE MY OPTIONS IN THE OFFER?
If you exchange your current options for new options, we believe that you
will not be required under current law to recognize income for U.S., U.K. or
Irish income tax purposes as a result of the exchange. If you are a Canadian
resident employee of Clarus or one of our subsidiaries and you exchange your
options pursuant to the offer, we believe that you may be required under current
Canadian law to recognize income for Canadian federal income tax purposes in an
amount equal to the value of the consideration you receive for tendering your
options. Neither the tender of your options nor the grant of new options should,
under current law, result in income for U.S. income tax purposes. However, we
recommend that you consult with your own tax adviser to determine the tax
consequences of tendering options pursuant to the offer. (Sections 13 and 14).
If your current options are incentive stock options, your new options will
be granted as incentive stock options to the maximum extent they qualify as
incentive stock options under the tax laws on the date of the grant. For options
to qualify as incentive stock options under the current U.S. tax laws, the value
of shares subject to options that first become exercisable by the option holder
in any calendar year cannot exceed $100,000, as determined using the option
exercise price. The excess value is deemed to be a non-qualified stock option,
which is an option that is not qualified to be an incentive stock option under
the current tax laws. If the exercise price of your new options is equal to or
less than the exercise price of the eligible options you tender, the new options
may qualify as incentive stock options to the extent that the options tendered
qualified as incentive stock options before being tendered. If the new options
have a higher exercise price than some or all of your current eligible options,
or if the vesting of the new options overlaps with other grants of incentive
stock options, a portion of the new options may exceed the limits for incentive
stock options and will have to be treated as nonqualified stock options.
(Section 13)
WHAT HAPPENS TO OPTIONS THAT I CHOOSE NOT TO TENDER OR THAT ARE NOT ACCEPTED
FOR EXCHANGE?
Options that you choose not to tender for exchange or that we do not accept
for exchange remain outstanding and retain their current exercise price and
current vesting schedule. However, if you tender any options for exchange, you
will be required to also tender all option grants that you received during the
six months immediately prior to the date we cancel options accepted for exchange
which have an exercise price lower than the exercise price of any other options
being tendered.
We intend to offer employees another opportunity to exchange outstanding
stock options granted under the stock incentive plans that were granted on or
after November 1, 1999 beginning on July 9, 2001. The terms of the second offer
will be generally the same as the terms of the offer, and we will grant new
options on the first business day which is at least six months and one day
following the date we cancel the options accepted by us for exchange in the
second offer. OPTION HOLDERS WHO ELECT TO EXCHANGE OPTIONS PURSUANT TO THIS
OFFER WILL NOT BE ELIGIBLE TO EXCHANGE OPTIONS PURSUANT TO THE SECOND OFFER.
WHEN DOES THE OFFER EXPIRE? CAN THE OFFER BE EXTENDED, AND IF SO, HOW WILL I BE
NOTIFIED IF IT IS EXTENDED?
The offer expires on May 7, 2001, at 12:00 midnight, Eastern time, unless
we extend it.
Although we do not currently intend to do so, we may, in our discretion,
extend the offer at any time. If the offer is extended, we will make a public
announcement of the extension no later than 9:00 a.m. on the next business day
following the previously scheduled expiration of the offer period. If the offer
is extended, then the grant date of the new options will also be extended.
(Section 15).
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HOW DO I TENDER MY OPTIONS?
If you decide to tender your options, you must deliver, before 12:00
midnight, Eastern time, on May 7, 2001, a properly completed and duly executed
letter of transmittal and any other documents required by the letter of
transmittal to Clarus Corporation, Attention: Pam Ellis, 3970 Johns Creek Court,
Suite 100, Suwanee, Georgia 30024 (facsimile: (770) 291-4775). We will only
accept a paper copy or a facsimile copy of your executed letter of transmittal.
Delivery by e-mail will not be accepted. Irish employees should obtain a form of
the letter of transmittal from our intranet.
If the offer is extended by us beyond May 7, 2001, you must deliver these
documents before the extended expiration of the offer.
We reserve the right to reject any or all tenders of options that we
determine are not in appropriate form or that we determine are unlawful to
accept. Otherwise, we expect to accept all properly and timely tendered options
which are not validly withdrawn. Subject to our rights to extend, terminate and
amend the offer, we currently expect that we will accept all such properly
tendered options promptly after the expiration of the offer. (Section 5).
DURING WHAT PERIOD OF TIME MAY I WITHDRAW PREVIOUSLY TENDERED OPTIONS?
You may withdraw your tendered options at any time before 12:00 midnight,
Eastern time, on May 7, 2001. If we extend the offer beyond that time, you may
withdraw your tendered options at any time until the extended expiration of the
offer. To withdraw tendered options, you must deliver to us a written notice of
withdrawal, or a facsimile thereof, with the required information while you
still have the right to withdraw the tendered options.
Once you have withdrawn options, you may re-tender options only by again
following the delivery procedures described above. (Section 4).
WHAT DO WE AND OUR BOARD OF DIRECTORS THINK OF THE OFFER?
Although our board of directors has approved this offer, neither we nor our
board of directors makes any recommendation as to whether you should tender or
refrain from tendering your options. You must make your own decision whether to
tender options. Our directors and employees who are defined as officers for
purposes of Section 16(b) of the Securities Exchange Act of 1934, as amended are
not eligible to participate in the offer. (Section 10).
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
For additional information or assistance, you should contact:
Clarus Corporation
Attention: Pam Ellis
3970 Johns Creek Court, Suite 100
Suwanee, Georgia 30024
telephone: (770) 291-5394
facsimile: (770) 291-4775
e-mail: ellisp@claruscorp.com
Page 8
CERTAIN RISKS OF PARTICIPATING IN THE OFFER
Participation in the offer involves a number of potential risks, including
those described below. This list briefly highlights some of the risks and is
necessarily incomplete. Eligible participants should carefully consider these
and other risks and are encouraged to speak with an investment and tax adviser
as necessary before deciding to participate in the offer. In addition, we
strongly urge you to read the rest of this offer to exchange, along with the
related documents before deciding to participate in the exchange offer. The list
of risks does not include certain risks that may apply to employees who live and
work outside of the United States; again, we urge you to read Section 14 of this
offer to exchange discussing tax consequences in the United Kingdom, Ireland and
Canada, as well as the rest of the offer to exchange and related documents for a
fuller discussion of the risks which may apply to you, and to consult with an
investment and tax adviser as necessary before deciding to participate in this
exchange offer.
ECONOMIC RISKS
PARTICIPATION IN THE OFFER WILL MAKE YOU INELIGIBLE TO RECEIVE ANY OPTION GRANTS
UNTIL NOVEMBER 9, 2001 AT THE EARLIEST.
Employees are generally eligible to receive option grants at any time that
the board of directors or compensation committee chooses to make them. However,
if you participate in the offer, you will not be eligible to receive any option
grants until November 9, 2001 at the earliest.
IF THE STOCK PRICE INCREASES AFTER THE DATE YOUR TENDERED OPTIONS ARE CANCELLED,
YOUR CANCELLED OPTIONS MIGHT HAVE BEEN WORTH MORE THAN THE NEW OPTIONS THAT YOU
HAVE RECEIVED IN EXCHANGE FOR THEM.
For example, if you cancel options with an exercise price of $35.00, and
Clarus' stock appreciates to $60 when the new option grants are made, your
option will have a higher exercise price than the cancelled option.
IF YOUR EMPLOYMENT TERMINATES PRIOR TO THE GRANT OF THE NEW OPTION, YOU WILL
RECEIVE NEITHER A NEW OPTION NOR THE RETURN OF YOUR CANCELLED OPTION.
Once your option is cancelled, it is gone for good. Accordingly, if your
employment terminates for any reason prior to the grant of the new option, you
will have the benefit of neither the cancelled option nor the new option.
IF WE ENTER INTO A CHANGE OF CONTROL TRANSACTION, YOU MAY NOT RECEIVE NEW OPTION
GRANTS.
We reserve the right to take any actions we deem necessary or appropriate
to complete a change of control transaction that our board of directors believes
is in the best interest of our company and our shareholders. This could include
terminating your right to receive new options under this Offer to Exchange.
TAX-RELATED RISKS FOR U.S. RESIDENTS
YOUR NEW OPTION MAY BE A NONSTATUTORY STOCK OPTION, WHEREAS YOUR CANCELLED
OPTION MAY HAVE BEEN AN INCENTIVE STOCK OPTION.
If your cancelled options were incentive stock options, your new options
will be incentive stock options, but only to the extent they qualify under the
Internal Revenue Code of 1986, as amended. For options to qualify as incentive
stock options, the value of shares subject to options that first become
exercisable by the option holder in any calendar year cannot exceed $100,000, as
determined using the option exercise price. It is possible that by participating
in this exchange, your options will exceed this limit and will be treated as
nonstatutory stock options. In general, nonstatutory stock options are less
favorable to you from a tax perspective. For more detailed information, please
read the rest of the offer to exchange, and see Section 13 of this offer to
exchange.
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BUSINESS RELATED RISKS
For a description of risks related to Clarus' business, please see Section
18 of this offer to exchange.
INTRODUCTION
Clarus Corporation is offering to exchange outstanding options to purchase
shares of our common stock granted under the Amended and Restated Stock
Incentive Plan of Clarus Corporation (the "Incentive Plan"), the Stock Incentive
Plan of Software Architects International, Limited (the "SAI Plan") and the SQL
1992 Stock Option Plan (the "SQL Plan" and, collectively, with the Incentive
Plan and the SAI Plan, the "stock incentive plans") that were granted on or
after November 1, 1999 for new options that we will grant under the stock
incentive plans. Members of our board of directors and all employees who are
defined as officers for purposes of Section 16(b) of the Securities Exchange Act
of 1934, as amended ("Section 16(b) officers") are not eligible to participate
in this exchange offer. We are making this offer upon the terms and subject to
the conditions set forth in this offer to exchange and letter of transmittal
(which together, as they may be amended from time to time, constitute the
"offer"). The number of shares of common stock subject to new options to be
granted to each option holder will be equal to the number of shares subject to
the options tendered by such option holder and accepted for exchange by us. We
will grant the new options on or about the first business day which is at least
six months and one day following the date we cancel the options accepted for
exchange by us. If you tender options for exchange, we will grant you new
options under the stock incentive plans and a new option agreement between us
and you. This offer is not conditioned upon a minimum number of options being
tendered. You may tender options for all or part of the shares of common stock
subject to your options as long as you tender options to purchase at least 200
shares of common stock and in increments of 100 shares of common stock. In
addition, if you tender an option grant for exchange, you will be required to
also tender for exchange all option grants that you received during the six
months immediately prior to the date we accept tendered options for exchange
with an exercise price lower than the exercise price of any other options being
tendered. If you attempt to tender some of your options but do not include all
of the options granted to you during the six months immediately prior to the
date we accept tendered options for exchange with an exercise price lower than
that exercise price of any other options being tendered, your entire tender will
be rejected. In addition, this offer is subject to conditions which we describe
in Section 6 of this offer to exchange.
We intend to offer employees another opportunity to exchange outstanding
stock options granted under the stock incentive plans that were granted on or
after November 1, 1999 (the "second offer"). The period of the second offer will
begin on or about July 9, 2001 and end on August 6, 2001. The terms of the
second offer will generally be the same as the terms of the offer, as described
in this offer to exchange, and we will grant new options on the first business
day which is at least six months and one day following the date we cancel the
options accepted by us for exchange in the second offer. OPTION HOLDERS WHO
ELECT TO EXCHANGE OPTIONS PURSUANT TO THIS OFFER WILL NOT BE ELIGIBLE TO
EXCHANGE OPTIONS PURSUANT TO THE SECOND OFFER.
If you tender options granted under the Incentive Plan for exchange,
subject to the terms of this offer, you will be granted new options under our
Incentive Plan, unless prevented by law or applicable regulations. If you tender
options granted under the SAI Plan for exchange, subject to the terms of this
offer, you will be granted new options under our SAI Plan, unless prevented by
law or applicable regulations and except that some options may be replaced with
incentive stock options granted under the Incentive Plan to the extent permitted
by applicable law and regulations. If you tender options granted under the SQL
Plan for exchange, subject to the terms of this offer, you will be granted new
options under the Incentive Plan, unless prevented by law or applicable
regulations. A new option agreement will be entered into between us and you. The
exercise price of the new options will be the fair market value of our common
stock on the grant date, which will be determined by the last sale price during
regular trading hours of our common stock on the Nasdaq National Market the day
of the grant of the new options. The new options will vest in thirty-six equal
monthly installments over a three year period.
Page 10
As of April 4, 2001 options to purchase 3,267,122 shares of our common
stock were issued and outstanding under the stock incentive plans. Of these
options, options to purchase 2,180,797 shares of our common stock were granted
on or after November 1, 1999 and were held by eligible employees. The shares of
common stock issuable upon exercise of options we are offering to exchange
represent approximately 67% of the total shares of common stock issuable upon
exercise of all options outstanding under the stock incentive plans as of April
4, 2001.
All options accepted by us pursuant to this offer will be cancelled.
THE OFFER
1. NUMBER OF OPTIONS; EXPIRATION DATE.
Upon the terms and subject to the conditions of the offer, we are offering
to exchange for new options to purchase common stock under the stock incentive
plans in return for all eligible outstanding options under the stock incentive
plans that are properly tendered and not validly withdrawn in accordance with
Section 4 before the "expiration date," as defined below. Eligible outstanding
options are all options that were granted on or after November 1, 1999. Members
of our board of directors and all employees who are defined as officers for
purposes of Section 16(b) of the Securities Exchange Act of 1934, as amended
("Section 16(b) officers") are not eligible to participate in this exchange
offer. You may tender options for all or part of the shares of common stock
subject to your options as long as you tender options to purchase at least 200
shares of common stock and in increments of 100 shares of common stock. In
addition, if you tender an option grant for exchange, you will be required to
also tender all option grants that you received during the six months
immediately prior to the date we cancel tendered options accepted for exchange
with an exercise price lower than the exercise price of any other options being
tendered.
In the second offer, we intend to give employees an additional opportunity
to exchange outstanding stock options granted under the stock incentive plans
that were granted on or after November 1, 1999. This second offer will begin on
or about July 9, 2001 and expire on August 6, 2001. The terms of the second
offer will be generally the same as the terms of the offer, and we will grant
new options on the first business day which is at least six months and one day
following the date we cancel the options accepted by us for exchange in the
second offer. OPTION HOLDERS WHO ELECT TO EXCHANGE OPTIONS PURSUANT TO THIS
OFFER WILL NOT BE ELIGIBLE TO EXCHANGE OPTIONS PURSUANT TO THE SECOND OFFER.
If your options are properly tendered and accepted for exchange, you will
be entitled to receive new options to purchase the number of shares of our
common stock which is equal to the number of shares subject to the options or
portion thereof that you tendered, subject to adjustments for any stock splits,
stock dividends and similar events. All new options granted in exchange for
options granted under the Incentive Plan will be subject to the terms of the
Incentive Plan and to a new option agreement between us and you except that some
new options granted in exchange for options granted under the SAI Plan may be
replaced with incentive stock options granted under the Incentive Plan. All new
options granted in exchange for options granted under the SAI Plan will be
subject to the terms of the SAI Plan and to a new option agreement between us
and you. All new options granted in exchange for options granted under the SQL
Plan will be subject to the terms of the Incentive Plan and to a new option
agreement. IF YOU ARE NOT AN EMPLOYEE OF CLARUS CORPORATION OR ONE OF OUR
SUBSIDIARIES FROM THE DATE YOU TENDER OPTIONS THROUGH THE DATE WE GRANT THE NEW
OPTIONS, YOU WILL NOT RECEIVE ANY NEW OPTIONS OR ANY OTHER CONSIDERATION IN
EXCHANGE FOR YOUR TENDERED OPTIONS THAT HAVE BEEN ACCEPTED FOR EXCHANGE. This
means that if you die or quit or we terminate your employment, with or without
cause, prior to the date we grant the new options for any reason, you will not
receive anything for the options that you tendered and we cancelled.
The term "expiration date" means 12:00 midnight, Eastern time, on May 7,
2001, unless and until we, in our discretion, have extended the period of time
during which the offer will remain open, in which event the term "expiration
date" refers to the latest time and date at which the offer, as so extended,
expires. See Section 14 for a description of our rights to extend, delay,
terminate and amend the offer.
Page 11
If we decide to take any of the following actions, we will publish notice
or otherwise inform you in writing of such action:
(a) we increase or decrease the amount of consideration offered for the
eligible options;
(b) we decrease the number of options eligible to be tendered in the
offer; or
(c) we increase the number of options eligible to be tendered in the
offer by an amount that exceeds 2% of the shares of common stock
issuable upon exercise of the options that are subject to the offer
immediately prior to the increase.
If the offer is scheduled to expire at any time earlier than the tenth
business day from, and including, the date that notice of such increase or
decrease is first published, sent or given in the manner specified in Section
14, we will extend the offer so that the offer is open at least 10 business days
following the publication, sending or giving of notice.
We will also notify you of any other material change in the information
contained in this offer to exchange.
For purposes of the offer, a "business day" means any day other than a
Saturday, Sunday or U.S. Federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, Eastern time.
2. PURPOSE OF THE OFFER.
We issued or assumed the options outstanding under the stock incentive
plans for the following purposes:
. to encourage and enable our employees to acquire or increase their
holdings of common stock and other proprietary interest in us, in order
to promote a closer identification of their interests with those of
Clarus and its stockholders and to encourage participants to enhance the
efficiency, soundness, profitability, growth and shareholder value of
Clarus; and
. to encourage our employees to continue their employment by Clarus.
Retention of our employees is one of the keys to our continued growth and
success. The offer provides an opportunity for us to offer these employees an
incentive to stay with our company. Many of our outstanding options, whether or
not they are currently exercisable, have exercise prices that are significantly
higher than the current market price of our common stock. We believe these
options are unlikely to be exercised in the foreseeable future. By making this
offer to exchange outstanding options for new options that will have an exercise
price equal to the fair market value of our common stock on the grant date, we
intend to provide our employees with the benefit of owning options that over
time may have a greater potential to increase in value, create better
performance incentives for employees and thereby maximize stockholder value.
If we engage in a change of control transaction prior to the date we grant
the new options, our stock price could increase (or decrease), and the exercise
price of the new options, if awarded, could be higher (or lower) than the
exercise price of eligible options you elect to have cancelled as part of this
offer. As outlined in Section 8, the exercise price of any new options granted
to you in return for your tendered options will be at the fair market value of
our common stock on the date of that grant. You will be at risk of any such
increase in our stock price during the period prior to the grant date of the new
options for these or any other reason.
We are also reserving the right to take any actions we deem necessary or
appropriate to complete a change of control transaction that our board of
directors believes is in the best interest of our company and our shareholders.
This could include terminating your right to receive new options under this
offer to exchange. If we were to terminate your right to receive new options
under this offer in connection with such a transaction, employees who have
tendered options for
Page 12
cancellation pursuant to this offer would not receive options to purchase
securities of the acquiror or any other consideration for their tendered
options.
Except as otherwise disclosed in this offer to exchange or in our filings
with the SEC, we presently have no plans or proposals that relate to or would
result in:
(a) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving us or any of our
subsidiaries;
(b) any purchase, sale or transfer of a material amount of our assets or
the assets of any of our subsidiaries;
(c) any material change in our present dividend rate or policy, or our
indebtedness or capitalization;
(d) any change in our present board of directors or management,
including a change in the number or term of directors or to fill any
existing board vacancies or to change any executive officer's
material terms of employment, although our Chief Marketing Officer,
Julie K. Smith, has recently announced her resignation;
(e) any other material change in our corporate structure or business;
(f) our common stock not being authorized for quotation in an automated
quotation system operated by a national securities association;
(g) our common stock becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act;
(h) the suspension of our obligation to file reports pursuant to Section
15(d) of the Securities Exchange Act;
(i) the acquisition by any person of any material amount of our
securities or the disposition of any material amount of our
securities; or
(j) any change in our certificate of incorporation or bylaws, or any
actions which may impede the acquisition of control of us by any
person.
Neither we nor our board of directors makes any recommendation as to
whether you should tender your options, nor have we authorized any person to
make any such recommendation. Note that the new options may have a higher
exercise price than some or all of your current options. You are urged to
evaluate carefully all of the information in this offer to exchange and to
consult your own investment and tax advisers.
You must make your own decision whether to tender your options for
exchange.
3. PROCEDURES FOR TENDERING OPTIONS.
Proper Tender of Options. To validly tender your options pursuant to the
offer, you must, in accordance with the terms of the letter of transmittal,
properly complete, duly execute and deliver to us the letter of transmittal, or
a facsimile thereof, along with any other required documents. We will only
accept a properly executed paper copy or a facsimile copy of your letter of
transmittal and any other required documents. We will not accept delivery by e-
mail. We must receive all of the required documents at 3970 Johns Creek Court,
Suite 100, Suwanee, Georgia 30024, Attention: Pam Ellis (facsimile: (770)
291-4775), before the expiration date. Your new options will be granted on a
date at least six months and one day after the date that we cancel the tendered
options accepted for exchange.
A copy of the letter of transmittal has been distributed with this offer to
exchange; however, due to restrictions under the securities laws of Ireland, the
letter of transmittal has not been delivered to Irish employees. If you are an
Irish employee, you may obtain a copy of the letter of transmittal on our
intranet.
Page 13
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING LETTERS OF TRANSMITTAL
AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING
OPTION HOLDER. IF DELIVERY IS BY MAIL, WE RECOMMEND THAT YOU USE REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT
TIME TO ENSURE TIMELY DELIVERY. YOUR OPTIONS WILL NOT BE CONSIDERED TENDERED
UNTIL WE RECEIVE THEM. WE WILL NOT ACCEPT DELIVERY BY E-MAIL.
Determination of Validity; Rejection of Options; Waiver of Defects; No
Obligation to Give Notice of Defects. We will determine, in our discretion, all
questions as to form of documents and the validity, form, eligibility, including
time of receipt, and acceptance of any tender of options. Our determination of
these matters will be final and binding on all parties. We may reject any or
all tenders of options that we determine are not in appropriate form or that we
determine are unlawful to accept. Otherwise, we expect to accept all properly
and timely tendered options which are not validly withdrawn. We may also waive
any of the conditions of the offer or any defect or irregularity in any tender
with respect to any particular options or any particular option holder. No
tender of options will be deemed to have been properly made until all defects or
irregularities have been cured by the tendering option holder or waived by us.
Neither we nor any other person is obligated to give notice of any defects or
irregularities in tenders, and no one will be liable for failing to give notice
of any defects or irregularities.
Our Acceptance Constitutes an Agreement. Your tender of options pursuant
to the procedures described above constitutes your acceptance of the terms and
conditions of the offer. OUR ACCEPTANCE FOR EXCHANGE OF YOUR OPTIONS TENDERED
BY YOU PURSUANT TO THE OFFER WILL CONSTITUTE A BINDING AGREEMENT BETWEEN US AND
YOU UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER.
Subject to our rights to extend, terminate and amend the offer, we
currently expect that we will accept promptly after the expiration of the offer
all properly tendered options that have not been validly withdrawn.
4. WITHDRAWAL RIGHTS.
You may only withdraw your tendered options in accordance with the
provisions of this Section 4.
You may withdraw your tendered options at any time before the expiration
date. If the offer is extended by us beyond that time, you may withdraw your
tendered options at any time until the extended expiration of the offer. In
addition, you may withdraw your tendered options until we accept your tendered
options for exchange.
To validly withdraw tendered options, you must deliver to us at the address
or facsimile number set forth in Section 3 a notice of withdrawal, or a
facsimile thereof, with the required information, while you still have the right
to withdraw the tendered options. Except as described in the following
sentence, the notice of withdrawal must be executed by the option holder who
tendered the options to be withdrawn exactly as such option holder's name
appears on the option agreement or agreements evidencing such options. If the
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or another person acting in a fiduciary or
representative capacity, the signer's full title and proper evidence of the
authority of such person to act in such capacity must be indicated on the notice
of withdrawal.
You may not rescind any withdrawal, and any options you withdraw will
thereafter be deemed not properly tendered for purposes of the offer, unless you
properly re-tender those options before the expiration date by following the
procedures described in section 3.
To validly change your election regarding the tender of option but continue
to elect to tender some of your options, you must deliver a new letter of
transmittal at the address or facsimile number set forth in Section 3. If you
deliver a new letter of transmittal, it will replace any previously submitted
letter of transmittal, which will be disregarded.
Neither we nor any other person is obligated to give notice of any defects
or irregularities in any notice of withdrawal, nor will anyone incur any
liability for failure to give any such notice. We will determine, in our
discretion, all
Page 14
questions as to the form and validity, including time of receipt, of notices of
withdrawal. Our determination of these matters will be final and binding.
5. ACCEPTANCE OF OPTIONS FOR EXCHANGE AND ISSUANCE OF NEW OPTIONS.
Upon the terms and subject to the conditions of this offer and as promptly
as practicable following the expiration date, we expect to accept for exchange
and cancel options properly tendered and not validly withdrawn before the
expiration date. Subject to the terms and conditions of this offer, if your
options are properly tendered and accepted for exchange, these options will be
cancelled as of the date of our acceptance and you will be granted new options
on or about the first business day that is at least six months and a day after
the date we cancel the options accepted for exchange. If we cancel options
accepted for exchange on May 8, 2001, you will be granted new options on or
about November 9, 2001, which is the first business day that is at least six
months and one day following the date we intend to cancel options accepted for
exchange. If the offer is extended, then the grant date of the new options will
also be extended.
If we accept and cancel the options you tender in connection with the
offer, the grant date and the pricing of any additional options that we may
decide to grant to you, such as annual, bonus or promotional options will be
deferred until a date that is at least six months and a day from the date the
tendered options are cancelled. We have determined that it is necessary for us
to defer the grant date and pricing of any such additional options to avoid
incurring compensation expense against our earnings because of accounting rules
that would apply to these interim option grants as a result of the offer.
Your new options will entitle you to purchase a number of shares of our
common stock which is equal to the number of shares subject to the options or
portion thereof you tender, subject to adjustments for any stock splits, stock
dividends and similar events.
PLEASE NOTE, HOWEVER, THAT IF YOU ARE NOT AN EMPLOYEE OF CLARUS CORPORATION
OR ONE OF OUR SUBSIDIARIES FROM THE DATE YOU TENDER OPTIONS THROUGH THE DATE WE
GRANT THE NEW OPTIONS, YOU WILL NOT RECEIVE ANY NEW OPTIONS OR ANY OTHER
CONSIDERATION IN EXCHANGE FOR YOUR TENDERED OPTIONS THAT HAVE BEEN ACCEPTED FOR
EXCHANGE.
Clarus will take any actions we deem necessary to complete a change of
control transaction that our board of directors believes is in the best interest
of our company and our shareholders. This could include terminating your right
to receive new options under this offer to exchange.
For purposes of the offer, we will be deemed to have accepted for exchange
options that are validly tendered and not properly withdrawn, if and when we
give oral or written notice to the option holders of our acceptance for exchange
of such options, which may be by press release. Subject to our rights to
extend, terminate and amend the offer, we currently expect that we will accept
promptly after the expiration of the offer all properly tendered options that
are not validly withdrawn. Promptly after we accept tendered options for
exchange, we will send each tendering option holder a letter indicating the
number of shares subject to the options that we have accepted for exchange, the
corresponding number of shares that will be subject to the new options and the
expected grant date of the new options.
6. CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of this offer, we will not be required
to accept any options tendered for exchange, and we may terminate or amend the
offer, or postpone our acceptance and cancellation of any options tendered for
exchange, in each case, subject to Rule 13e-4(f)(5) under the Securities
Exchange Act, if at any time on or after April 9, 2001 and before the expiration
date, we determine that any of the following events has occurred and, in our
reasonable judgment the occurrence of the event makes it inadvisable for us to
proceed with the offer or to accept and cancel options tendered for exchange:
(a) any threatened, instituted or pending action or proceeding by any
government or governmental, regulatory or administrative agency,
authority or tribunal or any other person, domestic or foreign,
before any court, authority, agency or tribunal that directly or
indirectly challenges the making of the offer, the acquisition of
some or all of
Page 15
the tendered options pursuant to the offer, the issuance of new
options, or otherwise relates in any manner to the offer or that, in
our reasonable judgment, could materially and adversely affect the
business, condition (financial or other), income, operations or
prospects of Clarus Corporation or our subsidiaries, or otherwise
materially impair in any way the contemplated future conduct of our
business or the business of any of our subsidiaries or materially
impair the benefits that we believe we will receive from the offer;
(b) any action is threatened, pending or taken, or any approval is
withheld, or any statute, rule, regulation, judgment, order or
injunction is threatened, proposed, sought, promulgated, enacted,
entered, amended, enforced or deemed to be applicable to the offer or
us or any of our subsidiaries, by any court or any authority, agency
or tribunal that, in our reasonable judgment, would or might directly
or indirectly:
(1) make the acceptance for exchange of, or issuance of new options
for, some or all of the tendered options illegal or otherwise
restrict or prohibit consummation of the offer or otherwise
relates in any manner to the offer;
(2) delay or restrict our ability, or render us unable, to accept
for exchange, or issue new options for, some or all of the
tendered options;
(3) materially impair the benefits that we believe we will receive
from the offer; or
(4) materially and adversely affect the business, condition
(financial or other), income, operations or prospects of us or
our subsidiaries, or otherwise materially impair in any way the
contemplated future conduct of our business or the business of
any of our subsidiaries;
(c) any change in generally accepted accounting standards which could or
would require us for financial reporting purposes to record
compensation expense against our earnings in connection with the
offer;
(d) a tender or exchange offer with respect to some or all of our common
stock, or a merger or acquisition proposal for us, is proposed,
announced or made by another person or entity or is publicly
disclosed; or
(e) any change or changes occurs in our business, condition (financial or
other), assets, income, operations, prospects or stock ownership or
in that of our subsidiaries that, in our reasonable judgment, is or
may be material to us or our subsidiaries or materially impairs or
may materially impair the benefits that we believe we will receive
from the offer.
The conditions to the offer are for our benefit. We may assert them in our
discretion regardless of the circumstances giving rise to them prior to the
expiration date. We may waive them, in whole or in part, at any time and from
time to time prior to the expiration date, in our discretion, whether or not we
waive any other condition to the offer. Our failure at any time to exercise any
of these rights will not be deemed a waiver of any such rights. The waiver of
any of these rights with respect to particular facts and circumstances is not a
waiver with respect to any other facts and circumstances. Any determination we
make concerning the events described in this Section 6 will be final and binding
upon everyone.
7. PRICE RANGE OF COMMON STOCK UNDERLYING THE OPTIONS.
Our common stock is quoted on the Nasdaq National Market under the symbol
"CLRS." The following table shows, for the periods indicated, the high and low
closing sales prices per share of our common stock as reported by the Nasdaq
National Market.
Page 16
High Low
Quarter ended March 31, 2001....................... $ 9.25 $ 5.09
Quarter ended December 31, 2000.................... $ 23.75 $ 6.06
Quarter ended September 30, 2000................... $ 63.25 $22.81
Quarter ended June 30, 2000........................ $ 68.38 $21.31
Quarter ended March 31, 2000....................... $136.00 $54.50
Quarter ended December 31, 1999.................... $ 71.00 $ 9.38
Quarter ended September 30, 1999................... $ 15.44 $ 5.06
Quarter ended June 30, 1999........................ $ 5.91 $ 4.50
As of April 6, 2001, the last reported sale price of our common stock, as
reported by the Nasdaq National Market, was $5.5625 per share. WE RECOMMEND THAT
YOU OBTAIN CURRENT MARKET QUOTATIONS FOR OUR COMMON STOCK BEFORE DECIDING
WHETHER TO TENDER YOUR OPTIONS.
8. SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF NEW OPTIONS.
Consideration. We will issue new options to purchase common stock under
the applicable stock incentive plan (generally the same stock incentive plan
under which the eligible options were granted except that with respect to
options originally granted under the SQL Plan, new options will be granted under
the Incentive Plan and options granted under the SAI Plan may be replaced with
incentive stock options granted under the Incentive Plan to the extent permitted
by applicable law and regulations) in exchange for outstanding eligible options
properly tendered and accepted for exchange by us. The number of shares of
common stock subject to new options to be granted to each option holder will be
equal to the number of shares subject to the options tendered by such option
holder and accepted for exchange, subject to adjustments for any stock splits,
stock dividends and similar events. If we receive and accept tenders of all
outstanding eligible options, we expect to grant new options to purchase a total
of 2,180,797 shares of our common stock. Our directors and our Section 16(b)
officers are not eligible to participate in the offer. The common stock
issuable upon exercise of these new options would equal approximately 67% of the
total shares of our common stock outstanding as of April 4, 2001.
Terms of New Options. The new options will be issued under the Incentive
Plan or the SAI Plan, depending on which plan the options tendered were granted
under and applicable laws and regulations. A new option agreement will be
entered into between us and each option holder who has tendered options in the
offer. The new option agreements will be substantially the same as the form
option agreements attached as Exhibits (d)(4) and (d)(5) to the Tender Offer
Statement on Schedule TO that we filed with the SEC on April 9, 2001, as the
case may be. Except with respect to the exercise price, the date the vesting
begins, the vesting period and certain other terms specified in the offer, the
terms and conditions of the new options will be substantially the same as the
terms and conditions of the options tendered for exchange. Options granted
under the SAI Plan may be replaced with incentive stock options granted under
the Incentive Plan to the extent permitted by applicable law and regulations.
However, if you exchange options granted under the SQL Plan, your new options
will be granted under the Incentive Plan. The material terms of the Incentive
Plan are described below. Because we will not grant new options until at least
six months and a day after the date we cancel the tendered options, the new
options may have a higher exercise price than some or all of the tendered
options.
The issuance of new options under this offer will not create any
contractual or other right of the recipients to receive any future grants of
stock options or benefits in lieu of stock options or any right of continued
employment.
The following description summarizes the material terms of our stock
incentive plans and the options granted under them. This description is only a
summary, and may not be complete. For complete information please refer to the
copies of the stock incentive plans and the new option agreements that have been
filed with the SEC as exhibits to the Tender Offer Statement on Schedule TO.
You may also contact us at Clarus Corporation, Attention: Pam Ellis, 3970 Johns
Creek Court, Suite 100, Suwanee, Georgia 30024 (telephone: (770) 291-5394,
facsimile: (770) 291-4775 and e-mail: ellisp@claruscorp.com) to request copies
of the stock incentive plans or the forms of the new option agreements, which
will be provided at our expense.
Page 17
General Information. The Incentive Plan provides the maximum number of
shares issuable pursuant to the exercise of options currently may not exceed
3,000,000 shares, plus (i) any shares of common stock available for future
awards under the SQL Plan; and (ii) any shares of common stock that are
represented by awards granted under the Incentive Plan or SQL Plan which are
forfeited, expired, cancelled or terminated without delivery of shares of common
stock or which result in the forfeiture of shares of common stock back to
Clarus. The maximum number of shares subject to options that may be awarded to
one person in any twelve month period under the Incentive Plan is 200,000.
The SAI Plan provides that the maximum number of shares issuable pursuant
to the exercise of options currently may not exceed 750,000 shares, plus any
shares subject to awards under the SAI Plan which are forfeited, cancelled,
terminated or expired without delivery of shares of common stock or which result
in the forfeiture of shares of common stock back to Clarus. The SQL Plan
provides the maximum number of awards currently issuable pursuant to all awards
may not exceed 1,633,938.
The Incentive Plan and the SQL Plan permit the granting of options intended
to qualify as incentive options under the Internal Revenue Code and the granting
of options that do not qualify as incentive options. The SQL Plan permits the
granting of nonqualified options only.
Administration. The Incentive Plan and the SAI Plan are administered by
the compensation committee of our board of directors. The compensation
committee is composed solely of "nonemployee directors" as defined in Rule 16b-3
under the Securities Exchange Act of 1934, as amended and "outside directors"
for purposes of Section 162m of the Internal Revenue Code. The members of the
compensation committee are appointed from time to time by our board of directors
and may be removed at any time by the board. Vacancies in the compensation
committee are filled by the board. The SQL Plan is administered by the board,
or upon delegation by the board, by a committee appointed by the board.
Term. Under the Incentive Plan and SAI Plan, the term of each option will
be determined by the compensation committee and may generally not exceed ten
years from the date of grant(or five years with respect to 10% stockholders).
Under the SQL Plan, the board will determine the term of each option, and no
options may be exercised more than ten years from the date of grant (or five
years with respect to a 10% stockholder). The new options to be granted
pursuant to the offer will have a term equal to the term of the options being
exchanged for such new option which generally is ten years.
Exercise Price. The exercise price of each option will be determined by
the compensation committee (or Board with respect to the SQL Plan). In the case
of an incentive stock option, the exercise price may not be less than 100% of
the fair market value of a share of our common stock on the grant date. The
exercise price of nonqualified stock option granted under the Incentive Plan or
the SAI Plan may not be less than the par value per share of the Common Stock
and under the SQL Plan may not be less than 85% of the fair market value of a
share of our common stock on the date of the grant. A nonqualified option is an
option that is not qualified to be an incentive stock option under current tax
laws. For 10% stockholders, the exercise price of an incentive stock option may
not be less than 110% of the fair market value of a share of common stock on the
date the option is granted. The exercise price of the new options to be granted
pursuant to the offer will be equal to the fair market value of our common stock
on the grant date, which will be determined by the last reported sale price
during regular trading hours of our common stock on the Nasdaq National Market
on the grant date.
Termination. Options issued under our stock incentive plans generally will
expire ten years after the grant date. Unless your option agreement otherwise
provides, options granted pursuant to the Incentive Plan and the SAI Plan are
subject to the following termination provisions. Options will terminate
following the termination of your employment for any reason other than
disability or death, or for cause (as defined in the plans), unless the options
are exercised, to the extent that they were exercisable immediately before such
termination, before the earlier of (i) three (3) months following your
termination or (ii) the end of the option period. In the event that the
termination of your employment is by reason of disability, death while you are
an employee, or death after termination of employment due to a disability, you,
or your executors, administrators, legatees or distributees of your estate, may
exercise your options to the extent that they were exercisable on the date of
your employment termination, before the earlier of (i)
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the end of the 12-month period after your termination; or (ii) the end of the
option period. If your employment is terminated for "cause" (as defined in the
plans), your options will lapse and no longer be exercisable as of the effective
time of your termination of employment, unless otherwise determined by the
compensation committee.
Unless your individual option agreement provides otherwise, options granted
under the SQL Plan are subject to the following termination provisions. If you
cease to perform services for any reason other than death or disability, you may
exercise an option, to the extent the option was otherwise exercisable on the
date of termination at any time within the three-month period following the
termination of services. If you cease to perform services because of
disability, you may at any time within the one-year period following termination
of services, exercise the option to the extent it was exercisable at the time of
termination. If you cease to perform services because of death, the option, to
the extent it was exercisable on the date of death, may be exercised within a
period of one year after the participant's death, by persons to whom the
participant's option passes by will or the laws of descent and distribution. In
no event, however, may any option be exercised after the end of its term.
Vesting and Exercise. The compensation committee (or the Board with
respect to the SQL Plan) has the authority to determine at what time or times
each option may be exercised and the period of time, if any, after retirement,
death, disability or termination of employment during which options may be
exercised. Options outstanding as of the date of a "change of control" (as
defined in the stock incentive plans) will be exercisable with respect to 50% of
that portion of the outstanding options not otherwise exercisable on the date of
the change of control, unless the compensation committee elects not to
accelerate the option periods of such offers because other equitable or other
appropriate action has been taken. The new options granted pursuant to the offer
will vest in thirty-six equal monthly installments over the next three years.
Payment of Exercise Price. You may exercise your options by delivery of a
written notice to us on any business day at the address listed on your exercise
notice, which specifies the number of shares for which the option is being
purchased and which is accompanied by payment in full of the purchase price.
The permissible methods of payment of the option exercise price generally are
the following:
. cash;
. delivery of shares of our common stock, which have been owned by the
option holder for no less than six months and otherwise are acceptable
to the compensation committee;
. delivery of written notice to us and delivery to a broker of written
notice of exercise and irrevocable instructions to promptly deliver to
us the amount of sale or loan proceeds to pay the option price (i.e.
cashless exercise); or
. a combination of these methods as elected by you.
Amendment and Termination of the Option Plans. Our board may amend or
terminate the stock incentive plans at any time and in any manner, subject to
certain restrictions. Options may not be granted under the SQL Plan after
November 21, 2002, options may not be granted under the Incentive Plan after
February 4, 2008, and options may not be granted under the SAI Plan after May
28, 2010.
No Stockholder Rights and Employment Rights. A participant shall have no
stockholder rights with respect to the shares of our common stock subject to his
or her outstanding options until such shares are purchased in accordance with
the provisions of the applicable stock incentive plan. Nothing in any of the
stock incentive plans confers upon the participant any right to continue in our
employ.
Transferability of Options. Incentive options are not transferable other
than by will or the laws of intestate succession. Nonqualified options granted
under the SAI Plan or the Incentive Plan are not transferable other than by will
or the laws of intestate succession, except as may be permitted by the
compensation committee in a manner consistent with the registration provisions
of the Securities Act of 1933, as amended. In addition, options (except in the
case of a permitted
Page 19
nonqualified option transfer) may be exercised during your lifetime only by you
or your guardian or legal representative.
Registration of Option Shares. All shares of common stock issuable upon
exercise of options under the stock incentive plans, including the shares that
will be issuable upon exercise of all new options to be granted pursuant to the
offer, have been registered under the Securities Act on a registration statement
on Form S-8 filed with the SEC. Unless you are one of our affiliates, you will
be able to sell your option shares free of any transfer restrictions under
applicable securities laws.
Tax Consequences. You should refer to Sections 13 and 14 for a discussion
of the U.S. Federal income tax and foreign tax consequences of accepting or
rejecting the new options under this offer to exchange. Whether you are an
employee based inside or outside of the United States, we recommend that you
consult with your own tax adviser to determine the tax consequences of this
transaction under the laws of the country in which you live and work.
Our statements in this offer to exchange concerning the stock incentive
plans and the new options are merely summaries and do not purport to be
complete. The statements are subject to, and are qualified in their entirety by
reference to, all provisions of our stock incentive plans and the forms of
option agreements under the stock incentive plans. Please refer to copies of
the stock incentive plans and the new option agreements that have been filed
with the SEC as exhibits to the Tender Offer Statement on Schedule TO. You may
also contact Pam Ellis at Clarus Corporation, 3970 John Creek Court, Suite 100,
Suwanee, Georgia 30024 (telephone: (770) 291-5394) to receive copies of the
stock incentive plans and the forms of option agreements thereunder. We will
promptly furnish you copies of these documents at your expense.
9. INFORMATION CONCERNING CLARUS CORPORATION.
We develop, market, and support Internet-based business-to-business (B2B)
e-commerce solutions targeted for large to mid-size enterprises (LME) that
automate the procurement, sourcing, and settlement of goods and services. Our
software helps organizations reduce the costs associated with the purchasing and
payment settlement of goods and services, and helps to maximize procurement
economies of scale. Our digital marketplace solution provides a framework that
allows companies to create trading communities and additional revenue
opportunities. Our solutions also benefit suppliers by reducing sales costs and
providing the opportunity to increase revenues. Our products have been licensed
by customers such as Comcast Corporation, Burlington Northern Santa Fe Railroad,
Gjensidige NOR, Mastercard International, MetLife, Parsons Brinckerhoff,
Sumurfit and Stone, and Wachovia Operational Services Corporation.
Our Internet-based business-to-business e-commerce solutions are
significantly different than the client/server financial software applications
that were the basis of our initial operations. There have been several
milestones in the evolution of our business since our incorporation in Delaware
in 1991. Those milestones include:
. Initial public offering. On May 26, 1998, we completed an initial
public offering of our common stock in which we sold 2.5 million
shares of common stock at $10.00 per share resulting in net proceeds
to us of approximately $22.0 million.
. ELEKOM acquisition. On November 6, 1998, we acquired ELEKOM
Corporation ("ELEKOM") for approximately $15.7 million, consisting of
$8.0 million in cash and approximately 1.4 million shares of our
common stock. ELEKOM developed a software program that provided
electronic corporate procurement capabilities to its clients.
. Sale of our Financial and Human Resources Software Business. On
October 18, 1999, we sold substantially all of the assets of our
financial and human resources software ("ERP") business to Geac
Computer Systems, Inc. and Geac Canada Limited. In this sale we
received approximately $13.9 million. Approximately $2.9 million of
the purchase price was placed in escrow and was subsequently settled
during 2000.
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. Follow-on public offering. On March 10, 2000, we sold 2,243,000 shares
of common stock in a secondary public offering at $115.00 per share
resulting in net proceeds to us of approximately $244.4 million.
. iSold.com acquisition. On April 28, 2000, we acquired all the capital
stock of iSold.com, Inc. ("iSold") for approximately $2.5 million in
cash of which $1.6 million was paid at the date of acquisition and
$900,000 is due in April 2001. iSold developed a software program that
provided auctioning capabilities to its clients.
. SAI/Redeo Companies acquisition. On May 31, 2000, we acquired all the
outstanding stock of SAI (Ireland) Limited, SAI Recruitment Limited
and its subsidiaries and related companies, i2Mobile.com Limited and
SAI America Limited (the "SAI/Redeo Companies"). The SAI/Redeo
Companies specialize in electronic payment settlement software.
In December 2000, we announced our business strategy of targeting large to
mid-size enterprises. In support of this strategy, we also announced an
expanded business model that would support a wider range of software licensing
arrangements. As part of this business model expansion, we intend to move from
a traditional up-front license fee revenue model to a ratable revenue
recognition model, as is required in subscription-based licensing agreements.
As a result, we believe that our future financial results may not be comparable
to our historic financial results.
Our principal executive offices are located at 3970 Johnson Creek Court,
Suite 100, Suwanee, Georgia 30024 and our telephone number at that address is
(770) 291-3900.
The financial statements included in our annual report on Form 10-K for the
fiscal year ended December 31, 2000 are incorporated herein by reference. See
"Additional Information" beginning on page 29 for instructions on how you can
obtain copies of our SEC filings, including filings that contain our financial
statements.
10. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE OPTIONS.
A list of our directors and executive officers is attached to this offer to
exchange as Schedule A. As of April 4, 2001, our executive officers and
directors as a group beneficially owned options outstanding under the Incentive
Plan to purchase a total of 274,474 shares of our common stock, which
represented approximately 1.77% of the shares subject to all options outstanding
under the Incentive Plan as of that date. As of April 4, 2001, our executive
officers and directors as a group beneficially owned options outstanding under
the SAI Plan to purchase a total of 0 shares of our common stock, which
represented approximately 0.00% of the shares subject to all options outstanding
under the SAI Plan. As of April 4, 2001, our executive officers and directors
as a group beneficially owned options outstanding under the SQL Plan to purchase
a total of 167,748 shares of our common stock, which represented approximately
1.09% of the shares subject to all options outstanding under the SAI Plan. None
of these options to purchase shares of common stock are eligible to be tendered
in the offer.
Except for ordinary course purchases under the Clarus Corporation Employee
Stock Purchase Plan and ordinary course grants of stock options to employees who
are not executive officers, there have been no transactions in options to
purchase our common stock or in our common stock which were effected during the
past 60 days by Clarus or, to our knowledge, by any executive officer, director,
affiliate or subsidiary of Clarus.
11. STATUS OF OPTIONS ACQUIRED BY US IN THE OFFER; ACCOUNTING CONSEQUENCES OF
THE OFFER.
Options we acquire pursuant to the offer will be cancelled and the shares
of common stock subject to those options will be returned to the pool of shares
available for grants of new options under the applicable stock incentive plan
and for issuance upon the exercise of such new options, except that options
cancelled under the SQL Plan will be allocated to the pool of shares available
for grants of new options under the Incentive Plan. To the extent such shares
are not fully reserved for issuance upon exercise of the new options to be
granted in connection
Page 21
with the offer, the shares will be available for future awards to employees and
other eligible plan participants without further stockholder action, except as
required by applicable law or the rules of the Nasdaq National Market or any
other securities quotation system or any stock exchange on which our common
stock is then quoted or listed.
We believe that we will not incur any compensation expense solely as a
result of the transactions contemplated by this offer because:
. we will not grant any new options until a business day that is at
least six months and one day after the date that we accept and cancel
options tendered for exchange; and
. the exercise price of all new options will equal the market value of
the common stock on the date we grant the new options; and
. we will require any option holder who tenders options in the offer to
tender all options that he or she received during the six months
immediately prior to the date on which the offer expires if those
options have an exercise price lower than the exercise price of the
options he or she tendered in the offer; and
. we will defer the grant of any other options to which an option holder
who tendered options in the offer may be entitled until after the date
on which we grant the new options.
12. LEGAL MATTERS; REGULATORY APPROVALS.
We are not aware of any license or regulatory permit that appears to be
material to our business that might be adversely affected by our exchange of
options and issuance of new options as contemplated by the offer, or of any
approval or other action by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, that would be required for
the acquisition or ownership of our options as contemplated herein. Should any
such approval or other action be required, we presently contemplate that we will
seek such approval or take such other action. We are unable to predict whether
we may determine that we are required to delay the acceptance of options for
exchange pending the outcome of any such matter. We cannot assure you that any
such approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such approval
or other action might not result in adverse consequences to our business. Our
obligation under the offer to accept tendered options for exchange and to issue
new options for tendered options is subject to conditions, including the
conditions described in Section 6.
13. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of the material U.S. Federal income tax
consequences of an exchange of options pursuant to the offer. This discussion
is based on the Internal Revenue Code, its legislative history, Treasury
Regulations and administrative and judicial interpretations as of the date of
the offer, all of which are subject to change, possibly on a retroactive basis.
This summary does not discuss all of the tax consequences that may be relevant
to you in light of your particular circumstances, nor is it intended to be
applicable in all respects to all categories of option holders. This summary
assumes that no option holder has paid any consideration for any options.
If you exchange outstanding incentive or nonqualified stock options for new
options, you will not be required to recognize income for U.S. Federal income
tax purposes at the time of the exchange. We believe that the exchange will be
treated as a non-taxable exchange. At the date of grant of the new options, you
will not be required to recognize additional income for U.S. Federal income tax
purposes. The grant of options is not recognized as taxable income.
If you tender incentive stock options and those options are accepted for
exchange, the new options will be granted as incentive stock options to the
maximum extent they qualify. For options to qualify as incentive stock options,
the value of shares subject to options that first become exercisable by the
option holder in any calendar year cannot exceed $100,000, as determined using
the option exercise price. The excess value is deemed to be a non-qualified
stock option. If the
Page 22
exercise price of the new options is equal to or less than the exercise price of
the options tendered, the new options should qualify as incentive stock options
to the extent that the options tendered qualified as incentive stock options
before being tendered. If your new options have a higher exercise price than
some or all of your current options, or if you are granted additional incentive
stock options after you tender options for exchange but before the new options
are granted, or if you receive additional incentive stock options after you
tender options for exchange but before we grant the new options, or if the
vesting of the new options overlaps with other grants of incentive stock
options, a portion of the new options may exceed the limits for incentive stock
options and will have to be treated as non-qualified stock options.
U.S. Federal Income Tax Consequences for Outstanding Incentive Stock
Options. Under current law you did not realize taxable income when incentive
stock options were granted to you under the stock incentive plans. In addition,
you generally will not realize taxable income when you exercise an incentive
stock option. However, your alternative minimum taxable income will be
increased by the amount that the aggregate fair market value of the shares you
purchase under an incentive stock option, which fair market value is generally
determined as of the date you exercise the option, exceeds the aggregate
exercise price of the option. Except in certain circumstances that are
described in your stock incentive plan and option agreement, such as your death
or disability, if you exercise an incentive stock option more than three months
after your employment is terminated, the option will not be treated as an
incentive stock option and is subject to taxation under the rules applicable to
nonqualified stock options that are discussed below.
If you sell common stock that you acquired by exercising an incentive stock
option, the tax consequences of the sale depend on whether the disposition is
"qualifying" or "disqualifying." The disposition of the common stock is
qualifying if it is made after the later of (a) two years from the date the
incentive stock option was granted or (b) one year after the date the incentive
stock option was exercised.
If the disposition of the common stock you receive when you exercise an
incentive stock option is qualifying, any excess of the sale price of the stock
over the exercise price of the option will be treated as long-term capital gain
taxable to you at the time of the sale. If the disposition is not qualifying,
which we refer to as a "disqualifying disposition," the excess of the fair
market value of the common stock on the date you exercise the option over the
exercise price will be taxable income to you at the time of the sale of the
stock. Of that income, the excess of the fair market value of the common stock
at the time you exercised the option over the exercise price will be ordinary
income and the balance, if any, of the income will be long or short-term capital
gain, depending on whether or not the common stock was sold more than one year
after the option was exercised.
If you sell common stock you received when you exercised an incentive stock
option in a qualifying disposition, we will not be entitled to a deduction equal
to the gain you realize when you completed that sale. However, if you sell, in
a disqualifying disposition, common stock you received when you exercised an
incentive stock option, we will be entitled to a deduction equal to the amount
of compensation income taxable to you.
U.S. Federal Income Tax Consequences of Nonqualified Stock Options. Under
current law, you do not realize taxable income upon the grant of a nonqualified
stock option. However, when you exercise the option, the difference between the
exercise price of the option and the fair market value of the shares subject to
the option on the date of exercise will be treated as taxable compensation
income to you, and you will be subject to withholding of income and employment
taxes at that time. We will generally be entitled to a deduction equal to the
amount of compensation income taxable to you.
The subsequent sale by you of shares acquired pursuant to the exercise of a
nonqualified stock option generally will give rise to capital gain or loss equal
to the difference between the sale price and the sum of the exercise price paid
for the shares plus the ordinary income recognized with respect to the shares.
The capital gain or loss will be treated as long-term capital gain or loss if
you held the shares for more than one year following exercise of the option.
WE STRONGLY RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISER WITH RESPECT TO
THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER.
Page 23
14. CERTAIN TAX CONSEQUENCES FOR NON-U.S. BASED EMPLOYEES.
Tax Consequences to U.K. Employees. If you are a U.K. based employee of
Clarus or one of our subsidiaries, there are certain tax consequences and
conditions of the offer that may apply depending on your tax status for U.K.
tax purposes. WE STRONGLY RECOMMEND THAT YOU CONTACT YOUR PERSONAL TAX ADVISER
OR THE INLAND REVENUE TO ASSIST YOU IN DETERMINING YOUR U.K. TAX STATUS.
If we accept and cancel the options you tender in connection with the
offer, it is our understanding that the grant of the new options will not be a
taxable event for U.K. income tax purposes. When you exercise your new options,
you will be subject to U.K. income tax and, as discussed below, you may be
subject to employee's National Insurance Contributions ("NIC") on the fair
market value of Clarus' shares at the time of exercise less the strike price of
your new options.
In April 1999, the U.K. Government made changes to the tax treatment on
certain share options and introduced a NIC on the exercise of certain stock
options. As a result of this, all new options received as a result of offer will
be subject to both employee's and employer's NIC upon the exercise of the new
options. The amount of the employee's and employer's NIC withholdings will be
calculated by multiplying the applicable NIC rate by the difference between the
fair market value of Clarus' shares at the time of exercise and the strike price
of your new options. Recent changes to this legislation have made it possible
for the company and the employee to agree to transfer the employer's NIC charge
to the employee. As a condition of this offer, if you are subject to U.K. tax on
the date the new options are granted, the new option agreement between you and
us will provide that you will accept the liability for and to pay the employer's
NIC when you exercise the new options. Accordingly, if you are subject to U.K.
tax and you elect to tender options for exchange, you must enter into a new
option agreement that will transfer the employer's NIC to you.
You should note that you do not have to pay any employee's NIC if your
total earnings in the tax year in which the options were exercised are above the
upper NIC threshold (currently (Pounds) 29,900 for the 2001/2002 tax year).
Moreover, any options that you currently hold that were granted to you on
or after October 15, 2000 are already subject to you agreeing to sign an
election accepting the liability for the employer's NIC charge. However, if you
are subject to U.K. tax on the date the new options are granted, you must agree
to accept the liability for and agree to pay the employer's NIC on new options
in order to receive your new options.
The above information is a general summary only of certain of the U.K.
income and social tax consequences of the exchange of options under the offer.
This discussion is based on the U.K. legislation, regulations and administrative
and judicial interpretations in force at the date of the offer, all of which may
change, possibly on a retroactive basis. This summary does not discuss all of
the U.K. income and social tax consequences that may be relevant to you in light
of your particular circumstances, nor is it intended to apply in all respects to
all categories of option holders. As such, we recommend that you consult your
own tax adviser with respect to the U.K. income tax, National Insurance
Contributions, and foreign tax consequences of participating in the offer.
This offer to exchange has not been approved for the purposes of Section 57
of the Financial Services Act 1986 ("FSA") by a person authorized under the FSA.
Accordingly, this offer to exchange may only be issued or passed on in the
United Kingdom to persons who are of a kind described in article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or are persons to whom the offer to exchange may otherwise lawfully be issued or
passed on.
Tax Consequences to Irish Employees. If you are an Irish based employee of
Clarus or one of our subsidiaries, there are certain tax consequences and
conditions of the offer that may apply depending on your tax status for Irish
tax law purposes. This summary does not address all aspects of Irish tax law
that may be relevant to you. This summary assumes no consideration was paid by
an option holder for the options. You are strongly urged to contact your
personal tax or financial adviser regarding the specific tax consequences of
exchange of your options.
Page 24
If we accept and cancel the options you tender in connection with the
offer, it is our understanding that the grant of the new options will not be a
taxable event for Irish income tax purposes. You will be subject to Irish income
tax when you exercise your new options in an amount equal to the spread between
the option exercise price and the fair market value of the common stock on the
date of exercise. You may elect to defer the income tax payable on the exercise
of an option in which case the income tax will not have to be paid until the
earlier of the relevant payment date in (1) the year of assessment in which the
option shares are disposed or (2) seven years after the year in which the option
was exercised. The options are not subject to payment of related social
insurance or to the levy. You may be subject to a stamp duty charge if the
documentation regarding the exchange is executed in Ireland. The stamp duty
charge is a fixed charge of Irish (pounds) 10.
When you dispose of the shares acquired through the exercise of an option,
you will be liable for Irish capital gains tax at the rate of 20% on such gains.
In computing the amount of gain, you may deduct from the sale proceeds of the
option price plus any amount which was chargeable to income tax on the exercise
of the option. These deductions can also be increased to account for inflation
if the expenditures were incurred more than 12 months before the date of
disposal of the common stock. You are also entitled to receive a gain of Irish
(pounds) 1000 per year tax free.
Tax Consequences to Canadian Employees. The following is a general summary
of the material Canadian federal income tax consequences to a Canadian resident
employee of Clarus or one of its subsidiaries who has been granted options by
virtue of his or her employment and who exchanges those options pursuant to the
offer. This summary is based upon the current provisions of the Income Tax Act
(Canada) (the "Canadian Tax Act") and the regulations thereunder and all
specific proposals to amend the Canadian Tax Act publicly announced prior to the
date hereof, any of which could change in a manner that would affect the tax
consequences described, possibly with retroactive effect. This summary does not
purport to address all aspects of Canadian federal income tax law that may be
relevant to you in the light of your personal circumstances, and does not deal
with the possible application of provincial, local, or other tax laws. You are
strongly urged to consult your personal tax or financial adviser regarding the
specific tax consequences of exchanging your options pursuant to the offer
(including the possible effect of changes in tax laws).
If you tender outstanding options pursuant to the offer, such tendered
options will be cancelled as of the date of our acceptance of your tender. It is
our understanding that this cancellation may be considered a taxable disposition
of your tendered options under the Canadian Tax Act. Accordingly, you must
include in your income for the year during which your options are cancelled an
amount equal to the value of the consideration you received for the cancellation
of your tendered options. The consideration you received for the cancellation of
your tendered options is our undertaking, subject to certain conditions, to
grant you new options on or about the first business day that is at least six
months and a day from the date we cancel your tendered options. You will be
required to determine the value of this consideration.
Provided that certain conditions are satisfied (including the condition
that the common stock qualifies as "prescribed shares" and that the exercise
price under the tendered options was not less than the fair market value of the
common stock at the time those options were granted), you may be entitled to a
50% deduction from the income inclusion described above.
When you acquire common stock pursuant to the exercise of your new options,
the amount by which the value of the common stock at that time (computed in
Canadian dollars) exceeds the aggregate of the amount you paid or will pay for
such common stock (computed in Canadian dollars) and the amount you paid to
acquire the options will be deemed to be a benefit you received and will be
included in computing your income. If you have included an amount in income as
a result of the cancellation of your tendered options (as described above) and
we grant you new options pursuant to the offer, the amount previously included
in your income may be considered an amount you paid to acquire the new options.
Provided that certain conditions are satisfied, recognition of the benefit
arising on the exercise of your new options may be deferred until the year in
which the common stock is disposed of. This deferral is available if the common
stock is listed on a prescribed stock exchange (which includes the Nasdaq
National Market) and if the exercise price you paid for
Page 25
the common stock was not less than the fair market value of the common stock on
the date of grant of the new options. There is a $100,000 annual limit on the
tax deferral. This limit is based upon the fair market value (at the time of
grant) of the common stock that vests in any particular year. If the conditions
allowing the tax deferral are not satisfied, you will be required to include the
benefit in income in the year in which the common stock is acquired.
Regardless of whether the exercise of the new options qualifies for the tax
deferral discussed above, provided that certain conditions are satisfied
(including the condition that the common stock qualifies as "prescribed shares"
and that the exercise price is not less than the fair market value of the common
stock at the time the new options were granted), you may be entitled to a 50%
deduction from the benefit inclusion described above.
The full amount of any benefit included in computing your income in respect
of the exercise of new options is added to your cost of the common stock to
determine the adjusted cost base of the common stock. For the purposes of
computing any capital gain or loss on the disposition of the common stock, the
cost of the common stock acquired by you will be averaged with the adjusted cost
base of all common stock owned by you a the time the common stock is acquired.
Where the deferral described above is available, and in certain other
circumstances, this averaging rule may not be applicable.
If you sell or otherwise dispose of the common stock you acquired by
exercising a new option, you will generally realize a capital gain (or capital
loss) to the extent that the proceeds of disposition, net of any reasonable
costs of disposition, exceed (or are less than) the adjusted cost base to you of
the common stock. One half of any capital gain (the "taxable capital gain")
must be included in your income for the year of disposition. You may deduct
one-half of any capital loss (the "allowable capital loss") so realized against
taxable capital gains for the year of disposition. Any excess of allowable
capital losses over taxable capital gains for the year of disposition may be
carried back up to three taxation years of forward indefinitely and deducted
against net taxable capital gains in those other years to the extent and in the
circumstances prescribed in the Canadian Tax Act.
15. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
We expressly reserve the right, in our discretion at any time and from time
to time, to extend the period of time during which the offer is open and delay
accepting any options tendered to us by publicly announcing the extension and
giving oral or written notice of the extension to the option holders and making
a public announcement thereof. If the offer is extended, then the grant date of
the new options will also be extended.
We also expressly reserve the right, in our reasonable judgment, prior to
the expiration date to terminate or amend the offer and to postpone our
acceptance and cancellation of any options tendered for exchange upon the
occurrence of any of the conditions specified in Section 6, by giving oral or
written notice of such termination or postponement to the option holders and
making a public announcement thereof. Our reservation of the right to delay our
acceptance and cancellation of options tendered for exchange is limited by Rule
13e-4(f)(5) promulgated under the Securities Exchange Act, which requires that
we must pay the consideration offered or return the options tendered promptly
after termination or withdrawal of a tender offer.
Subject to compliance with applicable law, we further reserve the right, in
our discretion, and regardless of whether any event set forth in Section 6 has
occurred or is deemed by us to have occurred, to amend the offer in any respect,
including, without limitation, by decreasing or increasing the consideration
offered in the offer to option holders or by decreasing or increasing the number
of options being sought in the offer.
Amendments to the offer may be made at any time and from time to time by
public announcement of the amendment. In the case of an extension, the
amendment must be issued no later than 9:00 a.m., Eastern time, on the next
business day after the last previously scheduled or announced expiration date.
Any public announcement made pursuant to the offer will be disseminated promptly
to option holders in a manner reasonably designated to inform option holders of
such change. Without limiting the manner in which we may choose to make a
public announcement, except as
Page 26
required by applicable law, we have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a press
release to the Dow Jones News Service.
If we materially change the terms of the offer or the information
concerning the offer, or if we waive a material condition of the offer, we will
extend the offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3)
under the Securities Exchange Act. These rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer, other than a change in price
or a change in percentage of securities sought, will depend on the facts and
circumstances, including the relative materiality of such terms or information.
16. FEES AND EXPENSES.
We will not pay any fees or commissions to any broker, dealer or other
person for soliciting tenders of options pursuant to this offer to exchange.
17. ADDITIONAL INFORMATION.
We have filed with the SEC a Tender Offer Statement on Schedule TO, of
which this offer to exchange is a part, with respect to the offer. This offer
to exchange does not contain all of the information contained in the Schedule TO
and the exhibits to the Schedule TO. We recommend that you review the Schedule
TO, including its exhibits, and the following materials which we have filed with
the SEC before making a decision on whether to tender your options:
(a) Our Annual Report on Form 10-K for the year ended December 31, 2000,
filed with the SEC on March 21, 2001;
(b) The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on May 15, 1998.
These filings, our other annual, quarterly and current reports, our proxy
statements and our other SEC filings may be examined, and copies may be
obtained, at the following SEC public reference rooms:
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
You may obtain information on the operation of the public reference rooms
by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the
public on the SEC's Internet site at http://www.sec.gov.
Our common stock is quoted on the Nasdaq National Market under the symbol
"CLRS," and our SEC filings can be read at the following Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
We will also provide without charge to each person to whom a copy of this
offer to exchange is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents to which we have referred you,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to:
Clarus Corporation
Attention: Pam Ellis
3970 Johns Creek Court, Suite 100
Suwanee, Georgia 30024
Telephone: (770) 291-5394
Facsimile: (770) 291-4775
E-mail: ellisp@claruscorp.com
between the hours of 9:00 a.m. and 4:00 p.m., Suwanee, Georgia local time. As
you read the documents listed in Section 17, you may find some inconsistencies
in information from one document to another. Should you find inconsistencies
between
Page 27
the documents, or between a document and this offer to exchange, you should rely
on the statements made in the most recent document. The information contained in
this offer to exchange about Clarus Corporation should be read together with the
information contained in the documents to which we have referred you.
18. FORWARD LOOKING STATEMENTS; MISCELLANEOUS.
This offer to exchange and our SEC reports referred to above contain
certain forward-looking statements, including or related to our future results,
including certain projections and business trends. Assumptions relating to
forward-looking statements involve judgments with respect to, among other
things, future economic, competitive and market conditions and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond our control. When used in this offer to exchange, the
words "estimate," "project," "intend," "believe" and "expect" and similar
expressions are intended to identify forward-looking statements. Although we
believe that assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could prove inaccurate, and we may not
realize the results contemplated by the forward-looking statement. Management
decisions are subjective in many respects and susceptible to interpretations and
periodic revisions based on actual experience and business developments, the
impact of which may cause us to alter our business strategy or capital
expenditure plans that may, in turn, affect our results of operations. In light
of the significant uncertainties inherent in the forward-looking information
included in this offer to change, you should not regard the inclusion of such
information as our representation that we will achieve any strategy, objectives
or other plans. The forward-looking statements contained in this offer to
exchange speak only as of the date of this offer to exchange as stated on the
front cover, and we have no obligation to update publicly or revise any of these
forward-looking statements.
These and other statements, which are not historical facts, are based
largely on management's current expectations and assumptions and are subject to
a number of risks and uncertainties that could cause actual results to differ
materially from those contemplated by such forward-looking statements. These
risks and uncertainties include the following:
- We may not effectively implement our business strategy.
- We may not be able to maintain referencable accounts.
- We expect our product line to appeal to early stage companies which
exposes us to higher than normal credit risk.
- If our subscription-based model is unsuccessful, the market may adopt
our products at a slower rate than anticipated, and our business may
suffer materially.
- We may not generate the substantial additional revenues necessary to
become profitable and anticipate that we will continue to incur
losses.
- As we expand our international sales and marketing activities, our
business will be more susceptible to numerous risks associated with
international operations.
- We have limited experience in marketing, selling and supporting our
products and services in foreign countries. We do not have experience
developing foreign language versions of our products.
- Our quarterly operating results are volatile and difficult to predict.
If we fail to meet expectations of public market analysts or
investors, the market price of our common stock may decrease
significantly.
- We may incur costs and liabilities related to potential or pending
litigation.
- Competition from other electronic procurement providers may reduce
demand for our products and cause us to reduce the price of our
products.
- Market adoption of our solution will be impeded if we do not continue
to establish and maintain strategic relationships.
- We expect to depend on our Clarus eProcurement and Clarus eMarket
products for a significant portion of our revenues for the foreseeable
future.
- Our products may perform inadequately in a high-volume environment.
- Defects in our products could delay market adoption of our solution or
cause us to commit significant resources to remedial efforts.
- Any acquisitions that we attempt or make could prove difficult to
integrate or require a substantial commitment of management time and
other resources.
- We may not be able to retain the existing employees of acquired
companies.
- An increase in the length of our sales cycle may contribute to
fluctuations in our operating results.
- Our success depends on the continued use of Microsoft technologies or
other technologies that operate with our products.
Page 28
- The failure to maintain, support or update software licensed from
third parties could materially and adversely affect our products'
performance or cause product shipment delays.
- If we are unable to manage our internal resources, we may incur
increased administrative costs and be unable to capitalize on revenue
opportunities.
- Our success depends on our continuing ability to attract, hire, train
and retain a substantial number of highly skilled managerial,
technical, sales, marketing and customer support personnel.
- Illegal use of our proprietary technology could result in substantial
litigation costs and divert management resources.
- Claims against us regarding our proprietary technology could require
us to pay licensing or royalty fees or to modify or discontinue our
products.
- A compromise of the encryption technology employed in our solutions
could reduce customer and market confidence in our products and
result in claims against us.
- Our success depends upon market acceptance of e-commerce as a reliable
method for corporate procurement and other commercial transactions.
- The market for business-to-business e-commerce solutions is
characterized by rapid technological change, and our failure to
introduce enhancements to our products in a timely manner could render
our products obsolete and unmarketable.
- Failure to expand Internet infrastructure could limit our growth.
- Future governmental regulations could materially and adversely affect
our business and e-commerce generally.
- Legislation limiting further levels of encryption technology may
adversely affect our sales.
- The market price of our common stock is highly volatile and several
factors that are beyond our control could adversely affect the market
price of our common stock.
We are not aware of any jurisdiction where the making of the offer is not
in compliance with applicable law. If we become aware of any jurisdiction where
the making of the offer is not in compliance with any valid applicable law, we
will make a good faith effort to comply with such law. If, after such good
faith effort, we cannot comply with such law, the offer will not be made to, nor
will tenders be accepted from or on behalf of, the option holders residing in
such jurisdiction.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR OPTIONS PURSUANT
TO THE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS
DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO
GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE
OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT
OR IN THE RELATED LETTER OF TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR
REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT
RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.
Clarus Corporation
April 9, 2001
Page 29
SCHEDULE A
INFORMATION CONCERNING
THE DIRECTORS AND EXECUTIVE OFFICERS
OF CLARUS CORPORATION
The directors and executive officers of Clarus Corporation and their
positions and offices as of April 6, 2001, are set forth in the following table:
Name Positions and Offices Held
---- --------------------------
Stephen P. Jeffery Chairman of the Board of Directors, President
and Chief Executive Officer
Steven M. Hornyak Executive Vice President and General Manager,
Americas
Michael W. Mattox Senior Vice President, Operations and Corporate
Security
James J. McDevitt Chief Financial Officer
Julie K. Smith Chief Marketing Officer
Mark A. Johnson Director
Brady L. Rackley, III Director
Tench Coxe Director
Donald L. House Director
Said Mohammadioun Director
The address of each director and executive officer is: c/o Clarus Corporation,
3970 Johns Creek Court, Suite 100, Suwanee, Georgia 30024.
A-1