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Verity Inc/DE – ‘DEF 14A’ for 9/26/00

On: Monday, 8/21/00, at 1:48pm ET · For: 9/26/00 · Accession #: 1095811-0-2941 · File #: 0-26880

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/21/00  Verity Inc/DE                     DEF 14A     9/26/00    1:84K                                    Bowne of Los Ang… Inc/FA

Definitive Proxy Solicitation Material — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Material                             26    121K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Additional Information Certain Transactions Employment Agreements and Termination and Change in Control Agreements Nonstatutory Stock Options Potential Limitation on Our Deductions Steven M. Krausz
1	1st Page - Filing Submission
11	Nonstatutory Stock Options
"	Potential Limitation on Our Deductions
"	Additional Information
18	Employment Agreements and Termination and Change in Control Agreements
20	Steven M. Krausz
22	Certain Transactions

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [ ]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

VERITY, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

---------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

---------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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VERITY, INC.
894 ROSS DRIVE
SUNNYVALE, CA 94089
------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 26, 2000

To the Stockholders of Verity, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Verity,
Inc., a Delaware corporation, will be held on Tuesday, September 26, 2000 at
11:00 a.m. local time at the Sunnyvale Sheraton, 1100 N. Mathilda Avenue,
Sunnyvale, California for the following purpose:

1. To elect two directors to hold office until the 2003 Annual Meeting of
Stockholders.

2. To approve an amendment to our Certificate of Incorporation to increase
the authorized number of shares of Common Stock from 100,000,000 to
200,000,000 shares.

3. To approve our 1995 Stock Option Plan, as amended, to increase the
aggregate number of shares of Common Stock authorized for issuance under
such plan from 10,121,672 to 12,121,672 shares.

4. To ratify the selection of PricewaterhouseCoopers LLP as our independent
accountants for our fiscal year ending May 31, 2001.

5. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

The Board of Directors has fixed the close of business on August 1, 2000,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.

By Order of the Board of Directors

/s/ Gordon C. Atkinson

Gordon C. Atkinson
Secretary

Sunnyvale, California

August 21, 2000

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.

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VERITY, INC.
894 ROSS DRIVE
SUNNYVALE, CA 94089
------------------------

PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS

SEPTEMBER 26, 2000
------------------------

INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

The enclosed proxy is solicited on behalf of the Board of Directors of
Verity, Inc., a Delaware corporation, for use at the Annual Meeting of
Stockholders to be held on September 26, 2000, at 11:00 a.m. local time, or at
any adjournment or postponement thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting. The Annual Meeting will be held at
the Sunnyvale Sheraton, 1100 N. Mathilda Avenue, Sunnyvale, California. We
intend to mail this proxy statement and accompanying proxy card on or about
August 21, 2000, to all stockholders entitled to vote at the Annual Meeting.

SOLICITATION

We will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. We may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by our directors, officers or other regular employees. No
additional compensation will be paid to directors, officers or other regular
employees for such services.

VOTING RIGHTS AND OUTSTANDING SHARES

Only holders of record of Common Stock at the close of business on August
1, 2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on August 1, 2000, we had outstanding and entitled to vote
32,657,754 shares of Common Stock.

Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Except for Proposal 2, Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether a matter has been approved. With respect to Proposal 2, broker non-votes
will have the same effect as negative votes.

REVOCABILITY OF PROXIES

Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with our
Secretary at our principal executive office, 894 Ross Drive, Sunnyvale, CA
94089, a written notice of revocation or a duly executed proxy bearing a later
date, or it may be revoked by attending the meeting and voting in person.
Attendance at the meeting will not, by itself, revoke a proxy.

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STOCKHOLDER PROPOSALS

The deadline for submitting a stockholder proposal for inclusion in our
proxy statement and form of proxy for our 2001 annual meeting of stockholders
pursuant to Rule 14a-8 of the Securities and Exchange Commission is April 23,
2001. The deadline for submitting a stockholder proposal or a nomination for
director that is not to be included in such proxy statement and proxy is also
April 23, 2001. Stockholders are also advised to review our Bylaws, which
contain additional requirements with respect to advance notice of stockholder
proposals and director nominations.

PROPOSAL 1

ELECTION OF DIRECTORS

Our Certificate of Incorporation and Bylaws provide that our Board of
Directors shall be divided into three classes, each class consisting, as nearly
as possible, of one-third of the total number of directors, with each class
having a three-year term. Vacancies on our Board of Directors may be filled only
by persons elected by a majority of the remaining directors. A director elected
by the Board of Directors to fill a vacancy (including a vacancy created by an
increase in the Board of Directors) shall serve for the remainder of the full
term of the class of directors in which the vacancy occurred and until such
director's successor is elected and qualified.

Our Board of Directors is presently composed of six members. There are two
directors in the class whose term of office expires in 2000. The nominees for
election to this class, Stephen A. MacDonald and Anthony J. Bettencourt, are
currently members of our Board of Directors. Mr. MacDonald was previously
elected by the stockholders and Mr. Bettencourt was appointed by our Board in
September 1999. If elected at the Annual Meeting, the nominees would serve until
the 2003 annual meeting and until their successors are elected and have
qualified, or until such directors' earlier death, resignation or removal.

Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the nominees named below. In the event that such nominees should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominees as management may
propose. The nominees have agreed to serve if elected, and management has no
reason to believe that such nominees will be unable to serve.

Set forth below is biographical information for each nominee and each
person whose term of office as a director will continue after the Annual
Meeting.

NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING

STEPHEN A. MACDONALD, age 54, has served as a member of our Board of
Directors since December 1988. From May 1983 until May 1996, Mr. MacDonald was
employed by Adobe Systems Incorporated, a software company, where he served as
Senior Vice President and Chief Operating Officer. From May 1996 to April 1998,
he served as President and Chief Executive Officer of Active Software, Inc., a
software company. Mr. MacDonald is currently a consultant. Mr. MacDonald is a
director of Network Computing Devices, Inc., a computer hardware and software
company. Mr. MacDonald holds a B.Sc. from Dalhousie University.

ANTHONY J. BETTENCOURT, age 39, has served as a member of our Board of
Directors since September 1999. Mr. Bettencourt joined our company in July 1995
as Vice President of North American sales. He was subsequently promoted to Vice
President of Worldwide Sales and Marketing and served in this position until his
departure in December 1996. From December 1996 to September 1997, Mr.
Bettencourt served as an officer of OnLive! Technologies, a private technology
company. Mr. Bettencourt rejoined our company in September 1997 as Senior Vice
President, Worldwide Sales and Product Marketing and was appointed to the
position of President in September 1999. Prior to joining our company, Mr.
Bettencourt served as vice

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president of sales for Versant Object Technology, a database management company,
from 1992 to June 1995. Mr. Bettencourt holds a B.A. from Santa Clara
University.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.

DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING

GARY J. SBONA, age 57, has served as our Chief Executive Officer since July
1997, as a member of our Board of Directors since May 1998 and as Chairman of
the Board of Directors since March 1999. He also served as our President from
July 1997 to September 1999. Mr. Sbona currently serves as Chairman and Chief
Executive Officer of Auspex Systems Inc., a network attached storage company,
and as a Director of 3D Systems Corporation, a solid imaging and mass
customization company. Since 1974, Mr. Sbona also serves as chairman and chief
executive officer of Regent Pacific Management Corporation, a professional
services firm that is currently providing us with management services.

KARL C. POWELL, age 57, has served as a member of our Board of Directors
since August 2000. Mr. Powell also serves as president and chief executive
officer of N H M & P, Inc, a newly-formed Oregon corporation engaged in the
development of software management tools. Mr. Powell was a co-founder of Sequent
Computer Systems, Inc. and served as director from 1983 until 1999, when it was
acquired by IBM. He also served as chairman of the board of Sequent Computer
Systems and as chief executive officer from the company's inception. Mr. Powell
holds a B.S. in Mechanical Engineering from the U.S. Merchant Marine Academy.

DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING

STEVEN M. KRAUSZ, age 45, has served as a member of our Board of Directors
since May 1988. Mr. Krausz has been a general partner of the venture capital
firms U.S. Venture Partners III, IV, V, VI and VII, U.S.V. Entrepreneur Partners
and BHMS Partners III since 1985. Mr. Krausz holds a B.S. in Electrical
Engineering and a M.B.A. from Stanford University.

CHARLES P. WAITE, JR., age 45, has served as a member of our Board of
Directors since May 1988. Mr. Waite has been a general partner of Olympic
Venture Partners II and a vice president of Northwest Venture Services Corp.
since 1987, a general partner of Olympic Venture Partners III since 1994 and a
general partner of Olympic Venture Partners IV since 1997, all of which are
venture capital firms. Mr. Waite is also a director of Loudeye Technologies,
Inc., WatchGuard Technologies, Inc. and several privately held companies. Mr.
Waite holds an A.B. in History from Kenyon College and a M.B.A. from Harvard
University.

BOARD COMMITTEES AND MEETINGS

During the fiscal year ended May 31, 2000, our Board of Directors held nine
meetings. The Board has an Audit Committee and a Compensation Committee.

The Audit Committee meets with our independent accountants at least
annually to review the results of the annual audit and discuss the financial
statements, recommends to the Board the independent auditors to be retained, and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is currently composed of three
non-employee directors: Messrs. Krausz, MacDonald and Waite; Mr. MacDonald
joined the Audit Committee on June 15, 2000. It met one time during fiscal year
2000.

The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
our stock option plans and otherwise determines compensation levels and performs
such other functions regarding compensation as the Board may delegate. The
Compensation Committee is composed of two non-employee directors: Messrs. Krausz
and Waite. It only took actions by unanimous written consent during fiscal year
2000.

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During the fiscal year ended May 31, 2000, each director attended 75% or
more of the aggregate of the meetings of the Board and of the committees on
which he served, held during the period for which he was a director or committee
member, respectively.

PROPOSAL 2

APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

Our Board of Directors has adopted, subject to stockholder approval, an
amendment to our Certificate of Incorporation to increase the authorized number
of shares of our Common Stock from 100,000,000 shares to 200,000,000 shares. As
amended, Article FOURTH, Paragraph 1 of our Certificate of Incorporation shall
read in its entirety as follows:

"The Corporation is authorized to issue two classes of shares to be
designated respectively Preferred Stock, having a par value of $0.001 per
share ("Preferred"), and Common Stock, having a par value of $0.001 per
share ("Common"). The total number of shares of Preferred this Corporation
shall have authority to issue is 1,999,995, and the total number of shares
of Common this Corporation shall have authority to issue is 200,000,000."

The additional Common Stock to be authorized by adoption of the amendment
would have rights identical to our currently outstanding Common Stock. Adoption
of the proposed amendment and issuance of the Common Stock would not affect the
rights of the holders of our currently outstanding Common Stock, except for
effects incidental to increasing the number of shares of our Common Stock
outstanding, such as dilution of the earnings per share and voting rights of
current holders of Common Stock. If the amendment is adopted, it will become
effective upon filing of a Certificate of Amendment of our Certificate of
Incorporation with the Secretary of State of the State of Delaware.

In addition to the 31,605,640 shares of Common Stock outstanding at May 31,
2000, our Board of Directors has reserved 16,431,323 shares for issuance upon
exercise of options and rights granted under our stock option and stock purchase
plans.

Although at present the Board of Directors has no plans to issue the
additional shares of Common Stock, it desires to have such shares available to
provide additional flexibility to use its capital stock for business and
financial purposes in the future. The additional shares may be used, without
further stockholder approval, for various purposes including, without
limitation, declaring a stock dividend, raising capital, providing equity
incentives to employees, officers or directors, establishing strategic
relationships with other companies and expanding our business or product lines
through the acquisition of other businesses or products.

The additional shares of Common Stock that would become available for
issuance if the proposal were adopted could also be used by us to oppose a
hostile takeover attempt or delay or prevent changes in our control or
management. For example, without further stockholder approval, the Board of
Directors could strategically sell shares of Common Stock in a private
transaction to purchasers who would oppose a takeover or favor the current Board
of Directors. In addition, if a person or group of persons attempted a hostile
takeover of us, such shares could be issued in connection with our Rights
Agreement, which would allow stockholders (other than the hostile parties) to
purchase our Common Stock at a discount to the then current market price, which
would have a dilutive effect on the hostile parties. Although this proposal to
increase the authorized Common Stock has been prompted by business and financial
considerations and not by the threat of any hostile takeover attempt (nor is the
Board of Directors currently aware of any such attempts directed at us),
nevertheless, stockholders should be aware that approval of proposal could
facilitate future efforts by us to deter or prevent changes in our control,
including transactions in which the stockholders might otherwise receive a
premium for their shares over then current market prices.

The affirmative vote of the holders of a majority of the shares of the
Common Stock will be required to approve this amendment to our Certificate of
Incorporation. As a result, abstentions and broker non-votes will have the same
effect as negative votes.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
4

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PROPOSAL 3

APPROVAL OF 1995 STOCK OPTION PLAN, AS AMENDED

We established the stock option plan the subject of this proposal in August
1988. In June 1995, our Board of Directors amended and restated this stock
option plan, extended its term and renamed it the "Verity, Inc. 1995 Stock
Option Plan." In 1996, our Board of Directors amended the 1995 Stock Option Plan
to (i) increase the number of shares of our Common Stock authorized for issuance
thereunder from 2,910,836 shares to 3,310,836 shares; (ii) provide that the
Board of Directors may not decrease the exercise price of certain stock options
or grant a new option in substitution therefor, without stockholder approval;
(iii) provide that the maximum term of certain stock options granted will be
eight years; and (iv) provide that the exercise price per share of any stock
option granted under the 1995 Stock Option Plan must equal at least the fair
market value of a share of our Common Stock on the date of grant of the stock
option. The purpose of the 1995 Stock Option Plan is to provide an equity
interest for our employees, directors and consultants or any parent or
subsidiary corporation of us, in order to give them a greater personal interest
in the success of the business and to provide added incentive to continue and
advance in their employment or service to us.

As a result of a series of amendments and a two-for-one stock split
declared in October 1999, a total of 10,121,672 shares of Common Stock have been
reserved for issuance under the 1995 Stock Option Plan (excluding the 2,000,000
shares now proposed for stockholder approval). As of May 31, 2000, options to
purchase 4,676,387 shares of Common Stock granted pursuant to the 1995 Stock
Option Plan had been exercised (of which 199,126 shares were repurchased by us),
4,667,361 shares of Common Stock were reserved for issuance upon the exercise of
outstanding options at a weighted average exercise price of $17.99 per share,
with exercise prices ranging from $0.57 to $31.75, and 977,050 shares of Common
Stock remained available for future option grants (excluding the 2,000,000
shares now proposed for stockholder approval), which equaled approximately 3.07%
of the total number of shares of Common Stock outstanding.

During the last fiscal year, shares of Common Stock were granted in the
amounts and at the weighted average prices per share under the 1995 Stock Option
Plan as follows: Gary Sbona, 1,000,000 shares ($30.93); Anthony Bettencourt,
401,000 shares ($30.02); Hugh Njemanze 151,000 shares ($31.06); James Ticehurst,
151,000 shares ($31.06); Ronald Weissman, 100,000 shares ($30.75); Todd Yamami,
151,000 shares ($31.06); Steven M. Krausz, 110,000 shares ($31.27); Charles P.
Waite, Jr., 110,000 shares ($31.27); Stephen A. MacDonald, 110,000 ($31.27); all
current executive officers as a group, 1,954,000 shares ($30.88); and all
Directors who are not executive officers as a group, 330,000 shares ($31.27).

PROPOSED AMENDMENTS TO THE OPTION PLAN

Our Board of Directors has amended the 1995 Stock Option Plan, subject to
stockholder approval, to increase the number of shares of our Common Stock
reserved under the 1995 Stock Option Plan by 2,000,000 shares so that the total
number of shares available for future grants as of May 31, 2000 under the 1995
Stock Option Plan would be 2,977,050. The stockholders are now being asked to
approve the increase at the Annual Meeting in order to make available sufficient
shares for continued operation of the 1995 Stock Option Plan.

We seek to attract, motivate and retain talented and enterprising employees
by rewarding performance and encouraging behavior that will improve our
profitability. We believe that the 1995 Stock Option Plan plays an important
role in achieving these objectives by enabling us to provide broad employee
equity interests in us. We believe that equity incentives provided by the 1995
Stock Option Plan help align the interests of our employees with the interests
of our stockholders, and enhance our ability to continue recruiting and
retaining qualified officers, employees and consultants essential to our
success. Our management believes that the continued operation of the 1995 Stock
Option Plan necessitates an increase in the share reserve under the 1995 Stock
Option Plan.

We have engaged Regent Pacific Management Corporation ("Regent Pacific") to
provide us management services, with employees of Regent Pacific currently
serving as our Chief Executive Officer and Chief Operating Officer, respectively
(See "Employment Agreements and Termination and Change in Control Agreements"
and "Certain Transactions"). Our goal for the longer term is to attract and
retain key executive

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officers to replace the Regent Pacific personnel. In order to attract and retain
such key management personnel, we believe that we must offer attractive equity
incentives and that the number of shares of Common Stock currently authorized
for issuance pursuant to the 1995 Stock Option Plan may be inadequate for such
purpose.

SUMMARY OF THE PROVISIONS OF THE OPTION PLAN

The following summary of the 1995 Stock Option Plan, as amended, is
qualified in its entirety by the specific language of the 1995 Stock Option
Plan, a copy of which is available to any stockholder upon request.

General. The 1995 Stock Option Plan provides for the grant of incentive
stock options within the meaning of Section 422 of the Code, and nonstatutory
stock options. As of May 31, 2000, options to purchase 4,676,387 shares of
Common Stock granted pursuant to the 1995 Stock Option Plan had been exercised
(of which 199,126 shares were repurchased by us), 4,674,361 shares of Common
Stock were reserved for issuance upon the exercise of outstanding options, and
977,050 shares of Common Stock remained available for future grants.

Shares Subject to Plan. Currently, a maximum of 10,121,672 of the
authorized but unissued or reacquired shares of our Common Stock may be issued
upon the exercise of options granted pursuant to the 1995 Stock Option Plan. Our
Board of Directors has amended the 1995 Stock Option Plan, subject to
stockholder approval, to increase by 2,000,000 the maximum number of shares of
Common Stock issuable thereunder to an aggregate of 12,121,672.

If our stockholders approve the 2,000,000 share increase in the number of
shares authorized for issuance under the 1995 Stock Option Plan, 2,977,050
shares of our Common Stock would be available for future option grants as of May
31, 2000, which equals approximately 9.4% of the total number of shares of our
Common Stock outstanding as of that date. The 1995 Stock Option Plan imposes a
limit under which no employee may receive in any of our fiscal years options to
purchase in excess of 1,000,000 shares. The grant limit is intended to comply
with Section 162(m) of the Code and the regulations thereunder in order to
preserve our ability to fully deduct any compensation expense related to options
granted under the 1995 Stock Option Plan. In the event of any stock dividend,
stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in our capital structure, appropriate
adjustments will be made to the shares subject to the 1995 Stock Option Plan, to
the grant limit and to outstanding options. To the extent any outstanding option
under the 1995 Stock Option Plan expires or terminates prior to exercise in full
or if shares issued upon exercise of an option are repurchased by us, the shares
of Common Stock for which such option is not exercised or the repurchased shares
are returned to the 1995 Stock Option Plan and become available for future
grant, but do not increase the total number of shares authorized for issuance
under the 1995 Stock Option Plan.

Administration. The 1995 Stock Option Plan is administered by our Board of
Directors or a duly appointed committee of the Board. The 1995 Stock Option Plan
provides that with respect to the participation of individuals whose
transactions in our equity securities are subject to Section 16 of the
Securities Exchange Act of 1934, the 1995 Stock Option Plan must be administered
in compliance with the requirements of Rule 16b-3 under the Exchange Act. With
respect to persons covered by Section 162(m) of the Code the 1995 Stock Option
Plan permits administration in compliance with Section 162(m) of the Code (for
more information on Section 162(m) of the Code, please see the paragraph
"Potential Limitation on Our Deductions" below). Subject to the provisions of
the 1995 Stock Option Plan, our Board determines the persons to whom options are
to be granted, the number of shares to be covered by each option, whether an
option is to be an incentive stock option or a nonstatutory stock option, the
timing and terms of exercisability of each option or the vesting of shares
acquired upon the exercise of an option, including the effect thereon of an
optionee's termination of service, the exercise price of and the type of
consideration to be paid to us upon the exercise of each option, the duration of
each option, and all other terms and conditions of the options. The 1995 Stock
Option Plan authorizes our Board to amend, modify, extend, renew, or grant a new
option in substitution for, any option, to waive any restrictions or conditions
applicable to any option or any shares acquired upon the exercise thereof, and
to accelerate, continue, extend or defer the exercisability of any option or the
vesting of any shares acquired upon the exercise of an option, including with
respect to the period

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following an optionee's termination of service with us. However, the Board may
not decrease the exercise price of a stock option granted from the option
reserve increase (or from the prior increase to the share reserve), or grant a
new option in substitution therefor having a lower exercise price without the
approval of our stockholders. Subject to certain limitations, the 1995 Stock
Option Plan provides for our indemnification of any director, officer of
employee against all reasonable expenses, including attorney's fees, incurred in
connection with any legal action arising from such person's action or failure to
act in administering the 1995 Stock Option Plan. Our Board will interpret the
1995 Stock Option Plan and options granted thereunder, and all determinations of
the Board will be final and binding on all persons having an interest in the
1995 Stock Option Plan or any option.

Eligibility. Generally, all of our employees, directors and consultants or
of any of our present or future parent or subsidiary corporations are eligible
to participate in the 1995 Stock Option Plan. As of June 30, 2000, we had
approximately 367 employees, including seven executive officers, eight corporate
officers and five directors. In addition, the 1995 Stock Option Plan permits
options to be granted to prospective employees and consultants in connection
with written offers of employment or engagement. Any such options may not become
exercisable prior to such individual's commencement of service. Any person
eligible under the 1995 Stock Option Plan may be granted a nonstatutory option.
However, only employees may be granted incentive stock options.

Terms and Conditions of Options. Each option granted under the 1995 Stock
Option Plan is evidenced by a written agreement between us and the optionee
specifying the number of shares subject to the option and the other terms and
conditions of the option, consistent with the requirements of the 1995 Stock
Option Plan. The exercise price per share of each option must equal at least the
fair market value of a share of our Common Stock on the date of grant. The
exercise price of any incentive stock option granted to a person who at the time
of grant owns stock possessing more than 10% of the total combined voting power
of all classes of our stock or any parent or subsidiary corporation of us must
be at least 110% of the fair market value of a share of our Common Stock on the
date of grant. Our Board determines the fair market value of the our Common
Stock in its sole discretion.

The option exercise price may be paid in cash, by check, or in cash
equivalent, by tender of shares of our Common Stock owned by the optionee having
a fair market value not less than the exercise price, by the assignment of the
proceeds of a sale or loan with respect to some or all of the shares of Common
Stock being acquired upon the exercise of the option, by means of a promissory
note, by any other lawful consideration approved by the Board, or by any
combination of these. The Board may nevertheless restrict the forms of payment
permitted in connection with any option grant.

Options granted under the 1995 Stock Option Plan become exercisable and
vested at such times and subject to such conditions as specified by the Board.
Generally, options granted under the 1995 Stock Option Plan are exercisable on
and after the date of grant, subject to our right to reacquire at the optionee's
exercise price any unvested shares held by the optionee upon termination of
employment or service with us or if the optionee attempts to transfer any
unvested shares. Shares subject to options generally vest in installments
subject to the optionee's continued employment or service. The maximum term of
an incentive stock option or nonstatutory stock option that draws upon shares
from the option reserve increase (and also the prior increase to the share
reserve) under the 1995 Stock Option Plan is eight years unless the incentive
stock option is granted to a ten percent stockholder, in which case the maximum
term is five years. The maximum term of any other incentive stock option granted
under the 1995 Stock Option Plan is ten years unless granted to a ten percent
stockholder, in which case the maximum term is five years. Consistent with the
Code, the 1995 Stock Option Plan does not limit the term of any nonstatutory
stock option not drawing upon shares from the option reserve increase (and the
prior increase to the share reserve). Options are nontransferable by the
optionee other than by will or by the laws of descent and distribution, and are
exercisable during the optionee's lifetime only by the optionee.

Transfer of Control. The 1995 Stock Option Plan provides that, in the event
of (i) a sale or exchange by the stockholders of more than 50% of our voting
stock, (ii) a merger or consolidation in which we are a party, (iii) the sale,
exchange or transfer of all or substantially all of our assets, or (iv) a
liquidation or dissolution of

DEF 14A 10th Page of 26 TOC 1st Previous Next ↓Bottom Just 10th

us wherein, upon any such event, our stockholders immediately before such event
do not retain direct or indirect beneficial ownership of more than 50% of the
total combined voting power of our voting stock, our successor, or the
corporation to which our assets were transferred in substantially the same
proportions as prior to such event, the acquiring or successor corporation may
assume our rights and obligations under outstanding options or substitute
substantially equivalent options for such corporation's stock. To the extent
that the options outstanding under the 1995 Stock Option Plan are not assumed,
substituted for, or exercised prior to the transfer of control, they will
terminate; provided, however, that the terms of certain options provide for
acceleration of vesting upon such a change in control (see "Employment
Agreements and Termination and Change in Control Agreements").

Termination and Amendment. The 1995 Stock Option Plan will continue in
effect until the earlier of its termination by the Board or the date on which
all shares available for issuance under the 1995 Stock Option Plan have been
issued and all restrictions on such shares under the terms of the Plan and the
option agreements have lapsed, provided that all incentive stock options must be
granted prior to June 14, 2010, the tenth anniversary of the date on which the
Board approved the proposed amendment of the 1995 Stock Option Plan. The Board
may terminate or amend the 1995 Stock Option Plan at any time, but, without
stockholder approval, the Board may not amend the 1995 Stock Option Plan to
increase the total number of shares of Common Stock issuable thereunder, change
the class of persons eligible to receive incentive stock options, or expand the
class of persons eligible to receive nonstatutory stock options. No amendment
may adversely affect an outstanding option without the consent of the optionee,
unless the amendment is required to preserve the option's status as an incentive
stock option or is necessary to comply with any applicable law.

SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OPTION PLAN

The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law of participation in the
1995 Stock Option Plan and does not attempt to describe all possible federal or
other tax consequences of such participation or tax consequences based on
particular circumstances.

Incentive Stock Options. An optionee recognizes no taxable income for
regular income tax purposes as the result of the grant or exercise of an
incentive stock option qualifying under Section 422 of the Code. Optionees who
do not dispose of their shares for two years following the date the option was
granted nor within one year following the exercise of the option will normally
recognize a long-term capital gain or loss equal to the difference, if any,
between the sale price and the purchase price of the shares. If an optionee
satisfies such holding periods upon a sale of the shares, we will not be
entitled to any deduction for federal income tax purposes. If an optionee
disposes of shares within two years after the date of grant or within one year
from the date of exercise, the difference between the fair market value of the
shares on the determination date (see discussion under "Nonstatutory Stock
Options" below) and the option exercise price (not to exceed the gain realized
on the sale if the disposition is a transaction with respect to which a loss, if
sustained, would be recognized) will be taxed as ordinary income at the time of
disposition. Any gain in excess of that amount will be a capital gain. If a loss
is recognized, there will be no ordinary income, and such loss will be a capital
loss. A capital gain or loss will be long-term if the optionee's holding period
is more than 12 months. Any ordinary income recognized by the optionee upon such
a disqualifying disposition of the shares generally should be deductible by us
for federal income tax purposes, except to the extent such deduction is limited
by applicable provisions of the Code or the regulations thereunder.

The difference between the option exercise price and the fair market value
of the shares on the determination date of an incentive stock option (see
discussion under "Nonstatutory Stock Options" below) is an item of adjustment in
computing the optionee's alternative minimum taxable income and may be subject
to an alternative minimum tax which is paid if such tax exceeds the regular tax
for the year. Special rules may apply with respect to certain subsequent sales
of the shares in a disqualifying disposition, certain basic adjustments for
purposes of computing the alternative minimum taxable income on a subsequent
sale of the shares and certain tax credits which may arise with respect to
optionees subject to the alternative minimum tax.

DEF 14A 11th Page of 26 TOC 1st Previous Next ↓Bottom Just 11th

Nonstatutory Stock Options. Options not designated or qualifying as
incentive stock options will be nonstatutory stock options. Nonstatutory stock
options have no special tax status. An optionee generally recognizes no taxable
income as the result of the grant of such an option. Upon exercise of a
nonstatutory stock option, the optionee normally recognizes ordinary income in
the amount of the difference between the option exercise price and the fair
market value of the shares on the determination date (as defined below). If the
optionee is an employee, such ordinary income generally is subject to
withholding of income and employment taxes. The "determination date" is the date
on which the option is exercised unless the shares are subject to a substantial
risk of forfeiture and are not transferable, in which case the determination
date is the earlier of (i) the date on which the shares are transferable or (ii)
the date on which the shares are not subject to a substantial risk of
forfeiture. If the determination date will be after the exercise date, the
optionee may elect, pursuant to Section 83(b) of the Code, to have the exercise
date be the determination date by filing an election with the Internal Revenue
Service not later than 30 days after the date the option is exercised. Upon the
sale of stock acquired by the exercise of a nonstatutory stock option, any gain
or loss, based on the difference between the sale price and the fair market
value on the determination date, will be taxed as capital gain or loss. A
capital gain or loss will be long-term if the optionee's holding period is more
than 12 months. No tax deduction is available to us with respect to the grant of
a nonstatutory option or the sale of the stock acquired pursuant to such grant.
We generally should be entitled to a deduction equal to the amount of ordinary
income recognized by the optionee as a result of the exercise of a nonstatutory
option, except to the extent such deduction is limited by applicable provisions
of the Code or the regulations thereunder.

Potential Limitation on Our Deductions. As part of the Omnibus Budget
Reconciliation Act of 1933, the U.S. Congress amended the Code to add Section
162(m) which denies a deduction to any publicly held corporation for
compensation paid to a covered employee in a taxable year to the extent that
non-performance-based compensation paid to such a covered employee exceeds $1
million. It is possible that compensation attributable to stock options granted
under the 1995 Stock Option Plan, when combined with all other types of
compensation received by any of our covered employees, may cause this limitation
to be exceeded in any particular year.

Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation.
Treasury regulations issued under Section 162(m) of the Code provide that
compensation attributable to stock options will qualify as performance-based
compensation if: (i) the stock option plan contains a per-employee limitation on
the number of shares for which stock options may be granted during a specified
period; (ii) the per-employee limitation is approved by the stockholders; (iii)
the stock option is granted by a compensation committee comprised solely of
"outside directors;" and (iv) the exercise price of the stock option is no less
than the fair market value of the stock on the date of grant. The term "outside
directors" excludes from the compensation committee directors who are (i)
current employees of us or an affiliate, (ii) former employees of us or an
affiliate receiving compensation for past services (other than benefits under a
tax-qualified pension plan), (iii) current and former officers of us or an
affiliate, (iv) directors currently receiving direct or indirect remuneration
from us or an affiliate in any capacity (other than as a director), and (v) any
other person who is otherwise considered an "outside director" for purposes of
Section 162(m) of the Code.

ADDITIONAL INFORMATION

1996 Nonstatutory Stock Option Plan: In February 1996, our Board of
Directors approved the 1996 Nonstatutory Stock Option Plan. Pursuant to the 1996
Nonstatutory Stock Option Plan, the Board of Directors has the power to grant
nonstatutory stock options to employees, prospective employees, consultants and
prospective consultants; provided, however, that no such grant may be made to a
person who is (i) a holder of 10% or more of our stock or (ii) one of our
executive officers or directors. As a result of a series of amendments and a
two-for-one stock split declared in October 1999, at May 31, 2000 a total of
8,420,000 shares of Common Stock were reserved for issuance to certain of our
employees and consultants. At May 31, 2000, 522,681 shares of Common Stock were
available for grant under our 1996 Nonstatutory Stock Option Plan. In June 2000,
an additional 2,000,000 shares were reserved for issuance under the 1996
Nonstatutory Stock Option Plan.

DEF 14A 12th Page of 26 TOC 1st Previous Next ↓Bottom Just 12th

1995 Outside Directors Plan: In 1995, our Board of Directors and
stockholders approved, and in 1999 amended, the 1995 Outside Directors Plan.
Under this plan there are reserved 1,000,000 shares of Common Stock for issuance
to our directors who are not employees. Specifically, the 1995 Outside Directors
Plan provides for the automatic granting of nonqualified stock options to our
non-employee directors. Under the 1995 Outside Directors Plan, each person who
is first elected or appointed as a non-employee director to the Board (excluding
any person who is already a director at the time of first becoming a
non-employee director) is automatically granted an option to purchase 40,000
shares of Common Stock on the date of such election or appointment. Thereafter
at each annual meeting of the stockholders, those non-employee directors with
six months of service as a director (not necessarily as a non-employee director)
who will be non-employee directors after such meeting automatically receive a
new option to purchase 40,000 shares of our Common Stock. As a result of one
amendment and a two-for-one stock split declared in October 1999, a total of
1,000,000 shares of Common Stock have been reserved for issuance under the 1995
Outside Directors Plan. At May 31, 2000, 370,000 shares of Common Stock were
available for grant under the 1995 Outside Directors Plan.

1997 Stock Option Plan for Verity Canada: In May 1997, our Board of
Directors authorized the adoption of the 1997 Stock Option Plan for Verity
Canada. The terms of the 1997 Stock Option Plan for Verity Canada are
substantially the same as those of the 1995 Stock Option Plan. As a result of a
series of amendments and a two-for-one stock split declared in October 1999, at
May 31, 2000 a total of 1,480,000 shares of Common Stock were reserved for
issuance to certain employees and consultants of Verity Canada. At May 31, 2000,
200,884 shares of Common Stock were available for grant under the 1997 Stock
Option Plan for Verity Canada. In June 2000, an additional 500,000 shares were
reserved for issuance under the 1997 Stock Option Plan for Verity Canada.

VOTE REQUIRED AND BOARD OF DIRECTOR'S RECOMMENDATION.

The affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy at the meeting and entitled to vote is
required for approval of this proposal. Abstentions and broker non-votes will
each be counted as present for purposes of determining the presence of a quorum
at the Annual Meeting of Stockholders. Abstentions will have the same effect as
a negative vote on this proposal. Broker non-votes will have no effect on the
outcome of this vote.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.

PROPOSAL 4

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

Our Board of Directors has selected PricewaterhouseCoopers LLP as our
independent accountants for our fiscal year ending May 31, 2001 and has further
directed that management submit the selection of independent accountants for
ratification by the stockholders at the Annual Meeting. PricewaterhouseCoopers
LLP, together with Coopers & Lybrand LLP, the predecessor entity of
PricewaterhouseCoopers LLP, has audited our financial statements since our
inception. Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.

Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
our independent accountants is not required by our Bylaws or otherwise. However,
the Board of Directors is submitting the selection of PricewaterhouseCoopers LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the Board
of Directors will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee and the Board of Directors in their
discretion may direct the appointment of different independent accountants at
any time during the year if they determine that such a change would be in the
best interests of us and our stockholders.

DEF 14A 13th Page of 26 TOC 1st Previous Next ↓Bottom Just 13th

The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of PricewaterhouseCoopers LLP. Abstentions
will be counted toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 4.

DEF 14A 14th Page of 26 TOC 1st Previous Next ↓Bottom Just 14th

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of our Common Stock as of June 30, 2000 by:

- each director and nominee for director;

- each of the executive officers named in the Summary Compensation Table;

- all directors and executive officers as a group; and

- each person, or group of affiliated persons, known by us to be beneficial
owners of 5% or more of our Common Stock.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of June 30, 2000 are deemed to be
beneficially owned. These shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of each other person.

Except as indicated in this table and pursuant to applicable community
property laws, each stockholder named in the table has sole voting and
investment power with respect to the shares set forth opposite such
stockholder's name. Percentage of ownership is based on 32,006,887 shares of
Common Stock, outstanding on June 30, 2000. Unless otherwise indicated, the
address of each of the individuals named below is 894 Ross Drive, Sunnyvale,
California 94089.

[Enlarge/Download Table]

BENEFICIAL OWNERSHIP
--------------------------------------------
SHARES ISSUABLE
PURSUANT TO OPTIONS
AND WARRANTS NUMBER OF
EXERCISABLE WITHIN SHARES (INCLUDING
60 DAYS OF NUMBER SHOWN IN FIRST PERCENTAGE
BENEFICIAL OWNER JUNE 30, 2000 COLUMN) OF TOTAL
---------------- ------------------- --------------------- ----------

DIRECTORS AND EXECUTIVE OFFICERS
Gary J. Sbona............................... 1,893,000 1,893,000 5.58%
Anthony J. Bettencourt...................... 653,000 658,439 2.02
Hugh S. Njemanze............................ 275,784 366,776 1.14
James E. Ticehurst.......................... 252,436 257,887 *
Ronald F.E. Weissman........................ 299,294 328,025 1.02
Todd K. Yamami.............................. 165,956 174,391 *
Steven M. Krausz............................ 212,600 212,600 *
Stephen A. MacDonald........................ 232,000 245,400 *
Charles P. Waite, Jr. ...................... 178,959 188,321 *
5% STOCKHOLDERS
Franklin Resources, Inc.(1)................. 2,089,094 2,089,094 6.13
All directors and executive officers as a
group (9 persons)......................... 4,163,029 4,324,839 11.96

---------------

* Represents beneficial ownership of less than 1% of the outstanding shares of
our Common Stock.

(1) Franklin Advisors, Inc., an investment advisor to Franklin Resources, Inc.,
has sole voting power and investment power with respect to 2,042,400 of
these shares and, consequently, may be deemed to beneficially own these
shares. Franklin Management, Inc. has sole investment power with respect to
46,694 of these shares and, consequently, may be deemed to beneficially own
these shares. Messrs. Charles B. Johnson and Rupert H. Johnson, Jr. own in
excess of 10% of the common stock of Franklin Resources, Inc. and,
consequently, may be deemed to beneficially own the shares held by Franklin
Resources, Inc. Franklin Advisors, Inc., Franklin Management, Inc. and
Messrs. Charles B. Johnson and Rupert H. Johnson, Jr. disclaim beneficial
ownership of the shares held by Franklin

DEF 14A 15th Page of 26 TOC 1st Previous Next ↓Bottom Just 15th

Resources, Inc. Franklin Resources, Inc. is located at 777 Mariners Island
Boulevard, San Mateo, California 94404.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than ten percent of a registered class of our
equity securities, to file with the SEC initial reports of ownership and reports
of changes in ownership of our common stock and other equity securities.
Officers, directors and greater than ten percent stockholders are required by
the SEC regulations to furnish us with copies of all Section 16(a) forms they
file.

To our knowledge, based solely on a review of the copies of such reports
furnished to us and written representations that no other reports were required,
during our fiscal year ended May 31, 2000, all Section 16(a) filing requirements
applicable to our officers, directors and greater than ten percent beneficial
owners were complied with.

EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

Each of our non-employee directors receives an annual retainer of $25,000.
Directors are also reimbursed for their expenses in attending Board and
committee meetings. Each person who is first elected or appointed as a
non-employee director (excluding any person who is already a director at the
time of first becoming a non-employee director) is automatically granted an
option to purchase 40,000 shares of Common Stock on the date of such election or
appointment pursuant to the 1995 Outside Directors Plan. In addition, all
directors who have served on the Board for more than six months and are not
members of management will receive stock options to purchase 40,000 shares of
Common Stock upon the date of each annual stockholders' meeting. The exercise
price of each option is the fair market value on the day it is granted. Each
option will vest over four years and generally must be exercised within ten
years.

During the last fiscal year, we granted options covering 110,000 shares to
each of Steven M. Krausz, Stephen A. MacDonald and Charles P. Waite, Jr. at a
weighted average exercise price of $31.27 per share. All 330,000 of these
options were granted under the 1995 Outside Directors Plan. See "Additional
Information" under Proposal 3 for further information on the 1995 Outside
Directors Plan. The per share exercise price of each option is the fair market
value of such common stock on the date of grant (based on the closing sales
price reported in the Nasdaq National Market for the date of grant).

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COMPENSATION OF EXECUTIVE OFFICERS

Summary of Compensation

The following table shows for the fiscal years ended May 31, 1998, 1999 and
2000, compensation awarded or paid to, or earned by, our Chief Executive
Officer, our other four most highly compensated executive officers at May 31,
2000 and a former executive officer who was no longer serving as one of our
executive officers at May 31, 2000:

SUMMARY COMPENSATION TABLE

[Enlarge/Download Table]

LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
--------------------------- ---- -------- -------- ------------ ---------------

Gary J. Sbona............................ 2000 $ 52,000 $ 10,400 1,000,000 $ 356
Chief Executive Officer and 1999 52,000 10,400 470,000 585
Chairman of the Board(2) 1998 15,167 0 350,000 73
Anthony J. Bettencourt................... 2000 270,833 150,000(4) 401,000 230
President(3) 1999 200,000 200,000 175,000 264
1998 147,051 292,500(5) 150,000 198
Hugh S. Njemanze......................... 2000 221,875 44,375 151,000 254
Chief Technology Officer 1999 196,875 39,375 75,000 408
1998 171,250 35,000 55,000 408
James E. Ticehurst....................... 2000 158,333 31,667 151,000 1,096
Vice President, Administration and 1999 136,250 27,250 80,000 1,422
Support Operations, and Asst. Secretary 1998 106,711 21,342 30,000 994
Ronald F.E. Weissman..................... 2000 221,082 42,667 100,000 427
Vice President, Strategy and 1999 213,333 40,000 80,000 696
Corporate Marketing(6) 1998 183,333 40,000 35,000 696
Todd K. Yamami........................... 2000 128,333 25,667 151,000 194
Vice President, Corporate Controller
and 1999 104,166 20,833 90,000 176
Chief Accounting Officer 1998 82,808 16,561 30,000 135

---------------
(1) Represents premiums paid on behalf of such executive officer for life
insurance coverage in excess of a base amount of $50,000 in coverage.

(2) Mr. Sbona is partially compensated for his services to us by Regent
Management Corporation. See "Certain Transactions" below.

(3) Mr. Bettencourt served as our as Senior Vice President, Worldwide Sales and
Marketing from September 1997 to September 1999 and as our President since
September 1999.

(4) $150,000 represents sales commissions earned under a sales plan.

(5) Of such amount, $180,000 represents a signing bonus paid in connection with
Mr. Bettencourt rejoining us in September 1997, and $112,500 represents
sales commissions earned under a sales commission plan.

(6) Mr. Weissman served as our Vice President, Strategy and Corporate Marketing
until April 2000 and would have been one of our four most highly paid
executive officers but for the fact he was not serving as an executive
officer as of the end of our most recent fiscal year.

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STOCK OPTION GRANTS AND EXERCISES

We grant options to our executive officers under our 1995 Stock Option
Plan. As of June 30, 2000, options to purchase a total of 4,408,465 shares were
outstanding under the 1995 Stock Option Plan and options to purchase 977,050
shares remained available for grant thereunder.

The following tables show for the fiscal year ended May 31, 2000, certain
information regarding options granted to, exercised by, and held at year end by,
the individuals listed in the Summary Compensation Table:

OPTION GRANTS IN LAST FISCAL YEAR

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POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------- ANNUAL RATES OF
NUMBER OF PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTION EMPLOYEES IN PRICE PER EXPIRATION -------------------------
NAME GRANTED(1) FISCAL YEAR(2) SHARE DATE 5% 10%
---- ---------- -------------- --------- ---------- ----------- -----------

Gary J. Sbona.............. 606,000 9.23% $30.75 10/18/07 $ 8,897,143 $23,310,206
394,000 6.01 31.75 01/25/08 5,972,729 14,305,724
--------- ----- ----------- -----------
1,000,000 15.24 14,869,872 37,615,930
Anthony J. Bettencourt..... 200,000 3.05 28.81 09/21/07 2,751,337 6,589,931
100,000 1.52 30.75 10/18/07 1,468,175 3,516,536
100,000 1.52 31.75 01/25/08 1,515,921 3,630,894
1,000 0.02 28.25 04/18/08 13,488 32,306
--------- ----- ----------- -----------
401,000 6.11 5,748,921 13,769,667
Hugh S. Njemanze........... 100,000 1.52 30.75 10/18/07 1,468,175 3,516,536
50,000 0.76 31.75 01/25/08 757,961 1,815,447
1,000 0.02 28.25 04/18/08 13,488 32,306
--------- ----- ----------- -----------
151,000 2.30 2,239,624 5,364,289
James E. Ticehurst......... 100,000 1.52 30.75 10/18/07 1,468,175 3,516,536
50,000 0.76 31.75 01/25/08 757,961 1,815,447
1,000 0.02 28.25 04/18/08 13,488 32,306
--------- ----- ----------- -----------
151,000 2.30 2,239,624 5,364,289
Ronald F.E. Weissman....... 100,000 1.52 30.75 10/18/07 1,468,175 3,516,536
Todd K. Yamami............. 100,000 1.52 30.75 10/18/07 1,468,175 3,516,536
50,000 0.76 31.75 01/25/08 757,961 1,815,447
1,000 0.02 28.25 04/18/08 13,488 32,306
--------- ----- ----------- -----------
151,000 2.30 2,239,624 5,364,289

---------------
(1) Options granted in fiscal 2000 generally vest over a 24-month period, except
for the options granted on January 25, 2000 and April 18, 2000 which vest
over a 12-month period.

(2) Based on an aggregate of 6,566,845 options granted to employees, including
the individuals listed in the Summary Compensation Table, in fiscal year
2000.

(3) The potential realizable value is calculated based on the term of the option
at its time of grant, 10 years, compounded annually. It is calculated by
assuming that the stock price on the date of grant appreciates at the
indicated annual rate, compounded annually for the entire term of the option
and that the option is exercised and sold on the last day of its term for
the appreciated stock price.

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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION VALUES

[Enlarge/Download Table]

NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR END(1) AT FISCAL YEAR END(1)(3)
ACQUIRED ON VALUE -------------------- ------------------------
NAME EXERCISE(1) REALIZED(2) VESTED UNVESTED VESTED UNVESTED
---- ----------- ----------- --------- -------- ----------- ----------

Gary J. Sbona......................... 386,000 $9,237,872 1,562,083 691,917 $33,503,291 $1,813,084
Anthony J. Bettencourt................ 125,000 2,963,104 521,789 294,211 10,562,652 1,709,656
Hugh S. Njemanze...................... 80,000 1,719,103 263,742 135,504 5,934,990 1,195,659
James E. Ticehurst.................... 58,000 1,469,835 183,058 116,378 3,633,525 637,005
Ronald F.E. Weissman.................. 98,000 2,449,715 199,960 109,334 4,275,286 1,403,551
Todd K. Yamami........................ 56,000 1,465,683 96,128 109,828 1,043,320 431,281

---------------
(1) These options are immediately exercisable in full at the date of grant, but
shares purchased upon exercise of unvested options are subject to a
repurchase right in our favor to repurchase unvested shares at the original
issuance price.

(2) Represents the fair market value of the underlying securities on the
exercise date minus the aggregate exercise price of such option.

(3) Calculated on the basis of the fair market value of the underlying
securities as of May 31, 2000, equal to $33.75 per share, the last trading
day of fiscal 2000, as reported by the Nasdaq National Market, minus the
aggregate exercise price.

EMPLOYMENT AGREEMENTS AND TERMINATION
AND CHANGE IN CONTROL AGREEMENTS

Our 1995 Stock Option Plan provides that, in the event of (a) a sale or
exchange by the stockholders of all or substantially all of our voting stock or
certain mergers or consolidations to which we are a party and in which our
stockholders do not retain beneficial ownership of at least a majority of our or
our successor's voting stock, (b) the sale, exchange or transfer of all or
substantially all of our assets other than to one or more subsidiary
corporations, or (c) our liquidation or dissolution, the Board of Directors may
provide for the acquiring or successor corporation to assume or substitute new
options for the options outstanding under the 1995 Stock Option Plan. To the
extent that the options outstanding under the 1995 Stock Option Plan are not
assumed, substituted for, or exercised prior to such event, they will terminate;
provided, however, that we have granted options to certain of our officers,
including the individuals listed in the Summary Compensation Table, which
provide for acceleration of vesting upon such a change in control.

Under the 1995 Stock Option Plan, the Board of Directors retains discretion
to modify the terms, including the price, of outstanding shares. Options granted
under that plan are immediately exercisable, subject to a right of repurchase in
favor of us for all exercised, unvested shares. Generally, 12.5% of the shares
subject to options granted to new employees become vested six months after the
date of commencement of employment and 2.083% of the shares subject to options
vest upon completion of each succeeding full month of continuous employment with
us. Shares subject to options granted to existing employees generally vest at
the rate of 2.083% per month for 48 months following the date of grant.
Generally, options have a term of eight (8) years. All options were granted at
fair market value as determined by the Board of Directors on the date of grant.

On July 31, 1997, Gary J. Sbona was appointed as our President and Chief
Executive Officer, and we entered into an agreement with Regent Pacific
Management Corporation, a management firm of which Mr. Sbona is the chief
executive officer, which agreement was subsequently amended. See "Certain
Transactions."

On September 23, 1999, we entered into a letter agreement with Anthony J.
Bettencourt to serve as President. See "Certain Transactions."

DEF 14A 19th Page of 26 TOC 1st Previous Next ↓Bottom Just 19th

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION

The Compensation Committee is comprised of two non-employee directors of
the Board of Directors, Messrs. Krausz and Waite. The committee is responsible
for setting and administering policies governing compensation of executive
officers. For all executive officers, the committee reviews the performance and
compensation levels for executive officers, sets salary and bonus levels and
makes option grants under our 1995 Stock Option Plan.

COMPENSATION POLICIES GENERALLY

The goals of our executive officer compensation policies are to attract,
retain and reward executive officers who contribute to our success, to align
executive officer compensation with our performance and to motivate executive
officers to achieve our business objectives. We use salary, executive officer
bonuses and stock options to achieve these goals.

Salaries and Bonuses. Salaries are set for each executive officer with
reference to a range of salaries for comparable positions among high technology
companies of similar size and location. Annual salary adjustments take into
account individual executive officers' achievements during the prior fiscal year
towards key company-wide objectives set annually by the Board of Directors, in
consultation with the Chief Executive Officer, as well as the executive
officers' performance of their individual responsibilities.

Variable cash incentive compensation for fiscal 2000 was provided through
our employee bonus plan for all executive officers except for our President,
whose bonus plan for fiscal 2000 was determined based upon negotiations between
the officer and us. In accordance with the committee's goal, fiscal 2000
variable cash incentive compensation for the bonus plan participants was
targeted for up to 20% of the officer's salary if predetermined corporate
revenue and net income objectives were achieved.

Stock Options. The committee strongly believes that equity ownership by
executive officers provides incentives to build stockholder value and align the
interests of executive officers with the stockholders. Initial stock option
grants to executive officers are subject to four year vesting. The size of the
initial grant has been determined with reference to comparable stock option
compensation offered by similarly sized high technology companies for similar
positions and the responsibilities and expected future contributions of the
executive officer, as well as recruitment considerations. In determining the
size of, or whether to grant, refresher grants, the committee has considered
each executive officer's performance during the previous periods and expected
contributions during future periods, as well as the relative position and
responsibilities of each executive officer and previous option grants to such
executive officers. Generally, refresher option grants vest monthly over a one
year period from the date of grant. The committee believes that refresher
options have provided strong incentives for executive officers to remain with
us.

Deductibility of Executive Compensation. We have considered regulations of
the Internal Revenue Service which restrict deductibility of executive
compensation paid to each of the five most highly compensated executive officers
at the end of any fiscal year to the extent such compensation exceeds $1,000,000
for any of such officers in any year and does not qualify for an exception under
the statute or proposed regulations. The committee concluded in March 1996 that
it would be advisable to establish certain restrictions on the granting of
options under the 1995 Stock Option Plan to assist in the qualification of
compensation recognized in connection with the exercise of such options for an
exemption; these restrictions were approved at the Special Meeting of
Stockholders held on March 28, 1996. The committee does not believe that other
components of our compensation will be likely to exceed $1,000,000 for any
executive officer in the foreseeable future and therefore concluded that no
further action with respect to qualifying such compensation for deductibility
was necessary at this time. In the future, the committee will continue to
evaluate the advisability of qualifying its executive compensation for
deductibility of such compensation. The committee's policy is to qualify its
executive compensation for deductibility under applicable tax laws as
practicable.

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CHIEF EXECUTIVE OFFICER COMPENSATION

On July 31, 1997, Mr. Gary J. Sbona was appointed as our President and
Chief Executive Officer, and we entered into an agreement with Regent Pacific
Management Corporation, a management firm of which Mr. Sbona is the Chief
Executive Officer. The terms of the agreement were reached in arms-length
negotiations with Regent Pacific Management Corporation. Pursuant to the
original agreement, Regent Pacific provided us management services at a fee of
$50,000 per week, including the services of Mr. Sbona as Chief Executive Officer
and President and other Regent Pacific personnel as part of our management team.
The agreement had a one-year term and could be canceled by us after the
expiration of the initial 26-week period, with a minimum compensation to Regent
Pacific of $1.3 million for that initial period. As a result of a series of
amendments, the agreement has been extended through August 31, 2001. Under this
amended agreement, Regent Pacific continues to provide us the services of Mr.
Sbona as Chairman and Chief Executive Officer of Verity, and continues to
provide us additional Regent Pacific management services. The agreement provides
us with an option to further extend the term of this agreement through February
2002.

Mr. Sbona became an employee of Verity in February 1998 and receives a
salary of $52,000 per year, or $1,000 per week. The Board determined Mr. Sbona's
salary taking into consideration the value of the services rendered to Verity
and Mr. Sbona's interest in the amounts paid to Regent Pacific Management
Corporation. Mr. Sbona also received a bonus of $10,400 in fiscal 2000 based on
these same considerations.

In connection with Mr. Sbona's service as our Chief Executive Officer, in
our fiscal year ending May 31, 2000, our Board granted Mr. Sbona options to
purchase 606,000 shares and 394,000 shares of our Common Stock, at an exercise
price of $30.75 and $31.75 per share, respectively, which was the fair market
value of our Common Stock on the date of grant. The shares subject to such
options will vest entirely upon certain change of control transactions or upon
the termination of Mr. Sbona without cause. The options will also remain
exercisable for one year following the termination of Mr. Sbona's services.
These options were issued to Mr. Sbona after a determination by the Board that
such options were appropriate and advisable to retain Mr. Sbona's services.

Compensation Committee

Steven M. Krausz
Charles P. Waite, Jr.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Steven M. Krausz and Charles P. Waite, Jr. served as members of our Board
of Directors' compensation committee during the fiscal year ended May 31, 2000.

None of our executive officers serves as a member of the Board of directors
or compensation committee of any entity that has one or more executive officers
serving as a member of our Board of Directors or compensation committee.

We have entered into indemnification agreements with our directors and
officers. Such agreements require us to indemnify such individuals to the
fullest extent permitted by law.

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PERFORMANCE MEASUREMENT COMPARISON(1)

The following graph shows the total stockholder return of an investment of
$100 in cash on October 6, 1995 for (i) our Common Stock, (ii) the Nasdaq Stock
Market and (iii) the Nasdaq Computer and Data Processing Index. All values
assume reinvestment of the full amount of all dividends and are calculated as of
May 31 of each year:

Comparison of 56 month Cumulative Total Return on Investment from October
6, 1995 through May 31, 2000:

COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG VERITY, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX

[Download Table]

NASDAQ STOCK NASDAQ COMPUTER &
VERITY, INC. MARKET (U.S.) DATA PROCESSING
------------ ------------- -----------------

10/6/95 100 100 100
10/95 199 103 110
11/95 269 105 111
12/95 239 104 109
1/96 205 105 108
2/96 257 109 115
3/96 182 109 114
4/96 186 118 128
5/96 212 124 132
6/96 155 118 127
7/96 118 108 114
8/96 132 114 117
9/96 67 122 130
10/96 64 121 127
11/96 90 129 136
12/96 83 128 135
1/97 76 138 147
2/97 53 130 135
3/97 42 121 125
4/97 30 125 141
5/97 35 139 157
6/97 29 144 160
7/97 35 159 177
8/97 35 159 172
9/97 26 168 175
10/97 28 159 172
11/97 27 160 176
12/97 27 157 165
1/98 24 162 178
2/98 28 178 202
3/98 45 184 219
4/98 51 187 220
5/98 42 177 205
6/98 58 189 242
7/98 56 187 234
8/98 28 150 190
9/98 37 171 227
10/98 59 178 221
11/98 93 196 256
12/98 143 222 295
1/99 184 254 357
2/99 209 231 317
3/99 181 249 356
4/99 189 257 338
5/99 179 250 330
6/99 293 272 370
7/99 268 267 350
8/99 264 278 366
9/99 372 279 384
10/99 372 301 413
11/99 559 338 482
12/99 460 412 653
1/00 368 397 580
2/00 577 473 687
3/00 441 463 645
4/00 351 390 494
5/00 365 343 434

* $100 INVESTED ON 10/6/95 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING MAY 31.

---------------

(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any of our filings under
the 1933 Act or the 1934 Act whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.

DEF 14A 22nd Page of 26 TOC 1st Previous Next ↓Bottom Just 22nd

CERTAIN TRANSACTIONS

On July 31, 1997, Mr. Gary J. Sbona was appointed as our President and
Chief Executive Officer, and we entered into an agreement with Regent Pacific
Management Corporation, a management firm of which Mr. Sbona is the Chairman and
Chief Executive Officer. Pursuant to the original agreement, Regent Pacific
agreed to provide us management services, at a fee of $50,000 per week,
including the services of Mr. Sbona as Chief Executive Officer and President and
other Regent Pacific personnel as part of our management team. The agreement had
a one-year term and we retained the option to cancel the agreement after the
expiration of the initial 26-week period, with a minimum compensation to Regent
Pacific of $1.3 million for that initial period.

The agreement required that we indemnify Regent Pacific and Mr. Sbona for
certain liabilities arising out of the performance of services under the
agreement. On April 13, 1998, we agreed to amend our agreement with Regent
Pacific to provide that Mr. Sbona and other Regent Pacific personnel would serve
as part of our management team. The amendment also served to extend the term of
the agreement until August 31, 1999, and to extend the noncancelable period of
the agreement until February 28, 1999.

In connection with Mr. Sbona's service as our President and Chief Executive
Officer, the Compensation Committee of our Board also granted Mr. Sbona an
option to purchase 700,000 shares of our Common Stock, at an exercise price of
$2.563 per share. In October 1998, our Board granted Mr. Sbona another option to
purchase additional 520,000 shares of our common stock, at an exercise price of
$3.813 per share. In May 1999, our Board granted Mr. Sbona another option to
purchase additional 420,000 shares of our Common Stock, at an exercise price of
$16.250 per share. In October 1999 and January 2000, our Board granted Mr. Sbona
options to purchase 606,000 and 394,000 of our Common Stock, at an exercise
price of $30.75 and $31.75 per share, respectively. The shares subject to such
options will vest entirely upon certain change of control transactions or upon a
termination of Mr. Sbona without cause. The options will also remain exercisable
for one year following the termination of Mr. Sbona's services.

On March 12, 1999, we extended our agreement with Regent Pacific Management
Corporation until August 31, 2000. Under this amended agreement, Regent Pacific
continues to provide us certain services at a fee of $50,000 per week. The new
agreement provides us with an option to further extend the term of this
agreement through February 2001. Additionally, the parties agree that Mr. Sbona
became our employee effective February 16, 1998. Furthermore, on March 12, 1999,
Mr. Sbona was appointed as our Chairman of the Board of Directors. Mr. Sbona has
been our Chief Executive Officer since July 1997 and has been a Board member
since May 1998.

On February 10, 2000, we extended our agreement with Regent Pacific
Management Corporation through August 31, 2001. This is the third amendment to
the retainer agreement between us and Regent Pacific Management Corporation
since the original agreement dated July 31, 1997. Under this amended agreement,
Regent Pacific continues to provide us the services of Gary J. Sbona as Chairman
and Chief Executive Officer of Verity, and continues to provide us additional
Regent Pacific management services. The agreement provides us with an option to
further extend the term of this agreement through February 2002.

On September 23, 1999, we entered into a letter agreement with Anthony J.
Bettencourt to serve as our President at a monthly salary of $25,000 with a
commission plan providing for the minimum payment of $200,000 in commissions
with respect to the year ending August 31, 2000, plus a $100,000 incentive bonus
payable on or before September 30, 2000. If Mr. Bettencourt's employment is
terminated with cause prior to September 30, 2000, he will not be entitled to
receive the $100,000 incentive bonus. The agreement is at-will, and further
provides that if Mr. Bettencourt is terminated without cause he will continue to
receive monthly payments of $41,667 for the term of the agreement and will be
entitled to receive the $100,000 incentive bonus. The term of the agreement is
one year.

DEF 14A 23rd Page of 26 TOC 1st Previous Next ↓Bottom Just 23rd

OTHER MATTERS

Our Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.

By Order of the Board of Directors

/s/ Gordon C. Atkinson

Gordon C. Atkinson

Secretary

August 21, 2000

A COPY OF OUR ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM
10-K FOR THE FISCAL YEAR ENDED MAY 31, 2000 IS AVAILABLE WITHOUT CHARGE UPON
WRITTEN REQUEST TO: CORPORATE SECRETARY, VERITY, INC., 894 ROSS DRIVE,
SUNNYVALE, CALIFORNIA 94089.

DEF 14A 24th Page of 26 TOC 1st Previous Next ↓Bottom Just 24th
PROXY

VERITY, INC.

PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 26, 2000

The undersigned hereby appoints Gary J. Sbona and James E. Ticehurst, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Verity, Inc. which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
Verity, Inc. to be held at the Sunnyvale Sheraton, 1100 N. Mathilda Avenue,
Sunnyvale, California on Tuesday, September 26, 2000 at 11:00 a.m. local time,
and at any and all postponements, continuations and adjournments thereof, with
all powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.

UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4, AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.

SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE

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[x] Please mark votes as in this example.

MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW AND FOR
PROPOSALS 2, 3 AND 4.

1: To elect two Directors to hold office until the 2003 Annual Meeting of
Stockholders.

NOMINEES: (01) Stephen A. MacDonald, (02) Anthony J. Bettencourt.

[ ] FOR all nominees listed above. [ ] WITHHOLD AUTHORITY
to vote for all nominees
listed above.

[ ]
---------------------------------------------------------------
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, PLEASE WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED ABOVE)

2: To approve the amendment to the Company's Certificate of Incorporation
to increase the authorized number of shares of Common Stock from
100,000,000 shares to 200,000,000 shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3: To approve the Company's 1995 Stock Option Plan, as amended, to increase
the aggregate number of shares of Common Stock authorized for issuance
under such plan from 10,121,672 shares 12,121,672 shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4: To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Company for its fiscal year ending May 31, 2001.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]

DEF 14A Last Page of 26 TOC 1st Previous Next ↓Bottom Just 26th

Please vote, date and promptly return this proxy in the enclosed return envelope
which is postage prepaid if mailed in the United States.

Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.

SIGNATURE DATE
----------------------------------- ---------------

SIGNATURE DATE
------------------------------------ ----------------

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘DEF 14A’ Filing	Date	First	Last	Other Filings

	6/14/10	10
	8/31/01	20	22	10-Q, DEF 14A
	5/31/01	2	25	10-K405
	4/23/01	4
	9/30/00	22
For Period End:	9/26/00	2	24
	8/31/00	22		10-Q
Filed on:	8/21/00	2	23
	8/1/00	2	3
	6/30/00	9	17
	6/15/00	5
	5/31/00	5	23	10-K405
	4/18/00	17
	2/10/00	22
	1/25/00	17
	9/23/99	18	22
	8/31/99	22		10-Q
	5/31/99	16		10-K405
	3/12/99	22
	2/28/99	22		10-Q
	5/31/98	16		10-K405
	4/13/98	22
	2/16/98	22
	7/31/97	18	22
	3/28/96	19
	10/6/95	21
				List all Filings

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Filing Submission 0001095811-00-002941 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Verity Inc/DE – ‘DEF 14A’ for 9/26/00

On: Monday, 8/21/00, at 1:48pm ET · For: 9/26/00 · Accession #: 1095811-0-2941 · File #: 0-26880

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Definitive Proxy Solicitation Material — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Definitive Proxy Solicitation Material — Schedule 14A
Filing Table of Contents