<PAGE>   1
                                                                    EXHIBIT 10.6


                                  VERITY, INC.

             1997 NONSTATUTORY STOCK OPTION PLAN FOR VERITY CANADA

                     (AS AMENDED THROUGH DECEMBER 4, 2000)



     1.  ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

         1.1  ESTABLISHMENT. The Verity, Inc. 1997 Nonstatutory Stock Option
Plan for Verity Canada (the "Plan") is hereby established effective as of
May 23, 1997.

         1.2  PURPOSE. The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract, retain and reward persons performing services for a Participating
Company and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.

         1.3  TERM OF PLAN. The Plan shall continue in effect until the earlier
of its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all restrictions on
such shares under the terms of the Plan and the agreements evidencing Options
granted under the Plan have lapsed.

     2.  DEFINITIONS AND CONSTRUCTION.

         2.1  DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:

              (a)  "BOARD" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s).

              (b)  "CODE" means the Internal Revenue Code of 1986, as amended,
of the United States of America and any applicable regulations promulgated
thereunder.

              (c)  "COMMITTEE" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

              (d)  "COMPANY" means Verity, Inc., a Delaware corporation, or any
successor corporation thereto.

              (e)  "CONSULTANT" means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a
Director.



                                       1.

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          (f) "DIRECTOR" means a member of the Board.

          (g) "EMPLOYEE" means any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the records of a
Participating Company; provided, however, that neither service as a Director nor
payment of a director's fee shall be sufficient to constitute employment for
purposes of the Plan.

          (h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, of the United States of America.

          (i) "FAIR MARKET VALUE" means, as of any date, the value of a share of
Stock or other property as determined by the Board, in its sole discretion, or
by the Company, in its sole discretion, if such determination is expressly
allocated to the Company herein, subject to the following:

              (i) If, on such date, there is a public market for the Stock, the
Fair Market Value of a share of Stock shall be the closing sale price of a share
of Stock (or the mean of the closing bid and asked prices of a share of stock if
the Stock is so quoted instead) as quoted on the Nasdaq National Market, the
Nasdaq Small-Cap Market or such other national or regional securities exchange
or market system constituting the primary market for the Stock, as reported in
the Wall Street Journal or such other source as the Company deems reliable. If
the relevant date does not fall on a day on which the Stock has traded on such
securities exchange or market system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded
prior to the relevant date, or such other appropriate day as shall be determined
by the Board, in its sole discretion.

              (ii) If, on such date, there is no public market for the Stock,
the Fair Market Value of a share of Stock shall be as determined by the Board
without regard to any restriction other than a restriction which, by its terms,
will never lapse.

          (j) "INSIDER" means an officer or a Director of the Company or any
other person whose transaction in Stock are subject to Section 16 of the
Exchange Act.

          (k) "OPTION" means a right to purchase Stock (subject to adjustment as
provided in Section 4.2) pursuant to the terms and conditions of the Plan.
Options are intended to be nonstatutory stock options and shall not be treated
as incentive stock options within the meanings of Section 422(b) of the Code.

          (l) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee setting forth the terms, conditions and restrictions of the
Option granted to the Optionee and any shares acquired upon the exercise
thereof.

          (m) "OPTIONEE" means a person who has been granted one or more
Options.

          (n) "PARTICIPATING COMPANY" means Verity Canada or any other
Subsidiary Corporation that the Board may designate from time to time as a
Participating Company and any successor corporation thereto.


                                       2.
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               (o)  "PARTICIPATING COMPANY GROUP" means, at any point in time,
the Company and all corporations collectively which are then Participating
Companies.

               (p)  "STOCK" means the common stock of the Company, as adjusted
from time to time in accordance with Section 4.2.

               (q)  "SUBSIDIARY CORPORATION" means any corporation, other than
the Company, in an unbroken chain of corporations beginning with the Company if
each of the corporations, other than the last corporation in the unbroken
chain, owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.

               (r)  "VERITY CANADA" means 14943 Yukon Inc., a Yukon
corporation, or any successor corporation thereto.

          2.2  CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular.
Use of the term "or" is not intended to be exclusive, unless the context
clearly requires otherwise.

     3.   ADMINISTRATION.

          3.1  ADMINISTRATION BY THE BOARD. The Plan shall be administered by
the Board. All questions of interpretation of the Plan or of any Option shall
be determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Option. Any officer of
the Company shall have the authority to act on behalf of the Company with
respect to any matter, right, obligation, determination or election which is
the responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
determination or election.

          3.2  ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if
any, of Rule 16b-3 under the Exchange Act, as amended from time to time, or any
successor rule or regulation.

          3.3  POWERS OF THE BOARD. In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:

               (a)  to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to be subject
to each Option;

               (b)  to determine the Fair Market Value of shares of Stock or
other property;

                                       3.
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               (c)  to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Option or such shares, including by
the withholding or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting of any shares
acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of employment or service
with the Participating Company Group on any of the foregoing, and (vii) all
other terms, conditions and restrictions applicable to the Option or such shares
not inconsistent with the terms of the Plan;

               (d)  to approve one or more forms of Option Agreement;

               (e)  to amend, modify, extend, or renew, or grant a new Option
in substitution for, any Option or to waive any restrictions or conditions
applicable to any Option or any shares acquired upon the exercise thereof;

               (f)  to accelerate, continue, extend or defer the exercisability
of any Option or the vesting of any shares acquired upon the exercise thereof,
including with respect to the period following an Optionee's termination of
employment or service with the Participating Company Group;

               (g)  to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to accommodate the tax
policy or custom of, any jurisdictions whose citizens may be granted Options;
and

               (h)  to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or any
Options as the Board may deem advisable to the extent consistent with the Plan
and applicable law.

     4.   SHARES SUBJECT TO PLAN.

          4.1  MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be one million nine hundred eighty thousand
(1,980,000) and shall consist of authorized but unissued or reacquired shares
of Stock or any combination thereof. If an outstanding Option for any reason
expires or is terminated or canceled or shares of Stock acquired, subject to
repurchase, upon the exercise of an Option are repurchased by the Company, the
shares of Stock allocable to the unexercised portion of such Option, or such
repurchased shares of Stock, shall again be available for issuance under the
Plan.

          4.2  ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the

                                       4.
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number and class of shares subject to the Plan and to any outstanding Options,
and in the exercise price per share of any outstanding Options. If a majority of
the shares which are of the same class as the shares that are subject to
outstanding Options are exchanged for, converted into, or otherwise become
(whether or not pursuant to an Ownership Change Event, as defined in Section
8.1) shares of another corporation (the "NEW SHARES"), the Board may
unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of
shares subject to, and the exercise price pre share of, the outstanding Options
shall be adjusted in a fair and equitable manner as determined by the Board, in
its sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded up or
down to the nearest whole number, as determined by the Board, and in no event
may the exercise price of any Option be decreased to an amount less than the par
value, if any, of the stock subject to the Option. The adjustments determined by
the Board pursuant to this Section 4.2 shall be final, binding and conclusive.

     5.   ELIGIBILITY. Options may be granted only to Employees and
Consultants; provided, however, that no Option may be granted to any person
whose eligibility to participate in the Plan would require approval of the Plan
by the stockholders of the Company under any law or regulation or the
requirements of any stock exchange or market system upon which the Stock may
then be listed. For purposes of the foregoing sentence, "Employees" and
"Consultants" shall include prospective Employees and prospective Consultants
to whom Options are granted in connection with written offers of employment or
other service relationship with a Participating Company. Eligible persons may
be granted more than one (1) Option.

     6.   TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
Option Agreements specifying the number of shares of Stock covered thereby, in
such form as the Board shall from time to time establish. Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

          6.1  EXERCISE PRICE. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that the
exercise price per share for an Option shall be not less than the Fair Market
Value of a share of Stock on the effective date of grant of the Option.

          6.2  EXERCISE PERIOD. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that no Option granted to a prospective Employee or prospective Consultant may
become exercisable prior to the date on which such person commences service
with a Participating Company.

          6.3  PAYMENT OF EXERCISE PRICE.

               (a)  FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased

                                       5.
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pursuant to any Option shall be made (i) in cash, by check, or cash equivalent,
(ii) by tender to the Company of shares of Stock owned by the Optionee having a
Fair Market Value (as determined by the Company without regard to any
restrictions on transferability applicable to such stock by reason of United
States federal or state securities laws, laws of other jurisdictions, or
agreements with an underwriter for the Company) not less than the exercise
price, (iii) by the assignment of the proceeds of a sale or loan with respect to
some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the United States Federal Reserve System) (a "CASHLESS EXERCISE"),
(iv) by the Optionee's promissory note in a form approved by the Company, (v) by
such other consideration as may be approved by the Board from time to time to
the extent permitted by applicable law, or (vi) by any combination thereof. The
Board may at any time or from time to time, by adoption of or by amendment to
the standard form of Option Agreement described in Section 7, or by other means,
grant Options which do not permit all of the foregoing forms of consideration to
be used in payment of the exercise price or which otherwise restrict one or more
forms of consideration. The Company may establish, from time to time, an
exchange ratio applicable to amounts paid in a currency other than United States
dollars.

               (b)  TENDER OF STOCK. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company of shares of Stock to the extent
such tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by
tender to the Company of shares of Stock unless such shares either have been
owned by the Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Company.

               (c)  CASHLESS EXERCISE. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.

               (d)  PAYMENT BY PROMISSORY NOTE. No promissory note shall be
permitted if the exercise of an Option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the regulations promulgated by the Board of Governors of the United States
Federal Reserve System or any other governmental entity affecting the extension
of credit in connection with the Company's securities, any promissory note
shall comply with such applicable regulations, and the Optionee shall pay the
unpaid principal and accrued interest, if any, to the extent necessary to comply
with such applicable regulations.

          6.4  TAX WITHHOLDING. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market

                                       6.
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Value, as determined by the Company, equal to all or any part of the United
States federal, state and local taxes, if any, and taxes of other jurisdictions,
if any, required by law to be withheld by the Participating Company Group with
respect to such Option or the shares acquired upon the exercise thereof.
Alternatively or in addition, in its sole discretion, the Company shall have the
right to require the Optionee, through payroll withholding, cash payment or
otherwise, including by means of a Cashless Exercise, to make adequate provision
for any such tax withholding obligations of the Participating Company Group
arising in connection with the Option or the shares acquired upon the exercise
thereof. The Company shall have no obligation to deliver shares of Stock or to
release shares of Stock from an escrow established pursuant to the Option
Agreement until the Participating Company Group's tax withholding obligations
have been satisfied by the Optionee.

                6.5     REPURCHASE RIGHTS. Shares issued under the Plan may be
subject to one or more repurchase options or other conditions and restrictions
as determined by the Board in its sole discretion at the time the Option is
granted. The Company shall have the right to assign at any time any repurchase
right it may have, whether or not such right is then exercisable, to one or more
persons as may be selected by the Company. Upon request by the Company, each
Optionee shall execute any agreement evidencing such transfer restrictions prior
to the receipt of shares of Stock hereunder and shall promptly present to the
Company any and all certificates representing shares of Stock acquired hereunder
for the placement on such certificates of appropriate legends evidencing any
such transfer restrictions.

        7.      STANDARD FORM OF OPTION AGREEMENT.

                7.1     GENERAL. Unless otherwise provided by the Board at the
time the Option is granted, an Option shall comply with and be subject to the
terms and conditions set forth in the form of Immediately Exercisable Stock
Option Agreement adopted by the Board concurrently with its adoption of the Plan
and as amended from time to time.

                7.2     STANDARD TERM OF OPTIONS. Except as otherwise provided
by the Board in the grant of an Option, any Option granted hereunder shall have
a term of ten (10) years from the effective date of grant of the Option.

                7.3     AUTHORITY TO VARY TERMS. The Board shall have the
authority from time to time to vary the terms of the standard form of Option
Agreement described in this Section 7 either in connection with the grant or
amendment of an individual Option or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and conditions of
any such new, revised or amended standard form or forms of Option Agreement
shall be in accordance with the terms of the Plan. Such authority shall include,
but not by way of limitation, the authority to grant Options which are not
immediately exercisable.

        8.      TRANSFER OF CONTROL.

                8.8     DEFINITIONS.

                        (a)     An "OWNERSHIP CHANGE EVENT" shall be deemed to
have occurred if any of the following occurs with respect to the Company:


                                       7.

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               (i)   the direct or indirect sale or exchange in a single or
series of relate transactions by the stockholders of the Company of more than
fifty percent (50%) of the voting stock of the Company;

               (ii)   a merger or consolidation in which the Company is a party;

               (iii)  the sale, exchange, or transfer of all or substantially
all of the assets of the Company; or

               (iv)   a liquidation or dissolution of the Company.

          (b)  A "TRANSFER OF CONTROL" shall mean on Ownership Change Event or
a series of related Ownership Change Events (collectively, the "TRANSACTION")
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.

     8.2  EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the event of a Transfer
of Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "ACQUIRING CORPORATION"),
may either assume the Company's rights and obligations under outstanding
Options or substitute for outstanding Options substantially equivalent options
for the Acquiring Corporation's stock. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Transfer of
Control nor exercised as of the date of the Transfer of Control shall terminate
and cease to be outstanding effective as of the date of the Transfer of
Control. Notwithstanding the foregoing, shares acquired upon exercise of an
Option prior to the Transfer of Control and any consideration received pursuant
to the Transfer of Control with respect to such shares shall continue to be
subject to all applicable provisions of the Option Agreement evidencing such
Option except as otherwise provided in such Option Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is subject
to the outstanding Options immediately prior to an Ownership Change Event
described in Section 8.1(a)(i) constituting a Transfer of Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are
members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides in
its sole discretion.

                                       8.

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     9.  PROVISION OF INFORMATION. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally
made available to the Company's common stockholders.

     10. NONTRANSFERABILITY OF OPTIONS.  During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.

     11. INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as members of the Board or officers or employees of the
Participating Company Group, members of the Board and any officers or employees
of the Participating Company Group to whom authority to act for the Board is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for
gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Company, in writing, the
opportunity at its own expense to handle and defend the same.

     12. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend the
Plan at any time. However, no termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion
thereof, without the consent of the Optionee, unless such termination or
amendment is necessary to comply with any applicable law or government
regulation.

     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing Verity, Inc. 1997 Nonstatutory Stock Option Plan for Verity
Canada was duly adopted by the Board on May 23, 1997 and last amended on
December 4, 2000.

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

                                       9.

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                                  PLAN HISTORY

<TABLE>
<S>                 <C>
05/23/1997          Plan established with a share reserve of 190,000

__/__/____          Date of increase of share reserve by 200,000 to _______

__/__/____          Date of increase of share reserve by 350,000 to _______

12/03/1999          Date of 2:1 stock split increasing reserve to 1,480,000

06/15/2000          Date of increase of share reserve by 500,000 to 1,980,000

12/04/2000          Date of increase of share reserve by 270,000 to 2,250,000

</TABLE>

                                      10.