IA CORP, S-8, 1999-03-01

IA CORP
S-8, 1999-03-01
PREPACKAGED SOFTWARE

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As filed with the Securities and Exchange Commission on March 1, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Including registration of shares for resale by means of a Form S-3 Prospectus)

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IA CORPORATION I
(Exact Name of Registrant as Specified in its Charter)

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DELAWARE 94-3161772
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(State of Incorporation) (I.R.S. Employer Identification No.)

1900 POWELL STREET, SUITE 600
EMERYVILLE, CALIFORNIA 94608-1840
(Address of Principal Executive Offices)

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1996 STOCK PLAN
1998 EMPLOYEE STOCK PURCHASE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENTS
(FULL TITLE OF THE PLANS)

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DAVID M. WINKLER
CHIEF FINANCIAL OFFICER
IA CORPORATION I
1900 POWELL STREET, SUITE 600
EMERYVILLE, CALIFORNIA 94608-1840
(510) 450-7000

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(Name, Address, and Telephone Number, Including Area Code, of Agent for Service)

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Copies to:
BARRY E. TAYLOR, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(650) 493-9300

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CALCULATION OF REGISTRATION FEE

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Proposed
Title of Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share Price Fee
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<S> <C> <C> <C> <C>
To be issued under the 1,400,000 $1.0870 (1) $1,521,800.00 $ 423.06
Common Stock, $0.01 par value
Stock Plan........................
To be issued under the 1998 Employee 159,306 $ .8500 (2) $ 135,410.10 $ 37.64
Stock Purchase Plan,
Issued under the 1998 Employee Stock
Purchase Plan..................... 90,694 $1.000 (3) $ 90,694.00 $ 25.21
Common Stock, $0.01 par value.....
To be issued under the Nonstatutory
Stock Option Agreements............ 574,311 $1.8125 $1,040,938.68 $ 289.38
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TOTAL 2,224,311 --- $2,788,842.78 $ 776
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(1) Computed in accordance with Rule 457(h) and 457(c) under the
Securities Act of 1933, as amended (the "Securities Act"). Such
computation is based on the weighted average exercise price of $1.1607
per share with respect to 758,000 outstanding options and on the price
of $1.00 with respect to 642,000 authorized but unissued shares
underlying options representing the average of the high and low prices
of IA Corporation I Common Stock on the Nasdaq National Market on
February 23, 1999 (the "Market Price").

(2) The offering price of $.8500 per share represents the estimated
exercise price of the 159,306 shares subject to future issuance under
the 1998 Employee Stock Purchase Plan, which is 85% of the Market
Price.

(3) Computed in accordance with Rule 457(h) and 457(c) under the Securities
Act. Such computation is based on the Market Price.

<PAGE>

PROSPECTUS

IA CORPORATION I

90,694 Shares of Common Stock

____________________

The shares offered in this Prospectus involve a high degree of risk. You should
carefully consider certain "Risk Factors" in determining whether to buy any IA
Corporation Common Stock. See page 3.

____________________

Our Common Stock is listed on the Nasdaq National Market under the system
"IACP." On February 23, 1999 the average of the high and low prices of the
Common Stock was $1.00 per share.

____________________

This Prospectus relates to 90,694 shares of our common stock (the "Shares"),
which the selling stockholders (the "Selling Stockholders") may offer from time
to time in one or more transactions in the over-the-counter market. We will
receive no part of the proceeds from sales of the shares. The Selling
Stockholders acquired the shares pursuant to our employee benefit plans.

The prices at which the Selling Stockholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. See "Plan of Distribution." The offering is not being
underwritten. We will not receive any of the proceeds from the sale of the
shares. None of the shares offered pursuant to this Prospectus have been
registered prior to the filing of the Registration Statement of which this
Prospectus is a part.

____________________

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

____________________

The date of this Prospectus is March 1, 1999
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TABLE OF CONTENTS

<TABLE>
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Page
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<S> <C>
The Company........................................................... 3
Risk Factors.......................................................... 3
Use of Proceeds....................................................... 6
Selling Stockholders.................................................. 6
Plan of Distribution.................................................. 7
Legal Matters......................................................... 8
Experts............................................................... 8
Where You Can Find More Information................................... 8
Indemnification of Directors and Officers............................. 9
Information Incorporated by Reference................................. 9
</TABLE>

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THE COMPANY

We were incorporated in Delaware in 1992. Our headquarters are located at 1900
Powell Street, Suite 600, Emeryville, California 94608-1840, and our telephone
number at that address is (510) 450-7000. We develop, market, implement and
support software solutions for financial service organizations that require
flexible automation of high volume, complex transactions.

RISK FACTORS

Investing in this company entails substantial risk. You should purchase shares
only if you can afford a complete loss. You should carefully consider the
following risk factors and other information contained in this prospectus before
deciding to invest in shares of our common stock.

This prospectus and the documents referred to herein contain forward-looking
statements that are based on current expectations and are subject to substantial
risks and uncertainties. You can identify these forward-looking statements by
words such as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" and similar words. You should read statements that contain these
words carefully because they: (1) discuss our future expectations; (2) contain
projections of our future results of operations or financial condition; or (3)
state other "forward-looking" information. These statements are not guarantees
of future performance. There may be events in the future that we are not able
to predict accurately or over which we have no control. The risk factors listed
in this section, as well as any cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe and may cause our stock
price to fall.

You should carefully consider the risks of your investment which we have
described in the "risk factors" section below, as well as other information
contained in this prospectus, information incorporated by reference, and
information which we file with the Securities and Exchange Commission from time
to time. The information in this prospectus is complete and accurate as of this
date, but the information may change after the date on this prospectus.

We Have Historically Experienced Operating Losses; We Cannot Assure You That We
Will be Profitable. We have incurred significant net losses since our inception.
At September 30, 1998, our accumulated deficit was approximately $21.6 million.
We have had operating profits only in the quarters ended March 31, 1995, 1996
and 1997, June 30, 1996, September 30, 1996 and 1997, and December 31,1996 and
1997. We cannot assure you that we will have operating profits in future
quarters or on an annual basis. We expect a net loss for the quarter ended
March 1, 1999.

Our Quarterly Operating Results Fluctuate. Our revenues and operating results
have varied in the past, and may continue to vary significantly in the future.
It is difficult to forecast our revenues and operating results. In addition,
the following factors, among others, could materially adversely affect our
revenues and operating results:

. The relatively long sales and implementation cycles of our software
products
. The variable size and timing of individual license transactions
. The timing of revenue recognized under the percentage- of-completion
method
. Increased competition
. The timing of new product releases by us and our competitors
. Market acceptance of our software products
. Delay or deferral of customer implementation of our products
. Software defects or other quality problems with our software products
. Changes in our and our competitors' pricing policies
. The mix of license and service revenue
. Budgeting cycles our customers
. The impact of the current consolidations in the banking industry which
may continue to slow sales cycles and reduce the number of potential
new customers
. The introduction of indirect sales into our revenue mix which could
result in lower gross margins
. Changes in operating expenses
. Changes in our strategy
. Personnel changes and general economic factors

In addition, we are still in the process of transitioning from providing
software development services to developing and selling software products. Our
transition entails a number of risks, including:

. Potential declines in revenue
. The need to develop the appropriate sales, marketing and software
production and distribution infrastructure.

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Further, because our orders range in size from several hundred thousand dollars
to several million dollars, any deferral or cancellation of an expected new
order, termination of, or delay in completion of, an existing large application
development contract has, and may continue to have a significant impact on
quarterly operating results. Additionally, we had expected substantial revenue
contributions from our 1997 alliance with NCR. This alliance has to-date
provided significantly less revenue than we originally expected. We cannot
assure you that this alliance will be successful in the future. Although we are
pursuing additional alliance opportunities, we cannot assure you that any of
these will be successful either. In addition, our customers or potential
customers may defer or cancel purchases of our products in the event of any
downturn in their business or the economy in general. Further, as the Year 2000
approaches, many current and potential customers are focusing their resources on
the Year 2000 capability issues. This attention to Year 2000 capability may
cause our customers or potential customers to further defer or cancel their
decision to purchase or implement our software products.

Due primarily to hardware requirements and customer site preparation, there is
typically a three to four month period between when a CheckVision customer order
is placed and the commencement of our installation services. We have experienced
a nine-month to one-year installation period for RemitVision. Installation of
our software products requires the cooperation of our customers. Any delay in
our installation of our software products could delay our recognition of
revenue, which could materially adversely effect on our operating results and
financial condition. In the past, we have experienced delays installing our
products. These delays resulted in strained customer relations, and, in one
instance, a contract termination. Similar situations in the future could
continue to adversely affect our operating results and could also adversely
effect our ability to market our products. The Company's future operating
results could continue to be adversely affected if revenues do not meet the
Company's expectations. The Company may also choose to reduce prices, increase
spending in response to competition or to pursue new market opportunities. In
particular, the Company's operating margins may continue to be materially
adversely affected in the future if new competitors, technological advances by
existing competitors, other competitive factors, or the Company's failure to
obtain software development contracts continue to require the Company to invest
significant resources in software product development efforts.

Due to the above factors, our revenues are difficult to forecast. We will,
however, base our expense levels in significant part on our expectations of
future revenue. As a result, we expect our expense levels to be relatively fixed
in the short term. Our failure to meet revenue expectations could adversely
affect our operating results. Further, an unanticipated decline in revenue for
a particular quarter may disproportionately affect our net income, because a
relatively small amount of our expenses will vary with revenues in the short
term. Because of the foregoing factors, we believe that period-to-period
comparisons of our operating results are not necessarily meaningful and that
such comparisons should not be relied upon as indications of future performance.
Further, it is possible that in future periods our operating results may be
below the expectations of public market analysts and investors. In such an
event, the price of our Common Stock would be materially adversely affected.
See "We Experience Risks Associated with to Software Product Business,""Our
Product Sales Cycle is Long".

We Experience Risks Associated with Transition to Software Product Business.
Upon formation, we shifted our strategy to focus increasingly on deriving
revenue from software products rather than from system integration services.
During this transition, which is still under way, we derived a majority of our
total revenues from the provision of services pursuant to large software
development contracts, certain of which provided the basis for our software
products. We recognize revenue from software development contracts on the
percentage-of-completion basis. Service revenue as a percentage of total
revenues for 1997 and 1996 was 50.5% and 48.0%, respectively, and 42.7% and
56.6% for the nine months ended September 30, 1998 and 1997, respectively. To
achieve revenue growth and improve operating margins, we must increase market
acceptance and sales of our software products. As we have become increasingly
reliant upon software product sales, we could continue to experience a decline
in total revenues if service revenue continues to decline more quickly than we
can increase revenue from software product sales. We must develop and enhance
our sales and marketing capabilities and software production and distribution
infrastructure as we continue the transition from a service business to a
software product business. We cannot assure you that we will be successful in
creating the necessary capabilities and infrastructure. Any significant
failure by us to manage the transition successfully would continue to
materially adversely effect our business, operating results and financial
condition and would continue to create significant fluctuation in quarterly
operating results.

We Depend on Development Services. Through 1997 we derived the majority of our
total revenues from large application development contracts. We have completed
the majority of these contracts, and we have been unable to attract new large
application development contracts as we have focused on sales of our software
products. Sales of our software products have been lower than expected.
Furthermore, we have historically used the research we derived from our software
development contracts as the basis for our software products, and we anticipate
that future software products may arise from new software development contracts.
Any ability to attract new customers to enter into such contracts, will
materially adversely affect our ability to develop new software products. In
addition, to the extent we are required to develop future software products
without software development contracts, our expenditures for software product
development may continue to materially adversely affect our operating margins.
We cannot assure you that we will be able to attract new customers to enter into
software development contracts or that we will be able to develop new software
products based on our research in connection with new software development
contracts. In addition, we cannot assure you that we will be able to
independently develop new software products, and any such failure would have a
material adverse effect on the Company's business, operating results and
financial condition. If we develop new software products, we may have to expend
substantial additional financial resources on software product development, and
we cannot assure you that such software products will achieve market acceptance.
In addition, upon commercialization

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of software products developed in connection with software development
contracts, we have agreed under certain circumstances in the past, and may in
the future agree to pay royalties to repay development expenses to the customer
for whom the development services were undertaken, and any such payments could
have a material adverse effect on our business, operating results and financial
condition.

We Rely on Banking Industry; We Must Penetrate Additional Segments of the
Financial Services Industry. Currently, a substantial majority of our total
revenue results from the services and licenses we provide to large banks. Our
future operating results will depend in part on our ability to penetrate
additional segments of the financial services industry such as the brokerage,
mutual funds, insurance and credit card segments. While we may devote
substantial resources to penetrate these and other markets, we cannot assure you
that the revenues generated from this effort, if any, will exceed the cost of
such efforts. To successfully expand our product offerings to market segments
other than the banking industry, we will have to create new software products
and modify our existing software products. We cannot assure you that we will be
able to create or modify such software products effectively or that such
software products, if successfully created or modified, will achieve market
acceptance. If we are unable to penetrate new markets, our future financial
condition will be dependent upon our ability to further penetrate the banking
industry. The current focus of the banking industry on mergers and on Year 2000
issues may continue to impede our ability to further penetrate this industry.
If we are unable to adapt our software products, or our sales and marketing
efforts to meet the needs of new markets, or if we are unsuccessful in our
efforts to further penetrate the banking industry, our business, operating
results and financial condition could be materially adversely affected.

Our Product Sales Cycle is Long. Our sales cycle is typically six to twelve
months and varies substantially from customer to customer. We believe that the
purchase of our software products is discretionary and represents a strategic
decision requiring a significant capital investment by our customers. As a
result, purchase of our software products generally involves a significant
commitment of management attention and resources by prospective customers and
requires multiple approvals. In addition, current consolidations in the banking
industry could continue to impact sale cycles. Accordingly, our sales are
subject to a long approval process. Our business, operating results and
financial condition have been in the past, and could be in the future,
materially adversely affected if customers delay, reduce or cancel orders. Such
delays, reductions or cancellations may contribute to significant fluctuations
of quarterly operating results in the future and may adversely affect such
results.

Our Customer Base Is Highly Concentrated. To date we have been highly dependent
on a concentrated customer base. In 1997, 1996 and 1995, our two largest
customers provided 24%, 34% and 45% of our total revenue, respectively. For the
three months ended September 30, 1998, our largest three customers provided
54.5% of our total revenues. For the nine months ended September 30, 1998, no
sales to any one customer accounted for 10% or more of total revenues. For the
nine months ended September 30, 1997, our largest two customers provided 22.0%
of our total revenues. Our reliance on a concentrated base of customers has been
due primarily to our dependence on large software development contracts and on
our reliance on the top tier of the banking market. We intend to continue to
seek customer support for strategic development projects that may yield
additional software products and expects that we may continue to experience a
dependence on a few significant customers for the foreseeable future. If we
are unable to establish relationships with additional significant customers and
if we continue to experience difficulties in increasing revenues derived from
the sale of software products as a percentage of total revenues, our business,
operating results and financial condition could continue to be materially
adversely affected.

Our Industry is Subject to Rapid Technological Change and We Depend on New
Software Products. The market for our software products is characterized by
rapid technological developments, evolving industry standards and rapid changes
in customer requirements. The introduction of competitive software products
responding to these trends could render our existing software products obsolete
and unmarketable. As a result, our success depends upon its ability to continue
to enhance its existing software products, respond to changing customer
requirements and develop and introduce in a timely manner new software products
that keep pace with technological developments and emerging industry standards.
Customer requirements include, but are not limited to:

. Operability across distributed heterogeneous and changing hardware
platforms
. Operating systems
. Relational databases
. Networks

For example, as more of our customers start to utilize Microsoft NT or adopt
other emerging operating systems on server platforms, we may need to optimize
the operation of our software products on such platforms in order to maintain
our competitive ability. We cannot assure you that our software products will
achieve market acceptance, or will adequately address the changing needs of
the marketplace, or that we will be successful in developing and marketing
enhancements to its existing software products, or new software products
incorporating new technology on a timely basis. Any failure to develop and
introduce new software products, or enhancements to existing software
products, in a timely manner to adequately address changing market conditions
or customer requirements, could materially adversely affect our business,
operating results and financial condition.

We have a number of ongoing software development projects. We expect to release
enhancements to our CheckVision and RemitVision products. Our objective is to
increase the portion of our total revenues derived from these software products.
We cannot assure you that we will release these enhancements in a timely manner
or at all, or that the features these enhanced software products include will be
features

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required to achieve market acceptance. Our product development programs have
been delayed in the past and we have experienced delays in the development of
RemitVision. We had lower than anticipated profits due to delays in RemitVision
contracts and due to our much lower sales of CheckVision products than
originally anticipated. The failure of our software products to achieve broader
market acceptance and increased sales could continue to have a material adverse
effect on our business, operating results and financial condition. See "-- We
Encounter Risks Associated with Year 2000 Compliance".

We Encounter Risks Associated With Year 2000 Compliance. The Year 2000 issue is
the result of computer programs being written using two digits rather than four
to define the applicable year. Computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If the Company's internal systems do not correctly recognize date
information when the year changes to 2000, there could be an adverse impact on
the Company's operations. We have completed an assessment and expect to purchase
enhanced software for our internal computer systems, which we expect to be Year
2000 compliant. We expect to implement the new software by July 31, 1999. We
have contacted our critical suppliers of products and services to determine that
such suppliers' operations and the products and services they provide to us are
Year 2000 capable. We cannot assure you that the failure of one of our suppliers
to ensure appropriate Year 2000 capability would not have an adverse effect on
us. We have also assessed the capability of our products sold to customers and
believe that the likelihood of a material adverse impact due to contingencies
related to the Year 2000 issue for the product we have sold is remote. We cannot
assure you, however, that our software products contain all necessary software
for Year 2000 compatibility. If any of our licensees experience Year 2000
problems, such licensees could assert claims for damages against us. Any such
litigation could result in substantial costs and diversion of our resources,
even if ultimately decided in favor of us. In addition, many companies are
expending significant resources to correct their software systems for Year 2000
compliance. These expenditures may result in reduced funds available to
purchase new software products such as those which we offer. The occurrence of
any of the foregoing could have a material adverse effect on our business,
financial condition and results from operations.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of the shares of our
common stock offered by the Selling Stockholders. All proceeds from the sale of
the shares will be for the account of the Selling Stockholders. See "Selling
Stockholders" and "Plan of Distribution."

SELLING STOCKHOLDERS

Except as noted below, none of the Selling Stockholders is an executive
officer or director of the Company and none of the Selling Stockholders
beneficially own, individually or in the aggregate, more than 1% of the
outstanding Common Stock of the Company prior to this offering. The following
table shows the names of the Selling Stockholders and the number of shares of
Common Stock to be sold by them pursuant to this Prospectus:

Name No. of Shares
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<S> <C>
Arjun Aiyer 3,237

Elizabeth Bennett 1

Ravindra N. Bhalla 431

Gerald M. Blodgett 7,644

Elena Chen 1

I-Chin Chen 1

Russell G. Chum 1,313

William Cunningham 780

Pratap Dhopte 1

Rajesh Edke 851

Charles R. Engan 1,108

Mohsen Fahim 1,493

Yue Peng Feng 3,855

Anthony J. Harris 248

Glenn Herteg 5,689

William G. Hipps 3,430

Kuan-I Hsiung 4,021
</TABLE>

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Name No. of Shares
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<S> <C>
Prashant Jamkhedkar 336

James M. Kalinski 930

Patricia Kasavan 1

Michael Katten 264

Nathaniel Kingsley 4,725

Francine Ko 1

Josef Kofman 380

David Lee 546

Hui-Tsung Liang 1,860

Hao-Yuan Lu 5,293

Geraldine McGrath (1) 611

Kristine Meidberg 1

Glenn A. Meisenheimer 5,816

Kevin D. Moran (2) 4,525

George Griffi Nelson 301

Jon P. Palmer 3,508

Raye Raskin 1,520

Charles A. Rogers 565

Margaret S. Rozowski 269

Darryl Seward 901

Ashok K. Shankarappa 3,560

Steve Sherman 1

Vikram Sridharan 2,242

Ramachandra Vungutur 1

Michael Waters 380

James Roy Williams 312

Russell M. Wilsey 2,219

David M. Winkler 2,178

Laurence K. Woon 7,470

Donald O. Worthington 1,868

Dongxiao Yue 4,006
</TABLE>
(1) Ms. McGrath has served as our Vice President since April 6, 1997 and
General Counsel since August 1, 1992. As of the date of this Prospectus, Ms.
McGrath owns less than 1% of the outstanding shares of common stock.

(2) Mr. Moran has served as our President, Chief Executive Officer and director
since July 27, 1998. As of the date of this Prospectus, Mr. Moran owns less
than 1% of the outstanding shares of our common stock.

(3) Mr. Winkler has served as our Chief Financial Officer since November 13,
1996, and Vice President, Secretary and Treasurer since August 1, 1992. As of
the date of this Prospectus, Mr. Winkler owns approximately 1% of the
outstanding shares of our common stock, including 42,286 shares issuable upon
exercise of stock options exercisable within 60 days of the date of this
Prospectus.

PLAN OF DISTRIBUTION

We have been advised by the Selling Stockholders that they intend to sell
all or a portion of the Shares offered hereby from time to time in the over-the-
counter market and that sales will be made at prices prevailing in the public
market at the times of such sales. The Selling Stockholders may also make
private sales directly or through a broker or brokers, who may act as agent or
as principal. Further, the Selling Stockholders may choose to dispose of the
Shares offered hereby by gift to a third party or as a donation to a charitable
or other non-profit entity. In connection with any sales, the Selling
Stockholders and any brokers participating in such sales may be deemed to be
underwriters within the meaning of the Securities Act.

Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and from any purchaser of shares in
such transaction). Usual and customary brokerage fees will be paid by the
Selling Stockholder. Broker-dealers may agree with the Selling Stockholders to
sell a specified number of Shares at a stipulated price per share, and, to the
extent such a broker-

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dealer is unable to do so acting as agent for the Selling Stockholders, to
purchase as principal any unsold Shares at the price required to fulfill the
broker-dealer commitment to the Selling Stockholders. Broker-dealers who acquire
Shares as principal may thereafter resell such Shares from time to time in
transactions (which may involve crosses and block transactions and which may
involve sales to and through other broker-dealers, including transactions of the
nature described above) in the over-the-counter market, in negotiated
transactions or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such Shares commissions computed as described above.

We have advised the Selling Stockholders that the anti-manipulative rules
of Regulation M under the Exchange Act may apply to sales in the market and have
informed them of the possible need for delivery of copies of this Prospectus.
The Selling Stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the Shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and, if any
such broker-dealers purchase Shares as principal, any profits received on the
resale of such Shares, may be deemed to be underwriting discounts and
commissions under the Securities Act.

If applicable, upon our being notified by the Selling Stockholders that
any material arrangement has been entered into with a broker-dealer for the sale
of Shares through a cross or block trade, a supplemental prospectus will be
filed under Rule 424(c) under the Securities Act, setting forth the name of the
participating broker-dealer(s), the number of Shares involved, the price at
which such Shares were sold by the Selling Stockholders, the commissions paid or
discounts or concessions allowed by the Selling Stockholders to such broker-
dealer(s), and, where applicable, that such broker-dealer(s) did not conduct any
investigation to verify the information set out in this Prospectus. Any
securities covered by this Prospectus that qualify for sale pursuant to Rule 144
under the Securities Act may be sold under that Rule rather than pursuant to
this Prospectus. There can be no assurance that the Selling Stockholders will
sell any or all of the Shares of Common Stock offered hereunder.

LEGAL MATTERS

Certain legal matters with respect to the validity of the issuance of the
Shares will be passed upon for the Company by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual report on form 10-K
for the year ended December 31, 1997, as set forth in their report, which is
incorporated by reference in reliance on the report of Ernst & Young LLP, given
on their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Accordingly, we file annual,
quarterly and special reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). You may read and copy any
document that we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. You can obtain copies of
our SEC filings at prescribed rates from the SEC Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. 20549. Our SEC filings are also available
to you free of charge at the SEC's web site at http://www.sec.gov.

Shares of our Common Stock are traded as "National Market Securities" on
the Nasdaq National Market. Documents we file can be inspected at the offices
of the National Association of Securities Dealers, Inc., Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006.

You can read and print press releases and additional information about us,
free of charge, at our web site at http://www.neurocrine.com.

This Prospectus is a part of a Registration Statement on Form S-8 (together
with all amendments and exhibits, referred to as the "Registration Statement")
filed by us with the SEC under the Securities Act of 1993, as amended. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information with respect to us and the
shares of Common Stock offered hereby, please refer to the Registration
Statement. The Registration Statement may be inspected at the public reference
facilities maintained by the SEC at the addresses set forth

-8-
<PAGE>

above. Statements in this Prospectus about any document filed as an exhibit are
not necessarily complete and, in each instance, you should refer to the copy of
such document filed with the SEC. Each such statement is qualified in its
entirety by such reference.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Securities and Exchange
Commission:

The Registrant's Bylaws provide that the Registrant shall indemnify its
directors and officers to the fullest extent permitted by law. The Registrant
believes that indemnification under its Bylaws covers at least negligence and
gross negligence on the part of indemnified parties.

The Registrant has entered into agreements to indemnify its directors and
officers, in addition to the indemnification provided for in the Registrant's
Bylaws. These agreements, among other things, indemnify the Registrant's
directors and executive officers for certain expenses (including attorneys'
fees), judgements, fines and settlement amounts incurred by any such person in
any action or proceeding, including any action by or in the right of the
Registrant, arising out of such person's service as a director or executive
officer of the Registrant, any subsidiary of the Registrant or any other company
or enterprise to which the person provides services at the request of the
Registrant.

The Registrant has purchased insurance on behalf of any officer or director
for any liability arising out of his or her actions in such capacity. The
Registrant believes that indemnification agreements and insurance are necessary
to attract and retain qualified directors and executive officers.

At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Registrant where indemnification
will be required or permitted. The Registrant is not aware of any threatened
litigation or proceeding that might result in a claim for such indemnification.

INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and information that we file later
with the SEC will automatically update and supersede previously filed
information, including information contained in this Prospectus.

We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act until this offering has been completed:

Our Annual Report on Form 10-K for the year ended December 31, 1997 filed
pursuant to Section 13 of the Securities Exchange Act of 1934 (the "Exchange
Act").

Our Definitive Proxy Materials for the Annual Meeting of Stockholders held
on June 17, 1998, filed pursuant to Section 13 of the Exchange Act.

Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1998
filed pursuant to Section 13 of the Exchange Act.

Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
filed pursuant to Section 13 of the Exchange Act.

Our Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
filed pursuant to Section 13 of the Exchange Act.

The description of the Registrant's Common Stock contained in the
Registration Statement on Form 8-A filed pursuant to Section 12(g) of the
Exchange Act on October 11, 1996.

You may request a free copy of these documents by writing to Investor
Relation, IA Corporation, 1900 Powell Street, Suite 600, Emeryville, CA 94608-
1840.

You should rely only on the information incorporated by reference or
provided in this Prospectus or a prospectus supplement or amendment. We have
not authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. Also, this Prospectus does not offer to sell any securities other
than the securities covered by this Prospectus. You should not assume that the
information in this Prospectus or a prospectus supplement or amendment is
accurate as of any date other than the date on the front of the document.

-9-
<PAGE>

IA CORPORATION I
REGISTRATION STATEMENT ON FORM S-8

PART II

INFORMATION REQUIRED IN REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference
---------------------------------------

There are hereby incorporated by reference in this Registration
Statement the following documents and information heretofore filed with the
Securities and Exchange Commission (the "Commission"):

(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997 filed pursuant to Section 13 of the Securities Exchange Act of
1934 (the "Exchange Act").

(b) The Company's Definitive Proxy Materials for the Annual Meeting
of Stockholders held on June 17, 1998 filed pursuant to Section 13 of the
Exchange Act.

(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 filed pursuant to Section 13 of the Exchange Act.

(d) The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998 filed pursuant to Section 13 of the Exchange Act.

(e) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 filed pursuant to Section 13 of the Exchange Act.

(f) The description of the Registrant's Common Stock contained in the
Registration Statement on Form 8-A filed pursuant to Section 12(g) of the
Exchange Act on October 11, 1996.

All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the filing of this
Registration Statement, and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in the Registration Statement and to be part hereof from the date of
filing of such documents.

Item 4. Description of Securities.
-------------------------

Not applicable.

Item 5. Interests of Named Experts and Counsel.
--------------------------------------

Not applicable.

Item 6. Indemnification of Directors and Officers.
-----------------------------------------

The Registrant has entered into agreements to indemnify its directors
and officers, in addition to the indemnification provided for in the
Registrant's Bylaws. These agreements, among other things, indemnify the
Registrant's directors and executive officers for certain expenses (including
attorneys' fees), judgements, fines and settlement amounts incurred by any such
person in any action or proceeding, including any action by or in the right of
the Registrant, arising out of such person's service as a director or executive
officer of the Registrant, any subsidiary of the Registrant or any other company
or enterprise to which the person provides services at the request of the
Registrant.

II-1
<PAGE>

The Registrant has purchased insurance on behalf of any officer or
director for any liability arising out of his or her actions in such capacity.
The Registrant believes that indemnification agreements and insurance are
necessary to attract and retain qualified directors and executive officers.

See also the undertakings set out in response to Item 9 herein.

Item 7. Exemption from Registration Claimed.
-----------------------------------

The issuance of the Shares being offered by the Form S-3 resale
prospectus were deemed exempt from registration under the Securities
Act in reliance upon Section 4(2) of the Securities Act.

Item 8. Exhibits.
--------

<TABLE>
<CAPTION>
Exhibit
Number Description
------- ------------------------------------------------------
<S> <C>
4.1 1996 Stock Plan, as amended
4.2 1998 Employee Stock Purchase Plan
4.3 Stock Option Agreement between the Company and
Kevin D. Moran
4.4 Stock Option Agreement between the Company and
Timothy F. McCarthy
5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, P.C.as
to legality of securities being registered.
23.1 Consent of Wilson, Sonsini, Goodrich & Rosati, P.C.
(contained in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney (see page II-4).
</TABLE>

Item 9. Undertakings.
------------

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be

II-2
<PAGE>

deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
an initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the Delaware Corporation Law, the Certificate of
Incorporation of the Registrant, the Bylaws of the Registrant, Indemnification
Agreements entered into between the Registrant and its officers and directors,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Emeryville, State of California, on this 1st day of
March, 1999.

IA CORPORATION I

By: /s/ Kevin D. Moran
--------------------------
Kevin D. Moran
President, Chief Executive Officer and
Chairman of the Board

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints, jointly and severally, Kevin D. Moran
and David M. Winkler, and each one of them, individually and without the other,
his or her attorney-in-fact, each with full power of substitution, for him or
her in any and all capacities, to sign any and all amendments to this
Registration Statement on Form S-8, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-in-
fact, or his or her substitute or substitutes, may do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
- -------------------------- --------------------------------------- ------------------
<S> <C> <C>
/s/ Kevin D. Moran President, Chief Executive Officer and March 1, 1999
- --------------------------
Kevin D. Moran Chairman of the Board

/s/ David M. Winkler Chief Financial Officer, Vice President March 1, 1999
- --------------------------
David M. Winkler and Secretary

/s/ Henry Kressel Director March 1, 1999
- --------------------------
Henry Kressel

/s/ Stewart Gross Director March 1, 1999
- --------------------------
Stewart Gross

/s/ John Oltman Director March 1, 1999
- --------------------------
John Oltman

/s/ Randy Katz Director March 1, 1999
- --------------------------
Randy Katz

/s/ Chakravarthi V. Ravi Director March 1, 1999
- --------------------------
Chakravarthi V. Ravi

/s/ Timothy F. McCarthy Director March 1, 1999
- --------------------------
Timothy F. McCarthy
</TABLE>

II-4
<PAGE>

INDEX TO EXHIBITS

Exhibit
Number Description
- -------- --------------------------------------------------
4.1 1996 Stock Plan, as amended
4.2 1998 Employee Stock Purchase Plan
4.3 Stock Option Agreement between the Company and Kevin D. Moran.
4.4 Stock Option Agreement between the Company and Timothy F.
McCarthy
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
as to legality of securities being registered.
23.1 Consent of Wilson Sonsini Goodrich & Rosati, P.C.
(contained in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney (see page II-4).

<PAGE>

EXHIBIT 4.1

IA CORPORATION I
1996 STOCK PLAN
(AS AMENDED THROUGH JUNE 1998)

1. Purposes of the Plan. The purposes of this Stock Plan are:
--------------------

. to attract and retain the best available personnel for positions of
substantial responsibility;

. to provide additional incentive to Employees and Consultants; and

. to promote the success of the Company's business.

Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant. Stock
Purchase Rights may also be granted under the Plan.

2. Definitions. As used herein, the following definitions shall apply:
-----------

(a) "Administrator" means the Board or any of its Committees as shall be
-------------
administering the Plan, in accordance with Section 4 of the Plan.

(b) "Applicable Laws" means the legal requirements relating to the
---------------
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options or Stock Purchase Rights are, or
will be, granted under the Plan.

(d) "Code" means the Internal Revenue Code of 1986, as amended.
----

(e) "Committee" means a Committee appointed by the Board in accordance
---------
with Section 4 of the Plan.

(f) "Common Stock" means the Common Stock of the Company.
------------

(g) "Company" means IA Corporation I, a Delaware corporation.
-------

(h) "Consultant" means any person, including an advisor, engaged by the
----------
Company or a Parent or Subsidiary to render services and who is compensated for
such services. The term "Consultant" shall not include Directors who are paid
only a director's fee by the Company or who are not compensated by the Company
for their services as Directors.
<PAGE>

(i) "Continuous Status as an Employee or Consultant" means that the
----------------------------------------------
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as an Employee
or Consultant shall not be considered interrupted in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. A
leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave approved by an authorized representative of
the Company. For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave
of absence approved by the Company is not so guaranteed, on the one hundred
eighty-first (181st) day of such leave any Incentive Stock Option held by the
Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option.

(j) "Director" means a member of the Board.
--------

(k) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.

(l) "Employee" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.

(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------

(n) "Fair Market Value" means, as of any date, the value of Common Stock
-----------------
determined as follows:

(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable; or

(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or

(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the Administrator.

-2-
<PAGE>

(o) "Incentive Stock Option" means an Option intended to qualify as an
----------------------
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

(p) "Nonstatutory Stock Option" means an Option not intended to qualify as
-------------------------
an Incentive Stock Option.

(q) "Notice of Grant" means a written notice evidencing certain terms and
---------------
conditions of an individual Option or Stock Purchase Right grant. The Notice of
Grant is part of the Option Agreement.

(r) "Officer" means a person who is an officer of the Company within the
-------
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

(s) "Option" means a stock option granted pursuant to the Plan.
------

(t) "Option Agreement" means a written agreement between the Company and
----------------
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.

(u) "Option Exchange Program" means a program whereby outstanding options
-----------------------
are surrendered in exchange for options with a lower exercise price.

(v) "Optioned Stock" means the Common Stock subject to an Option or Stock
--------------
Purchase Right.

(w) "Optionee" means an Employee or Consultant who holds an outstanding
--------
Option or Stock Purchase Right.

(x) "Parent" means a "parent corporation", whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.

(y) "Plan" means this 1996 Stock Plan.
----

(z) "Restricted Stock" means shares of Common Stock acquired pursuant to a
----------------
grant of Stock Purchase Rights under Section 11 below.

(aa) "Restricted Stock Purchase Agreement" means a written agreement
-----------------------------------
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.

-3-
<PAGE>

(bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
----------
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

(cc) "Section 16(b)" means Section 16(b) of the Securities Exchange Act of
-------------
1934, as amended.

(dd) "Share" means a share of the Common Stock, as adjusted in accordance
-----
with Section 13 of the Plan.

(ee) "Stock Purchase Right" means the right to purchase Common Stock
--------------------
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

(ff) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the
-------------------------
Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is two million one hundred thousand (2,100,000) Shares. The
Shares may be authorized, but unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).

4. Administration of the Plan.
--------------------------

(a) Procedure.
---------

(i) Multiple Administrative Bodies. If permitted by Rule 16b-3,
------------------------------
the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.

(ii) Administration With Respect to Directors and Officers Subject
-------------------------------------------------------------
to Section 16(b). With respect to Option or Stock Purchase Right grants made to
-------------
Employees who are also Officers or Directors subject to Section 16(b) of the
Exchange Act, the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in a manner complying with the rules under Rule 16b-3
relating to the disinterested administration of employee benefit plans under
which Section 16(b) exempt discretionary grants and awards of equity securities
are to be made, or (B) a committee designated by the Board to administer the
Plan, which committee shall be constituted to comply with the rules under Rule
16b-3 relating to the disinterested administration of employee benefit plans
under which Section 16(b) exempt discretionary grants and awards of equity
securities are to be made. Once appointed, such Committee shall continue to
serve in its designated capacity

-4-
<PAGE>

until otherwise directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members, remove members (with
or without cause) and substitute new members, fill vacancies (however caused),
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which Section 16(b)
exempt discretionary grants and awards of equity securities are to be made.

(iii) Administration With Respect to Other Persons. With respect to
--------------------------------------------
Option or Stock Purchase Right grants made to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a committee designated by the Board, which committee shall
be constituted to satisfy Applicable Laws. Once appointed, such Committee shall
serve in its designated capacity until otherwise directed by the Board. The
Board may increase the size of the Committee and appoint additional members,
remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by
Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan,
---------------------------
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;

(ii) to select the Consultants and Employees to whom Options and
Stock Purchase Rights may be granted hereunder;

(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof, are granted hereunder;

(iv) to determine the number of shares of Common Stock to be covered
by each Option and Stock Purchase Right granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options or Stock Purchase Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock
Purchase Right or the shares of Common Stock relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine;

-5-
<PAGE>

(vii) to reduce the exercise price of any Option or Stock Purchase
Right to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option or Stock Purchase Right shall have declined
since the date the Option or Stock Purchase Right was granted;

(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

(ix) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans established
for the purpose of qualifying for preferred tax treatment under foreign tax
laws;

(x) to modify or amend each Option or Stock Purchase Right (subject
to Section 15(c) of the Plan), including the discretionary authority to extend
the post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;

(xi) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;

(xii) to institute an Option Exchange Program;

(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

(c) Effect of Administrator's Decision. The Administrator's decisions,
----------------------------------
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.

5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be
-----------
granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. If otherwise eligible, an Employee or Consultant who has
been granted an Option or Stock Purchase Right may be granted additional Options
or Stock Purchase Rights.

6. Limitations.
-----------

(a) Each Option shall be designated in the written option agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds one hundred
thousand dollars ($100,000), such Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were

-6-
<PAGE>

granted. The Fair Market Value of the Shares shall be determined as of the time
the Option with respect to such Shares is granted. If an Option is granted
hereunder that is part Incentive Stock Option and part Nonstatutory Stock Option
due to becoming first exercisable in any calendar year in excess of one hundred
thousand dollars ($100,000), the Incentive Stock Option portion of such Option
shall become exercisable first in such calendar year, and the Nonstatutory Stock
Option portion shall commence becoming exercisable once the one hundred thousand
dollars ($100,000) limit has been reached.

(b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee's employment
or consulting relationship with the Company, nor shall they interfere in any way
with the Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.

(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than three hundred fifty thousand (350,000)
Shares.

(ii) In connection with his or her initial employment, an Employee
may be granted Options to purchase up to an additional six hundred thousand
(600,000) Shares which shall not count against the limit set forth in subsection
(i) above.

(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 13.

(iv) If an Option is canceled in the same fiscal year of the Company
in which it was granted (other than in connection with a transaction described
in Section 13), the canceled Option will be counted against the limits set forth
in subsections (i) and (ii) above. For this purpose, if the exercise price of
an Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.

7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
------------
effective upon the earlier to occur of its adoption by the Board or its approval
by the shareholders of the Company as described in Section 19 of the Plan. It
shall continue in effect for a term of ten (10) years unless terminated earlier
under Section 15 of the Plan.

8. Term of Option. The term of each Option shall be stated in the Notice of
--------------
Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option

-7-
<PAGE>

shall be five (5) years from the date of grant or such shorter term as may be
provided in the Notice of Grant.

9. Option Exercise Price and Consideration.
---------------------------------------

(a) Exercise Price. The per share exercise price for the Shares to be
--------------
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of grant.

(B) granted to any Employee other than an Employee described in
paragraph (A) immediately above, the per Share exercise price shall be no less
than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant.

(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.

(b) Waiting Period and Exercise Dates. At the time an Option is granted,
---------------------------------
the Administrator shall fix the period within which the Option may be exercised
and shall determine any conditions which must be satisfied before the Option may
be exercised. In so doing, the Administrator may specify that an Option may not
be exercised until the completion of a service period.

(c) Form of Consideration. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

(i) cash; or

(ii) check; or

(iii) promissory note; or

(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six (6)
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised; or

-8-
<PAGE>

(v) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price; or

(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement; or

(vii) any combination of the foregoing methods of payment; or

(viii) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.

10. Exercise of Option.
------------------

(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
-----------------------------------------------
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13 of the
Plan.

Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

(b) Termination of Employment or Consulting Relationship. Upon
----------------------------------------------------
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option within such period of time as is specified in

-9-
<PAGE>

the Notice of Grant, up to a maximum of three (3) months from the date of
termination, to the extent that he or she is entitled to exercise it on the date
of termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). In the absence of a specified time
in the Notice of Grant, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

Notwithstanding the above, in the event of an Optionee's change in status
from Consultant to Employee or Employee to Consultant, the Optionee's Continuous
Status as an Employee or Consultant shall not automatically terminate solely as
a result of such change in status. In such event, an Incentive Stock Option held
by the Optionee shall cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Nonstatutory Stock Option three months and one
day following such change of status.

(c) Disability of Optionee. Upon termination of an Optionee's Continuous
----------------------
Status as an Employee or Consultant as a result of the Optionee's Disability,
the Optionee may exercise his or her Option at any time within twelve (12)
months from the date of termination, but only to the extent that the Optionee is
entitled to exercise it on the date of termination (and in no event later than
the expiration of the term of the Option as set forth in the Notice of Grant).
If, on the date of termination, the Optionee is not entitled to exercise his or
her entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.

(d) Death of Optionee. Upon the death of an Optionee, the Option shall
-----------------
become one hundred percent (100%) vested and may be exercised at any time within
twelve (12) months following the date of death (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant), by
the Optionee's estate or by a person who acquires the right to exercise the
Option by bequest or inheritance. If the Optionee's estate or the person who
acquires the right to exercise the Option by bequest or inheritance does not
exercise the Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

(e) Buyout Provisions. The Administrator may at any time offer to buy out
-----------------
for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

(f) Rule 16b-3. Options granted to individuals subject to Section 16 of
----------
the Exchange Act ("Insiders") must comply with the applicable provisions of Rule
16b-3 and shall contain such

-10-
<PAGE>

additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

11. Stock Purchase Rights.
---------------------

(a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
------------------
in addition to, or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that
it will offer Stock Purchase Rights under the Plan, it shall advise the offeree
in writing, by means of a Notice of Grant, of the terms, conditions and
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid, and the time within
which the offeree must accept such offer, which shall in no event exceed six (6)
months from the date upon which the Administrator made the determination to
grant the Stock Purchase Right. The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the Administrator.

(b) Repurchase Option. Unless the Administrator determines otherwise, the
-----------------
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason (including death or Disability). The
purchase price for Shares repurchased pursuant to the Restricted Stock purchase
agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at a rate determined by the Administrator.

(c) Rule 16b-3. Stock Purchase Rights granted to Insiders, and Shares
----------
purchased by Insiders in connection with Stock Purchase Rights, shall be subject
to any restrictions applicable thereto in compliance with Rule 16b-3. An
Insider may only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a Stock
Purchase Right, during such time or times as are permitted by Rule 16b-3.

(d) Other Provisions. The Restricted Stock Purchase Agreement shall
----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.

(e) Rights as a Shareholder. Once the Stock Purchase Right is exercised,
-----------------------
the purchaser shall have the rights equivalent to those of a shareholder, and
shall be a shareholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 13 of the Plan.

12. Non-Transferability of Options and Stock Purchase Rights. An Option or
--------------------------------------------------------
Stock Purchase Right may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any

-11-
<PAGE>

manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.

13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
------------------------------------------------------------------------
Sale.
- ----

(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

(b) Dissolution or Liquidation. In the event of the proposed dissolution
--------------------------
or liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Optionee to have the
right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

(c) Merger or Asset Sale. In the event of a merger of the Company with or
--------------------
into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and Stock Purchase Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall have the right to exercise the Option or Stock
Purchase Right as to all of the Optioned Stock, including Shares as to which it
would not otherwise be exercisable. If an Option or Stock Purchase Right is
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option or
Stock Purchase Right shall be

-12-
<PAGE>

fully exercisable and vested for a period of fifteen (15) days from the date of
such notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period. In the event an Option or Stock Purchase right
becomes fully exercisable and vested pursuant to the preceding sentence, such
Option or Stock Purchase Right shall only be exercisable in full; no fractional
exercise shall be permitted. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

14. Date of Grant. The date of grant of an Option or Stock Purchase Right
-------------
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.

15. Amendment and Termination of the Plan.
-------------------------------------

(a) Amendment and Termination. The Board may at any time amend, alter,
-------------------------
suspend or terminate the Plan.

(b) Shareholder Approval. The Company shall obtain shareholder approval
--------------------
of any Plan amendment to the extent necessary and desirable to comply with Rule
16b-3 or with Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
shareholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the applicable law, rule or regulation.

(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.

16. Conditions Upon Issuance of Shares.
----------------------------------

-13-
<PAGE>

(a) Legal Compliance. Shares shall not be issued pursuant to the exercise
----------------
of an Option or Stock Purchase Right unless the exercise of such Option or Stock
Purchase Right and the issuance and delivery of such Shares shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, Applicable Laws, and the requirements of any stock exchange or
quotation system upon which the Shares may then be listed or quoted, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.

(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.

17. Liability of Company.
--------------------

(a) Inability to Obtain Authority. The inability of the Company to obtain
-----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an
--------------------------------
Option or Stock Purchase Right exceeds, as of the date of grant, the number of
Shares which may be issued under the Plan without additional shareholder
approval, such Option or Stock Purchase Right shall be void with respect to such
excess Optioned Stock, unless shareholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 15(b) of the Plan.

18. Reservation of Shares. The Company, during the term of this Plan, will at
---------------------
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

19. Shareholder Approval. Continuance of the Plan shall be subject to approval
--------------------
by the shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted. Such shareholder approval shall be obtained in the
manner and to the degree required under Applicable Laws and the rules of any
stock exchange upon which the Common Stock is listed.

-14-
<PAGE>

IA CORPORATION I

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT
----------------------------

________________________
________________________
________________________

You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:

Grant Number ______________________________

Date of Grant ______________________________

Vesting Commencement Date ______________________________

Exercise Price per Share $_____________________________

Total Number of Shares Granted ______________________________

Total Exercise Price $_____________________________

Type of Option: ___ Incentive Stock Option

___ Nonstatutory Stock Option

Term/Expiration Date: _____________________________

Vesting Schedule:
- ----------------

This Option may be exercised, in whole or in part, in accordance with the
following schedule:

Twenty-five percent (25%) of the Shares subject to the Option shall vest
twelve (12) months after the Vesting Commencement Date, and 1/48 of the Shares
subject to the Option shall vest each month thereafter.
<PAGE>

Termination Period:
------------------

This Option may be exercised for three (3) months after termination of the
Optionee's Continuous Status as an Employee or Consultant with the Company.
Upon the death or Disability of the Optionee, this Option may be exercised for
such longer period as provided in the Plan. In no event shall this Option be
exercised later than the Term/Expiration Date as provided above.

II. AGREEMENT
---------

1. Grant of Option. The Plan Administrator of the Company hereby grants
---------------
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the one hundred thousand dollars
($100,000) rule of Code Section 422(d) it shall be treated as a Nonstatutory
Stock Option ("NSO").

2. Exercise of Option.
------------------

(a) Right to Exercise. This Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange
<PAGE>

or quotation service upon which the Shares are then listed. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.

3. Method of Payment. Payment of the aggregate Exercise Price shall be by
-----------------
any of the following, or a combination thereof, at the election of the Optionee:

(a) cash; or

(b) check; or

(c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or

(d) surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, AND (ii) have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.

4. Non-Transferability of Option. This Option may not be transferred in any
-----------------------------
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee, only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

5. Term of Option. This Option may be exercised only within the term set out
--------------
in the Notice of Grant, and may be exercised during such term only in accordance
with the Plan and the terms of this Option Agreement.

6. Tax Consequences. Some of the federal and California tax consequences
----------------
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercising the Option.
---------------------

(i) Nonstatutory Stock Option. The Optionee may incur regular
-------------------------
federal income tax and California income tax liability upon exercise of a NSO.
The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise
Price. If the Optionee is an Employee or a former Employee, the Company will be
required
<PAGE>

to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

(ii) Incentive Stock Option. If this Option qualifies as an ISO,
----------------------
the Optionee will have no regular federal income tax or California income tax
liability upon its exercise, although the excess, if any, of the Fair Market
Value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to alternative minimum taxable
income for federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise. In the event that the Optionee undergoes a
change of status from Employee to Consultant, any Incentive Stock Option of the
Optionee that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option on
the ninety-first (91st) day following such change of status.

(b) Disposition of Shares.
---------------------

(i) NSO. If the Optionee holds NSO Shares for at least one (1)
---
year, any gain realized on disposition of the Shares will be treated as long-
term capital gain for federal income tax purposes.

(ii) ISO. If the Optionee holds ISO Shares for at least one (1)
---
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two (2) years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price.

(c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee
-------------------------------------------------
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on
or before the later of (i) two (2) years after the grant date, or (ii) one year
after the exercise date, the Optionee shall immediately notify the Company in
writing of such disposition. The Optionee agrees that he or she may be subject
to income tax withholding by the Company on the compensation income recognized
from such early disposition of ISO Shares by payment in cash or out of the
current earnings paid to the Optionee.

7. Entire Agreement; Governing Law. The Plan is incorporated herein by
-------------------------------
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely
<PAGE>

to the Optionee's interest except by means of a writing signed by the Company
and Optionee. This agreement is governed by California law except for that body
of law pertaining to conflict of laws.

8. NO GUARANTEE OF EMPLOYMENT. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
--------------------------
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN
EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT
CAUSE.

By your signature and the signature of the Company's representative below, you
and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

OPTIONEE: IA Corporation I

____________________________________ By:_______________________________
Signature

____________________________________ Title:____________________________
Print Name

____________________________________
Residence Address

____________________________________
<PAGE>

EXHIBIT A
---------

IA CORPORATION I
1996 STOCK PLAN

EXERCISE NOTICE

IA Corporation I
1900 Powell Street, Suite 600
Emeryville, CA 94608-1840
Attention: Secretary

1. Exercise of Option. Effective as of today, ________________, _____, the
------------------
undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
"Shares") of the Common Stock of IA Corporation I (the "Company") under and
pursuant to the 1996 Stock Plan (the "Plan") and the Stock Option Agreement
dated _____________, 19___ (the "Option Agreement"). The purchase price for the
Shares shall be $_______________________, as required by the Option Agreement.

2. Delivery of Payment. Purchaser herewith delivers to the Company the full
-------------------
purchase price for the Shares.

3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
----------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

4. Rights as Shareholder. Until the issuance (as evidenced by the
---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 13 of
the Plan.

5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse
----------------
tax consequences as a result of Purchaser's purchase or disposition of the
Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

6. Entire Agreement; Governing Law. The Plan and Option Agreement are
-------------------------------
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
<PAGE>

hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by California law except for that body of law pertaining to conflict of
laws.

Submitted by: Accepted by:

PURCHASER: IA Corporation I

__________________________________ By: _________________________________
Signature

__________________________________ Its: ________________________________
Print Name

Address: Address:
- ------- -------

___________________________ 1900 Powell St., Suite 600
Emeryville, CA 94608-1840
___________________________

<PAGE>

EXHIBIT 4.2

IA CORPORATION I

1998 EMPLOYEE STOCK PURCHASE PLAN

The following constitute the provisions of the 1998 Employee Stock Purchase
Plan of IA Corporation I.

1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

2. Definitions.
-----------

(a) "Board" shall mean the Board of Directors of the Company.
-----

(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----

(d) "Company" shall mean IA Corporation I and any Designated
-------
Subsidiary of the Company.

(e) "Compensation" shall mean all base straight time gross earnings,
------------
commissions, overtime, shift premium, incentive compensation, incentive
payments, and bonuses.

(f) "Designated Subsidiary" shall mean any Subsidiary which has been
---------------------
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.

(g) "Employee" shall mean any individual who is an Employee of the
--------
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.

(h) "Enrollment Date" shall mean the first day of each Offering
---------------
Period.

(i) "Exercise Date" shall mean the last Trading Day of each Purchase
-------------
Period.
<PAGE>

(j) "Fair Market Value" shall mean, as of any date, the value of
-----------------
Common Stock determined as follows:

(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day on the date of such determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable, or;

(2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;

(3) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the Board.

(k) "Offering Periods" shall mean the periods of approximately twelve
----------------
(12) months during which an option granted pursuant to the Plan may be
exercised, commencing on the first Trading Day on or after Februrary 1 and
August 1 of each year and terminating on the last Trading Day in the periods
ending twelve months later. The duration and timing of Offering Periods may be
changed pursuant to Section 4 of this Plan.

(l) "Plan" shall mean this 1998 Employee Stock Purchase Plan.
----

(m) "Purchase Price" shall mean 85% of the Fair Market Value of a
--------------
share of Common Stock on the Enrollment Date or on the Exercise Date, whichever
is lower; provided however, that, in the event (i) the Company's shareholders
approve an increase in the number of shares available for issuance under the
Plan, (ii) all or a portion of such additional shares are to be issued with
respect to one or more Offering Periods that are underway at the time of such
shareholder approval ("New Shares"), and (iii) the Fair Market Value of a share
of Common Stock on the date of such approval (the "Authorization Date FMV") is
higher than the Fair Market Value on the Enrollment Date for any such Offering
Period, the Purchase Price with respect to New Shares shall be 85% of the
Authorization Date FMV or the Fair Market Value of a share of Common Stock on
the Exercise Date, whichever is lower.

(n) "Purchase Period" shall mean the approximately six month period
---------------
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Enrollment Date and end with the next Exercise Date.

-2-
<PAGE>

(o) "Reserves" shall mean the number of shares of Common Stock covered
--------
by each option under the Plan which have not yet been exercised and the number
of shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.

(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
----------
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.

(q) "Trading Day" shall mean a day on which national stock exchanges
-----------
and the Nasdaq System are open for trading.

3. Eligibility.
-----------

(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.

(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds twenty-five thousand dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.

4. Offering Periods. The Plan shall be implemented by consecutive,
----------------
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after February 1 and August 1 of each year, or on such other
date as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof. The Board shall have the power to change the
duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without shareholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter.

-3-
<PAGE>

5. Participation.
-------------

(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.

(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.

6. Payroll Deductions.
------------------

(a) At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not exceeding ten percent (10%) of the Compensation
which he or she receives on each pay day during the Offering Period.

(b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.

(c) A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, or may increase or decrease the rate of his or
her payroll deductions during the Offering Period by completing or filing with
the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.

(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.

-4-
<PAGE>

(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.

7. Grant of Option. On the Enrollment Date of each Offering Period, each
---------------
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than
10,000 shares of the Company's Common Stock (subject to any adjustment pursuant
to Section 19), and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. Exercise of the option
shall occur as provided in Section 8 hereof, unless the participant has
withdrawn pursuant to Section 10 hereof. The option shall expire on the last day
of the Offering Period.

8. Exercise of Option. Unless a participant withdraws from the Plan as
------------------
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.

9. Delivery. As promptly as practicable after each Exercise Date on
--------
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.

-5-
<PAGE>

10. Withdrawal.
----------

(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.

(b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.

11. Termination of Employment. Upon a participant's ceasing to be an
-------------------------
Employee, for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the option shall be
returned to such participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 15 hereof, and such participant's
option shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant's customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.

12. Interest. No interest shall accrue on the payroll deductions of a
--------
participant in the Plan.

13. Stock.
-----

(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 250,000 shares, plus an annual increase to be added on the first day of
the Company's fiscal year beginning in 1999 equal to the lesser of (i) 300,000
shares, (ii) 2% of the outstanding shares on such date or (iii) a lesser amount
determined by the Board. If, on a given Exercise Date, the number of shares
with respect to which options are to be exercised exceeds the number of shares
then available under the Plan, the Company

-6-
<PAGE>

shall make a pro rata allocation of the shares remaining available for purchase
in as uniform a manner as shall be practicable and as it shall determine to be
equitable.

(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.

(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.

14. Administration. The Plan shall be administered by the Board or a
--------------
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

15. Designation of Beneficiary.
--------------------------

(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.

(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

16. Transferability. Neither payroll deductions credited to a
---------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment,

-7-
<PAGE>

transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds from an Offering
Period in accordance with Section 10 hereof.

17. Use of Funds. All payroll deductions received or held by the Company
------------
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

18. Reports. Individual accounts shall be maintained for each participant
-------
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.

19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
---------------------------------------------------------------------
Merger or Asset Sale.
--------------------

(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as well
as the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.

(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.

-8-
<PAGE>

(c) Merger or Asset Sale. In the event of a proposed sale of all or
--------------------
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.

20. Amendment or Termination.
------------------------

(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 19
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law, regulation or stock exchange rule), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.

(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish a limit on the number of shares purchasable by all
participants at the end of each Purchase Period, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, permit
payroll withholding in excess of the amount designated by a participant in order
to adjust for delays or mistakes in the Company's processing of properly
completed withholding elections, establish reasonable waiting and adjustment
periods and/or accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each participant properly
correspond with amounts withheld from the participant's Compensation, and
establish such other limitations or procedures as the Board (or its committee)
determines in its sole discretion advisable which are consistent with the Plan.

21. Notices. All notices or other communications by a participant to the
-------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form

-9-
<PAGE>

specified by the Company at the location, or by the person, designated by the
Company for the receipt thereof.

22. Conditions Upon Issuance of Shares. Shares shall not be issued with
----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

23. Term of Plan. The Plan shall become effective upon the earlier to
------------
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.

24. Automatic Transfer to Low Price Offering Period. To the extent
-----------------------------------------------
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.

-10-
<PAGE>

EXHIBIT A
---------

IA CORPORATION I

1998 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)

1. _____________________________________________________ hereby elects to
participate in the IA Corporation I 1998 Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan") and subscribes to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement and
the Employee Stock Purchase Plan.

2. I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday (not to exceed 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)

3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.

4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is subject
to shareholder approval of the Employee Stock Purchase Plan.

5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only):
___________________________________________________________________________
___________.

6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes
<PAGE>

as having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me over the price which I paid for the
shares. I hereby agree to notify the Company in writing within 30 days
--------------------------------------------------------------
after the date of any disposition of my shares and I will make adequate
-----------------------------------------------------------------------
provision for Federal, state or other tax withholding obligations, if any,
--------------------------------------------------------------------------
which arise upon the disposition of the Common Stock. The Company may, but
----------------------------------------------------
will not be obligated to, withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions
or benefits attributable to sale or early disposition of Common Stock by
me. If I dispose of such shares at any time after the expiration of the 2-
year and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time of
such disposition, and that such income will be taxed as ordinary income
only to the extent of an amount equal to the lesser of (1) the excess of
the fair market value of the shares at the time of such disposition over
the purchase price which I paid for the shares, or (2) 15% of the fair
market value of the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition will be taxed
as capital gain.

7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.

8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:

NAME: (Please print)______________________________________________
(First) (Middle) (Last)

__________________________________ ______________________________________
Relationship

______________________________________
(Address)
<PAGE>

Employee's Social
Security Number: ____________________________________

Employee's Address: ____________________________________

____________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:__________________ _________________________________________________
Signature of Employee

_________________________________________________
Spouse's Signature (If beneficiary other than
spouse)
<PAGE>

EXHIBIT B
---------

IA CORPORATION I

1998 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

The undersigned participant in the Offering Period of the IA Corporation I
1998 Employee Stock Purchase Plan which began on ____________, 19____ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.

Name and Address of Participant:

________________________________
________________________________
________________________________

Signature:

________________________________

Date:____________________________

<PAGE>

Exhibit 4.3

IA CORPORATION I

STOCK OPTION AGREEMENT

I. NOTICE OF STOCK OPTION GRANT
----------------------------

Kevin D. Moran

You have been granted an option to purchase Common Stock of IA Corporation
I, a Delaware corporation (the "Company"), subject to the terms and conditions
of this Option Agreement, as follows:

Date of Grant July 27, 1998
-------------------------

Vesting Commencement Date June 30, 1998
-------------------------

Exercise Price per Share $1.8125
-------------------------

Total Number of Shares Granted 309,311
-------------------------

Total Exercise Price $560,626.1875
-------------------------

Type of Option: ________ Incentive Stock Option

X Nonstatutory Stock Option
--------

Term/Expiration Date July 27, 2008
-------------------------

II. VESTING SCHEDULE
----------------

1. Vesting. This Option may be exercised, in whole or in part, in accordance
-------
with the following schedule:

(a) Twenty-five percent (25%) of the Shares subject to the Option shall
vest twelve (12) months after the Vesting Commencement Date, and 1/48 of the
Shares subject to the Option shall vest each month thereafter.

(b) Notwithstanding the foregoing in Section 1(a), the exercisability of
the Option will be accelerated upon the following events:

(i) In the event of a Change of Control during the first two years of
the Optionee's employment with the Company and provided that the Optionee has
not been offered the position(s) of President and Chief Executive Officer with
the Combined Entity substantially similar to the position(s) that the Optionee
occupied with the Company immediately prior to the Change of Control, which
includes the Company after such Change of Control (the "Combined Entity"), the
Option shall become immediately exercisable as to fifty percent (50%) of the
Shares subject to the Option.

Officer with the Combined Entity substantially similar to the position(s) that
the Optionee occupied with the Company immediately prior to the Change of
Control, the Option shall become immediately exercisable as to one hundred
percent (100%) of the Shares subject to the Option.

2. Termination Period:
------------------

This Option may be exercised to the extent exercisable on the date of
termination for ninety (90) days after the date of termination of employment or
consulting relationship, or such longer period as may be applicable upon death
or Disability of Optionee as provided in Sections 8 and 9 of this Agreement, but
in no event later than the Term/Expiration Date as provided above.

III. AGREEMENT
---------

1. Definitions. As used herein, the following definitions shall apply:
-----------

(a) "Administrator" means the Board or any of its Committees.
-------------

(b) "Applicable Laws" means the legal requirements relating to the
---------------
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options are, or will be, granted under the
Plan.

(d) "Change of Control" means the occurrence of any of the
-----------------
following events:

(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended), other than
Warburg, Pincus Investors L.P., or its affiliates, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the
total voting power represented by the Company's then outstanding voting
securities; or

(ii) The consummation of:

(A) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or the entity that
controls such surviving entity) at least 50% of the total voting power
represented by the voting securities of the Company or such surviving
entity or the entity that controls such surviving entity outstanding
immediately after such merger or consolidation; or

(B) the sale or disposition by the Company of all or
substantially all the Company's assets.

(e) "Code" means the Internal Revenue Code of 1986, as amended.
----

(f) "Committee" means a Committee appointed by the Board.
---------

(g) "Common Stock" means the Common Stock of the Company.
------------

-2-
<PAGE>

(h) "Consultant" means any person, including an advisor, engaged by
----------
the Company to render services and who is compensated for such services. The
term "Consultant" shall not include Directors who are paid only a director's fee
by the Company or who are not compensated by the Company for their services as
Directors. The term "Consultant" shall include any person subject to a valid
and enforceable consulting agreement with the Company.

(i) "Continuous Status as an Employee or Consultant" means that the
----------------------------------------------
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. For the purposes of this
Agreement, the term "consulting relationship" shall include being subject to a
valid and enforceable consulting agreement with the Company. Continuous Status
as an Employee or Consultant shall not be considered interrupted in the case of
(i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. A leave of absence approved by the Company shall include sick
leave, military leave, or any other personal leave approved by an authorized
representative of the Company.

(j) "Director" means a member of the Board.
--------

(k) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.

(m) "Fair Market Value"means, as of any date, the value of Common
-----------------
Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable; or

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

(n) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

(o) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Securities Exchange Act of 1934, as amended and
the rules and regulations promulgated thereunder.

(p) "Optioned Stock" means the Common Stock subject to the Option.
--------------

(q) "Parent" means a "parent corporation", whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.

(r) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 11 of this Agreement.

-3-
<PAGE>

(s) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.

2. Grant of Option. The Administrator hereby grants to the Optionee
---------------
named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee"), an option (the "Option") to purchase a number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price").

This Option is not intended to qualify as an Incentive Stock Option under
Section 422 of the Code.

3. Exercise of Option.
------------------

(a) Right to Exercise. This Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of this Option Agreement. In the event of Optionee's
death, disability or other termination of Optionee's employment or consulting
relationship, the exercisability of the Option is governed by the applicable
provisions of this Option Agreement and any employment agreement between
Optionee and the Company.

(b) Method of Exercise. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company.
The Exercise Notice shall be signed by the Optionee and shall be delivered in
person or by certified mail to the Secretary of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange or quotation service upon which the Shares
are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.

4. Method of Payment. Payment of the aggregate Exercise Price shall be
-----------------
by any of the following, or a combination thereof, at the election of the
Administrator:

(a) cash; or

(b) check; or

(d) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six (6)
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised; or

(e) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or

(f) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement; or

-4-
<PAGE>

(g) any combination of the foregoing methods of payment; or

(h) such other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws.

5. Non-Transferability of Option. This Option may not be sold, pledged,
-----------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee.

6. Term of Option. This Option may be exercised only within the term set
--------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Option Agreement.

7. Termination of Employment. Upon termination of an Optionee's
-------------------------
Continuous Status as an Employee or Consultant (other than as a result of the
Optionee's death or Disability), the Optionee may exercise his Option, but only
within [three (3) months] of such date and only to the extent that the Optionee
was entitled to exercise it at the date of such termination (and in no event
later than the expiration of the term of such Option as set forth in this Option
Agreement). To the extent that Optionee was not entitled to exercise an Option
at the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate. For purposes of this Section 7,
an Optionee's change in status from: (i) Employee to Consultant, (ii) Consultant
to Employee, or (iii) Employee or Consultant to Officer shall not, unless
otherwise specified by the Administrator, be considered a termination of
Continuous Status as an Employee or Consultant.

8. Disability of Optionee. Upon termination of an Optionee's Continuous
----------------------
Status as an Employee or Consultant as a result of the Optionee's Disability,
the Optionee may exercise his Option at any time within twelve (12) months from
the date of termination, but only to the extent that the Optionee is entitled to
exercise it on the date of termination (and in no event later than the
expiration of the term of the Option as set forth in the Notice of Grant). If,
on the date of termination, the Optionee is not entitled to exercise his entire
Option, the unexercisable portion of the Option shall terminate. If, after
termination, the Optionee does not exercise his Option within the time specified
herein, the Option shall terminate.

9. Death of Optionee. Upon the death of the Optionee, the Option shall
-----------------
become one hundred percent (100%) vested and may be exercised at any time within
twelve (12) months following the date of death (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant), by
the Optionee's estate or by a person who acquires the right to exercise the
Option by bequest or inheritance. If the Optionee's estate or the person who
acquires the right to exercise the Option by bequest or inheritance does not
exercise the Option within the time specified herein, the Option shall
terminate.

10. Buyout Provisions. The Administrator may at any time offer to buy out
-----------------
for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

11. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
------------------------------------------------------------------
Asset Sale.
- ----------

(a) Changes in Capitalization. Subject to any required action by the
-------------------------
stockholders of the Company, the number of shares of Common Stock covered by the
Option, as well as the price per share of Common Stock covered by the Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly

-5-
<PAGE>

provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to the Option.

12. Tax Consequences. Some of the federal and state tax consequences
----------------
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.

(a) Exercising the Nonqualified Stock Option ("NSO"). This Option
------------------------------------------------
does not qualify as an ISO. As a consequence, the optionee may incur regular
federal income tax and state income tax liability upon exercise. The Optionee
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the fair market value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price.
If the Optionee is an employee, the Company will be required to withhold from
his or her compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.

(b) Disposition of Shares. If the Optionee holds NSO Shares for at
---------------------
least one year, any gain realized on disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes.

By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted and governed by the terms
and conditions of this Option Agreement. Optionee has reviewed this Option
Agreement in its entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option Agreement and fully understands all
provisions of the Option Agreement. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions relating to the Option Agreement.

OPTIONEE: IA CORPORATION I

/s/ Kevin D. Moran By: /s/ IA Corporation
- ------------------------------ --------------------------------
Signature

Kevin D. Moran Title:
- ------------------------------ ----------------------------
Print Name

-6-
<PAGE>

CONSENT OF SPOUSE
-----------------

The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of this Option Agreement. In consideration of the Company's
granting his or her spouse the right to purchase Shares as set forth in this
Option Agreement, the undersigned hereby agrees to be irrevocably bound by the
terms and conditions of this Option Agreement and further agrees that any
community property interest shall be similarly bound. The undersigned hereby
appoints the undersigned's spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under this Option Agreement.

-------------------------------------
Spouse of Optionee

-7-
<PAGE>

EXHIBIT A
---------

EXERCISE NOTICE

IA Corporation I
1900 Power Street
Suite 600
Emeryville, CA 94608

Attention:

1. Exercise of Option. Effective as of today, __________, 199__, the
------------------
undersigned ("Purchaser") hereby elects to purchase __________ shares (the
"Shares") of the Common Stock of IA Corporation I (the "Company") under and
pursuant to the Stock Option Agreement dated as of July __, 1998 (the "Option
Agreement"). The purchase price for the Shares shall be $____, as required by
the Option Agreement.

2. Delivery of Payment. Purchaser herewith delivers to the Company the full
-------------------
purchase price for the Shares.

3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
----------------------------
received, read and understood the Option Agreement and agrees to abide by and be
bound by its terms and conditions.

4. Rights as Shareholder. Subject to the terms and conditions of this
---------------------
Agreement, Purchaser shall have all of the rights of a shareholder of the
Company with respect to the Shares from and after the date that Purchaser
delivers full payment of the Exercise Price until such time as Purchaser
disposes of the Shares.

6. Entire Agreement; Governing Law. The Option Agreement is incorporated
-------------------------------
herein by reference. This Agreement and the Option Agreement constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Purchaser with respect to the
subject matter hereof, and such agreement is governed by California law except
for that body of law pertaining to conflict of laws.

Submitted by: Accepted by:

PURCHASER: IA CORPORATION I

By:
- --------------------------- ------------------------
Signature

Its:
- --------------------------- -----------------------
Print Name

Address: Address:
- ------- -------

1900 Power Street, Suite 600
- --------------------------- Emeryville, CA 94608

-8-

<PAGE>

Exhibit 4.4

IA CORPORATION I

STOCK OPTION AGREEMENT

I. NOTICE OF STOCK OPTION GRANT
----------------------------

Timothy F. McCarthy

You have been granted an option to purchase Common Stock of IA Corporation
I, a Delaware corporation (the "Company"), subject to the terms and conditions
of this Option Agreement, as follows:
<TABLE>
<CAPTION>
<S> <C>
Date of Grant July 27, 1998
-------------------------

Vesting Commencement Date June 30, 1998
-------------------------

Exercise Price per Share $ 1.8125
-------------------------

Total Number of Shares Granted 265,000
-------------------------

Total Exercise Price $480,312.50
-------------------------

Type of Option: Incentive Stock Option
-------
X Nonstatutory Stock Option
-------

Term/Expiration Date July 27, 2008
-------------------------
</TABLE>

II. VESTING SCHEDULE
----------------

1. Vesting. This Option may be exercised, in whole or in part, in accordance
-------
with the following schedule:

(b) Notwithstanding the foregoing in Section 1(a), the exercisability of
the Option will be accelerated upon the following events:

(i) In the event of a Change of Control during the first two years of
the Optionee's employment with the Company and provided that the Optionee has
not been offered the position(s) with the Combined Entity substantially similar
to the position(s) that the Optionee occupied with the Company immediately prior
to the Change of Control, which includes the Company after such Change of
Control (the "Combined Entity"), the Option shall become immediately exercisable
as to fifty percent (50%) of the Shares subject to the Option.

(ii) Further, in the event of a Change of Control following Optionee's
second year of employment with the Company, and provided that the Optionee has
not been offered the position(s) with the Combined Entity substantially similar
to the position(s) that the Optionee occupied with the Company immediately prior
to the Change
<PAGE>

of Control, the Option shall become immediately exercisable as to one hundred
percent (100%) of the Shares subject to the Option.

2. Termination Period:
------------------

III. AGREEMENT
---------

1. Definitions. As used herein, the following definitions shall apply:
-----------

(a) "Administrator" means the Board or any of its Committees.
-------------

(b) "Applicable Laws" means the legal requirements relating to the
---------------
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options are, or will be, granted under the
Plan.

(d) "Change of Control" means the occurrence of any of the
-----------------
following events:

(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended),
other than Warburg, Pincus Investors L.P., or its
affiliates, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50%
or more of the total voting power represented by the
Company's then outstanding voting securities; or

(ii) The consummation of:

(A) a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity
or the entity that controls such surviving entity) at
least 50% of the total voting power represented by the
voting securities of the Company or such surviving entity
or the entity that controls such surviving entity
outstanding immediately after such merger or
consolidation; or

(B) the sale or disposition by the Company of all or
substantially all the Company's assets.

(e) "Code" means the Internal Revenue Code of 1986, as amended.
----

(f) "Committee" means a Committee appointed by the Board.
---------

(g) "Common Stock" means the Common Stock of the Company.
------------
<PAGE>

(i) "Continuous Status as an Employee or Consultant" means that the
----------------------------------------------
employment or consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. For the purposes of this
Agreement, the term "consulting relationship" shall include being subject to a
valid and enforceable consulting agreement with the Company. Continuous Status
as an Employee or Consultant shall not be considered interrupted in the case of
(i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. A leave of absence approved by the Company shall include sick
leave, military leave, or any other personal leave approved by an authorized
representative of the Company.

(j) "Director" means a member of the Board.
--------

(k) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.

(m) "Fair Market Value"means, as of any date, the value of Common
-----------------
Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable; or

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

(n) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

(p) "Optioned Stock" means the Common Stock subject to the Option.
--------------

(q) "Parent" means a "parent corporation", whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.

(r) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 11 of this Agreement.
<PAGE>

(s) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.

This Option is not intended to qualify as an Incentive Stock Option under
Section 422 of the Code.

3. Exercise of Option.
------------------

(a) Right to Exercise. This Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of this Option Agreement. In the event of Optionee's
death, disability or other termination of Optionee's employment or consulting
relationship, the exercisability of the Option is governed by the applicable
provisions of this Option Agreement and any employment agreement between
Optionee and the Company.

(b) Method of Exercise. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company.
The Exercise Notice shall be signed by the Optionee and shall be delivered in
person or by certified mail to the Secretary of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

4. Method of Payment. Payment of the aggregate Exercise Price shall be
-----------------
by any of the following, or a combination thereof, at the election of the
Administrator:

(a) cash; or

(b) check; or

(g) any combination of the foregoing methods of payment; or

(h) such other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws.

11. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
------------------------------------------------------------------
Asset Sale.
- ----------

made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to the Option.

OPTIONEE: IA CORPORATION I

/s/ Timothy F. McCarthy By: /s/ IA Corporation I
- ------------------------------ -------------------------------
Signature

Timothy F. McCarthy Title:
- -------------------- ----------------------------
Print Name
<PAGE>

CONSENT OF SPOUSE
-----------------

--------------------------------
Spouse of Optionee
<PAGE>

EXHIBIT A
---------

EXERCISE NOTICE

IA Corporation I
1900 Power Street
Suite 600
Emeryville, CA 94608

Attention:

2. Delivery of Payment. Purchaser herewith delivers to the Company the full
-------------------
purchase price for the Shares.

Submitted by: Accepted by:

PURCHASER: IA CORPORATION I

By:
- ------------------------------ -----------------------------
Signature

Timothy F. McCarthy Its:
- ------------------------------ ----------------------------
Print Name

Address: Address:
- ------- -------

1900 Power Street, Suite 600
- ---------------------------- Emeryville, CA 94608

<PAGE>

EXHIBIT 5.1

March 1, 1999

IA Corporation I
1900 Powell Street, Suite 600
Emeryville, California 94608-1840

RE: REGISTRATION STATEMENT OF FORM S-8
----------------------------------

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about March 1, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 2,224,311 shares of your
Common Stock (the "Shares") reserved for issuance under the 1996 Stock Plan and
the 1998 Employee Stock Purchase Plan (collectively, the "Plans") and the shares
underlying the nonstatutory stock option grants (the "Agreements"). As your
legal counsel, we have examined the proceedings taken and are familiar with the
proceedings proposed to be taken by you in connection with the sale and issuance
of the Shares under the Plans and pursuant to the Agreements.

It is our opinion that, when issued and sold in the manner referred to in
the Agreements and the Plans and pursuant to the respective agreements which
accompany each grant under the Plans, the Shares will be legally and validly
issued, fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and any amendment thereto.

Very truly yours,

/s/ WILSON SONSINI GOODRICH & ROSATI
__________________________________________
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

<PAGE>

EXHIBIT 23.2

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on (Form S-8) pertaining to the 1996 Stock Plan,
1998 Employee Stock Purchase Plan and the Non-Qualified Stock Opinion
Agreements IA Corporation I and to the incorporation by reference therein of
our report dated January 28, 1998 with respect to the consolidated financial
statements and schedule of IA Corporation I included in its Annual Report
(Form 10-K) for the year ended December 31, 1997, filed with the Securities
and Exchange Commission.

/s/ ERNST & YOUNG LLP
_____________________________
ERNST & YOUNG LLP

Walnut Creek, California

February 22, 1999