<PAGE>
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to
Commission File Number 0-28840
INFORMATION MANAGEMENT RESOURCES, INC.
(exact name of registrant
specified in its charter)
Florida 59-2911475
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
26750 U.S. Highway 19 North
Suite 500 33761
Clearwater, Florida (zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (813) 797-7080
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
------------------- ------------------------------------
Common Stock, par value $.10 per share The Nasdaq National Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
-----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or an amendment to this
Form 10-K. [X]
The aggregate market value of the Company's common stock, par value $.10 per
share (the "Common Stock") held by non-affiliates of the registrant as of March
13, 1998, was $568,035,487 based upon the closing price of $34.46 per share as
reported on the Nasdaq National Market for that date. The shares of Common
Stock held by each current executive officer and director and by each person who
is known to the Company to own 5% or more of the outstanding Common Stock have
been excluded from this computation on the basis that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes. As of March 13, 1998, there were
25,794,532 shares of the registrant's Common Stock outstanding. The closing
price of the shares outstanding have been adjusted to reflect the 3-for-2 stock
split in the form of a stock dividend payable on April 3, 1998 to shareholders
of record on March 20, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
None.
--------------------------------------------
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The directors and executive officers of the Company are as follows:
Name Age
---- ---
Satish K. Sanan(1) 50 Chairman of the Board; President and Chief
- --------------------- -- ------------------------------------------
Executive Officer; Director
---------------------------
John R. Hindman 49 Chief Operating Officer
- --------------------- -- -----------------------
Robert M. Molsick 43 Chief Financial Officer
- --------------------- -- -----------------------
Jeffery S. Slowgrove 40 Treasurer; Director
- --------------------- -- -------------------
Kasi V. Sridharan 43 Executive Vice President
- ----------------- -- ------------------------
Dilip Patel 39 Vice President-General Counsel; Secretary
- ----------------- -- ------------------------------------------
Philip Shipperlee 51 Director; Managing Director, IMR-U.K.
- ----------------- -- -------------------------------------
Michael J. Dean 38 Vice President - Finance, Controller
- ---------------- -- ------------------------------------
Charles C. Luthin (1)(2)(3) 55 Director
- --------------------------- -- --------
Vincent Addonisio(1)(2)(3) 43 Director
- --------------------------- -- --------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee
Satish K. Sanan co-founded the Company in 1988 and has served as President,
Chief Executive Officer and a Director of the Company since its inception. Mr.
Sanan also has served as a director of each of the Company's subsidiaries since
the date the respective subsidiary was formed or acquired by the Company. Mr.
Sanan serves as a director of Padua Stables, Inc. and is a partner of Padua
Stables, L.P. Prior to founding the Company, Mr. Sanan was employed by SHL
Systemhouse Limited from 1980 to 1988 where he was responsible for planning,
directing and controlling the achievement of sales and delivery objectives.
John R. Hindman has served as Chief Operating Officer of the Company since
April 1998 and served as the Company's Chief Financial Officer from March 1997
until April 1998. Mr. Hindman also serves as a Director for various
subsidiaries of the Company. From November 1993 until September 1996, Mr.
Hindman served as Chief Operating Officer and Chief Financial Officer of
Precision Systems, Inc. ("PSI"), a software systems provider to the
telecommunications industry. From September 1996 until February 1997, Mr.
Hindman served as a financial consultant to PSI. From July 1988 until October
1993, Mr. Hindman served as Chief Financial Officer of Kimmins Environmental, a
specialty contracting firm.
Robert M. Molsick has served as Chief Financial Officer of the Company
since April 1998. From June 1995 until March 1998, Mr. Molsick served as Chief
Financial officer of Kvaerner Construction, Inc., a commercial construction
company. From February 1993 until June 1995, Mr. Molsick served as Chief
Financial Officer of Foley & Associates Construction Company, a commercial
construction company. From August 1979 until February 1993 Mr. Molsick was
employed by Brown & Root Building Company, also a commercial construction
company, where he served as Chief Financial Officer from June 1983 to February
1993. Mr. Molsick is a Certified Public Accountant.
<PAGE>
Jeffery S. Slowgrove co-founded the Company in 1988 with Mr. Sanan and has
served as Treasurer and a Director of the Company since its inception. Mr.
Slowgrove also has served as a Director of Information Management Resources
(India) Limited ("IMR-India") since 1990.
Kasi V. Sridharan has served as Executive Vice President of the Company
since March 1997. Mr. Sridharan served as Vice President-Finance of the Company
from October 1995 until March 1997. Mr. Sridharan also serves as a Director for
various subsidiaries of the Company. He served as Vice President-Finance of
IMR-India from April 1992 until October 1995. From November 1988 until March
1992, Mr. Sridharan served as Chief Financial Officer for the Centre for
Development of Advanced Computing in Pune, India. Mr. Sridharan is a Chartered
Accountant.
Dilip Patel has served as Vice President-General Counsel and Secretary of
the Company since March 1996. Presently, Mr. Patel serves as a Director and
Secretary for various subsidiaries of the Company. From August 1990 until March
1996, Mr. Patel was an attorney in the International Department of the Tampa,
Florida law firm Fowler, White, Gillen, Boggs, Villareal & Banker, P.A. From
1983 until 1988 he practiced law as a Solicitor with Cartwright, Cunningham,
Haselgrove & Co. in London, England. Mr. Patel is a member of and is Board
Certified in Immigration and Nationality Law by the Florida Bar. He is admitted
as a Solicitor of the Supreme Court of England and Wales.
Philip Shipperlee has served as a Director of the Company since August 1996
and has served as the Managing Director of Information Management Resources,
plc. ("IMR-U.K.") since January 1997. Prior to such time, Mr. Shipperlee served
as the Managing Director of Link Group Holdings, Ltd. ("Link") from June 1980
until the Company's acquisition of Link in January 1997. Mr. Shipperlee served
as Managing Director of Information Management Resources (U.K.) Ltd. from 1994
until January 1997 when operations were merged with Link.
Michael J. Dean has served as Vice President-Finance since March 1997. Mr.
Dean served as Chief Financial Officer of the Company from July 1996 until March
1997 and as Controller of the Company from July 1994 to the present. Prior to
joining the Company, Mr. Dean served for ten years as a Manager for Harper, Van
Scoik & Company, a Certified Public Accounting firm in Clearwater, Florida. Mr.
Dean is a Certified Public Accountant.
Charles C. Luthin has been a director of the Company since August 1995.
From October 1994 until July 1995, he served as Vice President-Finance of the
Company. Since 1995, Mr. Luthin has served as Vice President-Finance for Eckerd
Family Youth Alternatives, Inc. a not-for-profit entity located in Clearwater,
Florida. From 1993 until 1994, Mr. Luthin served as President of Dow Sherwood
Corporation, a corporation that owns and operates restaurants. From 1989 until
1993, Mr. Luthin served as Vice President-Finance and Chief Financial Officer of
Trans-marine Management Company, providing financial management and analysis for
business interests of George M. Steinbrenner. From 1980 until 1989, Mr. Luthin
served in various capacities for Walt Disney World Company, most recently as
Vice President, Finance and Planning-Parks, where he was responsible for
financial analysis and long-term planning for that company's theme park
operations.
Vincent Addonisio has been a director of the Company since August 1996.
Mr. Addonisio has served as President of Parker Communications Network, Inc., a
point of sale marketing network company, since January 1997. From July 1993
until November 1996, Mr. Addonisio was employed by ABR Information Services,
Inc., a benefits administration outsourcing company in various positions that
included Director, Executive Vice President, Chief Financial Officer and
Treasurer. Mr. Addonisio served as Chief Financial Officer of AER Energy
Resources, Inc., a battery manufacturing company, from October 1992 until June
1993. From April 1991 until September 1992, Mr. Addonisio served as Vice
President and Chief Financial Officer of IQ Software, Inc., a software
development company.
2
<PAGE>
The Board of Directors is divided into three classes, each of whose members
will serve for a staggered three-year term. The Board is comprised of two Class
I directors (Messrs. Sanan and Addonisio), two Class II directors (Messrs.
Shipperlee and Luthin) and one Class III director (Mr. Slowgrove). In
accordance with Section 6.1 of the Company's First Amended and Restated Articles
of Incorporation, at each annual meeting of shareholders a class of directors
will be elected for a three-year term to succeed the directors of the same class
whose terms are then expiring. The terms of the initial Class II directors and
Class III directors and the reelected Class I directors will expire upon the
election and qualification of successor directors at the Annual Meeting of
Shareholders held in 1998, 1999 and 2000, respectively. There are no family
relationships between any of the directors or executive officers of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act requires the Company's directors and
officers and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the United States Securities and Exchange Commission
(the "Commission"). Such persons are required by Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors of
the Company, the Company believes that all Section 16(a) filing requirements
were met during 1997.
3
<PAGE>
Item 11. Executive Compensation
----------------------
The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company and each of the four other most
highly compensated executive officers of the Company determined as of the end of
the last year (hereafter referred to as the "Named Executive Officers") for the
years ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Securities
Annual Compensation Underlying All Other
Name and Principal Position Year Salary Bonus Options Compensation(1)
<S> <C> <C> <C> <C> <C>
Satish K. Sanan 1997 $406,000 $354,558 - $97,792(2)
Chairman of the Board and 1996 316,667 320,018 6,172,515 59,327(3)
Chief Executive Officer 1995 253,285 261,241 3,009,465 58,368(4)
Philip Shipperlee (5) 1997 154,100 - 60,000 -
Managing Director of IMR-U.K.
John R. Hindman (6) 1997 96,921 50,000 101,250 -
Chief Operating Officer
Dilip Patel (7) 1997 92,998 20,000 - -
Vice President - General Counsel 1996 67,018 25,000 112,500 -
Kasi V. Sridharan 1997 77,387 24,000 - -
Executive Vice President 1996 69,999 25,000 112,500 -
1995 44,099 - - -
</TABLE>
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted because such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total annual
salary and bonus for the Named Executive Officer for such year.
(2) Includes (i) $96,792 representing premiums for life insurance policies with
benefits payable to beneficiaries designated by Mr. Sanan; and (ii) a
$1,000 contribution on behalf of Mr. Sanan to the Company's 401(k) Plan.
(3) Includes (i) $58,327 representing premiums paid for life insurance policies
with benefits payable to beneficiaries designated by Mr. Sanan; and (ii) a
$1,000 contribution on behalf of Mr. Sanan to the Company's 401(k) Plan.
(4) Includes (i) $57,368 representing premiums paid for life insurance policies
with benefits payable to beneficiaries designated by Mr. Sanan; and (ii) a
$1,000 contribution on behalf of Mr. Sanan to the Company's 401(k) Plan.
(5) Mr. Shipperlee commenced employment with the Company in January 1997.
(6) Mr. Hindman commenced employment with the Company in March 1997 as Chief
Financial Officer. In April 1998 Mr. Hindman was named Chief Operating
Officer.
(7) Mr. Patel commenced employment with the Company in March 1996.
4
<PAGE>
Effective as of October 31, 1996, Mr. Sanan entered into a five year
employment agreement with the Company. The employment agreement expires on the
fifth anniversary of the effective date, and shall renew automatically for
additional one year periods until either the Company or Mr. Sanan serves a 180
day notice of non-renewal. The employment agreement may be terminated by the
Company only with cause. Cause is defined as including: (i) theft or
embezzlement with regard to material property of the Company; or (ii) continued
neglect by the employee in fulfilling his duties as Chief Executive Officer of
the Company as a result of alcoholism, drug addiction or excessive unauthorized
absenteeism, after written notification from the Board of Directors of such
neglect and the employee's failure to cure within a reasonable time. Under the
employment agreement, Mr. Sanan received an initial base salary of $400,000 plus
automobile expenses, subject to annual increases at the discretion of the
Compensation Committee. Effective January 1, 1998, the Compensation Committee
increased Mr. Sanan's base annual compensation to $500,000. The employment
agreement also provides for an annual incentive bonus equal to 2% of pre-tax net
income (determined without regard to the charge resulting from this payment). In
addition, on November 14, 1996, Mr. Sanan received a ten-year option to purchase
225,000 shares at an exercise price of $6.22 per share. Such option vested in
full on November 14, 1997. On March 31, 1998, Mr. Sanan received a ten-year
option to purchase 150,000 shares at an exercise price of $37.17 per share.
Such option vests over three years. Mr. Sanan will be eligible to receive
additional stock options exercisable at fair market value on the grant date, in
such amounts and subject to such vesting provisions as determined by the
Compensation Committee. The Company also has agreed to maintain and to pay the
premiums for approximately $10.6 million of life insurance policies with
benefits payable to beneficiaries designated by Mr. Sanan. The anticipated
annual premium is approximately $100,000. Mr. Sanan will receive all standard
benefits made available to other executive employees of the Company. In the
event that the Company terminates Mr. Sanan's employment without cause, Mr.
Sanan will receive a severance payment equal to three times the greater of (i)
Mr. Sanan's then current base salary plus the amount of his prior year bonus and
the annualized value of any current benefits, or (ii) his compensation as
reported for tax purposes for the immediately preceding calendar year. The
employment agreement contains a noncompetition covenant for a period of three
years following termination of employment by Mr. Sanan for any reason or by the
Company for cause.
Option Grants in Last Fiscal Year
The following table sets forth information concerning options granted
to the Named Executive Officers during the year ended December 31, 1997:
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
Number of Percent of Value at Assumed
Securities Total Annual Rate of Stock
Underlying Granted to Exercise or Price Appreciation for
Options Employees In Base Price Expiration Option Term(2)
Executive Officer Granted(1) Fiscal Year Per Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Philip Shipperlee(3) 60,000 3.0% $15.08 11/14/04 $368,589 $858,968
John R. Hindman(4) 101,250 5.0% $ 5.06 3/20/07 $321,562 $814,900
</TABLE>
(1) These options were granted with an exercise price equal to the fair market
value of the Common Stock on the date of grant as determined by the Board
of Directors.
(2) The potential realizable value is calculated based on the ten-year or
seven-year term of the option at the time of its grant. It is calculated by
assuming that the stock price on the date of grant appreciates at the
indicated annual rate, compounded annually for the entire term of the
option. The actual realizable value of the options based on the actual
market price may substantially exceed the potential realizable value shown
in the table.
(3) The option is a nonqualified stock option and vests over five years from
the date of the grant.
(4) The option is a nonqualified stock option and vests over three years from
the date of the grant.
5
<PAGE>
Option Exercises in Last Fiscal and Year-end Option Values
The following table sets forth the aggregate dollar value of all options
exercised and the total number of unexercised options held, on December 31,
1997, by the Named Executive Officers:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired Value December 31, 1997 December 31, 1997(1)
Executive Officer on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Satish K. Sanan.......... - - 9,370,238 - $231,392,669 $ -
Philip Shipperlee........ - - 11,250 71,250 $ 211,275 $ 806,075
John R. Hindman.......... - - - 101,250 $ - $2,019,600
Dilip Patel.............. 18,000 $264,510 4,500 90,000 $ 111,500 $2,230,000
Kasi V. Sridharan........ 22,500 $380,025 - 90,000 $ - $2,230,000
</TABLE>
- --------------
(1) The closing price for the Company's Common Stock as reported by The Nasdaq
Stock Market[SM] on December 31, 1997 was $25.00. Value is calculated on
the basis of the difference between the option exercise price and $25.00,
multiplied by the number of shares of Common Stock underlying the option.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Messrs. Luthin and Addonisio. Mr.
Addonisio was not an officer or employee of the Company, or of any subsidiary of
the Company, at any time during or prior to the year ended December 31, 1997.
Mr. Luthin served as Vice President-Finance of the Company from October 1994
until July 1995. He was not an officer or employee of the Company or of any
subsidiary of the Company, at any time during 1997.
Employee Benefit Plans
Employee Stock Incentive Plan
The Company's Stock Incentive Plan became effective on July 15, 1996 (the
"1996 Plan") to provide incentives for officers, directors, consultants and key
employees of the Company to promote the success of the Company and to enhance
the Company's ability to attract and retain the services of such persons. Under
the 1996 Plan 12,253,455 shares of Common Stock were reserved for issuance upon
the grant and exercise of options or rights thereunder. Effective October 2,
1997, the Company's Board of Directors approved an amendment to the 1996 Plan
increasing the number of shares issuable under such plan by 3,750,000 shares to
16,003,455 shares, subject to shareholder approval.
The Company's Amended and Restated Stock Incentive Plan (the "Stock Option
Plan") was approved by the Company's Board of Directors on November 8, 1997 and
became effective on such date, subject to approval by the Company's
shareholders. The Stock Option Plan, if approved by the Company's shareholders,
would supersede the 1996 Plan. Options granted under the Stock Option Plan may
be either: (i) options intended to qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as
6
<PAGE>
amended (the "Code"); or (ii) non-qualified stock options. The Stock Option Plan
also permits the grant of stock appreciation rights in connection with the grant
of stock options, and the grant of restricted stock awards. Stock options and
stock awards may be granted under the Stock Option Plan for all employees of the
Company, or of any present or future subsidiary or parent of the Company, or
other "key persons" to the Company.
An incentive stock option that is granted under the Stock Option Plan may not
be granted at a price less than the fair market value of the Company's Common
Stock on the date of grant (or less than 110% of fair market value in the case
of holders of 10% or more of the total combined voting power of all classes of
stock of the Company or a subsidiary or parent of the Company). Non-qualified
stock options may be granted at the exercise price established by the
Administrator, which may be less than the fair market value of the Company's
Common Stock on the date of grant. All grants to date have been, and the policy
of the Compensation Committee is that all future grants will be, at fair market
value on the grant date.
Each option granted under the Stock Option Plan is exercisable for a period
not to exceed ten years from the date of grant (or, in the case of incentive
stock options, five years in the case of a holder of more than 10% of the total
combined power of all classes of stock of the Company or of a subsidiary or
parent of the Company), is subject to approval of the Company's shareholders and
shall lapse upon expiration of such period, or earlier upon termination of the
recipient's employment with the Company, or as determined by the Compensation
Committee.
The number of shares of the Company's Common Stock reserved for issuance
under the Stock Option Plan is 16,003,455 shares. As of April 1, 1998, options
to purchase 14,835,918 shares of Common Stock were outstanding under the Stock
Option Plan or the earlier version of the plan and 1,167,537 shares of Common
Stock had been issued upon exercise of options granted under the Stock Option
Plan or the earlier version of the plan.
The Stock Option Plan is administered by the Company's Board of Directors,
the Compensation Committee of the Board of Directors and/or the Company's Chief
Executive officer (each an "Administrator"). The Stock Option Plan is
administered by the Compensation committee with respect to (i) any stock
incentives granted to any employee or key person (as defined in the Stock Option
Plan) who shall be subject to Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any person whose stock incentive must
be approved by a committee of disinterested directors in order to entitle the
Company and the recipient of the stock incentive to the exemption provided by
Rule 16b-3 promulgated under the Exchange Act; and (ii) any other person for
whom the Chief Executive Officer is not specifically designated as the
Administrator. The Board of Directors has designated the Company's Chief
Executive Officer as the Administrator with respect to the grant and
administration of non-statutory stock options to (i) employees and key persons
who have been recently hired or who have agreed to become employed by or provide
services to the Company; (ii) employees and key persons upon and in connection
with their promotion from one job category to another; and (iii) any employee or
key person, if in the sole discretion of the Chief Executive Officer, the grant
of a stock option to such person is appropriate or advisable in order to retain
such person. Any option grants approved by the Chief Executive Officer are
subject to any limitations which may be imposed by the Company's Restated Bylaws
or any applicable laws and are subject to the following additional limitations:
(i) the number of shares that may be subject to any option granted by the
authority of the Chief Executive Officer shall not exceed the number of shares
set forth in those guidelines set forth from time to time by the Compensation
Committee with respect to various classifications of employment or service; (ii)
all options or purchase rights granted or approved by the Chief Executive
Officer must be granted pursuant to the
7
<PAGE>
Stock Option Plan; (iii) the number of shares subject to options approved by the
Chief Executive Officer may not exceed the total number of shares authorized for
issuance under the Stock Option Plan, or such lesser number as the Board of
Directors or the Compensation Committee may determine in its sole discretion;
(iv) options must be granted at a price not less than the fair market value of
the underlying shares of Common Stock on the date of grant; (v) such officer
shall not have the authority to grant options to consultants or employees who
are or will be subject to the requirements of Section 16(b) of the Exchange Act;
and (vi) the authority granted to the Chief Executive Officer by the Board of
Directors may be further limited by the written directive of the Compensation
Committee from time to time.
The Administrators have the authority to determine exercise prices applicable
to the options, the eligible employees or other key persons to whom options may
be granted, the number of shares of the Company's Common Stock subject to each
option, and the extent to which options may be exercisable. The Compensation
Committee also has the authority to determine the recipients and the terms of
grants of stock appreciation rights and restricted stock awards under the Stock
Option Plan. The Administrators are empowered to interpret the Stock Option Plan
and to prescribe, amend and rescind the rules and regulations pertaining to the
Stock Option Plan. Options granted under the Stock Option Plan generally vest
over three to five years. Unless determined otherwise by an Administrator, no
option is transferable by the optionee other than by will or the laws of descent
and distribution, and each option is exercisable, during the lifetime of the
optionee, only by such optionee.
Employee Stock Purchase Plan
The Company's Employee Stock Purchase Plan, as amended, (the "Stock Purchase
Plan") became effective on October 1, 1996. A total of 450,000 shares of the
Company's Common Stock have been reserved for issuance under the Stock Purchase
Plan. The Stock Purchase Plan is intended to qualify under Section 423 of the
Code. An employee electing to participate in the Stock Purchase Plan must
authorize a stated dollar amount or percentage of the employee's regular pay to
be deducted by the Company from the employee's pay each three month period for
the purpose of purchasing shares of Common Stock (the "Purchase Period"). The
price at which employees may purchase Common Stock is 85% of the closing price
of the Common Stock on the Nasdaq National Market on the first day of the
Purchase Period or the last day of the Purchase Period, whichever is lower.
Employees of the Company who have completed six full months of service with the
Company and whose customary employment is at least 20 hours per week for more
than five months per calendar year are eligible to participate in the Stock
Purchase Plan. An employee may not be granted an option under the Stock Purchase
Plan if after the granting of the option such employee would be deemed to own 5%
or more of the combined voting power of value of all classes of stock of the
Company. As of April 1, 1998, 115,875 shares of Common Stock had been issued
pursuant to the Stock Purchase Plan. The Stock Purchase Plan is administered by
the Vice President-General Counsel of the Company, or any such other persons so
designated by the Company's Board of Directors.
Agreements with Employees
The Company's software development professionals working in the U.S. and
U.K., as well as executive officers, are required to sign an agreement with the
Company restricting the ability of the employee to compete with the Company
during his or her employment and for a period of one year thereafter,
restricting solicitation of customers and employees following employment with
the Company, and providing for ownership and assignment of intellectual property
rights to the Company.
Item 12. Stock Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------
The following table sets forth, as of April 1, 1998, the beneficial ownership
of the Company's outstanding Common Stock of (i) each person known by the
Company to own beneficially more than 5%
8
<PAGE>
of the Company's outstanding Common Stock, (ii) each executive officer of the
Company since January 1, 1997, (iii) each director of the Company since January
1, 1997, and (iv) all executive officers and directors as a group:
<TABLE>
<CAPTION>
Common Stock Beneficially Owned (1)
Number of Shares Percentage of
Name and Address of Beneficial Owners of Common Stock Class
<S> <C> <C>
Essex Investment Management Company(2)............................ 2,416,280 9.4%
125 High Street,
Boston, MA 02110
Pilgrim Baxter & Associates, Ltd.(2).............................. 2,032,050 7.9
825 Duportail Road
Wayne, PA 19087
Satish K. Sanan(3)................................................ 17,536,319 49.9
Jeffery S. Slowgrove(4)........................................... 1,226,482 4.8
Charles C. Luthin(5).............................................. 11,475 *
Philip Shipperlee(6).............................................. 94,621 *
Vincent Addonisio(7).............................................. 18,000 *
Michael J. Dean(8)................................................ 28,500 *
Dilip Patel(9).................................................... 22,500 *
Kasi V. Sridharan(10)............................................. 15,000 *
John R. Hindman(11)............................................... 33,750 *
Robert M. Molsick................................................. - -
All executive officers and directors as a group (10 persons)...... 18,986,647 53.8%
</TABLE>
- ----------------------
*Less than 1% of the outstanding Common Stock
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. For purposes of calculating
the percentage beneficially owned, the number of shares deemed outstanding
includes (i) 25,792,025 shares outstanding as of April 1, 1998 and (ii)
shares issuable by the Company pursuant to options held by the respective
person or group which may be exercised within 60 days following the date of
this Proxy Statement ("Presently Exercisable Options"). Presently
Exercisable Options are deemed to be outstanding and to be beneficially
owned by the person or group holding such options for the purpose of
computing the percentage ownership of such person or group but are not
treated as outstanding for the purpose of computing the percentage
ownership of any other person or group. Unless otherwise provided, the
street address of each beneficial owner is c/o Information Management
Resources, Inc., Suite 500, 26750 U.S. Highway 19 North, Clearwater,
Florida 33761.
(2) For purposes of this proxy statement, the Company has relied upon
information reported by the respective shareholder to the Securities and
Exchange Commission pursuant to Section 13(d) or 13(g) of the Securities
Exchange Act of 1934, as amended, in February 1998.
(3) Includes 9,370,238 shares issuable upon the exercise of Presently
Exercisable Options. Also includes: (i) 8,001,828 shares held in the A&S
Family Limited Partnership, the sole general partner of which is a
corporation controlled by Mr. Sanan; and (ii) 164,253 shares held by a
charitable foundation with respect to which Mr. Sanan disclaims beneficial
ownership.
(4) Includes 8,032 shares issuable upon the exercise of Presently Exercisable
Options.
(5) Includes 11,250 shares issuable upon the exercise of Presently Exercisable
Options.
(6) Includes 11,250 shares issuable upon the exercise of Presently Exercisable
Options.
(7) Includes 11,250 shares issuable upon the exercise of Presently Exercisable
Options.
(8) Includes 28,500 shares issuable upon the exercise of Presently Exercisable
Options.
(9) Includes 22,500 shares issuable upon the exercise of Presently Exercisable
Options.
(10) Includes 15,000 shares issuable upon the exercise of Presently Exercisable
Options.
(11) Includes 33,750 shares issuable upon the exercise of Presently Exercisable
Options.
9
<PAGE>
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
IMR-U.K. and Link Transactions
Pursuant to an agreement effective January 8, 1997, the Company acquired 100%
of the outstanding shares of Link Group Holdings Limited ("Link"), a U.K.-based
software services provider, from its two owners, Philip and Sheila Shipperlee.
Philip Shipperlee serves as a Director of the Company. Under the terms of the
agreement, the Company paid the Shipperlees $2.1 million in cash and 161,343
shares of the Company's Common Stock at closing and an additional $1.6 million
in cash on February 10, 1998. The acquisition was approved by the disinterested
members of the Board of Directors.
Concurrently with the Link acquisition, the Company executed an agreement
with Satish K. Sanan, the Company's President and Chief Executive Officer, and
his spouse to acquire 10.5% of Information Management Resources (U.K.) Ltd.
("IMR, Ltd.") for $520,000 in cash. The acquisition was approved by the
disinterested members of the Board of Directors. Prior to this acquisition, and
prior to the acquisition by the Company of Link, the Company owned 39.5% of IMR-
Ltd., Link owned 50.0% of IMR-Ltd. and Mr. and Mrs. Sanan together owned 10.5%
of IMR-Ltd. After the acquisition of Link and this acquisition from the Sanans,
the Company owns 100% of both Link and IMR-Ltd. Operations of these two
companies have been combined and operate under Information Management Resources,
plc. ("IMR-U.K."). Mr. Shipperlee serves as Managing Director of IMR-U.K.
Other Transactions
In October 1995, the Company entered into a Sublease Agreement with ABR
Information Services, Inc. ("ABR") pursuant to which ABR subleased from the
Company 11,000 square feet of office space in the Company's Clearwater, Florida
offices through October 31, 1997. This lease was terminated by mutual agreement
of the parties on June 30, 1997. In 1997, ABR paid to the Company approximately
$72,000 in rent pursuant to the sublease. Mr. Vincent Addonisio, a Director of
the Company, served as Executive Vice President, Chief Financial Officer,
Treasurer and a director of ABR from July 1993 until November 1996.
During 1997, the Company maintained insurance on the life of Mr. Sanan. The
proceeds from the insurance policies on the life of Mr. Sanan will be payable to
beneficiaries designated by Mr. Sanan. The annual payment by the Company for
insurance policies on the life of Mr. Sanan was approximately $97,000 in 1997.
Mr. Sanan has personally guaranteed IMR-India's credit facilities with Canara
Bank and Export-Import Bank of India.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Information Management Resources, Inc.
By: /s/ Satish K. Sanan
--------------------------------------------------
Satish K. Sanan
Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Satish K. Sanan President; Chief Executive Officer April 30, 1998
- ------------------------------- (Principal Executive Officer);
Satish K. Sanan Director
/s/ Robert M. Molsick Chief Financial Officer April 30, 1998
- ------------------------------- (Principal Financial Officer)
Robert M. Molsick
* Vice President-Finance, Controller April 30, 1998
-------------------- (Principal Accounting Officer)
Michael J. Dean
* Treasurer, Director April 30, 1998
--------------------
Jeffery S. Slowgrove
* Managing Director, IMR-U.K.; April 30, 1998
-------------------- Director
Philip Shipperlee
* Director April 30, 1998
--------------------
Charles C. Luthin
* Director April 30, 1998
--------------------
Vincent Addonisio
/s/ Dilip Patel
- -------------------------------
*By Dilip Patel, attorney-in-fact
</TABLE>
11
