<PAGE>
As filed with the Securities and Exchange Commission on August 24, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
INFORMATION MANAGEMENT ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
--------------
Connecticut 06-1289928
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
--------------
One Corporate Drive, Suite 414
Shelton, Connecticut 06484
(203) 925-6800
(Address of Principal Executive Offices) (Zip Code)
Information Management Associates, Inc. 1998 Employee and Consultant Stock
Option Plan
Information Management Associates, Inc. 1999 Employee and Consultant Stock
Option Plan
Information Management Associates, Inc. Amended
and Restated 1991 Stock Option Plan
Information Management Associates, Inc. 1996 Employee
and Consultant Stock Option Plan
Information Management Associates, Inc. 1996 Non-Employee
Directors Stock Option Plan
Information Management Associates, Inc.
Employee Stock Purchase Plan
(Full title of the plan)
--------------
Albert R. Subbloie, Jr.
President and Chief Executive Officer
Information Management Associates, Inc.
One Corporate Drive, Suite 414
Shelton, Connecticut 06484
(203) 925-6800
(Name, address and telephone number, including area code, of agent for service)
--------------
Copy to:
Thomas L. Fairfield, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
Goodwin Square, 225 Asylum Street
Hartford, Connecticut 06103
(860) 293-3500 Fax (860) 293-3555
--------------
CALCULATION OF REGISTRATION FEE
================================================================================
Title of Each Class of Amount to Proposed Proposed Amount of
Securities to be be Maximum Maximum Registration Fee(1)
Registered Registered Offering Aggregate
Price Offering
Per Price(1)
Share(1)
- --------------------------------------------------------------------------------
Common Stock (no par 1,300,000 $ 7.8125 $ 10,156,250 $ 2,574.98
value) to be issued upon
exercise of options
granted under the
Information Management
Associates, Inc. 1998
Employee and Consultant
Stock Option Plan and the
Information Management
Associates, Inc. 1999
Employee and Consultant
Stock Option Plan
================================================================================
(1) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee, on the basis of the average of the high
and low price per share of Information Management Associates, Inc.'s Common
Stock on the Nasdaq National Market on August 18, 1999.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Pursuant to General Instruction E to Form S-8 under the Securities Act of
1933, as amended (the "Securities Act"), Information Management Associates, Inc.
(the "Registrant") files this Registration Statement for the purpose of
registering additional securities of the same class as those registered under
the currently effective Registration Statement on Form S-8 (Registration No.
333-32417) relating to:
(a) the Information Management Associates, Inc. Amended and Restated
1991 Stock Option Plan;
(b) the Information Management Associates, Inc.1996 Employee and
Consultant Stock Option Plan;
(c) the Information Associates, Inc. 1996 Non-Employee Directors Stock
Option Plan;
(d) the Information Management Associates, Inc. Employee Stock
Purchase Plan;
(e) the Information Management Associates, Inc. 1998 Employee and
Consultant Stock Option Plan; and
(f) the Information Management Associates, Inc. 1999 Employee and
Consultant Stock Option Plan.
The contents of that Registration Statement, including any future
amendments thereto or subsequent filings incorporated therein by reference, are
incorporated herein by this reference. The additional securities registered
hereby consist of 1,300,000 shares of the Registrant's Common Stock, no par
value, which are reserved for issuance to participants under the Information
Management Associates, Inc. 1998 Employee and Consultant Stock Option Plan and
the Information Management Associates, Inc. 1999 Employee and Consultant Stock
Option Plan.
Item 3. Incorporation of Documents by Reference.
The Registrant hereby incorporates by reference into this Registration
Statement the following documents previously filed with the Securities and
Exchange Commission (the "SEC")
II - 1
<PAGE>
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(b) The Company's 10-K/A filed on July 12, 1999;
(c) The Company's 10-K/A (No. 2) filed on August 31, 1999
(d) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1999, and June 30, 1999 filed May 17, 1999 and
August 16, 1999, respectively;
(e) The description of the Company's Common Stock which is contained
in the Form 8-A Registration Statement (No. 001-13211) filed by
the Company with the Commission on July 24, 1997, including any
amendment or report filed for the purpose of updating such
description; and
(f) All documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
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 herein and to be a part of this
Registration Statement from the date of the filing of such
documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in
any other subsequently filed document which also is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a
part of this Registration Statement.
The documents incorporated by reference herein contain forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, the risks identified in the respective documents incorporated by
reference.
Item 8. Exhibits.
Exhibit
Number
- ------
5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P.
10.1 1998 Employee and Consultant Stock Option Plan and form of Stock
Option Agreement thereunder
10.2 1999 Employee and Consultant Stock Option Plan and form of Stock
Option Agreement thereunder
23.1 Consent of Arthur Andersen LLP, independent accountants
II - 2
<PAGE>
23.2 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (included in Exhibit
5.1)
24.1 Power of Attorney (see page II-3)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Town of Shelton, State of Connecticut on August 24, 1999.
INFORMATION MANAGEMENT ASSOCIATES, INC.
By: /s/ Albert R. Subbloie, Jr.
--------------------------------------------------
Albert R. Subbloie, Jr.
President and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Information Management
Associates, Inc. hereby severally constitute and appoint Albert R. Subbloie, Jr.
and Gary R. Martino, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, the Registration Statement on Form S-8 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement, and generally to do all such things in our names and on
our behalf in our capacities as officers and directors to enable Information
Management Associates, Inc. to comply with the provisions of the Securities Act
of 1933, as amended, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by our said attorneys, or any of them, to said Registration Statement and any
and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ Albert R. Subbloie, Jr. President, Chief Executive August 24, 1999
- ------------------------------- Officer and Director
Albert R. Subbloie, Jr. (Principal Executive
Officer)
II - 3
<PAGE>
Signature Title Date
/s/ Gary S. Martino Chairman of the Board of August 24, 1999
- ------------------------------- Directors, Chief Financial
Gary R. Martino Officer, Treasurer and
Director (Principal
Financial and Accounting
Officer)
/s/ Paul J. Schmidt Director August 24, 1999
- -------------------------------
Paul J. Schmidt
/s/ Thomas F. Hill Director August 24, 1999
- -------------------------------
Thomas F. Hill
/s/ Donald P. Miller Director August 24, 1999
- -------------------------------
Donald P. Miller
/s/ David J. Callard Director August 24, 1999
- -------------------------------
David J. Callard
II - 4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Sequential Page No.
5.1 Opinion of LeBoeuf, Lamb, Greene & MacRae,
L.L.P.
10.1 1998 Employee and Consultant Stock Option
Plan and form of Stock Option Agreement
thereunder
10.2 1999 Employee and Consultant Stock Option
Plan and form of Stock Option Agreement
thereunder
23.1 Consent of Arthur Andersen LLP, independent
accountants
23.2 Consent of LeBoeuf, Lamb, Greene & MacRae,
L.L.P. (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
<PAGE>
Exhibit 5.1
LeBoeuf, Lamb, Greene & MacRae
L.L.P.
Goodwin Square
225 Asylum Street
Hartford, CT 06103
August 24, 1999
Board of Directors
Information Management Associates, Inc.
One Corporate Drive, Suite 414
Shelton, CT 06484
Gentlemen:
We have acted as special counsel to Information Management Associates,
Inc., a Connecticut corporation (the "Company"), in connection with the filing
of a Registration Statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission covering 1,300,000 shares of common stock, no
par value, of the Company (the "Shares") which are issuable under the
Information Management Associates, Inc. 1998 Employee and Consultant Stock
Option Plan, and the Information Management Associates, Inc. 1999 Employee and
Consultant Stock Option Plan (collectively, the "Plans").
We have examined the originals, or photostatic or certified copies, of such
records of the Company, certificates of officers of the Company and of public
officials, and such other documents as we have deemed relevant and necessary as
the basis of the opinion set forth below. In such examination we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as photostatic or certified copies and the authenticity of the
originals of such copies.
Based upon and subject to the foregoing and subject to the assumptions set
forth below, we are of the opinion that the Shares will, when issued to the
Plans' participants pursuant to the Plans and the agreements relating thereto,
constitute validly issued common stock authorized under the Company's
Certificate of Incorporation and will be fully paid and nonassessable.
In rendering the opinions set forth in the foregoing paragraph hereof, we
have assumed with your permission that (i) at the time of issuance, such Shares
will be authorized under the Certificate of Incorporation of the Company, (ii)
the issuance of such Shares was or, in the case of stock options to be granted
after the date hereof, will be approved by the vote of the shareholders of the
Company or by the board of directors of the Company under authority of the
by-laws or of a vote of the shareholders, (iii) the exercise price of all stock
options granted or to be granted under the Stock Option Plans is or will be
equal to or greater than the par value of the common stock covered thereby, and
(iv) the cash, property, services, or expenses for which such Shares were
authorized to be issued will have been on or before such issuance actually
received, incurred, conveyed or rendered.
We express no opinion as to the laws of any jurisdiction other than the
Laws of the United States of America and the Connecticut Business Corporation
Act.
<PAGE>
We consent to the filing of this opinion with and as a part of the
Registration Statement. In giving this consent, we do not hereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the Rules and Regulations of the
Commission.
Very truly yours,
/s/ LeBoeuf, Lamb, Greene & MacRae L.L.P.
<PAGE>
EXHIBIT 10.1
INFORMATION MANAGEMENT ASSOCIATES, INC.
1998 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
I. ESTABLISHMENT OF PLAN; DEFINITIONS
1. Purpose. The purpose of the Information Management Associates, Inc. 1998
Employee and Consultant Stock Option Plan is to provide an incentive to
Employees and Consultants of Information Management Associates, Inc. (the
"Corporation") and its Affiliates who are in a position to contribute
materially to the long-term success of the Corporation and/or its Affiliates,
to increase their interest in the welfare of the Corporation and its
Affiliates, and to aid in attracting and retaining Employees and Consultants
of outstanding ability.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the meanings set forth below:
a. "Affiliate" shall mean any parent or subsidiary of the Corporation
which meets the requirements of Section 425 of the Code.
b. "Board" shall mean the Board of Directors of the Corporation.
c. "Cause" shall mean repeated failure to properly perform assigned
duties, gross negligence, insubordination, commission of a felony, or any
act injurious to the Corporation involving dishonesty or breach of any duty
of confidentiality or loyalty.
d. "Change of Control" shall mean a change of control of the Corporation
of a nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A under the Securities Exchange Act of 1934
(the "Exchange Act"), whether or not the Corporation is subject to the
Exchange Act at such time; provided, however, that without limiting the
generality of the foregoing, a "Change of Control" will in any event be
deemed to occur if and when (i) there shall be consummated (x) any
consolidation, reorganization or merger of the Corporation in which the
Corporation is not the continuing or surviving corporation or pursuant to
which shares of the Stock would be converted into cash, securities or other
property, other than a merger of the Company in which holders of the Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets
of the Corporation, or (ii) the shareholders of the Corporation shall
approve any plan or proposal for liquidation or dissolution of the
Corporation, or (iii) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act, including any "group" (as defined in
Section 13(d)(3) of the Exchange Act) (other than the Grantee or any group
controlled by the Grantee)) shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or
more of the outstanding Stock (other than pursuant to a plan or arrangement
entered into by such person and the Corporation) and such person discloses
its intent to effect a change of the control or ownership of the Company in
any filing with the Securities and Exchange Commission ("SEC") or (iv)
within any twenty-four (24) month period beginning on or after May 14,
1998, the persons who were directors of the Corporation immediately before
the beginning of such period (the "Incumbent Directors") shall cease (for
any reason other than death, disability or retirement) to constitute at
least a majority of the Board or the board of directors of any successor to
the Corporation, provided that, any director who was not a director as of
May 14, 1998 shall be deemed to be an Incumbent Director if such director
was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this
definition unless such election, recommendation or approval was the result
of any actual or threatened election contest of the type contemplated by
Regulation 14a-11 promulgated under the Exchange Act or any successor
provision.
e. "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
<PAGE>
f. "Consultant" shall mean any consultant of the Corporation or any of
its Affiliates.
g. "Corporation" shall mean Information Management Associates, Inc., a
Connecticut corporation.
h. "Disability" shall mean a medically determinable physical or mental
condition which causes an Employee to be unable to engage in any
substantial gainful activity and which can be expected to result in death
or to be of long, continued and indefinite duration.
i. "Employee" shall mean any employee, including officers, of the
Corporation or any of its Affiliates, as determined under the Code and the
Treasury Regulations thereunder.
j. "Fair Market Value" shall mean on any date, (i) if the Stock is not
listed on a national securities exchange or quoted on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq"),
the fair market value of the Stock on that date as determined by the Board,
or (ii) if the Stock is listed on a national securities exchange or is
quoted on Nasdaq, the closing price reported on the composite tape for
issues listed on such exchange at the close of business on the day next
preceding such date, or the closing price or the average of the closing
dealer "bid" and "asked" prices of the Stock at the close of business on
the day next preceding the date of grant as quoted by Nasdaq, or if no
trades shall have been reported for such date, on the next preceding date
on which there were trades reported; provided that if no quotations shall
have been made within the 10 business days preceding such date, the Fair
Market Value shall be determined by the Board as provided in clause (i)
above.
k. "Good Reason" shall mean, with respect to a Grantee's termination of
employment or termination of consultancy, a voluntary termination within six
months following a Change of Control due to (a) a substantial reduction of the
Grantee's duties or responsibilities as compared to his duties and
responsibilities immediately prior to the Change of Control; (b) a reduction
in Grantees' rate of compensation; or (c) a relocation of Grantee's place of
employment or consultancy to a location more than 75 miles from either of the
Company's current places of business at One Corporate Drive, Shelton,
Connecticut or 18101 Von Karman Ave., Suite 1100, Irvine, California.
l. "Grantee" shall mean an Employee or Consultant granted a Stock Option
under this Plan.
m. "Incentive Stock Option" shall mean an option granted pursuant to the
Incentive Stock Option provisions as set forth in Part II of this Plan.
n. "Non-Qualified Stock Option" shall mean an option granted pursuant to
the Non-Qualified Stock Option provisions as set forth in Part III of this
Plan.
o. "Option Period" shall mean the term of the Stock Option as fixed by
the Board.
p. "Plan" shall mean the Information Management Associates, Inc. 1998
Employee and Consultant Stock Option Plan as set forth herein and as
amended from time to time.
q. "Stock" shall mean authorized but unissued shares of the Common Stock
of the Corporation, no par value, or reacquired shares of the Corporation's
Common Stock.
r. "Stock Option" shall mean an option, which shall include Non-Qualified
Stock Options and Incentive Stock Options, granted pursuant to the Plan to
purchase shares of Stock.
s. "Stock Option Agreement" shall mean the written instrument evidencing
the grant of one or more Stock Options under the Plan and which contains
the terms and conditions applicable to such grant.
t. "Ten Percent Shareholder" shall mean an Employee or Consultant who at
the time a Stock Option is granted owns stock possessing more than ten
percent (10%) of the total combined voting power of all stock of the
Corporation or of its Affiliates.
3. Shares of Stock Subject to the Plan. There are hereby reserved for
issuance under the Plan 800,000 shares of Stock. Subject to the provisions of
Paragraph 1 of Part IV, the Stock which may be issued pursuant to Stock
Options authorized to be granted under the Plan and the Stock which is subject
to outstanding but unexercised Stock Options under the Plan shall not exceed
800,000 shares of Stock in the aggregate. If a Stock Option shall expire and
terminate for any reason, in whole or in part, without being exercised, the
number of shares of Stock as to which such expired or terminated Stock Option
shall not have been exercised may again become available for the grant of
Stock Options.
There shall be no terms and conditions in a Stock Option which provide that
the exercise of an Incentive Stock Option reduces the number of shares of
Stock for which an outstanding Non-Qualified Stock Option may be exercised;
and there shall be no terms and conditions in a Stock Option which provide
that the exercise of a Non-Qualified Stock Option reduces the number of shares
of Stock for which an outstanding Incentive Stock Option may be exercised.
<PAGE>
4. Administration of the Plan. The Plan shall be administered by the Board.
Subject to the express provisions of the Plan, the Board shall have authority
to grant Stock Options under the Plan, to interpret the Plan, to prescribe,
amend, and rescind rules and regulations relating to it, to determine the
terms and provisions of Stock Option Agreements, and to make all other
determinations necessary or advisable for the administration of the Plan. Any
controversy or claim arising out of or related to the Plan shall be determined
unilaterally by and at the sole discretion of the Board. Any determination,
decision or action of the Board in connection with the construction,
interpretation, administration, implementation or maintenance of the Plan
shall be final, conclusive and binding upon all Grantees and all person(s)
claiming under or through any Grantees. In addition, the Board shall have the
authority to delegate any of its duties and responsibilities under the Plan to
such committee(s) as it shall determine including any such delegation
necessary for the Plan's compliance with the requirements of Rule 16b-3
promulgated by the SEC, as amended ("Rule 16b-3") and Section 162(m) of the
Code.
5. Amendment or Termination. The Board may, at any time, alter, amend,
suspend, discontinue, or terminate the Plan; provided, however, that such
action shall not adversely affect the right of Grantees to Stock Options
previously granted.
6. Effective Date and Duration of the Plan. The Plan shall become effective
on May 14, 1998, subject to the approval by the shareholders of the
Corporation. The Plan shall terminate ten years from the date it becomes
effective, and no Stock Option may be granted under the Plan thereafter, but
such termination shall not affect any Stock Option theretofore granted.
II. INCENTIVE STOCK OPTION PROVISIONS
1. Granting of Incentive Stock Options.
a. Only Employees of the Corporation or its Affiliates shall be eligible
to receive Incentive Stock Options under the Plan.
b. When granting an Incentive Stock Option, the Board shall determine the
purchase price of the Stock subject thereto, provided, that the purchase
price of each share of Stock subject to an Incentive Stock Option shall not
be less than 100% of the Fair Market Value of a share of the Stock on the
date the Incentive Stock Option is granted; and provided, further, that the
purchase price of each share of Stock subject to an Incentive Stock Option
granted to a Ten Percent Shareholder shall not be less than 110% of the
Fair Market Value of a share of the Stock on the date the Incentive Stock
Option is granted.
c. No Incentive Stock Option shall be exercisable more than ten years
from the date the Incentive Stock Option was granted; provided, however,
that an Incentive Stock Option granted to a Ten Percent Shareholder shall
not be exercisable more than five years from the date the Incentive Stock
Option was granted.
d. The Board shall determine and designate from time to time those
Employees who are to be granted Incentive Stock Options and specify the
number of shares subject to each Incentive Stock Option.
e. Notwithstanding any other provisions hereof, the aggregate Fair Market
Value (determined at the time the option is granted) of the Stock with
respect to which Incentive Stock Options are exercisable for the first time
by the Employee during any calendar year (under all such plans of the
Corporation and its Affiliates) shall not exceed $100,000.
f. The Board, in its sole discretion, shall determine whether any
particular Incentive Stock Option shall become exercisable in one or more
installments, specify the installment dates, and, within the limitations
herein provided, determine the total period during which the Incentive
Stock Option is exercisable. Further, the Board may make such other
provisions as may appear generally acceptable or desirable to the Board or
necessary to qualify its grants under the provisions of Section 422 of the
Code.
g. The Board may grant at any time new Incentive Stock Options to an
Employee who has previously received Incentive Stock Options or other
options whether such prior Incentive Stock Options or other options are
still outstanding, have previously been exercised in whole or in part, or
are canceled in connection with the issuance of new Incentive Stock
Options. The purchase price of the new Incentive Stock Options may be
established by the Board without regard to the existing Incentive Stock
Options or other options.
<PAGE>
h. During any calendar year, no Employee may be granted Incentive Stock
Options with respect to more than 200,000 shares of Stock.
2. Exercise of Incentive Stock Options. The purchase price of Stock subject
to an Incentive Stock Option shall be payable on exercise of the option in
cash or by check, bank draft or postal or express money order. The Board, in
its discretion, may permit a Grantee to make partial or full payment of the
purchase price by the surrender of Stock owned by the Grantee prior to the
date of exercise. Shares of Stock surrendered in payment of the purchase price
as provided above shall be valued at the Fair Market Value thereof on the date
of exercise. Surrender of such stock shall be evidenced by delivery of the
certificate(s) representing such shares in such manner, and endorsed in such
form, or accompanied by stock powers endorsed in such form, as the Board may
determine.
In the absence of any other action by the Board, all Incentive Stock Options
shall become exercisable in equal installments over a period of four years
calculated from the date of grant.
3. Termination of Employment. Except as provided otherwise in the applicable
Stock Option Agreement (in which case the provisions of the Stock Option
Agreement shall control over the provisions of this paragraph 3):
a. If a Grantee's employment is terminated, including termination by
reason of retirement at or after age 65, or by reason of Disability (other
than for Cause or voluntary termination prior to retirement at or after age
65 or death) only those Incentive Stock Options held by the Grantee which
were immediately exercisable at the date of the termination of Grantee's
employment shall be exercisable by the Grantee following the termination of
Grantee's employment. Such Incentive Stock Options must be exercised within
three months after such termination of employment (but in no event after
expiration of the Option Period) or they shall be forfeited.
b. If a Grantee's employment is terminated for Cause or if the Grantee
shall have voluntarily terminated employment other than by retirement at or
after age 65, all then outstanding Incentive Stock Options held by the
Grantee shall expire immediately and such Incentive Stock Options shall not
be exercisable after the date of the termination of Grantee's employment.
c. If a Grantee's employment is terminated by death, only those Incentive
Stock Options held by the Grantee which were immediately exercisable at the
date of the Grantee's death shall be exercisable by the representative of
the Grantee's estate or beneficiaries thereof to whom the Incentive Stock
Options have been transferred. Such Incentive Stock Options must be
exercised by the earlier of (i) three months from the date of the Grantee's
death or (ii) the expiration of the Option Period, or they shall be
forfeited.
d. The Board may grant a leave of absence to any Grantee and, for
purposes hereunder, such Grantee shall be deemed to be continued to be
employed with the Corporation or its Affiliates during such leave of
absence.
III. NON-QUALIFIED STOCK OPTION PROVISIONS
1. Granting of Non-Qualified Stock Options.
a. Employees and Consultants of the Corporation or its Affiliates shall
be eligible to receive Non-Qualified Stock Options under the Plan.
b. The Board shall determine and designate from time to time those
Employees and Consultants who are to be granted Non-Qualified Stock Options
and specify the number of shares subject to each Non-Qualified Stock
Option.
<PAGE>
c. The Board may grant at any time new Non-Qualified Stock Options to an
Employee or Consultant who has previously received Non-Qualified Stock
Options or other options, whether such prior Non-Qualified Stock Options or
other options are still outstanding, have previously been exercised in
whole or in part, or are canceled in connection with the issuance of new
Non-Qualified Stock Options.
d. When granting a Non-Qualified Stock Option, the Board shall determine
the purchase price of the Stock subject thereto.
e. The Board, in its sole discretion, shall determine whether any
particular Non-Qualified Stock Option shall become exercisable in one or
more installments, specify the installment dates and, within the
limitations herein provided, determine the total period during which the
Non-Qualified Stock Option is exercisable. Further, the Board may make such
other provisions as may appear generally acceptable or desirable to the
Board.
f. No Non-Qualified Stock Option shall be exercisable more than ten years
from the date such option is granted.
g. During any calendar year, no Employee may be granted Non-Qualified
Stock Options with respect to more than 200,000 shares of Stock.
2. Exercise of Non-Qualified Stock Options. The purchase price of Stock
subject to a Non-Qualified Stock Option shall be payable on exercise of the
option in cash or by check, bank draft or postal or express money order. The
Board, in its discretion, may permit a Grantee to make partial or full payment
of the purchase price by the surrender of Stock owned by the Grantee prior to
the date of exercise. Shares of Stock surrendered in payment of the purchase
price as provided above shall be valued at the Fair Market Value thereof on
the date of exercise, surrender of such to be evidenced by delivery of the
certificates(s) representing such shares in such manner, and endorsed in such
form, or accompanied by stock powers endorsed in such form, as the Board may
determine.
In the absence of any other action by the Board, all Non-Qualified Stock
Options shall become exercisable in equal installments over a period of four
years calculated from the date of grant.
3. Termination of Employment. Except as provided otherwise in the applicable
Stock Option Agreement (in which case the provisions of the Stock Option
Agreement shall control over the provisions of this paragraph 3):
a. If a Grantee's employment is terminated, including termination by
reason of retirement at or after age 65 or by reason of Disability (other
than for Cause or voluntary termination prior to retirement at or after age
65 or death), only those Non-Qualified Stock Options held by the Grantee
which were immediately exercisable at the date of the termination of
Grantee's employment shall be exercisable by the Grantee following the
termination of Grantee's employment. Such Non-Qualified Stock Options must
be exercised within three months after such termination of employment (but
in no event after expiration of the Option Period) or they shall be
forfeited.
b. If a Grantee's employment is terminated for Cause or if the Grantee
shall have voluntarily terminated employment other than by retirement at or
after age 65, all then outstanding Non-Qualified Stock Options held by the
Grantee shall expire immediately and such Non-Qualified Stock Options shall
not be exercisable after the date of the termination of Grantee's
employment.
c. If a Grantee's employment is terminated by death, only those Non-
Qualified Stock Options held by the Grantee which were immediately
exercisable at the date of death shall be exercisable by the representative
of the Grantee's estate or beneficiaries thereof to whom the Non-Qualified
Stock Options have been transferred. Such Non-Qualified Stock Options must
be exercised by the earlier of (i) three months from the date of the
Grantee's death or (ii) the expiration of the Option Period, or they shall
be forfeited.
d. The Board may grant a leave of absence to any Grantee and, for
purposes hereunder, such Grantee shall be deemed to continue to be employed
for purposes of continuing such Grantee's employment with the Corporation
or its Affiliates during such leave of absence.
<PAGE>
4. Termination of Consultancy. Except as provided otherwise in the
applicable Stock Option Agreement (in which case the provisions of the Stock
Option Agreement shall control over the provisions of this paragraph 4):
a. If a Grantee's consulting engagement is terminated (other than for
Cause or voluntary termination or death), only those Non-Qualified Stock
Options held by the Grantee which were immediately exercisable at the date
of termination of the Grantee's consulting engagement shall be exercisable
by the Grantee following the termination of the Grantee's consulting
engagement. Such Non-Qualified Stock Options must be exercised within three
months after such termination of the Grantee's consulting engagement (but
in no event after expiration of the Option Period) or they shall be
forfeited.
b. If a Grantee's consulting engagement is terminated for Cause or if the
Grantee shall have voluntarily terminated his or her consulting engagement,
all then outstanding Non-Qualified Stock Options held by the Grantee shall
expire immediately and such Non-Qualified Stock Options shall not be
exercisable after the date of termination of the Grantee's consulting
engagement.
c. If a Grantee's consulting engagement is terminated by death, only
those Non-Qualified Stock Options immediately exercisable at the date of
the Grantee's death shall be exercisable by the representative of the
Grantee's estate or beneficiaries thereof to whom the Non-Qualified Stock
Options have been transferred. Such Non- Qualified Stock Options must be
exercised by the earlier of (i) three months from the date of the Grantee's
death or (ii) the expiration of the Option Period, or they shall be
forfeited.
IV. GENERAL PROVISIONS
1. Recapitalization Adjustments.
a. In the event of any change in capitalization affecting the Stock,
including, without limitation, a stock dividend or other distribution,
stock split, reverse stock split, recapitalization, consolidation,
subdivision, split-up, spin-off, split-off, combination or exchange of
shares or other form of reorganization or recapitalization, or any other
change affecting the Stock, the Board shall authorize and make such
proportionate adjustments, if any, as the Board deems appropriate to
reflect such change, including, without limitation, with respect to the
aggregate number of shares of Stock for which Stock Options in respect
thereof may be granted under the Plan, the number of shares of Stock
covered by each outstanding Stock Option, and the purchase price per share
of Stock in respect of outstanding Stock Options.
b. Any provision hereof to the contrary notwithstanding, in the event the
Corporation is a party to a merger or other reorganization, outstanding
Stock Options shall be subject to the agreement of merger or
reorganization. Such agreement may provide, without limitation, for the
assumption of outstanding Stock Options by the surviving corporation or its
parent, for their continuation by the Corporation (if the Corporation is a
surviving corporation) for accelerated vesting and accelerated expiration
or for settlement in cash.
2. Change of Control. Notwithstanding anything to the contrary contained in
the Plan or in any Stock Option Agreement, except as provided by the Board upon
the grant of an Option, upon the occurrence of a Change of Control, (i) twenty
percent (20%) of the unvested portion of all then outstanding Stock Options held
by any Grantee (the "Unvested Portion") shall automatically become immediately
vested and exercisable and (ii) an additional twenty percent (20%) of the
Unvested Portion held by any Grantee as of the date of the Change of Control
shall become vested if, within six (6) months following a Change of Control (A)
the Grantee's employment or consultancy with the Company or its Affiliate shall
be involuntarily terminated by the Company without Cause or (B) the Grantee's
employment or consultancy with the Company or its Affiliate shall be terminated
by the Grantee for Good Reason.
3. General.
a. Each Stock Option shall be evidenced by a Stock Option Agreement.
b. The granting of a Stock Option in any year shall not give the Grantee
any right to similar grants in future years or any right to be retained as
an Employee or Consultant of the Corporation, and all Employees and
Consultants shall remain subject to discharge or removal to the same extent
as if the Plan were not in effect.
c. No Employee or Consultant, and no beneficiary or other person claiming
under or through him, shall have any right, title or interest by reason of
any Stock Option to any particular assets of the Corporation, or any shares
of Stock allocated or reserved for the purposes of the Plan or subject to
any Stock Option except as set forth herein. The Corporation shall not be
required to establish any fund or make any other segregation of assets to
assure the exercise of any Stock Option.
<PAGE>
d. No Stock Option or right under the Plan shall or may be sold,
exchanged, assigned, pledged, encumbered, or otherwise hypothecated or
disposed of except by will or the laws of descent and distribution, and a
Stock Option shall be exercisable during the Grantee's lifetime only by the
Grantee or his conservator.
e. Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Corporation's obligation to issue or deliver any
certificate or certificates for shares of Stock under a Stock Option, and
the transferability of Stock acquired by exercise of a Stock Option, shall
be subject to all of the following conditions:
(1) Any registration or other qualification of such shares under any state
or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Board shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable;
(2) The obtaining of any other consent, approval, or permit from any state
or federal governmental agency which the Board shall, in its absolute
discretion upon the advice of counsel, determine to be necessary or advisable;
and
(3) Each stock certificate issued pursuant to a Stock Option shall bear such
legends which the Corporation shall determine, in its absolute discretion, are
necessary or advisable, or which in the opinion of counsel to the Corporation
are required under applicable federal or state securities laws.
f. All payments to Grantees or to their legal representatives shall be
subject to any applicable tax, community property, or other statutes or
regulations of the United States or of any state having jurisdiction
thereof. The Grantee may be required to pay to the Corporation the amount
of any withholding taxes which the Board, in its sole discretion, deems
necessary to be withheld in order to comply with any applicable statutes or
regulations with respect to a Stock Option or its exercise. In the event
that such payment is not made when due, the Corporation shall have the
right to deduct, to the extent permitted by law, from any payment or
settlement of any kind otherwise due to such person all or part of the
amount required to be withheld. If the Board, in its sole discretion,
permits shares of Stock to be used to satisfy any such tax withholding,
such Stock shall be valued based upon the Fair Market Value of such Stock
as of the date the tax withholding is required to be made, such date to be
determined by the Board. The Corporation shall not be required to issue
Stock until such obligations are satisfied.
g. In the case of a grant of a Stock Option to any Employee or Consultant
of an Affiliate of the Corporation, the Corporation may, if the Board so
directs, issue or transfer the shares, if any, covered by the Stock Option
to the Affiliate, for such lawful consideration as the Board may specify,
upon the condition or understanding that the Affiliate will transfer the
shares to the Employee or Consultant in accordance with the terms of the
Stock Option specified by the Board pursuant to the provisions of the Plan.
h. A Grantee entitled to Stock as a result of the exercise of an Option
shall not be deemed for any purpose to be, or have rights as, a shareholder
of the Corporation by virtue of such exercise, except to the extent a stock
certificate is issued therefor and then only from the date such certificate
is issued. No adjustments shall be made for dividends or distributions or
other rights for which the record date is prior to the date such stock
certificate is issued, except as otherwise provided herein. The Corporation
shall issue any stock certificates required to be issued in connection with
the exercise of a Stock Option with reasonable promptness after such
exercise.
i. The grant or exercise of Stock Options granted under the Plan shall be
subject to, and shall in all respects comply with, applicable Connecticut
corporate law relating to such grant or exercise.
j. Should the participation of any Employee or Consultant in the Plan be
subject to Section 16 of the Securities Exchange Act of 1934 or any
successor statute ("Section 16"), it is the express intent of the
Corporation that, notwithstanding anything to the contrary contained in the
Plan, the Plan and Stock Options granted under the Plan shall satisfy and
be interpreted in a manner to achieve the result that the applicable
requirements of Rule 16b-3 shall be satisfied with respect to such
Employees and Consultants, with the result that such Employees and
Consultants shall be entitled to the benefits of Rule 16b-3 or other
<PAGE>
applicable exemptive rules under Section 16. If any provision of the Plan or
of any Stock Option would otherwise frustrate or conflict with the intent of
the Corporation expressed in the immediately preceding sentence, to the extent
possible, such provision shall be interpreted and deemed amended so as to
avoid such conflict, and, to the extent of any remaining irreconcilable
conflict with such intent, the provision shall, solely with respect to
Employees and Consultants subject to Section 16, be deemed void.
k. It is the express intent of the Corporation that, notwithstanding
anything to the contrary contained in the Plan, the Plan and Stock Options
granted under the Plan shall satisfy and be interpreted in a manner to
achieve the result that Stock Options granted under the Plan shall
constitute "performance-based" compensation within the meaning of Section
162(m) of the Code. If any provision of the Plan or of any Stock Option
would otherwise frustrate or conflict with the intent of the Corporation
expressed in the immediately preceding sentence, to the extent possible,
such provision shall be interpreted and deemed amended so as to avoid such
conflict, and, to the extent of any remaining irreconcilable conflict with
such intent, the provision shall, solely with respect to Employees subject
to Section 162(m) of the Code, be deemed void.
<PAGE>
EXHIBIT 10.2
INFORMATION MANAGEMENT ASSOCIATES, INC.
1999 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
I. Establishment of Plan; Definitions
1. Purpose. The purpose of the Information Management Associates, Inc. 1999
Employee and Consultant Stock Option Plan is to provide an incentive to
Employees and Consultants of Information Management Associates, Inc. (the
"Corporation") and its Affiliates who are in a position to contribute
materially to the long-term success of the Corporation and/or its Affiliates,
to increase their interest in the welfare of the Corporation and its
Affiliates, and to aid in attracting and retaining Employees and Consultants
of outstanding ability.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the meanings set forth below:
a. "Affiliate" shall mean any parent or subsidiary of the Corporation
which meets the requirements of Section 425 of the Code.
b. "Board" shall mean the Board of Directors of the Corporation.
c. "Cause" shall mean repeated failure to properly perform assigned
duties, gross negligence, insubordination, commission of a felony, or any
act injurious to the Corporation involving dishonesty or breach of any duty
of confidentiality or loyalty.
d. "Change of Control" shall mean a change of control of the Corporation
of a nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A under the Securities Exchange Act of 1934
(the "Exchange Act"), whether or not the Corporation is subject to the
Exchange Act at such time; provided, however, that without limiting the
generality of the foregoing, a "Change of Control" will in any event be
deemed to occur if and when (i) there shall be consummated (x) any
consolidation, reorganization or merger of the Corporation in which the
Corporation is not the continuing or surviving corporation or pursuant to
which shares of the Stock would be converted into cash, securities or other
property, other than a merger of the Company in which holders of the Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets
of the Corporation, or (ii) the shareholders of the Corporation shall
approve any plan or proposal for liquidation or dissolution of the
Corporation, or (iii) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act, including any "group" (as defined in
Section 13(d)(3) of the Exchange Act) (other than the Grantee or any group
controlled by the Grantee)) shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or
more of the outstanding Stock (other than pursuant to a plan or arrangement
entered into by such person and the Corporation) and such person discloses
its intent to effect a change of the control or ownership of the Company in
any filing with the Securities and Exchange Commission, or (iv) within any
twenty-four (24) month period beginning on or after May 25, 1999, the
persons who were directors of the Corporation immediately before the
beginning of such period (the "Incumbent Directors") shall cease (for any
reason other than death, disability or retirement) to constitute at least a
majority of the Board or the board of directors of any successor to the
Corporation, provided that, any director who was not a director as of May
25, 1999 shall be deemed to be an Incumbent Director if such director was
elected to the Board by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this definition unless
such election, recommendation or approval was the result of any actual or
threatened election contest of the type contemplated by Regulation 14a-11
promulgated under the Exchange Act or any successor provision.
e. "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
<PAGE>
f. "Consultant" shall mean any consultant of the Corporation or any of
its Affiliates.
g. "Corporation" shall mean Information Management Associates, Inc., a
Connecticut corporation.
h. "Disability" shall mean a medically determinable physical or mental
condition which causes an Employee to be unable to engage in any
substantial gainful activity and which can be expected to result in death
or to be of long, continued and indefinite duration.
i. "Employee" shall mean any employee, including officers, of the
Corporation or any of its Affiliates, as determined under the Code and the
Treasury Regulations thereunder.
j. "Fair Market Value" shall mean on any date, (i) if the Stock is not
listed on a national securities exchange or quoted on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq"),
the fair market value of the Stock on that date as determined by the Board,
or (ii) if the Stock is listed on a national securities exchange or is
quoted on Nasdaq, the closing price reported on the composite tape for
issues listed on such exchange on such date, or the closing price or the
average of the closing dealer "bid" and "asked" prices of the Stock on the
date of grant as quoted by Nasdaq, or if no trades shall have been reported
for such date, on the next preceding date on which there were trades
reported; provided that if no quotations shall have been made within the 10
business days preceding such date, the Fair Market Value shall be
determined by the Board as provided in clause (i) above.
k. "Good Reason" shall mean, with respect to a Grantee's termination of
employment or termination of consultancy, a voluntary termination within six
months following a Change of Control due to (a) a substantial reduction of the
Grantee's duties or responsibilities as compared to his duties and
responsibilities immediately prior to the Change of Control; (b) a reduction
in Grantee's rate of compensation; or (c) a relocation of Grantee's place of
employment or consultancy to a location more than 75 miles from either of the
Company's current places of business at One Corporate Drive, Shelton,
Connecticut or 18101 Von Karman Ave., Suite 1100, Irvine, California.
l. "Grantee" shall mean an Employee or Consultant granted a Stock Option
under this Plan.
m. "Incentive Stock Option" shall mean an option granted pursuant to the
Incentive Stock Option provisions as set forth in Part II of this Plan.
n. "Non-Qualified Stock Option" shall mean an option granted pursuant to
the Non-Qualified Stock Option provisions as set forth in Part III of this
Plan.
o. "Option Period" shall mean the term of the Stock Option as fixed by
the Board.
p. "Plan" shall mean the Information Management Associates, Inc. 1999
Employee and Consultant Stock Option Plan as set forth herein and as
amended from time to time.
q. "Stock" shall mean authorized but unissued shares of the Common Stock
of the Corporation, no par value, or reacquired shares of the Corporation's
Common Stock.
r. "Stock Option" shall mean an option, which shall include Non-Qualified
Stock Options and Incentive Stock Options, granted pursuant to the Plan to
purchase shares of Stock.
s. "Stock Option Agreement" shall mean the written instrument evidencing
the grant of one or more Stock Options under the Plan and which contains
the terms and conditions applicable to such grant.
t. "Ten Percent Shareholder" shall mean an Employee who at the time a
Stock Option is granted owns stock possessing more than ten percent (10%)
of the total combined voting power of all stock of the Corporation or of
its Affiliates.
3. Shares of Stock Subject to the Plan. There are hereby reserved for
issuance under the Plan 500,000 shares of Stock. Subject to the provisions of
Paragraph 1 of Part IV, the Stock which may be issued pursuant to Stock
Options authorized to be granted under the Plan and the Stock which is subject
to outstanding but unexercised Stock Options under the Plan shall not exceed
500,000 shares of Stock in the aggregate. If a Stock Option shall expire and
terminate for any reason, in whole or in part, without being exercised, the
number of shares of Stock as to which such expired or terminated Stock Option
shall not have been exercised may again become available for the grant of
Stock Options.
There shall be no terms and conditions in a Stock Option which provide that
the exercise of an Incentive Stock Option reduces the number of shares of
Stock for which an outstanding Non-Qualified Stock Option may be exercised;
and there shall be no terms and conditions in a Stock Option which provide
that the exercise of a Non-Qualified Stock Option reduces the number of shares
of Stock for which an outstanding Incentive Stock Option may be exercised.
<PAGE>
4. Administration of the Plan. The Plan shall be administered by the Board.
Subject to the express provisions of the Plan, the Board shall have authority
to grant Stock Options under the Plan, to interpret the Plan, to prescribe,
amend, and rescind rules and regulations relating to it, to determine the
terms and provisions of Stock Option Agreements, and to make all other
determinations necessary or advisable for the administration of the Plan. Any
controversy or claim arising out of or related to the Plan shall be determined
unilaterally by and at the sole discretion of the Board. Any determination,
decision or action of the Board in connection with the construction,
interpretation, administration, implementation or maintenance of the Plan
shall be final, conclusive and binding upon all Grantees and all person(s)
claiming under or through any Grantees. In addition, the Board shall have the
authority to delegate any of its duties and responsibilities under the Plan to
such committee(s) as it shall determine including any such delegation
necessary for the Plan's compliance with the requirements of Rule 16b-3
promulgated by the Securities and Exchange Commission, as amended ("Rule 16b-
3") and Section 162(m) of the Code.
5. Amendment or Termination. The Board may, at any time, alter, amend,
suspend, discontinue, or terminate the Plan; provided, however, that such
action shall not adversely affect the right of Grantees to Stock Options
previously granted.
6. Effective Date and Duration of the Plan. The Plan shall become effective
on May 25, 1999, subject to the approval by the shareholders of the
Corporation. The Plan shall terminate ten years from the date it becomes
effective, and no Stock Option may be granted under the Plan thereafter, but
such termination shall not affect any Stock Option theretofore granted.
II. Incentive Stock Option Provisions
1. Granting of Incentive Stock Options.
a. Only Employees of the Corporation or its Affiliates shall be eligible
to receive Incentive Stock Options under the Plan.
b. When granting an Incentive Stock Option, the Board shall determine the
purchase price of the Stock subject thereto, provided, that the purchase
price of each share of Stock subject to an Incentive Stock Option shall not
be less than 100% of the Fair Market Value of a share of the Stock on the
date the Incentive Stock Option is granted; and provided, further, that the
purchase price of each share of Stock subject to an Incentive Stock Option
granted to a Ten Percent Shareholder shall not be less than 110% of the
Fair Market Value of a share of the Stock on the date the Incentive Stock
Option is granted.
c. No Incentive Stock Option shall be exercisable more than ten years
from the date the Incentive Stock Option was granted; provided, however,
that an Incentive Stock Option granted to a Ten Percent Shareholder shall
not be exercisable more than five years from the date the Incentive Stock
Option was granted.
d. The Board shall determine and designate from time to time those
Employees who are to be granted Incentive Stock Options and specify the
number of shares subject to each Incentive Stock Option.
e. Notwithstanding any other provisions hereof, the aggregate Fair Market
Value (determined at the time the option is granted) of the Stock with
respect to which Incentive Stock Options are exercisable for the first time
by the Employee during any calendar year (under all such plans of the
Corporation and its Affiliates) shall not exceed $100,000.
f. The Board, in its sole discretion, shall determine whether any
particular Incentive Stock Option shall become exercisable in one or more
installments, specify the installment dates, and, within the limitations
herein provided, determine the total period during which the Incentive
Stock Option is exercisable. Further, the Board may make such other
provisions as may appear generally acceptable or desirable to the Board or
necessary to qualify its grants under the provisions of Section 422 of the
Code.
<PAGE>
g. The Board may grant at any time new Incentive Stock Options to an
Employee who has previously received Incentive Stock Options or other
options whether such prior Incentive Stock Options or other options are
still outstanding, have previously been exercised in whole or in part, or
are canceled in connection with the issuance of new Incentive Stock
Options. The purchase price of the new Incentive Stock Options may be
established by the Board without regard to the existing Incentive Stock
Options or other options.
h. During any calendar year, no Employee may be granted Incentive Stock
Options with respect to more than 200,000 shares of Stock.
2. Exercise of Incentive Stock Options. The purchase price of Stock subject
to an Incentive Stock Option shall be payable on exercise of the option in
cash or by check, bank draft or postal or express money order. The Board, in
its discretion, may permit a Grantee to make partial or full payment of the
purchase price by the surrender of Stock owned by the Grantee prior to the
date of exercise. Shares of Stock surrendered in payment of the purchase price
as provided above shall be valued at the Fair Market Value thereof on the date
of exercise. Surrender of such stock shall be evidenced by delivery of the
certificate(s) representing such shares in such manner, and endorsed in such
form, or accompanied by stock powers endorsed in such form, as the Board may
determine.
In the absence of any other action by the Board, all Incentive Stock Options
shall become exercisable in equal installments over a period of four years
calculated from the date of grant.
3. Termination of Employment. Except as provided otherwise in the applicable
Stock Option Agreement (in which case the provisions of the Stock Option
Agreement shall control over the provisions of this paragraph 3):
a. If a Grantee's employment is terminated, including termination by
reason of retirement at or after age 65, or by reason of Disability (other
than for Cause or voluntary termination prior to retirement at or after age
65 or death) only those Incentive Stock Options held by the Grantee which
were immediately exercisable at the date of the termination of Grantee's
employment shall be exercisable by the Grantee following the termination of
Grantee's employment. Such Incentive Stock Options must be exercised within
three months after such termination of employment (but in no event after
expiration of the Option Period) or they shall be forfeited.
b. If a Grantee's employment is terminated for Cause or if the Grantee
shall have voluntarily terminated employment other than by retirement at or
after age 65, all then outstanding Incentive Stock Options held by the
Grantee shall expire immediately and such Incentive Stock Options shall not
be exercisable after the date of the termination of Grantee's employment.
c. If a Grantee's employment is terminated by death, only those Incentive
Stock Options held by the Grantee which were immediately exercisable at the
date of the Grantee's death shall be exercisable by the representative of
the Grantee's estate or beneficiaries thereof to whom the Incentive Stock
Options have been transferred. Such Incentive Stock Options must be
exercised by the earlier of (i) three months from the date of the Grantee's
death or (ii) the expiration of the Option Period, or they shall be
forfeited.
d. The Board may grant a leave of absence to any Grantee and, for
purposes hereunder, such Grantee shall be deemed to be continued to be
employed with the Corporation or its Affiliates during such leave of
absence.
III. Non-Qualified Stock Option Provisions
1.Granting of Non-Qualified Stock Options.
a. Employees and Consultants of the Corporation or its Affiliates shall
be eligible to receive Non-Qualified Stock Options under the Plan.
<PAGE>
b. The Board shall determine and designate from time to time those
Employees and Consultants who are to be granted Non-Qualified Stock Options
and specify the number of shares subject to each Non-Qualified Stock
Option.
c. The Board may grant at any time new Non-Qualified Stock Options to an
Employee or Consultant who has previously received Non-Qualified Stock
Options or other options, whether such prior Non-Qualified Stock Options or
other options are still outstanding, have previously been exercised in
whole or in part, or are canceled in connection with the issuance of new
Non-Qualified Stock Options.
d. When granting a Non-Qualified Stock Option, the Board shall determine
the purchase price of the Stock subject thereto.
e. The Board, in its sole discretion, shall determine whether any
particular Non-Qualified Stock Option shall become exercisable in one or
more installments, specify the installment dates and, within the
limitations herein provided, determine the total period during which the
Non-Qualified Stock Option is exercisable. Further, the Board may make such
other provisions as may appear generally acceptable or desirable to the
Board.
f. No Non-Qualified Stock Option shall be exercisable more than ten years
from the date such option is granted.
g. During any calendar year, no Employee may be granted Non- Qualified
Stock Options with respect to more than 200,000 shares of Stock.
2. Exercise of Non-Qualified Stock Options. The purchase price of Stock
subject to a Non-Qualified Stock Option shall be payable on exercise of the
option in cash or by check, bank draft or postal or express money order. The
Board, in its discretion, may permit a Grantee to make partial or full payment
of the purchase price by the surrender of Stock owned by the Grantee prior to
the date of exercise. Shares of Stock surrendered in payment of the purchase
price as provided above shall be valued at the Fair Market Value thereof on
the date of exercise, surrender of such to be evidenced by delivery of the
certificates(s) representing such shares in such manner, and endorsed in such
form, or accompanied by stock powers endorsed in such form, as the Board may
determine.
In the absence of any other action by the Board, all Non-Qualified Stock
Options shall become exercisable in equal installments over a period of four
years calculated from the date of grant.
3. Termination of Employment. Except as provided otherwise in the applicable
Stock Option Agreement (in which case the provisions of the Stock Option
Agreement shall control over the provisions of this paragraph 3):
a. If a Grantee's employment is terminated, including termination by
reason of retirement at or after age 65 or by reason of Disability (other
than for Cause or voluntary termination prior to retirement at or after age
65 or death), only those Non-Qualified Stock Options held by the Grantee
which were immediately exercisable at the date of the termination of
Grantee's employment shall be exercisable by the Grantee following the
termination of Grantee's employment. Such Non-Qualified Stock Options must
be exercised within three months after such termination of employment (but
in no event after expiration of the Option Period) or they shall be
forfeited.
b. If a Grantee's employment is terminated for Cause or if the Grantee
shall have voluntarily terminated employment other than by retirement at or
after age 65, all then outstanding Non-Qualified Stock Options held by the
Grantee shall expire immediately and such Non-Qualified Stock Options shall
not be exercisable after the date of the termination of Grantee's
employment.
c. If a Grantee's employment is terminated by death, only those Non-
Qualified Stock Options held by the Grantee which were immediately
exercisable at the date of death shall be exercisable by the
<PAGE>
representative of the Grantee's estate or beneficiaries thereof to whom the
Non-Qualified Stock Options have been transferred. Such Non-Qualified Stock
Options must be exercised by the earlier of (i) three months from the date
of the Grantee's death or (ii) the expiration of the Option Period, or they
shall be forfeited.
d. The Board may grant a leave of absence to any Grantee and, for
purposes hereunder, such Grantee shall be deemed to continue to be employed
for purposes of continuing such Grantee's employment with the Corporation
or its Affiliates during such leave of absence.
4. Termination of Consultancy. Except as provided otherwise in the
applicable Stock Option Agreement (in which case the provisions of the Stock
Option Agreement shall control over the provisions of this paragraph 4):
a. If a Grantee's consulting engagement is terminated (other than for
Cause or voluntary termination or death), only those Non-Qualified Stock
Options held by the Grantee which were immediately exercisable at the date
of termination of the Grantee's consulting engagement shall be exercisable
by the Grantee following the termination of the Grantee's consulting
engagement. Such Non-Qualified Stock Options must be exercised within three
months after such termination of the Grantee's consulting engagement (but
in no event after expiration of the Option Period) or they shall be
forfeited.
b. If a Grantee's consulting engagement is terminated for Cause or if the
Grantee shall have voluntarily terminated his or her consulting engagement,
all then outstanding Non-Qualified Stock Options held by the Grantee shall
expire immediately and such Non-Qualified Stock Options shall not be
exercisable after the date of termination of the Grantee's consulting
engagement.
c. If a Grantee's consulting engagement is terminated by death, only
those Non-Qualified Stock Options immediately exercisable at the date of
the Grantee's death shall be exercisable by the representative of the
Grantee's estate or beneficiaries thereof to whom the Non-Qualified Stock
Options have been transferred. Such Non-Qualified Stock Options must be
exercised by the earlier of (i) three months from the date of the Grantee's
death or (ii) the expiration of the Option Period, or they shall be
forfeited.
IV. General Provisions
1. Recapitalization Adjustments.
a. In the event of any change in capitalization affecting the Stock,
including, without limitation, a stock dividend or other distribution,
stock split, reverse stock split, recapitalization, consolidation,
subdivision, split-up, spin-off, split-off, combination or exchange of
shares or other form of reorganization or recapitalization, or any other
change affecting the Stock, the Board shall authorize and make such
proportionate adjustments, if any, as the Board deems appropriate to
reflect such change, including, without limitation, with respect to the
aggregate number of shares of Stock for which Stock Options in respect
thereof may be granted under the Plan, the number of shares of Stock
covered by each outstanding Stock Option, and the purchase price per share
of Stock in respect of outstanding Stock Options.
b. Any provision hereof to the contrary notwithstanding, in the event the
Corporation is a party to a merger or other reorganization, outstanding
Stock Options shall be subject to the agreement of merger or
reorganization. Such agreement may provide, without limitation, for the
assumption of outstanding Stock Options by the surviving corporation or its
parent, for their continuation by the Corporation (if the Corporation is a
surviving corporation) for accelerated vesting and accelerated expiration
or for settlement in cash.
2. Change of Control. Notwithstanding anything to the contrary contained in
the Plan or in any Stock Option Agreement, except as provided by the Board upon
the grant of an Option, upon the occurrence of a Change of Control, (i) twenty
percent (20%) of the unvested portion of all then outstanding Stock Options held
by any Grantee (the "Unvested Portion") shall automatically become immediately
vested and exercisable and (ii) an additional twenty percent (20%) of the
Unvested Portion held by any Grantee as of the date of the Change of Control
shall become vested if, within six (6) months following a Change of Control (A)
the Grantee's employment or consultancy with the Company or its Affiliate shall
be involuntarily terminated by the Company without Cause or (b) the Grantee's
employment or consultancy with the Company or its Affiliate shall be terminated
by the Grantee for Good Reason.
<PAGE>
3. General.
a. Each Stock Option shall be evidenced by a Stock Option Agreement.
b. The granting of a Stock Option in any year shall not give the Grantee
any right to similar grants in future years or any right to be retained as
an Employee or Consultant of the Corporation, and all Employees and
Consultants shall remain subject to discharge or removal to the same extent
as if the Plan were not in effect.
c. No Employee or Consultant, and no beneficiary or other person claiming
under or through him, shall have any right, title or interest by reason of
any Stock Option to any particular assets of the Corporation, or any shares
of Stock allocated or reserved for the purposes of the Plan or subject to
any Stock Option except as set forth herein. The Corporation shall not be
required to establish any fund or make any other segregation of assets to
assure the exercise of any Stock Option.
d. No Stock Option or right under the Plan shall or may be sold,
exchanged, assigned, pledged, encumbered, or otherwise hypothecated or
disposed of except by will or the laws of descent and distribution, and a
Stock Option shall be exercisable during the Grantee's lifetime only by the
Grantee or his conservator.
e. Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Corporation's obligation to issue or deliver any
certificate or certificates for shares of Stock under a Stock Option, and
the transferability of Stock acquired by exercise of a Stock Option, shall
be subject to all of the following conditions:
(1) Any registration or other qualification of such shares under any
state or federal law or regulation, or the maintaining in effect of any
such registration or other qualification which the Board shall, in its
absolute discretion upon the advice of counsel, deem necessary or
advisable;
(2) The obtaining of any other consent, approval, or permit from any
state or federal governmental agency which the Board shall, in its
absolute discretion upon the advice of counsel, determine to be
necessary or advisable; and
(3) Each stock certificate issued pursuant to a Stock Option shall
bear such legends which the Corporation shall determine, in its
absolute discretion, are necessary or advisable, or which in the
opinion of counsel to the Corporation are required under applicable
federal or state securities laws.
f. All payments to Grantees or to their legal representatives shall be
subject to any applicable tax, community property, or other statutes or
regulations of the United States or of any state having jurisdiction
thereof. The Grantee may be required to pay to the Corporation the amount
of any withholding taxes which the Board, in its sole discretion, deems
necessary to be withheld in order to comply with any applicable statutes or
regulations with respect to a Stock Option or its exercise. In the event
that such payment is not made when due, the Corporation shall have the
right to deduct, to the extent permitted by law, from any payment or
settlement of any kind otherwise due to such person all or part of the
amount required to be withheld. If the Board, in its sole discretion,
permits shares of Stock to be used to satisfy any such tax withholding,
such Stock shall be valued based upon the Fair Market Value of such Stock
as of the date the tax withholding is required to be made, such date to be
determined by the Board. The Corporation shall not be required to issue
Stock until such obligations are satisfied.
g. In the case of a grant of a Stock Option to any Employee or Consultant
of an Affiliate of the Corporation, the Corporation may, if the Board so
directs, issue or transfer the shares, if any, covered by the Stock Option
to the Affiliate, for such lawful consideration as the Board may specify,
upon the condition or understanding that the Affiliate will transfer the
shares to the Employee or Consultant in accordance with the terms of the
Stock Option specified by the Board pursuant to the provisions of the Plan.
h. A Grantee entitled to Stock as a result of the exercise of an Option
shall not be deemed for any purpose to be, or have rights as, a shareholder
of the Corporation by virtue of such exercise, except to the
<PAGE>
extent a stock certificate is issued therefor and then only from the date
such certificate is issued. No adjustments shall be made for dividends or
distributions or other rights for which the record date is prior to the
date such stock certificate is issued, except as otherwise provided herein.
The Corporation shall issue any stock certificates required to be issued in
connection with the exercise of a Stock Option with reasonable promptness
after such exercise.
i. The grant or exercise of Stock Options granted under the Plan shall be
subject to, and shall in all respects comply with, applicable Connecticut
corporate law relating to such grant or exercise.
j. Should the participation of any Employee or Consultant in the Plan be
subject to Section 16 of the Securities Exchange Act of 1934 or any
successor statute ("Section 16"), it is the express intent of the
Corporation that, notwithstanding anything to the contrary contained in the
Plan, the Plan and Stock Options granted under the Plan shall satisfy and
be interpreted in a manner to achieve the result that the applicable
requirements of Rule 16b-3 shall be satisfied with respect to such
Employees and Consultants, with the result that such Employees and
Consultants shall be entitled to the benefits of Rule 16b-3 or other
applicable exemptive rules under Section 16. If any provision of the Plan
or of any Stock Option would otherwise frustrate or conflict with the
intent of the Corporation expressed in the immediately preceding sentence,
to the extent possible, such provision shall be interpreted and deemed
amended so as to avoid such conflict, and, to the extent of any remaining
irreconcilable conflict with such intent, the provision shall, solely with
respect to Employees and Consultants subject to Section 16, be deemed void.
k. It is the express intent of the Corporation that, notwithstanding
anything to the contrary contained in the Plan, the Plan and Stock Options
granted under the Plan shall satisfy and be interpreted in a manner to
achieve the result that Stock Options granted under the Plan shall
constitute performance-based compensation within the meaning of Section
162(m) of the Code. If any provision of the Plan or of any Stock Option
would otherwise frustrate or conflict with the intent of the Corporation
expressed in the immediately preceding sentence, to the extent possible,
such provision shall be interpreted and deemed amended so as to avoid such
conflict, and, to the extent of any remaining irreconcilable conflict with
such intent, the provision shall, solely with respect to Employees subject
to Section 162(m) of the Code, be deemed void.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-8 of our reports dated
March 3, 1999 included in Information Management Associates, Inc.'s Form 10-K
for the year ended December 31, 1998 and to all references to our firm included
in this registration statement.
Arthur Andersen LLP
Hartford, Connecticut
August 27, 1999
