Exhibit 10.5
[FORM OF]
INFORMATION MANAGEMENT ASSOCIATES, INC.
Non-Qualified Stock Option Agreement
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Non-Qualified Stock Option Agreement (the "Agreement") made this _____ day
of _______________, 19____ between INFORMATION MANAGEMENT ASSOCIATES, INC., a
Connecticut corporation, (hereinafter called the "Corporation") and
_______________________ (hereinafter called the "Grantee").
In consideration of the premises, the mutual covenants hereinafter set
forth, and other good and valuable consideration, the Corporation and the
Grantee agree as follows:
1. Award of Option. The Corporation hereby awards to the Grantee, as a
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matter of separate inducement and agreement, and not in lieu of salary or any
other compensation for services, options to purchase an aggregate of
_____________ shares of the Corporation's Common Stock ("Stock") pursuant to the
nonqualified stock option provisions contained in Part III of the Information
Management Associates, Inc. 1996 Employee and Consultant Stock Option Plan (the
"Plan"), on the terms and conditions hereinafter set forth, at the purchase
price of $________ per share (such shares, number of shares and purchase price
being subject to adjustment as provided in Paragraph 9 below). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Plan.
2. Terms of Plan. The Plan, a copy of which is attached hereto, is
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incorporated herein by reference and is made part of this Agreement as if fully
set forth herein. This Agreement is subject to, and the Corporation and the
Grantee agree to be bound by, all of the terms and conditions of the Plan as the
same exists at the time this Agreement was entered. The Plan shall control in
the event there is any express conflict between the Plan and the terms hereof,
and on such matters that are not expressly covered in this Agreement.
Subsequent amendments of the Plan shall not adversely affect the Grantee's
rights under this Agreement.
[TWO OPTIONS FOR SECTION 3]
[OPTION 1: ONE YEAR VESTING PERIOD]
3. Exercise of Option. The stock options granted pursuant to this
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Agreement are exercisable as to all of the shares of Stock covered hereby on or
after __________________.
[OPTION 2: VESTING OVER MORE THAN ONE YEAR]
3. Exercise of Option. The stock options granted pursuant to this
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Agreement are exercisable as follows:
(a) as to ______ of the shares of Stock with respect to which options are
granted hereby, on or after ____________________;
(b) as to ______ of the shares of Stock with respect to which options are
granted hereby, on or after ____________________;
(c) as to ______ of the shares of Stock with respect to which options are
granted hereby, on or after ____________________; and
(d) as to ______ of the shares of Stock with respect to which options are
granted hereby, on or after ____________________.
Each exercise must encompass at least 100 shares. In the event the
Grantee's exercise includes a fractional share, the Corporation will not be
required to issue a fractional share but will pay the Grantee in cash the value
of such fraction. All unexercised rights shall lapse and forever terminate
after the expiration of ten years from the date of this Agreement (the "Option
Period").
4. Termination of Employment or Consulting Engagement.
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(a) Employment
(1) If 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 by the Grantee 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.
(2) If 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.
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(3) If 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.
(4) 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.
(b) Consulting Engagement
(1) If 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.
(2) If 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.
(3) If 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.
5. Manner of Exercise. Full payment for the shares of Stock purchased
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shall be made at the time of any exercise of options pursuant to this Agreement.
The purchase price shall be payable to the Corporation in United States dollars
in cash or by check, bank
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draft, or postal or express money order. The Board, in its discretion, may
permit 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 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. Subject to the terms and
conditions hereof, the options shall be exercisable by notice to the Corporation
on the form provided by the Corporation, a copy of which is attached hereto. In
the event that the options are being exercised by any person or persons other
than the Grantee, the notice shall be accompanied by proof, satisfactory to the
Corporation, of the right of such person or persons to exercise any right under
this Agreement.
6. Rights of Grantee. The grant of any option in any year shall give such
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Grantee neither any right to similar grants in future years nor any right to be
retained as an employee of the Corporation. The right and power of the
Corporation to dismiss or discharge any participant is specifically
unqualifiedly unimpaired by this Agreement.
Neither the Grantee nor any other person legally entitled to exercise any
rights under this Agreement shall be entitled to any of the rights or privileges
of a stockholder of the Corporation with respect to any shares which may be
issuable upon any exercise pursuant to this Agreement, unless and until a
certificate or certificates representing such shares shall have been actually
issued and delivered to the Grantee or such person.
7. Non-Transferability of Option. Except as otherwise provided herein,
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the options and the rights and privileges conferred hereby may not be
transferred, assigned, pledged or hypothecated in any way, other than by will or
the laws of descent and distribution, and the options hereunder shall be
exercisable during the Grantee's lifetime only by the Grantee or his
conservator.
8. Taxes and Withholding. All payments to Grantee or to his or her legal
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representative 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 this 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
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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.
9. Recapitalization Adjustments.
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(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,
the number of shares of Stock covered by this Agreement, and the purchase price
per share of Stock in respect of this Agreement.
(b) Any provision hereof to the contrary notwithstanding, in the event the
Corporation is a party to a merger or other reorganization, this Agreement shall
be subject to the agreement of merger or reorganization. Such agreement may
provide, without limitation, for the assumption of this Agreement by the
surviving corporation or its parent, for its continuation by the Corporation (if
the Corporation is a surviving corporation), for accelerated vesting and
accelerated expiration of Stock Options covered by this Agreement or for
settlement of such options in cash.
10. Notices. Each notice to the Corporation relating to this Agreement
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shall be in writing and delivered in person or by registered mail to the
Corporation at its office, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, to the attention of the Secretary. All notices to the Grantee or other
person or persons then entitled to exercise any right pursuant to this agreement
shall be delivered to the Grantee or such other person or persons at the
Grantee's address specified below or at such other address as the Grantee or
such other person may specify in writing to the Corporation by a notice
delivered in accordance with this paragraph.
11. Restriction on Shares. The Corporation's obligation to issue or
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deliver any certificate or certificates for shares of Stock under this
Agreement, and the transferability of shares of Stock acquired by the exercise
of these options, shall be subject to all of the following conditions, which, by
his execution of this Agreement, the Grantee acknowledges may affect the
exercisablility
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of these options and the transferability of any shares acquired upon exercise
hereof:
(a) 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
provided that, the Corporation shall be under no obligation to register or
qualify these options or the shares subject to these options;
(b) 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;
(c) Each stock certificate issued pursuant to this Agreement 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; and
(d) The Corporation shall not be obligated to issue or deliver any
shares of Stock pursuant to this Agreement or the exercise thereof if such
issuance or delivery would, in the opinion of counsel to the Corporation,
be a violation of any applicable state or federal law or regulation.
12. Miscellaneous. This Agreement comprises the whole agreement between
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the parties hereto. It may not be modified or terminated orally, and it shall
be deemed to be a Connecticut contract, subject to construction and enforcement
in accordance with the laws of Connecticut.
This Agreement shall inure to the benefit of, and be binding upon, each
successor of the Corporation and, to the extent specifically provided herein and
in the Plan, shall inure to the benefit of and be binding upon the Grantee's
heirs, legal representatives, and successors.
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IN WITNESS WHEREOF, this Agreement is executed by the Grantee and by the
Corporation through its duly authorized officer or officers as of the day and
year first above written.
GRANTOR:
INFORMATION MANAGEMENT
ASSOCIATES, INC.
By:
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Name:
Title:
GRANTEE:
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Name:
Address:
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Social Security No.:
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LETTER OF STOCK OPTION EXERCISE
CONFIDENTIAL
INFORMATION MANAGEMENT ASSOCIATES, INC.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Gentlemen:
I wish to purchase the following shares of Common Stock by exercising the
options granted to me on ________________________ pursuant to a Non-Qualified
Stock Option Agreement, dated ______________________:
Nonqualified stock option shares: __________________
The purchase price for these shares is $______ per share. My check payable
to Information Management Associates, Inc. in the amount of $_______________ in
payment of the purchase price is enclosed. Please issue the stock
certificate(s) for these shares in my name as follows:
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*Name
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Address
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Social Security Number
I understand and acknowledge that neither the stock options granted to me
under the Non-Qualified Stock Option Agreement or the shares to be issued to me
upon exercise thereof have been registered under the Securities Act of 1933, as
amended (the "Act") or under state securities laws. I am acquiring such shares
for investment and not with a view to the distribution thereof. I have been
provided with financial and other information regarding Information Management
Associates, Inc. ("IMA") sufficient to enable me to make an informed investment
decision with respect to
the purchase of the shares and have had an opportunity to ask questions of and
receive answers from management of IMA with respect to its financial condition,
results of operations and material aspects of its business. I understand and
agree that the Company is under no obligation to register the shares and that I
must hold the shares indefinitely unless such shares are registered under the
Act or there is an exemption from the registration requirements of the Act which
applies to any proposed transfer.
Sincerely yours,
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Signature
( ) ( )
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Office Telephone/Home Telephone
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* If you wish to have the shares issued in your name and that of another
person jointly, we suggest that the following form be used: "(Your name)
and (name of other person), as joint tenants with right of survivorship."
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LETTER OF STOCK OPTION GRANT
Date
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Dear ____________________:
I am pleased to confirm that you have been awarded a Nonqualified Stock
Option (the "Option") under the Information Management Associates, Inc. 1996
Employee and Consultant Stock Option Plan (the "Plan"). Enclosed is a
Nonqualified Stock Option Agreement (the "Agreement"), which has been signed by
Information Management Associates, Inc. Please sign such Agreement and return a
copy to me in the enclosed envelope.
As you know, the Option covers common shares of Information Management
Associates, Inc. and are exercisable in accordance with the terms of the
Agreement. In addition, the shares covered by this Option have not been
registered under state or federal securities laws. Accordingly, under these
laws, until such time as an effective registration statement is filed or an
exemption becomes available with respect to these shares, there are prohibitions
upon the exercise of this Option and the later sale of any shares purchased
under this Option. These prohibitions stem from the securities laws.
Please contact the undersigned with any questions you may have.
Sincerely,
