SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11c or (S)240.14a-
12
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APPLIED INTELLIGENCE GROUP, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
_________________________________________________________________
(2) Aggregate number of securities to which transaction
applies:
_________________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(5) Total fee paid:
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Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
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<PAGE>
APPLIED INTELLIGENCE GROUP, INC.
13800 BENSON ROAD
EDMOND, OKLAHOMA 73013
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
The 1997 Annual Meeting of Stockholders (the "Annual
Meeting") of Applied Intelligence Group, Inc., an Oklahoma
corporation (the "Company"), will be held on Tuesday, June 3,
1997 at 10:00 a.m. at the Harvey Business Center, Room 104, on
the campus of Oklahoma Christian University of Science & Arts,
2501 East Memorial Road, Oklahoma City, Oklahoma 73134 for the
following purposes:
1. To elect a Class I Director to the Board of Directors for a
term expiring in 2000.
2. To approve the Company's 1997 Employee Stock Purchase Plan.
3.To ratify the appointment of Coopers & Lybrand L.L.P. as the
independent public accountants of the Company for the fiscal
year ending December 31, 1997.
4.To transact such other business as may come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in
the Proxy Statement accompanying this Notice.
Only stockholders of record at the close of business on
April 11, 1997, are entitled to notice of and to vote at the
meeting.
All Stockholders are cordially invited to attend the meeting in
person. To assure your representation at the meeting, however,
you are urged to mark, sign, date and return the enclosed proxy
as promptly as possible in the postage-prepaid envelope enclosed
for that purpose. Any stockholder attending the meeting may vote
in person even if he or she previously has returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
________________________________
Robert N. Baker
Secretary
Edmond, Oklahoma
April 11, 1997
<PAGE>
APPLIED INTELLIGENCE GROUP, INC.
13800 BENSON ROAD
EDMOND, OKLAHOMA 73013
PROXY STATEMENT
1997 ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
VOTING AND OTHER MATTERS
GENERAL
The enclosed proxy is solicited on behalf of Applied
Intelligence Group, Inc., an Oklahoma Corporation (the
"Company"), by the Company's Board of Directors for use at the
Annual Meeting of Stockholders to be held at the Harvey Business
Center, Room 104, on the campus of Oklahoma Christian University
of Science & Arts, 2501 East Memorial Road, Oklahoma City,
Oklahoma 73134, on Tuesday, June 3, 1997 at 10:00 a.m., and at
any adjournments thereof, for the purposes set forth in this
Proxy Statement and in the accompanying Notice of Annual Meeting
of Stockholders.
These proxy solicitation materials were first mailed on or
about April 28, 1997, to all stockholders entitled to vote at the
Meeting.
Voting Securities and Voting Rights
Stockholders of record at the close of business on April 11,
1997 (the "Record Date"), are entitled to notice of and to vote
at the Meeting. On the Record Date, there were issued and
outstanding 2,726,944 of the Company's Common Stock, $.001 par
value per share (the "Common Stock"), of which 1,500,000 (55
percent) are held by the executive officers and directors of the
Company.
The presence, in person or by proxy, of the holders of a
majority of the total number of shares of Common Stock
outstanding constitutes a quorum for the transaction of business
at the Meeting. Each stockholder voting at the Meeting, either
in person or by proxy, may cast one vote per share of Common
Stock held on all matters to be voted on at the Meeting.
Assuming that a quorum is present, the affirmative vote of a
majority of the shares of Common Stock of the Company present in
person or represented by proxy at the Meeting and entitled to
vote is required: (i) to elect one director for a term expiring
in 2000; (ii) to approve the Company's 1997 Employee Stock
Purchase Plan; and (iii) to ratify the appointment of Coopers &
Lybrand L.L.P. as the independent public accountants of the
Company for the fiscal year ending December 31, 1997.
Votes cast by proxy or in person at the Meeting will be
tabulated by the election inspectors appointed for the Meeting
and will determine whether a quorum is present. The election
inspectors will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of
any matter submitted to the shareholders for a vote. If a broker
indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to
vote with respect to that matter.
Voting of Proxies
When a proxy is properly executed and returned, the shares
it represents will be voted at the Meeting as directed. If no
specification is indicated, the shares will be voted (i) "for"
the election of the nominee as set forth in this Proxy Statement,
(ii) "for" approval of the Company's 1997 Employee Stock Purchase
Plan; and (iii) "for" the ratification of the appointment of
Coopers & Lybrand L.L.P. as the independent public accountants of
the Company for the fiscal year ending December 31, 1997.
Revocability of Proxies
Any person giving a proxy may revoke the proxy at any time
before its use by delivering to the Company written notice of
revocation or a duly executed proxy bearing a later date or by
attending the Meeting and voting in person.
Expenses of Solicitation
The cost of soliciting proxies, including expenses in
connection with preparing and mailing this Proxy Statement, will
be borne by the Company. In addition, the Company will reimburse
brokerage firms and other persons representing beneficial owners
of Common Stock of the Company for their expenses in forwarding
proxy material to such beneficial owners. Solicitation of proxies
by mail may be supplemented by telephone, telegram, telex and
personal solicitation by the directors, officers or employees of
the Company. No additional compensation will be paid for such
solicitation.
Annual Report
The Company's 1997 Annual Report to Stockholders (the
"Annual Report"), which includes the Company's annual report on
Form 10-KSB and financial and other information about the
Company's activities for the fiscal year ended December 31, 1996,
is being mailed to stockholders with this Proxy Statement, but is
not incorporated into this Proxy Statement.
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS, DIRECTORS AND OFFICERS
The following table sets forth certain information as to the
beneficial ownership of the Common Stock of the Company as of
April 22, 1997, by (i) each director, including the nominee for
director, (ii) each executive officer named in the Summary
Compensation Table under the section entitled "EXECUTIVE
COMPENSATION," and (iii) all current executive officers and direc
tors of the Company as a group, and (iv) each person known by the
Company to be the beneficial owner of more than five percent of
the Common Stock.
<TABLE>
<CAPTION>
Shares Percent of
Beneficially Outstanding
Name (and Address) of Beneficial Owned Shares
Owner
<S> <C> <C>
Robert L. Barcum(1) 554,529 20.33%
Robert N. Baker(1) 554,529 20.33%
Russell L. Reinhardt(1) 316,081 11.59%
David B. North(1) 74,861 2.74%
Executive Officers and Directors
as a group (five persons)(2) 1,502,056 55.07%
- ----------
<FN>
(1) The business address of the named person is 13800 Benson
Road, Edmond, Oklahoma 73013-6417.
(2) The number of shares and percent after this offering include
2,056 shares of Common Stock issuable pursuant to exercisable
stock options held by an executive officer.
</FN>
</TABLE>
PROPOSAL TO ELECT DIRECTOR
Nominee
The Company's Certificate of Incorporation provides that the
number of directors shall be fixed from time to time by
resolution of the Board of Directors or stockholders. Currently,
the number of directors is fixed at five (of which there are two
vacancies) and that number is divided into three classes, with
one class standing for election each year for three-year terms.
The Board of Directors has nominated Russell L. Reinhardt
for re-election as a Class I director for a three-year term
expiring in 2000 or until his successor is elected and qualified.
The Board of Directors is not proposing any nominees for the
vacant Class III directors. Accordingly, after the election of
director, the two vacancies will continue to exist on the Board
of Directors, which, as with all other vacancies, may be filled
by a vote of a majority of the directors then in office.
The Company is currently actively seeking two individuals
outside the Company to serve as members of the Board of Directors
and to fill the Class III director positions.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the re-election of Mr. Reinhardt as
a Class I Director. In the event that Mr. Reinhardt is unable or
declines to serve as a director at the time of the Meeting, the
proxies will be voted for a nominee, if any, designated by the
current Board of Directors to fill the vacancy. It is not
expected that Mr. Reinhardt will be unable or will decline to
serve as a director.
The Board of Directors recommends a vote "For" Mr.
Reinhardt.
The following table sets forth information regarding the
directors and nominee for director of the Company:
<TABLE>
<CAPTION>
Name Age Position Term
Expires
<S> <C> <C> <C>
Robert L. Barcum(1) 48 President and Chairman of 1998
the Board
Robert N. Baker(1) 45 Vice President-Network 1998
Services, Secretary and
Director
Russell L. Reinhardt(1) 50 Vice President-Solutions 1997
and Director
- ----------
<FN>
(1) Member of Stock Option Committee of the Applied Intelligence
Group, Inc. 1995 Stock Option Plan.
</FN>
</TABLE>
The following is a brief description of the business
background of the directors and executive officers of the
Company:
Robert L. Barcum, as a cofounder, has served as a Director
and as an executive officer of the Company since its formation in
1985 and currently serves as Chairman of the Board and President
and Chief Executive Officer. He currently serves as a Class II
director for a term expiring at the annual meeting of
shareholders to be held in 1998. Mr. Barcum is responsible for
developing the Company's national retail practice, including
product and services planning, marketing and business alliances.
He also manages the Consulting and Systems Integration business
area. Mr. Barcum has more than 25 years of experience in
management information systems for retail organizations. He is
active in the National Retail Federation. Since 1991 has served
as an outside Director of Duckwall-ALCO Stores, Inc., a publicly-
held retailer and a Company customer and since 1993, has served
as an outside director of Commercial Distributing Inc. , a
distributor of automotive products in the automobile after-market
and a Company customer. Since 1995, he has served on the Business
Advisory Council of Oklahoma Christian University of Science and
Arts (formerly Oklahoma Christian College), and since 1996 has
served as a member of the Advisory Board of Kent State
University.
Robert N. Baker, as a cofounder, has served as a Director
and Vice President of the Company since its formation in 1985 and
currently serves as Vice President-Network Services and Corporate
Secretary. He currently serves as a Class II director for a term
expiring at the annual meeting of shareholders to be held in
1998. Mr. Baker is responsible for developing the viaLINK
services as well as managing the Network Services business area.
Mr. Baker has over 20 years of experience in management,
technical support and systems development within the retail
industry. He graduated magna cum laude from Oklahoma Christian
University of Sciences and Arts (formerly Oklahoma Christian
College) with a Bachelor of Science in Mathematics.
Russell L. Reinhardt, the nominee Director, has served as a
Director, Vice President and Secretary since joining the Company
in 1986 and currently serves as Vice President-Solutions, and a
Class I Director. Mr. Reinhardt is responsible for product
development, business partnerships and business relations, and
holds various responsibilities related to business planning. Mr.
Reinhardt manages the Solutions business area. Mr. Reinhardt has
20 years experience with the IBM Corporation during which time he
held a range of staff and management positions. Mr. Reinhardt is
a graduate of the University of Michigan with a B.S.E. in Science
Engineering.
David B. North has served as Vice President since joining
the Company in 1985 and currently serves as Vice
President-Technology and Assistant Secretary. Mr. North is the
Company's chief computer scientist and serves as project manager,
system designer and technical consultant. Mr. North was an
instructor of computer science at the University of Oklahoma for
two years and also an Instructor, Systems Analyst and Program
Developer at Oklahoma Christian University of Sciences and Arts.
Currently he serves in an advisory capacity to the University of
Oklahoma Center for MIS Studies. Mr. North is a graduate of
Oklahoma Christian University of Sciences and Arts (formerly
Oklahoma Christian College) with a Bachelor of Science in
Chemistry. He was awarded a Masters of Science in Computer
Science from the University of Oklahoma and has completed further
graduate studies in Artificial Intelligence at the University of
Oklahoma. Mr. North is 40 years old.
John M. Duck has served as Director of Finance and
Administration since joining the Company in 1991 and currently
serves as Vice President, Treasurer and Chief Financial Officer.
Mr. Duck is responsible for all financial and tax reporting and
compliance as well as for overall direction of the Finance
Department of the Company. Prior to joining the Company, Mr. Duck
served as Chief Financial Officer of Griffin Entities, Inc. as
well as Mr. Rooter Corporation. Mr. Duck currently serves on the
Board of Directors of the Edmond Chamber of Commerce and is a
member of the Oklahoma County Private Industry Council. Mr. Duck
is a certified public accountant and holds a Bachelor of Science
in Economics from Oklahoma City University. Mr. Duck is 54 years
old.
Directors hold office until their successors have been
elected and qualified. All officers serve at the pleasure of the
Board of Directors. There are no family relationships among any
of the Company's directors or executive officers of the Company.
Meetings and Committees of the Board of Directors
The Company's bylaws authorize the Board of Directors to
appoint among its members one or more committees composed in
whole or in part one or more directors. As of April 11, 1997,
the Board of Directors had appointed the Stock Option Committee.
Other than the Stock Option Committee, the Board of Directors
does not have any other standing committees.
Stock Option Committee. Mr. Barcum and Mr. Baker, and Mr.
Reinhardt, members of the Board of Directors, Mr. North, an
executive officer of the Company, and Ms. Kay Titchenal, the
Director of Human Resources of the Company, serve on the Stock
Option Committee. The Stock Option Committee's principal
functions are to determine individuals to whom stock options will
be granted under the Company's 1995 Stock Option Plan, the terms
on which such options will be granted, and to administer and
interpret the Plan.
The Board of Directors of the Company held three meetings
during the fiscal year ended December 31, 1996, all of which were
attended unanimously by the directors of the Company.
Director Compensation
All present directors are executive officers of the Company
and receive no additional compensation for their services as
directors or as members of the Stock Option Committee in 1996.
EXECUTIVE COMPENSATION
Summary of Cash and Other Compensation
The following table sets forth the total compensation
received for services rendered in all capacities to the Company
for the years ended December 31, 1994, 1995 and 1996, by the
Company's President and it executive officers whose aggregate
cash compensation exceeded $100,000 (together the "Named
Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual
Compensation
(1)
Name and Principal Position Year Salary(2) Bonus(3)
<S> <C> <C> <C>
Robert L. Barcum(4) 1996 $169,987 $ -
President and Chief Executive 1995 170,710 -
Officer 1994 165,406 15,000
Robert N. Baker(4) 1996 $169,150 $ -
Vice President-Network Services, 1995 170,389 -
Secretary 1994 163,645 15,000
Russell L. Reinhardt(4) 1996 $171,840 $ -
Vice President-Solutions 1995 171,256 -
1994 165,756 15,000
David B. North 1996 $116,248 $ -
Vice President-Technology, 1995 109,194 -
Assistant 1994 106,202 15,000
Secretary
- ----------
<FN>
(1) The named executive officer received additional non-cash
compensation, perquisites and other personal benefits; however,
the aggregate amount and value thereof did not exceed 10 percent
of the total annual salary and bonus paid to and accrued for the
named executive officer during the year.
(2) Dollar value of base salary (both cash and non-cash) earned
during the year.
(3) Dollar value of bonus (both cash and non-cash) earned during
the year.
(4) During the years 1996 and 1995, Robert L. Barcum, Robert N.
Baker and Russell L. Reinhardt each were paid the same annual
base salary of $175,127, and during 1994, each were paid the same
annual base salary of $168,391. The differences in the amounts
presented above are due to different levels of participation of
each individual in the Section 125 Cafeteria Plan offered by the
Company to all employees on a non-discriminatory basis.
</FN>
</TABLE>
The Named Executive Officers were not granted any stock
option grants or awards during 1996 and did not hold any stock
option grants or awards December 31, 1996.
Stock Option Plan
The Company established the Applied Intelligence Group, Inc.
1995 Stock Option Plan (the "Stock Option Plan" or the "Plan") in
March 1995, and amended the Plan on April 29, 1996. The Plan
provides for the issuance of incentive stock options ("ISO
Options") and non-incentive stock options ("NSO Options") to
employees and non-employees of the Company, including employees
who also serve as Directors of the Company. The number of shares
of Common Stock authorized and reserved for issuance under the
Plan is 300,000. As of the date of this Proxy Statement, options
to purchase a total of 192,264 shares of Common Stock ranging
from $.63 to $3.875 (with a weighted average exercise price of
$2.77) per share were outstanding, of which 74,764 were
exercisable (with a weighted average exercise price of $1.03 per
share).
The Stock Option Committee, which is currently comprised of
Ms. Kay H. Titchenal and Messrs. Barcum, Baker, Reinhardt and
North, administers and interprets the Plan and has authority to
grant options to all eligible participants and determine the
types of options granted, the terms, restrictions and conditions
of the options at the time of grant.
The option price of the Common Stock is determined by the
Stock Option Committee. The option price of NSO Options may not
be less than 75 percent of the fair market value of the shares on
the date of grant of the option. In the case of an ISO Option,
the option price may not be less than the fair market value of
the Common Stock on the date of the grant of the ISO Option. The
fair market value of a share of the Common Stock is determined by
the Stock Option Committee. Upon the exercise of an option, the
option price must be paid in full, in cash, Common Stock (at the
fair market value thereof) or a combination thereof. For a period
of two years ending November 20, 1998, the Company has agreed
with Barron Chase Securities, Inc. not to grant more than 25,000
NSO Options having an option price of less than fair market value
of the shares on the date of grant of the option, without written
consent of Barron Chase Securities, Inc.
Options are exercisable during employment and for a period
of three months after the participant ceases to be an employee, a
director, or non-employee service provider of the Company;
however, in the event of death or disability of the participant,
the ISO Options are exercisable for a period of one year
following death or disability. In any event options may not be
exercised beyond the expiration date of the option. NSO Options
may only be granted to key management employees, directors, key
professional employees or key professional non-employee service
providers of the Company, while ISO Options may only be granted
to key management or key professional non-employees of the
Company. No option may be granted after February 28, 2005.
Options are not transferable except by will or by the laws of
descent and distribution.
All outstanding options granted pursuant to the Plan will
become fully vested and immediately exercisable in the event that
(i) within any 12-month period, the Company sells an amount of
Common Stock that exceeds 50 percent of the number of shares of
Common Stock outstanding immediately prior to such 12-month
period, (ii) the Company completes an initial public offering of
its stock, or (iii) a "change of control" occurs. For purposes of
the Plan, a "change of control" is defined as the acquisition in
a transaction or series of transactions by any person, entity or
group (two or more persons acting as a partnership, limited
partnership, syndicate or other group for the purpose of
acquiring securities of the Company) of beneficial ownership of
50 percent or more (or less than 50 percent as determined by a
majority of the directors of the Company) of either the then
outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding voting securities.
Profit Sharing Plan
In 1987, the Company adopted the Applied Intelligence Group,
Inc. Profit Sharing Plan (the "Profit Sharing Plan"). The Profit
Sharing Plan covers all employees of the Company who have
completed at least one year of service with the Company as of the
enrollment date under the Profit Sharing Plan. The Company may
make an annual contribution to the Profit Sharing Plan on behalf
of employees which, if made, begins to vest for each employee's
account after the employee has completed two years of service
with the Company. Thereafter, each employee's account vests
ratably as to 20 percent of the employee's account following each
subsequent year of completed service with the Company. Vested
contributions will normally be distributed to an employee upon
(i) the employee's retirement, (ii) the employee's death or
disability, (iii) the termination of the employee's employment
with the Company or (iv) the termination of the Profit Sharing
Plan. The Company did not make any contributions to the Profit
Sharing Plan for the fiscal years ended December 31, 1996 and
1995.
In 1993, the Company amended the Profit Sharing Plan to
include a 401(k) deferred compensation feature, whereby eligible
participants may elect to defer up to 15 percent of their
salaries, not to exceed the annual statutory limits, pursuant to
a voluntary salary reduction agreement. The Company may determine
matching levels of contributions from time to time, at the
discretion of the administrative committee. No matching
contributions were made by the Company during 1994 and 1995. All
employee contributions under the 401(k) feature are fully vested
at all times.
1997 Employee Stock Purchase Plan
In April 1997, the Company adopted the 1997 Employee Stock
Purchase Plan to offer employees of the Company the opportunity
to purchase the Company's Common Stock through payroll
deductions. The 1997 Employee Stock Option Plan is more fully
described at "PROPOSAL TO APPROVE THE 1997 EMPLOYEE STOCK
PURCHASE PLAN."
COMPLIANCE WITH SECTION 16 OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the company's directors and officers, and
persons who own more than 10 percent of a registered class of the
Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than 10 percent
stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such
forms received by it during the year ended December 31, 1996, and
written representations that no other reports were required, the
Company believes that each person who, at any time during such
year, was a director, officer or beneficial owner of more than 10
percent of the Company's Common Stock complied with all Section
16(a) filing requirements during such fiscal year. The
directors, officers and greater than 10 percent stockholders did
not become subject to the requirements of Section 16(a) until
November 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 12, 1996, Vantage Capital Resources, Inc., an
Oklahoma corporation ("VCRI"), merged with and into the Company
(the "Merger"). VCRI was organized on March 28, 1996, by John
Simonelli and Larry E. Howell with an initial capitalization of
$360. On June 5, 1996, VCRI completed a private placement
offering of 250,000 shares of VCRI common stock at an offering
price of $1.75 per share, with net proceeds to VCRI of $394,567.
Pursuant to the private placement offering, David B. North, an
executive officer and Director of the Company, purchased 22,500
shares of VCRI common stock, and James R. Stepp, a former
executive officer of the Company, purchased 1,000 shares of VCRI
common stock; however, all of such shares were subsequently
redeemed by the Company, as described below. In consummation of
the Merger, the Company issued 610,000 shares of its Common
Stock, on a one-for-one basis, for the outstanding Common Stock
of VCRI.
In connection with the organization of VCRI, each of Messrs.
Simonelli and Howell were issued 180,000 shares of VCRI Common
Stock for $.001 per share. Prior to the Merger, VCRI had not
engaged in any operations other than the negotiation of the
Merger and the offering of its Common Stock pursuant to a private
placement offering. Upon consummation of the Merger, each of
Messrs. Simonelli and Howell, as well as the other shareholders
of VCRI, exchanged their shares of VCRI Common Stock, on a one-
for-one basis, for the Company's Common Stock. Pursuant to an
Exchange Agreement dated October 14, 1996 (the "Exchange
Agreement"), each of Messrs. Simonelli and Howell exchanged
180,000 shares of Common Stock for stock options exercisable two
years following completion of this offering for the purchase of
180,000 shares of Common Stock for $5.00 per share on or before
November 30, 2001. The stock options and the Common Stock or
other securities issuable under the stock options may not be
offered for sale except in compliance with the applicable
provisions of the Securities Act of 1933, as amended. The Company
has agreed that if it files with the Securities and Exchange
Commission a post-effective amendment to the registration
statement of which this Prospectus (the "Registration Statement")
is a part, a new registration statement, or similar offering
document, Messrs. Simonelli and Howell (or other holders of the
stock options) shall have the right through December 31, 2001, to
include in such registration statement or offering statement the
Common Stock or other securities issuable upon exercise of the
stock options at no expense to Messrs. Simonelli and Howell.
In connection with the Merger and the transactions related
thereto, an independent determination of fairness and
reasonableness of the terms of the transactions was not obtained;
however, the transactions were negotiated on an arm's-length
basis by the respective parties (which included all of the
shareholders of the Company) and are believed by respective
parties and management of the Company to have been fair.
Furthermore, upon closing of the Merger, Messrs. Simonelli
and Howell entered into three-year employment agreements with the
Company and were elected to the Board of Directors and appointed
executive officers of the Company. Pursuant to the Exchange
Agreement, on October 14, 1996, Messrs. Simonelli and Howell
resigned as executive officers and Directors of the Company, and
their employment agreements were terminated effective April 1,
1996, without any payment of or continuing right to receive
compensation under such employment agreements.
On October 14, 1996, the Company redeemed the shares of
Common Stock issued to James R. Stepp, a former executive officer
of the Company, in exchange for the 1,000 shares of VCRI common
stock that he purchased in connection with the VCRI Private
Placement Offering, for $1.75 per share and for an aggregate
amount of $1,750.
On October 15, 1996, the Company redeemed the shares of
Common Stock issued to David B. North in exchange for the 22,500
shares of VCRI common stock that he purchased in connection with
the VCRI Private Placement Offering for $1.75 per share for an
aggregate amount of $39,375. In redemption of the shares, the
Company issued to Mr. North a promissory note in the principal
amount of $39,375, bearing interest at the rate of 10 per annum
(payable at maturity), with a maturity date of November 15, 1997.
Management of the Company believes that the terms of the
promissory note were at least as favorable as could be obtained
from unaffiliated third-party lenders.
Pursuant to ten separate promissory notes, Robert L. Barcum,
Robert N. Baker and Russell L. Reinhardt have loaned to the
Company, in the aggregate, $437,000 (the "Shareholders'
Loans"). The Shareholders' Loans are each evidenced by a
promissory note, bearing interest at rates of 8.5 percent to 10
percent per annum, with maturity dates three years from the date
of the note. With respect to the Shareholders' Loans, the
interest paid or accrued for payment to each of Robert L. Barcum,
Robert N. Baker and Russell L. Reinhardt was $9,503, $10,487
and $11,915, respectively, during 1996, and $11,305, $14,856 and
$16,037, respectively, during 1995.
The Company has adopted policies that any loans to officers,
directors and five percent or more shareholders ("affiliates")
and any future transactions between the Company and any
affiliates will be subject to approval by a majority of the
disinterested independent directors of the Company and will be on
terms no less favorable than could be obtained from unaffiliated
parties. As of the date of this Proxy Statement, the Board of
Directors is comprised of three members, none of whom are
independent directors.
PROPOSAL TO APPROVE THE 1997 EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
In April 1997, the Company approved the 1997 Employee Stock
Purchase Plan (the "Plan"), subject to approval by the Company's
stockholders. A copy of the Plan is attached as Appendix A to
this Proxy Statement. The Board of Directors recommends a vote
"For" the approval of the Plan.
The purpose of the Plan is to promote superior levels of
performance from, and to encourage ownership by, eligible
employees of the Company by increasing their interest in the
success of the Company. The Plan is designed to meet his goal by
offering financial incentives for employees to purchase Common
Stock of the Company, thereby increasing the interest of
employees in pursuing the long-term growth, profitability and
financial success of the Company. The Company believes that the
Plan will further the achievement of this goal.
1997 Employee Stock Purchase Plan
The Plan provides for the granting of stock options to
eligible employees of the Company. It is intended that the Plan
and the stock options granted under the Plan will meet the
qualification requirements set forth in the Internal Revenue Code
of 1986, as amended (the "Code"). The Board of Directors
believes that the Plan will represent an important factor in
attracting and retaining employees, and will constitute a
significant compensation program for the employees of the Company
and will provide the employees the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary
interest, in the Company and an increased personal interest in
its continued success and progress. Eligible employees holding a
stock option granted under the Plan will not have any of the
rights of a stockholder with respect to optioned shares until
such holder exercises the option.
Administration
The Plan is administered by the Board of Directors or a
committee appointed by and serving at the pleasure of the Board
of Directors, consisting of not less than two members of the
Board of Directors. The Board or committee administers and
interprets the Plan and has the authority to establish, adopt or
revise rules and regulations with respect to the Plan. The
interpretation of the Plan by the Board or the committee will be
final, binding, and conclusive on all employees and participants.
Eligibility and Grant of Options
All full-time employees (i.e., whose customary employment is
20 hours or more per week and more than five months in any
calendar year), who have been continuously employed more than six
months will be eligible to participate in the Plan by entering
into an option agreement to purchase shares of Common Stock of
the Company. Provided, however, the employees who own or would
own five percent or more of the Company's Common Stock
immediately after the options are granted in accordance with the
option agreement after giving effect to and assuming exercise of
such options and any other stock options held by the employee-
participant, are not eligible to participate in the Plan. For
purposes of determining the five percent or more limitation,
Common Stock owned, directly or indirectly, by or for (i)the
participant's brothers and sisters, spouse, ancestors and lineal
descendants, and (ii) a corporation, partnership, estate, or
trust (which are considered as being owned proportionately by or
for its shareholders, partners or beneficiaries), are
attributable to the employee-participant. A participant may be
granted a stock option under the Plan which would entitle such
participant to purchase stock under all "employee stock ownership
plans" of the Company intended to qualify under Section 423 of
the Code to accrue at a rate which exceeds $25,000 of fair market
value of the Common Stock (determined at the time such stock
option is granted) for each calendar year in which such stock
option is outstanding at any time.
An employee will become a participant by delivery of an
option agreement to the Committee. A participant may elect the
amount of equal periodic contributions to be withheld from such
participant's compensation up to $20 per payroll period. A
participant will continue as a participant until expiration or
termination of the Plan, unless the participant withdraws from,
or otherwise becomes ineligible to participate in the Plan. In
the event of the death of a participant or a participant who
terminates employment with the Company on account of (i)
retirement on or after age 55, (ii) retirement based on
disability, (iii) lay off, or (iv) an authorized leave of absence
granted by the Company within one month prior to the end of the
applicable purchase period, the legal representative of the
deceased participant or the participant will be considered to be
a participant under the Plan and will continue to be a
participant in the Plan until the next succeeding exercise date,
unless the participant voluntarily elects to withdraw from the
Plan. In the event a participant voluntarily withdraws from the
Plan, the participant will be entitled to participate in the Plan
in any succeeding purchase period if the eligibility requirements
of the Plan are satisfied. A Participant will be deemed to have
made an election to withdraw from the Plan on the date of his
employment termination with the Company and the participant's
entire account balance, if any, on the date of withdrawal, will
be refunded to the participant.
If a participant qualified and receives a "hardship
withdrawal" from the Company's 401(k) Plan or any other cash or
deferred arrangement established by the Company under Section
401(k) of the Code, the participant will be prohibited form
making contributions to the Plan for a period of 12 months after
receipt of such hardship distribution.
Exercise of Options
The total number of shares of Common Stock authorized and
reserved for issuance under the Plan is 100,000. The number of
shares of Common Stock subject to appropriate adjustment in the
event of any merger, consolidation, recapitalization,
reclassification, stock dividend, stock split or similar
transaction.
The option agreement entitles a participant on an applicable
exercise date to purchase the specific number of whole shares of
Common Stock at a pre-determined price per share. Participants
may contribute up to $20 per pay period into their account to
purchase whole shares of the Common Stock of the Company at pre-
determined quarterly grant dates or exercise dates. The grant
date began on the first day of each quarterly purchase period
commencing April 1, 1997, and will continue for each quarterly
period thereafter until January 1, 2002. The exercise date will
be the last day of each calendar quarter, commencing June 30,
1997, and continuing for each quarterly period until March 31,
2002. The option price will be 85 percent of the per share fair
market value on the granting date or the exercise date, whichever
is the lesser, of the purchase period. On each exercise date, the
Company will issue to the participant the number of whole shares
based on the participant's account balance and the applicable
option price of the shares. During each quarterly purchase
period, a participant will not be permitted to purchase more than
50 shares of Common Stock. Any remaining balance in
Participants' accounts after the purchase of shares during a
quarterly purchase period will be carried over to the next
quarterly purchase period and exercise date. No interest will be
paid on account balances at any time.
The stock options may not be assigned, encumbered or
otherwise transferred by the participants, except by will or
under laws of inheritance.
Duration and Modification
The Plan will remain in force until March 31, 2002. The
Board of Directors may amend the Plan in any respect consistent
with Sections 421 and 423 of the Code, except that, without
approval of the stockholders, no amendment shall (i) increase the
maximum number of shares of Common Stock reserved under the Plan
other than in connection with a merger, consolidation,
recapitalization, reclassification, stock split, combination of
shares, stock dividend, or (ii) make the Plan available to any
person who is not an employee of the Company.
Federal Income Tax Consequences of Stock Options
Stock options granted under the Plan will be intended to
qualify as statutory stock options under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, there will be no taxable income to a participant
employee when a stock option is granted to and exercised by the
participant. The amount by which the fair market value of the
shares of Common Stock acquired pursuant to exercise of stock
options at the time of exercise exceeds the option price
generally will be treated as an item of preference in computing
the alternative minimum taxable income of the participant. If a
participant exercises a stock option and does not dispose of the
shares within either two years after the date of the grant of the
option or one year after the date the shares were issued to the
participant, any gain realized upon disposition will be taxable
to the participant as a capital gain. If the participant does
not satisfy the applicable holding periods, however, the
difference between the option price and the fair market value of
the shares on the date of exercise of the option will be taxed as
ordinary income, and the balance of the gain, if any, will be
taxed as capital gain. If the shares are disposed of before
expiration of the one-year or two-year periods and the amount
realized is less than the fair market value of the shares at the
date of exercise, the participant's ordinary income is limited to
the amount realized less the option exercise price paid. The
company will be entitled to a tax deduction only to the extent
the participant has ordinary income upon the sale or other
disposition of the shares received when the option was exercised.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand
L.L.P., independent accountants, to audit the financial
statements of the Company for the fiscal year ending December 31,
1997. Coopers & Lybrand L.L.P. has served the Company in such
capacity since 1993. The Board of Directors recommend that
stockholders vote in favor of the ratification of such
appointment. The Board of Directors anticipates that
representatives of Coopers & Lybrand L.L.P. will be present at
the Annual Meeting, will have the opportunity to make a statement
if they so desire, and will be available to respond to
appropriate questions.
In the event that ratification of the appointment of Coopers
& Lybrand L.L.P. as the Company's independent accountants is not
obtained at the Meeting, the Board will reconsider its
appointment.
OTHER MATTERS
The Board of Directors knows of no other matters, other than
those described in this Proxy Statement, to be submitted to the
Meeting. If any other matters properly come before the Meeting,
it is the intention of the persons named in the enclosed proxy
card to vote the shares they represent as the Board of Directors
may recommend.
STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented by
stockholders at the annual meeting of stockholders of the Company
for the fiscal year ending December 31, 1997, pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to be included in the proxy statement and form
of proxy relating to such meeting, must be received by the
Company no later than January 31, 1998. Any stockholder proposals
intended to be presented at the Company's 1998 Annual Meeting,
other than a stockholder proposal submitted pursuant to Exchange
Act Rule 14a-8, must be received in writing by the Secretary of
the Company at the principal executive office of the Company no
later than the close of business on March 3, 1998, nor prior to
February 2, 1998, together with all supporting documentation
required by the Company's By-laws.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL
1996 (INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO),
WHICH WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 31, 1997, WILL BE PROVIDED WITHOUT CHARGE TO ANY PERSON TO
WHOM THIS PROXY STATEMENT IS MAILED UPON THE WRITTEN REQUEST OF
ANY SUCH PERSON TO JOHN M. DUCK, VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER, APPLIED INTELLIGENCE GROUP, INC., 13800 BENSON
ROAD, EDMOND, OKLAHOMA 73013.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS
IMPORTANT TO THE COMPANY. PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD TODAY.
By order of the Board of Directors:
/s/ ROBERT N. BAKER
Robert N. Baker
Secretary
Edmond, Oklahoma
April 14, 1997
<PAGE>
AIG LOGO
Dear Stockholder:
The officers and directors of Applied Intelligence Group, Inc.
cordially invite you to attend the Annual Meeting of Stockholders,
Tuesday, June 3, 1997 at 10:00 a.m., at the Harvey Business Center,
Room 104, on the campus of Oklahoma Christian University of Sciences & Arts,
2501 East Memorial Road, Oklahoma City, Oklahoma.
Please review the important information enclosed with this Proxy.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares.
Please mark the boxes on the proxy card to indicate how your
shares will be voted. Then sign the card, detach it and return your
proxy in the enclosed postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
/s/ ROBERT L. BARCUM
Robert L. Barcum
Chairman of the Board
and Chief Executive Officer
<PAGE>
LOGO
APPLIED INTELLIGENCE GROUP, INC.
13800 BENSON ROAD
EDMOND, OKLAHOMA 73013
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD June 3, 1997
The undersigned stockholder hereby constitutes and appoints
Robert N. Baker and John M. Duck, and each or either of them, as
proxies of the undersigned (the "Proxies"), with full power to
substitute, and authorizes each of them to represent and to vote
all shares of common stock, par value $.01 per share, of Applied
Intelligence Group, Inc. (the "Company") held by the undersigned
at the close of business on April 11, 1997, at the 1997 Annual
Meeting of Stockholders (the "Annual Meeting") of the Company to
be held at the Harvey Business Center, Room 104, on the campus of
Oklahoma Christian University of Sciences & Arts, 2501 East
Memorial Road, Oklahoma City, Oklahoma 73134 on Tuesday, June 3,
1997 at 10:00 a.m., and at any adjournments or postponements
thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED FOR THE PROPOSALS IN PARAGRAPHS 1, 2 and
3, AND IN THE DISCRETION OF THE PROXIES, FOR ANY MATTER DESCRIBED
IN PARAGRAPH 4. A stockholder wishing to vote in accordance with
the recommendation of the Board of Directors of the Company need
only sign and date this Proxy and return it to the Company.
1. To elect Russell L. Reinhardt as a Class I member to the
Board of Directors to hold office until the 2000 Annual
Meeting of Stockholders and until their respective successors
are duly elected and qualified.
[_] FOR [_] AGAINST [_] ABSTAIN
2. To approve the Company's 1997 Employee Stock Purchase Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify the appointment of Coopers & Lybrand L.L.P. as
the Company's independent public accountants for the fiscal
year ending December 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon
any other matters that may be properly brought before the Annual
Meeting and at any adjournments or postponements thereof.
[_] FOR [_] AGAINST [_] ABSTAIN
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
LOGO
The undersigned hereby acknowledge(s) receipt of a copy of the Notice of
Annual Meeting of Stockholders, and hereby revoke(s) any proxy or proxies
heretofore given. This Proxy may be revoked at any time before it is
exercised.
Please sign exactly as name appears hereon. Joint owners should
each sign. Executors, administrators, trustees, guardians or
other fiduciaries should give full title as such. If signing for
a corporation, please sign in full corporate name by a duly
authorized officer. If signing for a partnership, please sign in
Partnership name by an authorized person.
______________________________ ______________________________
Signature Signature
______________________________ ______________________________
Print Name Print Name
______________________________ ______________________________
Date Date
<PAGE>
APPLIED INTELLIGENCE GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
Effective Date: April 1, 1997
<PAGE>
APPLIED INTELLIGENCE GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN
Table of Contents
ARTICLE I NAME AND PURPOSE OF PLAN A-1
1.1 Name of Plan A-1
1.2 Purpose A-1
ARTICLE II DEFINITIONS A-1
2.1 Definitions A-1
2.2 Construction A-4
ARTICLE III FUNDING AND EARLY WITHDRAWAL OF ACCOUNTS A-5
3.1 Stock Purchase Accounts A-5
3.2 Participant's Contributions A-5
3.3 Continued Participation; Voluntary
Withdrawal from Plan A-5
3.4 Withdrawal by Terminating Participant A-5
3.5 Reparticipation A-5
3.6 Interest Accrual A-6
ARTICLE IV EXERCISE OF STOCK OPTION A-6
4.1 Exercise A-6
4.2 Amount of Shares of Stock A-6
4.3 Distribution A-7
4.4 Fractional Shares A-7
4.5 Issuance of Shares A-7
ARTICLE V MAXIMUM SHARES OF STOCK AVAILABLE A-7
5.1 Maximum Number of Shares Available
to Participants A-7
5.2 Maximum Authorized Shares A-7
5.3 Termination of Offering for the
Second and Subsequent Purchase Periods A-7
ARTICLE VI ADMINISTRATION A-7
6.1 Appointment of Committee A-7
6.2 Committee Powers and Duties A-8
6.3 Committee to Make Rules and Interpret
Plan A-8
ARTICLE VII AMENDMENT OF THE PLAN A-8
ARTICLE VIII RECAPITALIZATION AND EFFECT OF CERTAIN
TRANSACTIONS A-8
8.1 Stock Adjustments A-8
8.2 Effect of Certain Transactions A-9
8.3 Stockholder Approval A-9
ARTICLE IX MISCELLANEOUS A-9
9.1 Notices A-9
9.2 Application of the Funds A-9
9.3 Repurchase of Stock A-9
9.4 Alternate Contribution Methods A-9
9.5 Nonassignability A-10
9.6 Government Regulation A-10
9.7 Effective Date of Plan A-10
9.8 Termination of Plan A-10
9.9 No Obligations to Exercise Stock Option A-10
9.10 Right to Continued Employment A-10
9.11 Reliance on Reports A-10
9.12 Applicable Law A-10
9.13 Construction A-10
<PAGE>
APPLIED INTELLIGENCE GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
NAME AND PURPOSE OF PLAN
I.1 Name of Plan. This Plan shall be known as:
Applied Intelligence Group, Inc. Employee Stock Purchase Plan.
I.2 Purpose. The Applied Intelligence Group, Inc.
Employee Stock Purchase Plan, by offering Employees the
opportunity to purchase the Company's Stock through payroll
deductions, is intended to encourage participation in the
ownership and economic progress of the Company. Employees may
only be granted Stock Options to purchase Stock. Except as
otherwise provided in the Plan, by reason of their employment
relationship with the Company and/or the Employer, all Employees
of all Employers will be eligible to participate in the Plan.
ARTICLE II
DEFINITIONS
II.1 Definitions. Where the following capitalized
words and phrases appear in either a singular or plural form in
this instrument, they shall have the respective meanings set
forth below unless a different context is clearly expressed
herein.
(a) Account and Account Balance:
(i) The word "Account" shall mean the
record established and maintained to record the
interest in the Plan of each Participant in
accordance with Article III.
(ii) The words "Account Balance" shall
mean the credited balance standing in a
Participant's Account from time to time.
(b) Board: The word "Board" shall mean the Board
of Directors of the Company.
(c) Code: The word "Code" shall mean the
Internal Revenue Code of 1986, as amended from time to
time.
(d) Committee: The word "Committee" shall mean
the Compensation Committee of the Board referred to in
Article VI.
(e) Company: The word "Company" shall mean
Applied Intelligence Group, Inc., an Oklahoma
corporation.
(f) Employee: The word "Employee" shall mean any
person employed by the Employer on the basis of an
employer-employee relationship who receives
remuneration for personal services rendered to the
Employer.
(g) Employer: The word "Employer" shall mean the
Company and any Subsidiary of the Company.
(h) Exercise Date: The words "Exercise Date"
shall mean the last day of each calendar quarter during
which the Plan is in existence, being June 30, 1997,
September 30, 1997, December 31, 1997, March 31, 1998,
June 30, 1998, September 30, 1998, December 31, 1998,
March 31, 1999, June 30, 1999, September 30, 1999,
December 31, 1999, March 31, 2000, June 30, 2000,
September 30, 2000, December 31, 2000, March 31, 2001,
June 30, 2001, September 30, 2001, December 31, 2001,
and March 31, 2002.
(i) Fair Market Value: The words "Fair Market
Value" shall mean (A) during such time as the Stock is
listed upon the New York Stock Exchange or other
exchanges or the NASDAQ/National Market System, the
closing price of the Stock on such stock exchange or
exchanges or the NASDAQ/ National Market System on the
day for which such value is to be determined, or if no
sale of the Stock shall have been made on any such
stock exchange or the NASDAQ/National Market System
that day, on the next preceding day on which there was
a sale of such Stock or (B) during any such time as the
Stock is not listed upon an established stock exchange
or the NASDAQ/National Market System, the mean between
dealer "bid" and "ask" prices of the Stock in the
over-the-counter market on the day for which such value
is to be determined, as reported by the National
Association of Securities Dealers, Inc.
(j) Granting Date: The words "Granting Date"
shall mean the beginning of each applicable Purchase
Period, being April 1, 1997, July 1, 1997, October 1,
1997, January 1, 1998, April 1, 1998, July 1, 1998,
October 1, 1998, January 1, 1999, April 1, 1999, July
1, 1999, October 1, 1999, January 1, 2000, April 1,
2000, July 1, 2000, October 1, 2000, January 1, 2001,
April 1, 2001, July 1, 2001, October 1, 2001, and
January 1, 2002.
(k) Option Agreement: The words "Option
Agreement" shall mean an agreement to be executed by
the Participant and the Company, which shall comply
with the terms of the Plan and shall be in such form as
the Committee agrees upon from time to time.
(l) Option Price: The words "Option Price" shall
mean the price which shall be paid by the Participant
from his Account for any Stock purchased on an
applicable Exercise Date pursuant to any Stock Option
granted to such Participant; provided, such option
price shall be the lesser of:
(i) 85% of the per share Fair Market
Value on the Granting Date of the Purchase Period
applicable to such Participant: or
(ii) 85% of the per share Fair Market
Value on the Exercise Date of the Purchase Period
applicable to such Participant.
Provided, in no event shall the Option Price per share
be less than the par value of the Stock.
(m) Participant: The word "Participant" shall
mean an Employee (i) who executes with the Company an
Option Agreement on or prior to a Granting Date, (ii)
who on such Granting Date has been continuously
employed by the Employer for at least six months, and
(iii) whose customary employment is more than 20 hours
per week and more than five months in any calendar
year. Provided, for purposes of calculating the
foregoing six month service requirement for an
Employee, all employment service with the Company and
its Subsidiaries will be recognized. The word
"Participant" shall also include the legal
representative of a deceased Participant, and a
Participant who, within one month prior to the end of
the applicable Purchase Period for which he is a
Participant, terminates his employment with the
Employer on account of (i) retirement on or after age
55, (ii) retirement because of disability, (iii) lay
off by the Employer, or (iv) an authorized leave of
absence granted by the Employer. "Disability" for
purposes of this Subsection (m) shall mean a physical
or mental condition which, in the judgment of the
Committee, totally and permanently prevents a
Participant from engaging in any substantial gainful
employment with the Employer. A determination that
disability exists shall be based upon independent
medical evidence satisfactory to the Committee. In the
event that any Employer ceases to be a Subsidiary of
the Company, the Employees of such Employer will be
deemed to have terminated employment as of such date.
(n) Plan: The word "Plan" shall mean this
Applied Intelligence Group, Inc. Employee Stock
Purchase Plan, and any amendments thereto.
(o) Purchase Period: The words "Purchase Period"
shall mean any calendar quarter of each year during
which the Plan is in existence, as follows:
(i) "First Purchase Period"--April 1,
1997 through June 30, 1997.
(ii) "Second Purchase Period"--July 1,
1997 through September 30, 1997.
(iii) "Third Purchase Period"--October
1, 1997 through December 31, 1997.
(iv) "Fourth Purchase Period"--January
1, 1998 through March 31, 1998.
(v) "Fifth Purchase Period"--April 1,
1998 through June 30, 1998.
(vi) "Sixth Purchase Period"--July 1,
1998 through September 30, 1998.
(vii) "Seventh Purchase Period"--October
1, 1998 through December 31, 1998.
(viii) "Eighth Purchase Period"--January
1, 1999 through March 31, 1999.
(ix) "Ninth Purchase Period"--April 1,
1999 through June 30, 1999.
(x) "Tenth Purchase Period"--July 1,
1999 through September 30, 1999.
(xi) "Eleventh Purchase Period"--October
1, 1999 through December 31, 1999.
(xii) "Twelfth Purchase Period"--January
1, 2000 through March 31, 2000.
(xiii) "Thirteenth Purchase Period"--
April 1, 2000 through June 30, 2000.
(xiv) "Fourteenth Purchase Period"--July
1, 2000 through September 30, 2000.
(xv) "Fifteenth Purchase Period"--
October 1, 2000 through December 31, 2000.
(xvi) "Sixteenth Purchase Period"--
January 1, 2001 through March 31, 2001.
(xvii) "Seventeenth Purchase Period"--
April 1, 2001 through June 30, 2001.
(xviii) "Eighteenth Purchase Period"--
July 1, 2001 through September 30, 2001.
(xix) "Nineteenth Purchase Period"--
October 1, 2001 through December 31, 2001.
(xx) "Twentieth Purchase Period"--
January 1, 2002 through March 31, 2001.
(p) Stock: The word "Stock" shall mean the
common stock of the Company, par value $.001 per share,
authorized for issuance pursuant to the terms of the
Plan, subject to Article VIII of the Plan.
(q) Stock Option: The words "Stock Option" shall
mean the right of a Participant on an applicable
Exercise Date to purchase the number of whole shares of
Stock as provided in Article IV.
(r) Subsidiary: The word "Subsidiary" shall mean
any present or future subsidiary corporation of the
Company as defined in Section 424 of the Code.
(s) Terminating Participant: The words
"Terminating Participant" shall mean a Participant who
terminates his employment for reasons other than those
set forth in Subsection 2.1(m).
II.2 Construction. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine
gender, unless the context clearly indicates to the contrary.
Any word appearing herein in the plural shall include the
singular, where appropriate, and likewise the singular shall
include the plural, unless the context clearly indicates to the
contrary.
ARTICLE III
FUNDING AND EARLY WITHDRAWAL OF ACCOUNTS
III.1 Stock Purchase Accounts. As of the
applicable Granting Date, there shall be established and
maintained under the Plan in the name of each Participant (who is
a Participant with respect to the Purchase Period pertaining to
such Granting Date) an Account which shall be debited and
credited in accordance with the following Sections of this
Article III.
III.2 Participant's Contributions. By becoming a
Participant, authorization shall be deemed to be automatically
given by the Participant for his periodic contributions which
shall be credited to his Account. Prior to the applicable
Granting Date, the Participant shall elect in his Option
Agreement filed with the Committee the dollar amount of equal
periodic contributions which shall be withheld by the Employer by
payroll deduction from the Participant's compensation on each
payroll payment date. Such dollar amount shall not exceed $20
per payroll payment date ("Contribution Rate"); provided, an
election, once made with respect to any Purchase Period cannot be
changed after commencement of the Purchase Period; and provided
further, a Participant may elect to change his Contribution Rate
for succeeding Purchase Periods by notifying the Committee within
10 days of any succeeding Granting Date. If a Participant
receives a "hardship withdrawal" from a cash or deferred
arrangement established by the Employer under Section 401(k) of
the Code, he shall be prohibited from making contributions to his
Account under this Plan for a period of 12 months after receipt
of such hardship distribution. If a Participant's number of
payroll payment dates thereafter shall be changed, appropriate
adjustment shall be made so that equal periodic contributions
shall be made.
III.3 Continued Participation; Voluntary Withdrawal
from Plan. Once a Participant elects to participate in the Plan,
he shall thereafter remain as a Participant until expiration or
termination of the Plan, unless he otherwise withdraws from, or
otherwise becomes ineligible to participate in the Plan. A legal
representative of a deceased Participant and a Participant who
terminates employment for any reasons specified in Subsection
2.1(m) within one month prior to the end of the applicable
Purchase Period will continue to be a Participant in the Plan
until the next succeeding Exercise Date unless such Participant
or his representative (in the event of the Participant's death)
elects to withdraw from the Plan pursuant to this Section 3.3. A
Participant may withdraw from the Plan at any time by filing a
written notice with the Committee of withdrawal prior to the next
applicable Exercise Date. Upon a Participant's withdrawal, his
entire Account Balance, if any, on the date of withdrawal shall
be refunded to him.
III.4 Withdrawal by Terminating Participant. A
Terminating Participant shall be deemed to have made an election
to withdraw from the Plan on the date his employment terminates.
Upon such withdrawal, his entire Account Balance, if any, on the
date of withdrawal, shall be refunded to him.
III.5 Reparticipation. A Participant who withdraws
under Section 3.3 within any Purchase Period shall not be
eligible to reenter the Plan with respect to the same Purchase
Period; provided, a Participant who withdraws from the Plan under
Section 3.3 prior to the end of any Purchase Period shall not be
precluded from becoming a Participant with respect to any
succeeding Purchase Period if he has satisfied the eligibility
requirements of the Plan.
III.6 Interest Accrual. With respect to the refund
or distribution of an Account Balance under either of Sections
3.3 or 3.4, no interest shall be paid or payable. If the Plan is
terminated under either of Sections 8.2 or 9.8, the refund of an
Account Balance shall be with interest at a per annum rate of 5%
and shall be computed upon the average balance in such
Participant's Account for the period of time following the
Granting Date applicable to such Participant and ending on the
day of the withdrawal or distribution.
ARTICLE IV
EXERCISE OF STOCK OPTION
IV.1 Exercise. If a Participant has not made an
earlier election to withdraw pursuant to either of Sections 3.3
or 3.4, he shall be deemed to have elected to exercise his Stock
Option as of each Exercise Date with respect to the applicable
Purchase Period.
IV.2 Amount of Shares of Stock.
(a) Subject to the Subsection (b) following, the
whole number of shares of Stock to which a Participant
shall be entitled ("Total Stock Entitlement") upon the
applicable Exercise Date shall be determined under the
following formula:
Account Balance = Total Stock Entitlement
Option Price
Provided, the Account Balance for purposes of this
Section 4.2 shall be determined without crediting any
interest thereon.
(b) The Total Stock Entitlement computed for each
Participant shall be reduced to the extent that any of
the following Subsections shall apply:
(i) No Participant shall be entitled to
participate in the Plan to a greater extent than
that permitted under Section 423(b)(3) of the
Code. Thus, no Employee may be granted a Stock
Option if such Employee, immediately after the
Stock Option is granted, owns stock possessing
five percent or more of the total combined voting
power or value of all classes of stock of the
Company or of its parent or any Subsidiary (if
applicable). For purposes of this Subsection, the
rules of Section 424(d) of the Code shall apply in
determining the stock ownership of an individual,
and stock which the Employee may purchase under
all outstanding stock options shall be treated as
stock owned by the Employee.
(ii) No Participant shall be entitled to
participate in the Plan to a greater extent than
that permitted under Section 423(b)(8) of the
Code. Thus, no Employee may be granted a Stock
Option which permits his rights to purchase stock
under all such "employee stock ownership plans" of
the Company and its parent or any Subsidiary (if
applicable) intended to qualify under Section 423
of the Code to accrue at a rate which exceeds
$25,000 of fair market value of such stock
(determined at the time such Stock Option is
granted) for each calendar year in which such
Stock Option is outstanding at any time. For
purposes of this Subsection, (1) the right to
purchase stock under an option accrues when the
option (or any portion thereof) first becomes
exercisable during the calendar year; (2) the
right to purchase stock under an option accrues at
the rate provided in the option, but in no case
may such rate exceed $25,000 of fair market value
of such stock (determined at the time such stock
option is granted) for any one calendar year; and
(3) a right to purchase stock which has accrued
under one option granted pursuant to any such plan
may not be carried over to any other such stock
option.
IV.3 Distribution. A Participant's Total Stock
Entitlement as determined under Section 4.2 shall be distributed
to him pursuant to Section 4.5 together with any cash which is
not applied toward the purchase of whole shares of Stock. No
interest shall be payable upon such refunded Account Balance.
IV.4 Fractional Shares. Fractional shares will not be
issued under the Plan and any accumulated payroll deductions
which would have been used to purchase fractional shares will be
returned to the Participant promptly following the termination of
all Purchase Periods, without interest.
IV.5 Issuance of Shares. The shares of Stock purchased
by a Participant on the applicable Exercise Date shall for all
purposes, be deemed to have been issued and sold at the close of
business on such Exercise Date. Prior to that time, none of the
rights or privileges of a stockholder of the Company shall exist
with respect to such shares.
ARTICLE V
MAXIMUM SHARES OF STOCK AVAILABLE
V.1 Maximum Number of Shares Available to
Participants. If on the Exercise Date of any Purchase Period the
Total Stock Entitlement for all Participants, determined under
Section 4.2 hereof exceeds the number of shares of Stock
available for issuance under the Plan, there shall be a
proportionate reduction for the ensuing applicable Purchase
Period of each Participant's Total Stock Entitlement in order to
eliminate such excess. Notwithstanding any provision herein to
the contrary, the maximum number of shares a Participant will be
allowed to purchase during any Purchase Period is 50 shares of
Stock.
V.2 Maximum Authorized Shares. Subject to adjustment
under Article VIII, the maximum number of shares of Stock which
may be issued under the Plan shall not in the aggregate exceed
100,000 shares of Stock whether it be authorized but unissued
shares of Stock or treasury shares of Stock.
V.3 Termination of Offering for the Second and
Subsequent Purchase Periods. If in the opinion of the Committee,
there is insufficient Stock available for Stock Options at any
Granting Date after the October 1, 1997 Granting Date, the
Committee may terminate the offering contemplated for any or all
succeeding Purchase Periods.
ARTICLE VI
ADMINISTRATION
VI.1 Appointment of Committee. The Plan shall be
administered by the Committee appointed by the Board and
consisting of not less than two members from the Board. The
members of the Committee shall serve at the pleasure of the
Board. Any member may serve concurrently as a member of any
other administrative committee of any other plan of the Company
or its affiliates entitling participants therein to acquire
stock, stock options or deferred compensation rights including
stock appreciation rights.
VI.2 Committee Powers and Duties. The Committee shall
have all the powers and authorities which are reasonably
appropriate and necessary to discharge its duties under the Plan.
VI.3 Committee to Make Rules and Interpret Plan. The
Committee, in its sole discretion, shall have the authority,
subject to the provisions of the Plan, to establish, adopt, or
revise rules and regulations with respect to the administration
of the Plan and to make all such determinations relating to the
Plan as it may deem necessary or advisable for the administration
of the Plan. The Committee's interpretation of the Plan and all
decisions and determinations by the Committee with respect to the
Plan shall be final, binding, and conclusive on all parties
unless otherwise determined by the Board.
ARTICLE VII
AMENDMENT OF THE PLAN
The Board may at any time, or from time to time, amend
the Plan in any respect consistent with Sections 421 and 423 of
the Code, except that, without approval of the stockholders, no
amendment shall (i) increase the maximum number of shares
reserved under the Plan other than as provided in Article VIII,
or (ii) make the Plan available to any person who is not a
Participant.
ARTICLE VIII
RECAPITALIZATION AND EFFECT OF CERTAIN TRANSACTIONS
VIII.1 Stock Adjustments. In the event that the shares
of Stock, as presently constituted, shall be changed into or
exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization,
reclassification, stock split, combination of shares or
otherwise), or if the number of such shares of Stock shall be
increased through the payment of a stock dividend, then there
shall be substituted for or added to each share available under
and subject to the Plan as provided in Section 5.2 hereof, and
each share theretofore appropriated or thereafter subject or
which may become subject to Stock Options under the Plan, the
number and kind of shares of stock or other securities into which
each outstanding share of Stock shall be so changed or for which
each such share shall be exchanged or to which each such share
shall be entitled, as the case may be, on a fair and equivalent
basis in accordance with the applicable provisions of Section 424
of the Code; provided, in no such event will such adjustment
result in a modification of any Stock Option as defined in
Section 424(h) of the Code. In the event there shall be any
other change in the number or kind of the outstanding shares of
Stock, or any stock or other securities into which the Stock
shall have been changed or for which it shall have been
exchanged, then, if the Committee shall, in its sole discretion,
determine that such change equitably requires an adjustment in
the shares available under and subject to the Plan, or in any
Stock Option theretofore granted or which may be granted under
the Plan, such adjustments shall be made in accordance with such
determination, except that no adjustment of the number of shares
of Stock available under the Plan or to which any Stock Option
relates that would otherwise be required shall be made unless and
until such adjustment either by itself or with other adjustments
not previously made would require an increase or decrease of at
least 1% in the number of shares of Stock available under the
Plan or to which a Stock Option relates immediately prior to the
making of such adjustment (the "Minimum Adjustment"). Any
adjustment representing a change of less than such minimum amount
shall be carried forward and made as soon as such adjustment
together with other adjustments required by this Section 8.1 and
not previously made would result in a Minimum Adjustment.
Notwithstanding the foregoing, any adjustment required by this
Section 8.1 which otherwise would not result in a Minimum
Adjustment shall be made with respect to shares of Stock relating
to any Stock Option immediately prior to exercise of such Stock
Option.
No fractional shares of Stock or units of other
securities shall be issued pursuant to any such adjustment, and
any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole
share. Any adjustments under this Section 8.1 shall be made
according to the sole discretion of the Company, and its decision
shall be binding and conclusive.
VIII.2 Effect of Certain Transactions. Subject to
any required action by the stockholders, if the Company shall be
the surviving or resulting corporation in any merger or
consolidation, any Stock Option hereunder shall pertain to and
apply to the shares of stock of the Company, but a dissolution or
liquidation of the Company or merger or consolidation in which
the Company is not the surviving or the resulting corporation
shall cause the Plan and any Stock Option hereunder to terminate
upon the effective date of such dissolution, liquidation, merger
or consolidation, and the Account Balance of each Participant
shall be refunded to him. Provided, that for the purpose of this
Section 8.2, if any merger, consolidation or combination occurs
in which the Company is not the surviving corporation and is the
result of a mere change in the identity, form or place of
organization of the Company accomplished in accordance with
Section 368(a)(1)(F) of the Code, then, such event shall not
cause a termination.
VIII.3 Stockholder Approval. The Plan shall be
approved by the holders of a majority of the outstanding shares
of Stock, present, or represented, and entitled to vote at a
meeting called for such purposes, which approval must occur
within the period ending twelve (12) months after the date the
Plan is adopted by the Board. In the event stockholder approval
is not obtained within such twelve-month period, the Plan and all
such Stock Options and such Stock shall be void.
ARTICLE IX
MISCELLANEOUS
IX.1 Notices. Any notice which a Participant files
pursuant to the Plan shall be on the form prescribed by the
Committee and shall be effective when received by the Committee.
IX.2 Application of the Funds. All funds received by
the Company under the Plan may be used for any corporate purpose.
IX.3 Repurchase of Stock. The Company shall not be
required to repurchase from any Participant shares of Stock which
he acquired under the Plan.
IX.4 Alternate Contribution Methods. If authorized
payroll deductions of a Participant's periodic contributions
under Section 3.2 are not permitted by reason of the provisions
of any law applicable to an Employer, the Committee shall adopt
an appropriate alternative method under which affected
Participants may make payment for shares of Stock purchased
hereunder which would otherwise have been made pursuant to
Section 3.2.
IX.5 Nonassignability. Stock Options are exercisable
only by the Participant during his lifetime, or by his estate or
the person who acquires the right to exercise such Stock Option
upon his death by bequest or inheritance, and are not
transferable by him other than by will or the laws of descent and
distribution. No Stock Option shall be subject in any manner to
alienation, anticipation, sale, transfer, assignment, pledge, or
encumbrance, except for transfer by will or the laws of descent
and distribution. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any Stock Option contrary to the
provisions hereof, shall be void and ineffective, shall give no
right to any purported transferee, and may, at the sole
discretion of the Committee, result in forfeiture of the Stock
Option involved in such attempt.
IX.6 Government Regulation. The Company's obligation
to sell and deliver the Stock under the Plan is at all times
subject to any and all approvals, rules and regulations of any
governmental authority required in connection with the
authorization, issuance, sale or delivery of such Stock.
IX.7 Effective Date of Plan. The Plan shall become
effective on April 1, 1997, if within twelve months after that
date the Plan has been approved by the holders of a majority of
the common stock of the Company present, or represented, and
entitled to vote at a meeting called for such purposes.
IX.8 Termination of Plan. The Plan shall continue in
effect through March 31, 2002, unless terminated pursuant to
Section 8.2 or by the Board, which shall have the right to
terminate the Plan at any time. Upon the termination of the Plan
pursuant to this Section 9.8 or Section 8.2, the Account Balance
of each Participant shall be refunded to the Participant.
IX.9 No Obligations to Exercise Stock Option. The
granting of a Stock Option shall impose no obligation upon the
Participant to exercise his Stock Option.
IX.10 Right to Continued Employment. Participation
in the Plan shall not give any Participant any right to remain in
the employ of the Employer. The Employer reserves the right to
terminate any Participant at any time.
IX.11 Reliance on Reports. Each member of the
Committee and each member of the Board shall be fully justified
in relying or acting in good faith upon any report made by the
independent public accountants of the Company and upon any other
information furnished in connection with the Plan by any person
or persons other than himself. In no event shall any person who
is or shall have been a member of the Committee or of the Board
be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information
or for any action taken, including the furnishing of information,
or failure to act, if in good faith.
IX.12 Applicable Law. This Plan shall be governed
by and interpreted in accordance with the laws of the State of
Oklahoma.
IX.13 Construction. It is intended that this Plan
shall qualify in accordance with Sections 421 and 423 of the
Code, and the provisions of this Plan shall be interpreted and
applied in a manner consistent with such intent. Pursuant to the
terms of the Plan and the applicable provisions of the Code, all
Participants in the Plan will have the same rights and privileges
and all such Participants will be treated in an equal, uniform
and nondiscriminatory manner.
