<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 0-27463
Loislaw.com, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 71-0655999
- ------------------------------------------ ------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
105 North 28th Street
Van Buren, Arkansas 72956
- ------------------------------------------ ------------------------------------
(Address of principal executive offices) (Zip Code)
(501) 471-5581
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
(Title of Class)
---------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
------
As of March 27, 2000, the aggregate market value of voting stock held by
non-affiliates of the Registrant, based upon the closing sales price for the
Registrant's Common Stock, as reported in the Nasdaq National Market System, was
$144,892,123. Shares of Common Stock held by each officer and director and by
each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for any other
purpose.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
20,970,586 shares of common stock, $.001 par value, were outstanding on
March 27, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
The following items of Loislaw.com, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1999 are hereby added or amended. Each
amended item is set forth herein in its entirety, as amended. No exhibits are
filed with this Amendment.
Page
----
PART I
Executive Officers of the Registrant...................................... 2
PART III
Item 10. Directors and Executive Officers of the Registrant............ 3
- ----------
Item 11. Executive Compensation........................................ 4
- ----------
Item 12. Security Ownership of Certain Beneficial Owners and Management 9
- ----------
Item 13. Certain Relationships and Related Transactions................ 11
- ----------
1
<PAGE>
PART I
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to each
executive officer of the Company, including the name, age and position held for
each individual. Biographical information for each of the executive officers of
the Company, with the exception of Messrs. Parker and Beyland, follows the
table. Biographical information for Messrs. Parker and Beyland is contained in
Item 10 below.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Kyle D. Parker.......... 43 Chief Executive Officer and Chairman of the Board
Mark O. Beyland......... 49 President, Chief Financial Officer and Director
Michael E. Romanies..... 37 Vice President of Marketing
Randell L. Sisemore..... 37 Vice President of Finance
Jay Scott Thompson...... 42 Chief Technology Officer
Sam Sexton, III......... 42 General Counsel
Pamela G. Rogers........ 39 Controller
Douglas W. Parker, Sr... 75 Secretary
</TABLE>
Michael E. Romanies joined Loislaw.com as Vice President of Marketing in
July 1999. Mr. Romanies served as Vice President of Marketing and Sales at
NETsilicon Inc., a hardware and software supplier, from August 1998 to June
1999. He also served as Vice President at Number Nine Visual Technology, a
manufacturer and supplier of graphic chips and cards, from October 1996 to
August 1998, and President of World Color Press New Media, a multimedia
development company, from November 1995 to September 1996. In addition, he
served as Vice President at Reed Technology and Information Services, Inc. from
January 1987 to November 1995. Mr. Romanies holds a B.S. in Electrical
Engineering from Wilkes University.
Randell L. Sisemore joined Loislaw.com as Vice President of Finance in
September 1999. Prior to joining Loislaw.com, Mr. Sisemore served as Treasurer
of USA Truck, Inc., a publicly traded truckload motor carrier, from October 1993
to September 1999. Mr. Sisemore holds a B.S.B.A. in accounting from the
University of Arkansas and is a certified public accountant.
Jay Scott Thompson joined Loislaw.com in April 1992 as Assistant MIS
Director. Mr. Thompson served as Director of Information Systems from February
1995 to November 1998. Mr. Thompson became Chief Technology Officer in December
1998. Mr. Thompson has over 15 years of experience in the electronics industry.
Sam Sexton, III joined Loislaw.com as General Counsel in January 2000.
Mr. Sexton was engaged in the private practice of law from 1987 to 1996. From
1996 to 1999, he served as General Counsel to Consolidated Eco-Systems, Inc., an
environmental remediation and consulting company. Mr. Sexton holds a B.A. with
High Honors and J.D. with High Honors from the University of Arkansas and is a
licensed attorney.
Pamela G. Rogers joined Loislaw.com as Controller in October 1997. Prior to
joining Loislaw.com, Ms. Rogers served as Controller for Stapleton Corporation,
a manufacturing company, from March 1997 to October 1997. Ms. Rogers also served
as Controller for Exsorbet Administration, Inc., an environmental remediation
company, from January 1996 to February 1997, Controller for Consolidated
Environmental Services, Inc., an environmental consulting company, from January
1995 to January 1996 and Vice President of Client Services for LSI Financial
Group, a loan and lease servicing company, from June 1991 to October 1994. Ms.
Rogers holds a B.A. in Accounting from the University of Central Arkansas and is
a certified public accountant.
Douglas W. Parker, Sr. has served as Secretary of Loislaw.com since October
1987. He served as a director and Treasurer of Loislaw.com from October 1987 to
June 1999. Mr. Parker practiced law at the Parker Law Firm for over 36 years.
Mr. Parker is the father of Kyle D. Parker. Mr. Parker holds a B.S. from the
University of Arkansas and an L.L.B. from LaSalle University.
Except for the relationship between Kyle D. Parker and Douglas W. Parker,
Sr., there are no family relationships between any director or executive officer
and any other director or executive officer.
2
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
The following table sets forth certain information with respect to each
current director of the Company, including the name, age and term of office as a
director for each individual.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION
---- --- -------- --------
<S> <C> <C> <C>
Kyle D. Parker (1)....... 43 1987 Chief Executive Officer and Chairman of the Board
Mark O. Beyland (2)...... 49 1999 President, Chief Financial Officer and Director
Robert C. Ammerman (1)... 46 1997 Director
D. Randy Laney (2)....... 45 1999 Director
Hannah C. Stone* (1)(2).. 34 1999 Director
- -----------------
</TABLE>
* Current nominee for re-election as a director at the 2000 annual meeting of
stockholders.
(1) Member of the compensation committee
(2) Member of the audit committee
Kyle D. Parker founded Loislaw.com in 1987 and has served as Chief
Executive Officer and Chairman of the Board since that time. Mr. Parker also
served as President of Loislaw.com from 1987 to May 1999. Since 1985 Mr. Parker
has been a partner in the Parker Law Firm in Fort Smith, Arkansas. Mr. Parker
served on the Legal Automation Committee of the Arkansas Bar Association and the
American Association of Law Librarian's Task Force on Citation Formats. Mr.
Parker holds a J.D., with highest honors, from Franklin Pierce Law Center and a
B.A., cum laude, from Arkansas Tech University. Mr. Parker is the son of Douglas
W. Parker, Sr.
Mark O. Beyland joined Loislaw.com as President, Chief Financial Officer
and a director in May 1999. Mr. Beyland served as President and Chief Executive
Officer of Reed Technology and Information Services, Inc., a subsidiary of Reed-
Elsevier, from September 1993 to March 1998. Mr. Beyland holds a B.S. in
Business from Ohio State University and an M.B.A. from the University of Dayton.
Robert C. Ammerman has served as a director of Loislaw.com since November
1997. Since 1987 Mr. Ammerman has served as Treasurer of Capital Resource
Management, Inc., a private capital investment firm, and as general partner of
several private capital funds affiliated with Capital Resource Management. Mr.
Ammerman holds a B.A. and an M.S. from Carnegie Mellon University.
D. Randy Laney has served as a director of Loislaw.com since June 1999.
Since October 1998 Mr. Laney has served as Chief Executive Officer, President
and Chairman of BAV Software, Inc., a web-enabled supply chain software
development company. From August 1995 to October 1998, Mr. Laney served as a
partner of Bentonville Associates Ventures, LLC, a financial and business
consulting company. Mr. Laney was employed by Wal-Mart Corporation from 1970 to
1993 and served as Vice President of Finance and Treasurer for a portion of that
time. He holds a B.S. and a J.D. from the University of Arkansas.
Hannah C. Stone has served as a director of Loislaw.com since June 1999. In
1993, Ms. Stone joined Sandler Capital Management, a private capital investment
firm, and she is a general partner of various partnerships associated with
Sandler Capital Management. She holds a B.A. from Stanford University and an
M.B.A. from Harvard Business School. She is also a director of Millbrook Press.
Under an Amended and Restated Stockholders' Agreement dated as of May 25,
1999, as long as each of (a) Capital Resource Lenders III, L.P. and (b) Sandler
Capital Partners IV, L.P. and Sandler Capital Partners IV, FTE, L.P.,
collectively, hold at least 10% of the outstanding shares of the Company's
Common Stock, persons who were stockholders on that date have agreed to vote
their shares to elect one representative of Capital Resource Lenders III, L.P.
and one representative of the Sandler parties to the Board of Directors. Ms.
Stone was selected as a director of Loislaw.com in connection with this
agreement. Mr. Ammerman will continue as a director pursuant to this
3
<PAGE>
agreement. For more information regarding the Amended and Restated Stockholders
Agreement, see "Item 11. Executive Compensation--Compensation Committee
Interlocks and Insider Participation."
Executive Officers
For information regarding the executive officers of the Company, see
"Executive Officers of the Registrant" in Part I of this Annual Report, which is
incorporated in this Item 10 by reference.
Section 16(a) Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes of
ownership with the Commission. Based solely on its review of the copies of such
forms received by it, and written representations from certain reporting
persons, the Company believes that during fiscal 1999 all filing requirements
applicable to its directors, officers and greater than 10% beneficial owners
were complied with.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to annual
and long-term compensation paid or awarded to the Company's CEO and each of the
other executive officers of the Company who met the minimum compensation
threshold of $100,000 for inclusion in the table for or with respect to the last
two fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation -----------------
------------------------------------------- Securities
Other Annual Underlying
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options/SARs (#)
--------------------------- ------ ----------- --------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Kyle D. Parker, Chief Executive Officer............ 1999 197,453 50,000 -- --
1998 153,905 -- -- --
Mark O. Beyland, President and Chief Financial
Officer(1)........................................ 1999 112,689 37,500 94,085(2) 340,287
1998 -- -- --
W. Clark Wigley, Vice President of Business
Development(3).................................... 1999 144,000 -- 6,000(4) --
1998 144,000 -- 6,000(4) --
</TABLE>
(1) Mr. Beyland joined the company in May 1999.
(2) Consists of relocation expenses paid on behalf of Mr. Beyland in connection
with his hiring.
(3) Mr. Wigley resigned from his position as an officer of the Company
effective April 27, 2000.
(4) Consists of a car allowance of $500 per month.
4
<PAGE>
The following table sets forth certain information with respect to all
options granted to the named executive officers during 1999.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term(1)
------------------------------------------------------- -----------------------------------
Percent of
Number of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration 5% 10%
Name Granted(#) Fiscal Year ($/Sh) Date ------- ---------
- ---- ------------ ------------- ---------- ---------- ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Kyle D. Parker, Chief Executive
Officer........................ -0- -0-
Mark O. Beyland, President and
Chief Financial Officer........ 441,454(2) 61.87% $2.91 5/25/09 807,898 2,047,371
W. Clark Wigley, Vice President
of Business Development........ -0- -0-
</TABLE>
- ------------------------------------
(1) Represents the hypothetical appreciation in value of the underlying shares
over ten years (the term of the option) at the assumed annual rates of
appreciation of 5% and 10%.
(2) These nonqualified stock options were granted to Mr. Beyland on May 25,
1999 and vested with respect to 220,727 shares on the date of grant and the
remaining 220,727 shares vest in equal monthly installments over the following
24 months. The exercise price is equal to the fair market value of the Common
Stock on the grant date.
Aggregated Option/SAR Exercises FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/SARs
Options/SARs at FY-End(#) at FY-End ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable(1)
---- ------------------------- ----------------------------
<S> <C> <C>
Kyle D. Parker, Chief Executive Officer.......... -0- -0-
Mark O. Beyland, President and Chief Financial
Officer......................................... 285,106/156,348 10,325,114/5,662,143
W. Clark Wigley, Vice President of Business
Development..................................... -0- -0-
</TABLE>
- ---------------------------------
(1) Market value of the Common Stock at December 31, 1999 ($39.125) less the
option exercise price, multiplied by the number of shares.
None of the named executive officers exercised any options during 1999.
Equity Plans
The Company has reserved 1,500,000 shares of Common Stock for issuance upon
the exercise of incentive or nonqualified options granted under its 1996 Stock
Option Plan, as amended (the "1996 Plan"). The Board has approved an amendment
to the 1996 Plan to increase the total number of shares that may be issued
thereunder to 2,500,000, subject to approval by the stockholders at the 2000
annual meeting of stockholders. Options may be granted under the 1996 Plan to
employees, which may include executive officers, and to consultants, which may
include directors. The Company has reserved 300,000 shares of Common Stock for
issuance under a payroll-deduction Employee Stock Purchase Plan adopted in
September 1999, as amended. The Company has also reserved 320,000 shares of
Common Stock for issuance upon the exercise of options granted under the
Nonqualified Stock Option Plan for Nonemployee Directors, subject to approval of
that plan by the stockholders at the 2000 annual meeting. See "Compensation of
Directors."
Compensation of Directors
The Company pays each nonemployee director an annual fee of $10,000 and
reimburses each director for reasonable expenses incurred in attending Board
meetings. In addition, directors who are not officers or employees
5
<PAGE>
of Loislaw.com are eligible to receive options under the Company's Nonqualified
Stock Option Plan for Nonemployee Directors (the "Directors' Plan").
The Board of Directors adopted the Directors' Plan on July 22, 1999. This
plan provides for the issuance of a maximum of 320,000 shares of Common Stock.
The Company expects to submit the Directors' Plan to the stockholders of the
Company for approval at the 2000 annual meeting.
The Directors' Plan is administered by a committee of employee directors. In
July 1999, the committee approved a grant of options to each of the three
nonemployee directors of the Company to purchase 40,000 shares of the Company's
common stock at an exercise price equal to the initial public offering price of
the common stock on September 29, 1999. Subject to the director's continued
membership on the Board and the approval of the plan by stockholders of the
Company, each option will vest in annual increments of 25% beginning one year
from the date of grant. Directors, including new members elected to the Board
of Directors in the future, may be granted options at the discretion of the
committee of the Board administering the plan. All options granted to
nonemployee directors will be nonstatutory options with an exercise price equal
to 100% of the fair market value of common stock on the date of grant.
Employment Agreements
The Company has entered into the following employment agreements with the
Company's Chairman and Chief Executive Officer and the Company's President and
Chief Financial Officer:
<TABLE>
<CAPTION>
Base
Officer Term Salary Position
- --------------------- ---------------------- ---------- -------------------------------------
<S> <C> <C> <C>
Kyle D. Parker....... June 1999-June 2002 $225,000 Chairman and Chief Executive Officer
Mark O. Beyland...... June 1999-June 2002 $175,000 President and Chief Financial Officer
</TABLE>
The employment agreements of Messrs. Parker and Beyland entitle each of
them to participate in any bonus or employee benefit plans or arrangements from
time to time in effect. If the Company terminates the employment of Mr. Parker
or Mr. Beyland without "'cause," as defined in the agreements, Mr. Parker or Mr.
Beyland will be entitled to receive payments equal to one year's annual salary.
If the termination of their employment is in connection with a change of control
of Loislaw.com, Mr. Parker and Mr. Beyland each will be entitled to receive a
lump-sum payment equal to two times his annual salary plus bonuses and
continuing coverage under the Company's medical plan for one year. Under the
employment agreements, Messrs. Parker and Beyland each agree not to engage,
directly or indirectly, in activities in competition with Loislaw.com either as
an employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other capacity during the term of the
employment agreement and for 12 months after termination of his employment, if
the termination occurs during the term of the agreement.
401(k) Plan
The Company has established a tax-qualified employee savings and retirement
plan. Employees must complete 12 months of service before they are eligible to
participate. Employees may contribute a percentage of their pre-tax
compensation and the Company may, in the Company's discretion from year-to-year,
make matching and profit sharing contributions to the retirement plan. Amounts
contributed by the Company vest over six years. This plan does not provide for
the investment of any funds in Common Stock or other securities of the Company.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Messrs. Parker and Ammerman and
Ms. Stone. Mr. Parker is an executive officer of Loislaw.com. Ms. Melissa A.
Parker, Mr. Parker's sister-in-law, loaned Loislaw.com $4,000,000, which was
subsequently converted into Series B redeemable preferred stock. The Company
redeemed the Series B preferred stock held by Ms. Parker for $5.0 million on
October 5, 1999.
Three of the Company's Board members are affiliated with the Company's
significant stockholders. The persons named below are members of the Company's
Board of Directors and Compensation Committee and are also affiliated with
certain of the Company's stockholders.
6
<PAGE>
<TABLE>
<CAPTION>
Name of Board Member Entity with Whom Board Member is Affiliated Relationship
- ------------------------- ------------------------------------------- --------------------
<S> <C> <C>
Robert C. Ammerman Capital Resource Partners III, LLC, the general partner of Managing Member
Capital Resource Lenders III, L.P.
CRP Investment Partners III, LLC Managing Member
Hannah C. Stone Sandler Capital Management, an affiliate of Sandler Capital Managing Director
Partners IV, L.P. and Sandler Capital Partners IV, FTE, L.P.
Kyle D. Parker Douglas W. Parker, Sr. Son
Melissa A. Parker Brother-in-Law
</TABLE>
The other three managing members of Capital Resource Partners with whom Mr.
Ammerman shares voting and dispositive power with respect to shares held by
Capital Resource Lenders are Mr. Fred C. Danforth, Mr. Stephen M. Jenks and Mr.
Alexander S. McGrath. Messrs. Danforth, Jenks and McGrath are also the only
other managing members of CRP Investment Partners. Investment decisions are
determined by a majority vote.
The persons who share voting and dispositive power with respect to the
shares held by Sandler Capital Partners IV, L.P. and Sandler Capital Partners
IV, FTE, L.P. are Mr. Harvey Sandler, Mr. John Kornreich and Mr. Michael
Marocco.
Series A convertible preferred stock. On November 24, 1997, the Company
entered into a Senior Subordinated Note and Securities Purchase Agreement with
Capital Resource Lenders III, L.P. Under the terms of this agreement, the
Company sold $3.0 million of Series A convertible preferred stock and issued a
warrant for the right to purchase 1,944,586 shares of Loislaw.com Common Stock
at $0.005 per share to Capital Resource Lenders III, L.P. In connection with
this sale, the Company entered into a Stockholders' Agreement and a Registration
Rights Agreement. Both of these agreements were amended and restated on May 25,
1999 and are described below.
Series C convertible preferred stock. On May 25, 1999, the Company sold
2,495,697 shares of Series C convertible preferred stock to a limited number of
investors for a total of $14.5 million. The names of the investors and the
number of shares purchased by them for $5.81 per share are set forth below:
<TABLE>
<CAPTION>
Number of
Name of Investor Shares
- ---------------- ---------
<S> <C>
Capital Resource Lenders III, L.P. .................. 857,509
Sandler Capital Partners IV, L.P. ................... 793,680
Sandler Capital Partners IV, FTE, L.P. .............. 325,080
Mark O. Beyland...................................... 129,088
Exeter Capital Partners IV, L.P. .................... 390,340
</TABLE>
Capital Resource Lenders III, L.P. is one of the holders of the Company's
Series A convertible preferred stock, and it purchased its portion of the Series
C convertible preferred stock by converting notes issued to it by the Company
with a total outstanding principal balance of $5 million. Capital Resource
Lenders III and its affiliate, CRP Investment Partners III, also have guaranteed
a portion of the Company's lines of credit with the Company's bank. Mark O.
Beyland is the Company's President and Chief Financial Officer.
Amended and Restated Registration Rights Agreement. On May 25, 1999, the
Company entered into an Amended and Restated Registration Rights Agreement with
the Company's stockholders. This agreement gives Capital Resource Lenders III,
L.P., CRP Investment Partners III, LLC, Mark O. Beyland, Sandler Capital
Partners IV, L.P., Sandler Capital Partners IV, FTE, L.P., Exeter Capital
Partners IV, L.P. and Rowland T. Moriarty the right to require the Company to
use its best efforts to register under the Securities Act all or any part of the
shares of the Company's Common Stock that they own. This right is subject to
limitations and conditions, including that the Company will not be required to
effect a registration:
. more than one time for the former holders of the Series A convertible
preferred stock;
. more than one time for the former holders of the Series C convertible
preferred stock; and
7
<PAGE>
. if the reasonably anticipated total price of the offering to the public
will not exceed $5 million.
Additionally, if the Company proposes to register Common Stock under the
Securities Act, the above stockholders as well as Charles J. Lindsay, George P.
Lindsay, Charles M. Dubroff, Nester J. Olivier and Dublind Partners, Inc., or
their assignees, may have the right to request the inclusion of their shares of
Common Stock in the registration.
Finally, all former holders of Series A convertible preferred stock and
Series C convertible preferred stock have the right to request any number of
registrations on Form S-3, subject to limitations and conditions, including that
the reasonably anticipated total price to the public must exceed $500,000.
The Company has agreed to pay the expenses of the registrations described
above. These costs include filing fees, printing expenses, and up to $10,000 in
fees of legal counsel for the selling stockholders. The selling stockholders
would pay any underwriting discounts and commissions associated with the sale of
their securities.
The Company has agreed that in the event of any registration of securities
under the Amended and Restated Registration Rights Agreement, the Company will
indemnify the selling stockholders against Securities Act liabilities incurred
in connection with the registration.
Subject to some limitations and conditions, the registration rights held by
these stockholders may be transferred with their securities.
Rowland T. Moriarty is a holder of Common Stock, which he acquired upon
conversion of Series A convertible preferred stock, a warrant holder and, on
occasion, a marketing consultant to the Company. He also has guaranteed a
portion of the Company's lines of credit with the Company's bank.
Amended and Restated Stockholders' Agreement. On May 25, 1999, the
Company and its existing stockholders entered into an Amended and Restated
Stockholders' Agreement. This agreement provides that the existing stockholders
will vote their shares to elect to the Board of Directors of Loislaw.com one
person designated by each of (a) Capital Resource Lenders III, L.P. and (b)
Sandler Capital Partners IV, L.P. and Sandler Capital Partners IV, FTE, L.P.,
collectively, so long as they each hold at least 10% of the Company's
outstanding shares of Common Stock. In addition, these stockholders, as well as
the Parker Trust, Kyle D. Parker, Douglas W. Parker, Sr., and Melissa A. Parker,
have co-sale rights entitling them to include shares of their stock in the
following sales:
. the sale by any party to the stockholders' agreement of a control block of
securities of Loislaw.com; or
. the sale of securities of Loislaw.com by any party to the stockholders'
agreement to a designated competitor of Loislaw.com.
The existence of this co-sale right could allow these stockholders to sell
their shares of stock at a premium over the fair market value of the Common
Stock and could transfer control of Loislaw.com.
Stockholders that are parties to this agreement may not sell their
securities of Loislaw.com in a control block sale or a private sale to a
designated competitor except in compliance with the co-sale right.
Loans from the Company's stockholders. The Company has borrowed money from
Capital Resource Lenders III, L.P., CRP Investment Partners III, LLC and Rowland
T. Moriarty and has executed several senior subordinated notes, which as of
September 30, 1999 had a combined outstanding principal balance of $9,989,434.
These notes accrued interest at a rate of 12.5% per annum and were due on
November 30, 2003. The Company repaid these notes in full on October 5, 1999
with a portion of the proceeds of its initial public offering.
8
<PAGE>
The following table sets forth certain information regarding these notes.
1999 Subordinated Debt
<TABLE>
<CAPTION>
Total Interest
Amount Paid and
Borrowed Principal Repaid Amount Owed at
Stockholder During 1999 During 1999 October 5, 1999
- ----------- ----------- ------------------ ----------------
<S> <C> <C> <C>
Capital Resource Lenders III, L.P................... $1,966,924 $10,759,139 $10,155,474
CRP Investment Partners III, LLC.................... 2,308 12,624 11,928
Rowland Moriarty.................................... 30,768 168,315 159,034
</TABLE>
On February 9, 1999, the Company granted Capital Resource Lenders III, CRP
Investment Partners III and Rowland Moriarty warrants to purchase a total of
204,182 shares of the Company's Common Stock in connection with a limited
guaranty of the Company's credit agreement with Fleet National Bank provided by
these parties. The amount the Company repaid to Capital Resource Lenders III on
May 19, 1999 includes a $10,566 reduction of principal in connection with the
exercise of warrants.
1999 Convertible Debt
<TABLE>
<CAPTION>
Amount Converted into Shares
Amount of Series C Convertible Amount of Interest
Borrowed Preferred Stock Paid on May 25,
Stockholder During 1999 During 1999 1999
- ----------- ------------ ----------------------------- -------------------
<S> <C> <C> <C>
Capital Resource Lenders III, L.P. ...... $5,000,000 $4,982,127 $89,931
</TABLE>
On May 25, 1999, the notes described in the table above were converted into
857,509 shares of Series C convertible preferred stock, which were in turn
converted into 1,715,018 shares of Common Stock on October 5, 1999.
Lease with the Parker Law Firm. The Company leases the Company's
principal executive office and operations facility in Van Buren, Arkansas from
the Parker Law Firm, of which Douglas W. Parker, Sr. and Kyle D. Parker are
partners. The lease provides for a five-year term expiring in May 2004 with two
five-year renewals at the option of Loislaw.com. Monthly payments under the
lease were increased to $14,100 in May 1999 as a result of expansion of space
under the lease. During 1999, the Company paid $102,797 under this lease.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 28, 2000, with
respect to the shares of the Company's Common Stock beneficially owned (i) by
each person known to the Company to be the beneficial owner of more than 5% of
the Company's Common Stock, (ii) by each director, nominee for election as a
director and each executive officer named in the Summary Compensation Table, and
(iii) by all current directors and executive officers of the Company as a group.
The number of shares beneficially owned includes shares of Common Stock
with respect to which the persons named below have either investment or voting
power. A person is also deemed to be the beneficial owner of a security if that
person has the right to acquire beneficial ownership of that security within 60
days through the exercise of an option or through the conversion of another
security. Except as noted, each beneficial owner has sole investment and voting
power with respect to the Common Stock.
Common Stock not outstanding that is subject to options or conversion
privileges is deemed to be outstanding for the purpose of computing the
percentage of Common Stock beneficially owned by the person holding such options
or conversion privileges, but is not deemed to be outstanding for the purpose of
computing the percentage of Common Stock beneficially owned by any other person.
9
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME BENEFICIALLY OWNED OF CLASS
---- ------------------ --------
<S> <C> <C>
Kyle D. Parker (1) 3,399,200 16.2%
W. Clark Wigley (2) 280,000 1.3
Mark O. Beyland (3) 598,463 2.8
Robert C. Ammerman (4)(5) 5,704,169 27.2
Hannah C. Stone (5)(6) 2,277,520 10.8
D. Randy Laney (5) 40,000 0.2
Capital Resource Lenders III, L.P. (4) 5,664,169 27.0
Sandler Capital Partners IV, L.P. (6) 2,237,520 10.7
Sandler Capital Partners IV, FTE, L.P. (6) 2,237,520 10.7
Douglas W. Parker, Sr. (7) 1,479,600 7.1
Melissa A. Parker (8) 1,559,600 7.4
All directors and executive officers as a group (9) 13,550,702 63.1
(12 persons)
</TABLE>
- -----------------------
(1) Consists of 1,119,200 shares held of record by Kyle D. Parker, 2,000,000
shares held by a limited partnership in which an entity owned by him is the
sole general partner and 280,000 shares held by the Parker Trust, of which
he is the trustee. Under the terms of the trust, Mr. Parker has sole voting
power of all of the shares held of record by the trustee. W. Clark Wigley
has been granted an option by the trust to purchase 280,000 shares.
(2) Consists of an option to purchase 280,000 shares of Common Stock from the
Parker Trust that is fully vested.
(3) Includes 340,287 shares subject to options held by Mr. Beyland that are
presently exercisable or will be exercisable within 60 days.
(4) Consists of 5,659,542 shares of Common Stock held of record by Capital
Resource Lenders III, L.P., and 4,627 shares of Common Stock held of record
by CRP Investment Partners III, LLC. Mr. Ammerman is a managing member of
Capital Resource Partners III, LLC, which is the general partner of Capital
Resource Lenders III, L.P. Capital Resource Partners III, LLC has sole
voting and investment power with respect to the shares held of record by
Capital Resource Lenders III, L.P. Mr. Ammerman is also a managing member
of CRP Investment Partners III, LLC. Mr. Ammerman shares with three other
managing members the voting and investment power with respect to the shares
beneficially owned by CRP Investment Partners III, LLC. Mr. Ammerman
disclaims beneficial ownership of all shares owned by these entities,
except to the extent of his pecuniary interest in those shares. The
address for Mr. Ammerman, Capital Resource Lenders III, L.P. and CRP
Investment Partners III, LLC is 85 Merrimac Street, Suite 200, Boston,
Massachusetts 02114.
(5) Includes an option to purchase 40,000 shares pursuant to the Directors'
Plan, subject to approval of that plan by the stockholders at the 2000
annual meeting.
(6) Consists of 1,587,360 shares of Common Stock held of record by Sandler
Capital Partners IV, L.P. and 650,160 shares of Common Stock held of record
by Sandler Capital Partners IV, FTE, L.P. Ms. Stone is a Managing Director
of Sandler Capital Management, a general partnership, which is the general
partner of Sandler Capital Partners IV, L.P. and Sandler Capital Partners
IV, FTE, L.P. Ms. Stone shares voting and investment power with respect to
the shares held of record by Sandler Capital Partners IV, L.P. and Sandler
Capital Partners IV, FTE, L.P. with several other managing directors. Ms.
Stone disclaims beneficial ownership of these shares, except to the extent
of her pecuniary interest therein. The address for Ms. Stone, Sandler
Capital Partners IV, L.P. and Sandler Capital Partners IV, FTE, L.P. is 767
Fifth Avenue, 45th Floor, New York, New York 10153.
(7) Consists of 479,600 shares held of record by Douglas W. Parker, Sr. and
1,000,000 shares held by a limited partnership in which an entity owned by
him is the sole general partner.
(8) Consists of 559,600 shares held of record by Ms. Parker and 1,000,000
shares held of record by a limited partnership in which an entity owned by
her is the sole general partner.
(9) Includes options to purchase an aggregate of 499,037 shares that are
presently exercisable or will be exercisable within 60 days.
10
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company sold Series A convertible preferred stock to Capital Resource
Lenders III, L.P. For information relating to the sale of Series A convertible
preferred stock, see "Item 11. Executive Compensation--Compensation Committee
Interlocks and Insider Participation," which is incorporated in this Item 13 by
reference.
The Company redeemed shares of Series B redeemable preferred stock. On
November 1, 1995, the Company borrowed $2.0 million from Melissa A. Parker,
sister-in-law of Kyle D. Parker and daughter-in-law of Douglas W. Parker, Sr.
Further, the Company borrowed additional funds from Ms. Parker and as of June
30, 1997 the outstanding principal balance borrowed was $4.0 million. In
November 1997, the $4.0 million loan plus accrued interest in the amount of
$395,891 was converted into 439,589 shares of Series B redeemable preferred
stock. These shares earned dividends at a rate of 7.735% per year and dividends
were paid as and when declared by the Board. Upon the completion of the
Company's initial public offering on October 5, 1999, the Company redeemed these
shares of Series B redeemable preferred stock for $5.0 million.
In May 1999, the Company sold shares of Series C convertible preferred
stock and Common Stock to a limited number of investors. For more information
relating to the sale of Series C convertible preferred see "Item 11. Executive
Compensation--Compensation Committee Interlocks and Insider Participation,"
which is incorporated in this Item 13 by reference.
The Company entered into a registration rights agreement that requires the
Company to register shares held by the Company's existing stockholders for
resale. For information relating to the terms of this Amended and Restated
Registration Rights Agreement see "Item 11. Executive Compensation--Compensation
Committee Interlocks and Insider Participation," which is incorporated in this
Item 13 by reference.
The Company entered into a stockholders agreement that grants special
rights to the Company's existing stockholders. For information relating to the
terms of the Amended and Restated Stockholders' Agreement see "Item 11.
Executive Compensation--Compensation Committee Interlocks and Insider
Participation," which is incorporated in this Item 13 by reference.
The Company has borrowed money from some of the Company's stockholders. For
information relating to the Company's loans from stockholders see "Item 11.
Executive Compensation--Compensation Committee Interlocks and Insider
Participation," which is incorporated in this Item 13 by reference.
Three of the Company's Board members are affiliated with the Company's
significant stockholders. For information relating to the Company's Board
members' affiliations with the Company's stockholders see "Item 11. Executive
Compensation--Compensation Committee Interlocks and Insider Participation,"
which is incorporated in this Item 13 by reference.
The Company leases its offices from the Parker Law Firm. For information
relating to the Company's lease see "Item 11. Executive Compensation--
Compensation Committee Interlocks and Insider Participation," which is
incorporated in this Item 13 by reference.
All future transactions will be approved by a majority of the Company's
disinterested directors. All future transactions, including loans, between the
Company and the Company's officers, directors, principal stockholders and their
affiliates will be approved by a majority of the Board of Directors, including a
majority of the disinterested directors, and will be on terms no less favorable
to the Company than could be obtained from unaffiliated third parties.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 1, 2000 LOISLAW.COM, INC.
--------------
By: /s/ MARK O. BEYLAND
-----------------------------------
Mark O. Beyland, President
and Chief Financial Officer
12
