<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
INTERNET LAW LIBRARY, INC.
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
(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)(1) 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 amount on
which filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offering fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of the filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
INTERNET LAW LIBRARY, INC.
4301 WINDFERN ROAD
SUITE 200
HOUSTON, TEXAS 77041
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: February 28, 2000
TIME: 10:00 a.m., central time
PLACE: Internet Law Library, Inc.
4301 Windfern Road, Suite 200
Houston, Texas
MATTERS TO BE VOTED ON:
1. Election of three class I directors to hold office for three
years;
2. Approval and adoption of our amended and restated certificate
of incorporation;
3. Approval of an amendment to our stock option plan to increase
by 2,700,000 the number of shares of our common stock
authorized for issuance under the plan;
4. Ratification of the appointment of Harper & Pearson Company as
our independent auditors for our fiscal year ended December
31, 1999; and
5. Any other business that may properly come before the meeting
and any adjournment of the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
ELECTION OF DIRECTORS, THE APPROVAL AND ADOPTION OF OUR AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION, THE AMENDMENT TO OUR STOCK OPTION PLAN, AND THE
APPOINTMENT OF HARPER & PEARSON COMPANY.
Stockholders who are holders of record at the close of business on
January 24, 2000 will be entitled to vote at the annual meeting.
Please read the attached proxy statement and the voting instructions on
the proxy card and then vote by completing, signing and dating the proxy card
and returning it in the enclosed postage prepaid envelope or by facsimile to
(713) 462-7519. If you attend the annual meeting, you may, if you prefer, revoke
your proxy and vote your shares in person. Please contact Robert Sarlay at (281)
600-6000 if you have any questions.
By Order of the Board of Directors,
Carol A. Wilson
Secretary
Houston, Texas
January 31, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
THE ANNUAL MEETING...................................................................................... 1
BACKGROUND OF INTERNET LAW LIBRARY...................................................................... 3
BOARD OF DIRECTORS...................................................................................... 3
Election of Directors............................................................................. 3
Directors Whose Terms of Office Continue.......................................................... 5
Board Meetings.................................................................................... 6
Committees of the Board of Directors.............................................................. 6
Board Compensation................................................................................ 6
EXECUTIVE OFFICERS...................................................................................... 7
Other Significant Employees....................................................................... 8
Family Relationships.............................................................................. 9
EXECUTIVE COMPENSATION.................................................................................. 9
REPORT ON EXECUTIVE COMPENSATION........................................................................ 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION............................................. 12
STOCK PERFORMANCE GRAPH................................................................................. 12
STOCK OWNERSHIP......................................................................................... 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................................................... 13
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE............................................................... 14
APPROVAL AND ADOPTION OF THE AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION.............................................................................. 15
APPROVAL OF AMENDMENT TO OUR STOCK OPTION PLAN.......................................................... 21
SELECTION OF INDEPENDENT AUDITORS....................................................................... 21
STOCKHOLDER PROPOSALS................................................................................... 21
ANNUAL REPORT........................................................................................... 21
ANNEX A - Amended and Restated Certificate of Incorporation of Internet Law Library, Inc................ A-1
</TABLE>
<PAGE>
THE ANNUAL MEETING
The board of directors is soliciting proxies to be used at the
annual meeting. This proxy statement is first being sent to stockholders on
January 31, 2000.
The following is important information regarding the annual meeting.
Q: WHAT MAY I VOTE ON?
A: At the annual meeting, you will be voting on four proposals. Item
numbers refer to the numbers on the proxy card.
Item 1: Election of three class I directors to hold office for three
years.
Item 2: Approval and adoption of our amended and restated certificate
of incorporation.
Item 3: Approval of an amendment to our stock option plan to increase
by 2,700,000 the number of shares of our common stock
authorized for issuance under the plan.
Item 4: Ratification of the appointment of Harper & Pearson Company as
our independent auditors.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
A: The board of directors recommends that you vote in favor of the
election of directors, the approval and adoption of our amended and
restated certificate of incorporation, the amendment to our stock
option plan, and the appointment of Harper & Pearson Company.
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders of record on the close of business on January 24, 2000 are
entitled to vote at the annual meeting. Each share of common stock is
entitled to one vote. On December 31, 1999, we had 24,920,991 shares of
common stock outstanding.
Q: WHO CAN ATTEND THE ANNUAL MEETING?
A: All stockholders of record on the close of business on January 24, 2000
can attend. If your shares are held in the name of a broker or other
nominee, please bring proof of share ownership with you to the meeting.
A copy of your brokerage account statement or an omnibus proxy, which
you can get from your broker, will serve as proof of share ownership.
Q: HOW DO I VOTE?
A: To cast your vote by mail, please complete, sign, and mail the proxy
card in the enclosed postage prepaid envelope or fax it to (713)
462-7519. By voting, you will authorize the persons named on the proxy
card, who will be your "proxies," to vote your shares as you instruct.
You may vote for all, some, or none of the nominees for director. You
may also approve, disapprove, or not vote on the other proposals.
If you do not instruct your proxies how to cast your votes for
directors, your proxies will vote FOR election of all of the nominees
for directors. If you "withhold" your vote for any of the nominees,
your vote will not be counted in the tabulation of votes cast on that
nominee. If you leave Items 2, 3 or 4 blank, your proxies will vote FOR
approval of all items that you left blank.
1
<PAGE>
Q: HOW CAN I CHANGE MY VOTE OR REVOKE MY PROXY?
A: You can change your vote or revoke your proxy at any time before the
meeting in any of three ways:
1. by sending written notice to our Secretary, Carol A. Wilson;
2. by sending another proxy that is properly signed and later
dated; or
3. by voting in person at the meeting.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It means you hold shares registered in more than one account. Sign and
return all proxy cards to ensure that all your shares are voted.
Q: HOW WILL VOTES BE COUNTED?
A: The annual meeting will be held if a quorum is represented in person or
by proxy at the meeting. A quorum is a majority of our outstanding
shares of common stock entitled to vote. If you have returned a signed
proxy card or attend the meeting in person, then you will be considered
part of the quorum, even if you do not vote. Failures to vote, referred
to as abstentions, are not counted in the tally of votes for or against
a proposal. A withheld vote is the same as an abstention.
Broker non-votes occur when proxies submitted by brokers, banks or
other nominees holding shares in "street" name do not indicate a vote
for some or all of the proposals because they do not have discretionary
voting authority and have not received instructions on how to vote on
the proposals. We will treat broker non-votes as shares that are
present and entitled to vote for quorum purposes. However, broker
non-votes will not be counted as votes cast on a proposal and will have
no effect on the result of the vote on that proposal.
Q: WHO WILL PAY THE COSTS OF OBTAINING THE PROXIES?
We will pay all of the costs of obtaining proxies on the enclosed form.
Some of our directors, officers, and other employees may solicit
proxies personally or by telephone, mail or facsimile. They will not be
specially compensated for these solicitation activities. We do not
expect to pay any fees for proxies. We may, however, pay brokerage
firms and other custodians for their reasonable expenses for forwarding
proxy materials to the beneficial owners of our common stock.
Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: We do not know of any business to be considered at the annual meeting,
other than the proposals described in this proxy statement. If any
other matter is presented at the meeting on which a vote may be
properly taken, the shares of our common stock represented by proxies
will be voted in accordance with the judgment of the persons named as
proxies on the enclosed proxy card.
2
<PAGE>
BACKGROUND OF INTERNET LAW LIBRARY
On March 25, 1999, Planet Resources, Inc., our predecessor, entered
into an agreement and plan of reorganization with National Law Library, Inc. and
the stockholders of National Law Library. Under this agreement, effective as of
March 30, 1999, National Law Library and Planet Resources were merged, and each
share of National Law Library common stock was exchanged for one share of Planet
Resources common stock. In contemplation of this transaction, Planet Resources'
stockholders agreed to a one-for-two reverse stock split, which resulted in
2,000,000 shares of its common stock being outstanding immediately prior to the
merger. A majority of these shares were owned by A.W. Dugan, our former chairman
of the board and president, who may be deemed to have controlled Planet
Resources before the merger. Hunter M.A. Carr, our current chairman of the
board, president and chief executive officer, owned 15,152,500 shares of
National Law Library's common stock, and received an equal number of shares of
Planet Resources' common stock in the merger. On July 8, 1999, we changed our
name from Planet Resources, Inc. to Internet Law Library, Inc.
Also under the terms of this agreement, the majority of the members of
Planet Resources' board of directors resigned and were replaced by three of
National Law Library's designees, Hunter M.A. Carr, Kelley V. Kirker, and
Jonathan C. Gilchrist. Mr. Gilchrist resigned as a director on June 15, 1999.
As a result of this transaction, Mr. Carr may be deemed to have assumed
control of us. As of December 31, 1999, Mr. Carr beneficially owned
approximately 59.1% of our common stock. In addition, former National Law
Library stockholders, including Mr. Carr, currently hold approximately 18
million shares of our common stock and our original stockholders currently hold
approximately two million shares of our common stock.
Except for this transaction, no arrangement or understanding exists
between any director or executive officer or any other person under which any
director or executive officer was selected as a director or executive officer.
As a result of the fundamental change in control and in our operations
caused by this transaction, much of the information in this proxy statement is
for the period beginning with the date of our inception on November 30, 1998 and
ending on the last day of our first fiscal period on June 30, 1999. We will
refer to this time period in this proxy statement as our "1999 fiscal period."
In December 1999, our board of directors changed the end of our fiscal
year from June 30 to December 31. Accordingly, our future information will be
presented using a December 31 fiscal year-end.
BOARD OF DIRECTORS
ELECTION OF DIRECTORS (ITEM 1 ON PROXY CARD)
There are currently seven directors on our board of directors. Our
board of directors is divided into three classes with staggered three-year
terms. Directors elected at the meeting will hold office for three-year terms.
The board has selected the three current class I directors whose terms expire at
the annual meeting as nominees for election at the annual meeting.
The election of the directors requires the affirmative vote of a
plurality of the shares of our common stock voted at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES LISTED
BELOW.
All nominees have consented to serve as directors. The board has no
reason to believe that any of the nominees will be unable to act as director.
However, if a director is unable to stand for re-election, the board may either
reduce the size of the board of designate a substitute. If a substitute nominee
is named, the proxies will vote for the election of the substitute.
3
<PAGE>
The nominees are as follows:
HUNTER M.A. CARR
Age: 51
Director since: March 30, 1999
Recent business experience: Mr. Carr has been our chairman of the board
of directors, president and chief executive
officer since March 30, 1999. Mr. Carr is
the founder of National Law Library, Inc.
and has served as chairman of the board and
president of National Law Library since its
founding in November 1998. From April 1994
until July 1999, Mr. Carr served as chairman
of the board and chief executive officer of
ITIS, Inc., a company in which he is the
sole stockholder. In July 1999, Mr. Carr
resigned as chief executive officer of ITIS,
but continues to serve as its chairman of
the board and remains its sole stockholder.
KELLEY V. KIRKER
Age: 40
Director since: March 30, 1999
Recent business experience: Mr. Kirker served as one of our vice
presidents from June 15, 1999 until July 13,
1999. Mr. Kirker has also served as a
director of National Law Library since July
1, 1999. On October 1, 1999, Mr. Kirker was
appointed chief executive officer of ITIS.
Prior to that, since April 1994, Mr. Kirker
has served as president and chief operating
officer of ITIS. From 1987 until 1994, Mr.
Kirker was employed by MLSI, Inc., a company
engaged in litigation support service and
owned by Mr. Carr. Prior to 1987, Mr. Kirker
was employed for approximately five years by
Texaco, Inc. in its computer information
service area.
GEORGE A. ROBERTS
Age: 80
Director since: January 1, 2000
Recent business experience: Dr. Roberts served Teledyne, Inc. in various
positions from 1966 until his retirement in
1993. He began his service as president,
became chief executive officer and president
in 1986, was elected vice chairman of the
board and chief executive officer in 1991,
and became chairman of the board in 1991.
Prior to that time, from 1941 until 1966,
Dr. Roberts was employed by the Vasco Metals
Corporation, first as research metallurgist,
as chief metallurgist in 1945, as vice
president-technology in 1953, and was
elected president in 1961.
Dr. Roberts is a member of the National
Academy of Engineering, a fellow of The
American Society for Metals, The
Metallurgical Society and The Society of
Manufacturing Engineers. He is also a life
trustee of the Carnegie-Mellon University.
In 1980, he was awarded the Carnegie-Mellon
University Distinguished Achievement Award.
In 1984, Dr. Roberts received an award from
the National Conference of Christians and
Jews for distinguished service in the field
of human relations, and he also received the
1984 Americanism Award from the Boy Scouts
of America.
4
<PAGE>
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
EUGENE A. CERNAN, CAPTAIN, USN (RET.)
Age: 65
Director since: January 1, 2000
Expiration of term: 2002
Recent business experience: Mr. Cernan, author of THE LAST MAN ON THE
MOON (St. Martin's Press 1999) brings to
Internet Law Library an unparalleled
background of courage and achievement. Mr.
Cernan spent 20 years as a naval aviator,
the last 13 of which were with NASA. He
served on three space missions, the last
being as Commander of Apollo XVII, and has
received numerous decorations and honors for
that service. Mr. Cernan has served as
chairman of Johnson Engineering Corporation,
which provides NASA with systems development
for flight crews and crew station design for
the Space Shuttle, Spacelab, Space Station,
Lunar Base, and Mars Outpost since 1994.
From 1986 to 1992, Mr. Cernan was the
executive vice president and director of
Coral Petroleum, Inc., where he was in
charge of corporate development of a
worldwide supply and marketing strategy.
From 1986 to 1992, he was executive
consultant for the government systems group
of Digital Equipment. He has been selected
for enshrinement into the National Aviation
Hall of Fame in July 2000.
Mr. Cernan's many honors range from the Navy
Distinguished Flying Cross to a television
Emmy. His membership in professional
societies includes the Society of
Experimental Test Pilots, the American Space
Institute, and the Golden Eagles. His
directorships include Up with People, the
Lone Star Flight Museum, First Bank, and
Alaska Aerospace Development Corp.
JOE H. REYNOLDS
Age: 78
Director since: August 1999
Expiration of term: 2001
Recent business experience: Mr. Reynolds has served as our general
counsel since July 1999. Since 1996, Mr.
Reynolds has served as of counsel to the
Houston, Texas, law firm of Schwartz,
Junell, Campbell & Oathout, LLP. From 1992
until 1996, Mr. Reynolds served as of
counsel to the Houston office of the law
firm of Andrews & Kurth LLP. Mr. Reynolds is
an experienced litigator, and is presently
representing National Law Library as
attorney of record in the matter of
LOISLAW.COM INC. V. ITIS, INC., NATIONAL LAW
LIBRARY, INC., AND INTERNET LAW LIBRARY,
INC.
PAUL THAYER
Age: 80
Director since: January 1, 2000
Expiration of term: 2001
Recent business experience: Mr. Thayer's background provides a wealth of
experience from which he can draw as a
director. From 1983 to 1984, he served in
the Reagan Administration as Deputy
Secretary of Defense and received many
awards for his service. Prior to this time,
from 1970 to 1983, Mr. Thayer served as
chairman of Ling-Temco-Vought in Dallas,
Texas. Mr. Thayer graduated number one in
his Navy Aviation Cadet Class. He later
served as a test pilot, combat ace,
commercial airline pilot, and he flew around
the world in 1993. Mr. Thayer was a U.S.
Navy combat ace in World War II and an
experimental test pilot. He was the first
pilot to break the sound barrier in a
production Navy fighter. In 1994, he was
inducted into the Navy Experimental Test
Pilots Hall of Fame, and he is a past
recipient of the J.H. Doolittle Award and
the Kitty Hawk Award. Among his many other
honors are the Distinguished Flying Cross,
two presidential citations, and the
distinguished Horatio Alger Award. Mr.
Thayer's notable
5
<PAGE>
community service includes the Robert M.
Thompson Navy League Award for outstanding
civilian leadership, the University of
Kansas Distinguished Service Citation for
outstanding achievements and service to
mankind, and the Air Force Medal and
Decoration for Exceptional Civilian Service.
In addition, Mr. Thayer is a past chairman
of the Chamber of Commerce of the United
States and of the National Corporate
Advisory Board of the Vietnam Veterans
Memorial Fund.
JACK I. TOMPKINS
Age: 53
Director since: August 1999
Expiration of term: 2002
Recent business experience: Mr. Tompkins has served as chairman of the
board and chief executive officer of iExalt,
Inc. since September 1999. From April 1999
until September 1999, Mr. Tompkins was
executive vice president and chief financial
officer of Crescent Real Estate Equities
Company, a real estate investment trust
listed on the New York Stock Exchange. From
the time of its inception in 1997 until the
time of its sale in January 1999, Mr.
Tompkins served as chairman of the board of
Automotive Realty Trust Company of America.
From 1988 to 1996, he served as chief
financial officer and senior vice president
and chief information, administrative and
accounting officer of Enron Corp. Mr.
Tompkins began his career at Arthur Young &
Company and later joined Arthur Andersen
LLP, where he was elected to the partnership
in 1981. Mr. Tompkins is a certified public
accountant.
BOARD MEETINGS
The board met once during our 1999 fiscal period. All of the directors
attended this meeting.
COMMITTEES OF THE BOARD OF DIRECTORS
There were no committees of the board of directors in our 1999 fiscal
year. Effective on January 1, 2000, the board of directors established an audit
committee and a compensation committee.
AUDIT COMMITTEE
Members: Jack I. Tompkins (Chairman)
Kelly V. Kirker
Functions: Makes recommendations concerning the
engagement of our independent auditors,
reviews with our independent auditors the
plans and results of the audit engagement,
approves professional services provided by
our independent auditors, reviews the
independence of the independent auditors,
considers the range of audit and non-audit
fees, and reviews the adequacy of our
internal accounting controls.
COMPENSATION COMMITTEE
Members: Paul Thayer (Chairman)
George A. Roberts
Functions: Determines compensation for executive
officers and administers our stock option
and stock purchase plans.
BOARD COMPENSATION
Under our 1999 Director Option Plan, which was adopted on March 26,
1999, each of our outside directors who is not also one of our employees is
entitled to receive options to purchase 15,000 shares of our common stock on the
date he or she becomes a director. The greater of 1/8th or 1/48th of the shares
subject to the option times the number of months that the outside director has
served on the board vest on the six-month anniversary of the date of grant.
After the six-month anniversary of the date of grant, the remainder vest
monthly. Each outside director also
6
<PAGE>
receives options to purchase 1,000 shares of common stock at each of our
annual meetings of stockholders if, on the date of the meeting, he or she has
served on the board for at least six months. These options have a term of ten
years, and are exercisable at the fair market value of our common stock on
the date of grant. We have not, however, granted our outside directors any
options to purchase shares of our common stock.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
All executive officers are elected annually, and serve at the discretion of, the board. Our executive officers
are as follows:
NAME AGE POSITION RECENT BUSINESS EXPERIENCE
- ---- --- -------- --------------------------
<S> <C> <C> <C>
Hunter M.A. Carr 51 Chairman of the Board of Mr. Carr is the founder of National Law Library
Directors, President and Chief and has served as its chairman of the board and
Executive Officer since March 30, president since its founding in November 1998.
1999 From April 1994 until July 1999, Mr. Carr
served as chairman of the board and chief
executive officer of ITIS, Inc., a company in
which he is the sole stockholder. In July 1999,
Mr. Carr resigned as chief executive officer of
ITIS, but continues to serve as its chairman of
the board and remains its sole stockholder.
Malcolm F. McNeill 52 Chief Financial Officer since Prior to joining us, since November 1994, Mr.
September 1, 1999 McNeill provided financial consulting services
as sole proprietor to publicly and privately
owned companies in the Houston area. Prior to
1994, he served in various financial and
management positions with companies engaged in
natural gas transportation, independent power
development, and oil and gas exploration and
production. Earlier, Mr. McNeill served for
nearly seven years on the audit staff of Price
Waterhouse LLP. He is a certified public
accountant.
Robert Sarlay 54 Vice President-Special Programs Prior to joining us, from October 1998 until
and Shareholder Relations since July 1999, Mr. Sarlay was the manager of
July 1999 marketing for ITIS and provided marketing and
shareholder services on a contract basis to us
and to National Law Library. From August 1997
to October 1998, Mr. Sarlay was the
owner/operator of three restaurants in the
Houston area. From 1993 to 1997, he served as
the president of Advanced Care Centers of
America, LLC, an operator of nursing home
facilities in Texas. Mr. Sarlay was the vice
president commercial division of Asset
Partners, Inc., an operator of commercial
office buildings in the Houston area. Prior to
1991, Mr. Sarlay served as an operations and
executive officer of various companies engaged
in long-term care, medical management,
apartment development and management, and
convenience store operations.
7
<PAGE>
Edward P. Stevens 51 Vice President for Mergers & From 1998 to 1999, Mr. Stevens served as sales
Acquisitions since November 1999 engineer for StorNet, Inc. Prior to that time,
from 1997 to 1998, he served as integration
sales consultant for Computer Tech, Inc. From
1995 to 1997, Mr. Stevens served as acting
president and national account manager for
Executive Database Controls.
Carol A. Wilson 57 Corporate Secretary since June From September 1995 to April 1999, Ms. Wilson
1999 served as the legal secretary and personal
assistant to John M. O'Quinn, P.C. From 1980 to
1995, she was the legal secretary to Joe H.
Reynolds. Since 1985, Ms. Wilson has been an
active member and speaker in various state and
national legal secretarial and paralegal
organizations. She is the author of PLAIN
LANGUAGE PLEADINGS (Prentice Hall 1996), and
has been published in national trade journals
and other publications.
OTHER SIGNIFICANT EMPLOYEES
The following sets forth information significant employees who are not executive officers but who make or are expected to
make significant contributions to our business.
NAME AGE POSITION RECENT BUSINESS EXPERIENCE
- ---- --- -------- --------------------------
David P. Harriman 51 President of National Law In 1996, Mr. Harriman founded, Brief Reporter
Library since November 1999 LLC, a publishing start-up with a database of
appellate briefs for attorneys on their Internet.
Prior to that time, Mr. Harriman served in various
positions at The Mithie Company, most recently as
president and chief executive officer from 1989 to
1996.
Charles F. Dunbar 51 Vice President-Sales of National From April 1999 to June 30, 1999, Mr. Dunbar
Law Library since July 1999 was an employee of ITIS. From April 1995 to April
1999, he was the chief executive officer and
president of Image Vault, a sales and marketing
consulting firm based in Houston, Texas. From 1990
to 1995, Mr. Dunbar served as vice president of
sales for MLSI, Inc., a company owned by Mr. Carr,
and then as vice president of sales for ITIS.
Kara A. Kirker 36 Chief Financial Officer and Prior to joining us, Ms. Kirker provided services
Treasure of National Law to National Law Library on a contract basis as an
Library since October 1, 1999 officer of ITIS. From January 1994 until National
Law Library's inception in November 1998, Ms. Kirker
served as the controller and treasurer of ITIS, in
which positions she continue to serve. From 1981 to
1994, Ms. Kirker served as assistant treasurer of
Stone & Webster Oil Company, Inc. in the revenue
accounting area.
</TABLE>
8
<PAGE>
FAMILY RELATIONSHIPS
Kara A. Kirker is a niece by marriage of Hunter M.A. Carr and is
married to Kelley V. Kirker. There are no other family relationships among any
of our directors or executive officers.
EXECUTIVE COMPENSATION
Each of Mr. Carr, Mr. Sarlay, Mr. Dunbar, and Ms. Kirker is currently
an officer of Internet Law Library or National Law Library, one of our wholly
owned subsidiaries, and was, until July 1, 1999, an employee of ITIS, Inc., a
corporation wholly-owned by Mr. Carr. Effective beginning in March 1999,
National Law Library and ITIS operated under a management and financial services
agreement under which ITIS provided accounting, staffing, and procurement
services and office space to National Law Library. Under the agreement, we paid
ITIS for staffing services at 125% of cost. Under a personal services contract
between National Law Library and Mr. Carr covering executive services, marketing
and business development, public relations, and general management, which became
effective in November 1998, Mr. Carr received $55,400 for services performed
during our 1999 fiscal period.
We did not grant any stock appreciation rights during our 1999 fiscal
period.
The following table summarizes the compensation paid by us directly to
A.W. Dugan, who served as our chief executive officer until March 30, 1999, and
either directly to or indirectly under the management and financial services
agreement for services performed by Mr. Carr, who began service as our chief
executive officer on March 30, 1999. Neither we nor any of our subsidiaries paid
any employee an annual salary and bonus exceeding $100,000 during our 1999
fiscal period.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------------- ----------------------------------------------
Awards Payouts
Other ----------------------------- ------- All
annual Restricted Securities other
Name and compen- Stock underlying LTIP compen-
principal position Year Salary Bonus sation Awards options Payouts sation
- -------------------- ---- -------- ------- ------ ------------- -------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hunter M.A. Carr 1999 $-0- $-0- $55,400 (1) $-0- -0- $-0- $-0-
Chairman of the 1998 -0- -0- -0- -0- -0- -0- -0-
Board, President and 1997 -0- -0- -0- -0- -0- -0- -0-
Chief Executive
Officer
A.W. Dugan 1999 $-0- $-0- $-0- $-0- -0- $-0- $-0-
Former Chairman of 1998 -0- -0- -0- -0- -0- -0- -0-
the Board and 1997 -0- -0- -0- -0- -0- -0- -0-
President
</TABLE>
- --------------------
(1) Mr. Carr was compensated solely pursuant to a personal services
contract during our 1999 fiscal period.
9
<PAGE>
The following table sets forth the grants of stock options made to Mr.
Carr during our 1999 fiscal period. No stock options were granted to Mr. Dugan
during this period.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
----------------------------------------------------------
Percent of
Number of total
securities options
underlying granted to
options employees Exercise or
granted in fiscal base price Expiration
NAME (1) year (2) ($/share) date Grant date value (3)
- ---- --------- -------- ----------- -------- --------------------
<S> <C> <C> <C> <C> <C>
Hunter M.A. Carr 1,250,000 100% $3.00 4/11/09 $1,210,991
</TABLE>
- --------------------------
(1) All such options vested on April 12, 1999, the date of grant.
(2) Excludes 1,000,000 granted to a director during our 1999 fiscal period.
(3) We used the Black-Scholes option valuation model to determine the option
value on date of grant. Using the Black-Scholes model, we have assumed an
expected volatility factor of 287%, a 6% risk-free rate of return, a
dividend yield of zero, and a term for exercising the option of 10 years.
The actual value, if any, a person may realize will depend on the excess of
the stock price over the exercise price on the date the option is
exercised. Stock appreciation gains do not represent our estimate or
projection of the future price of our common stock.
The following table sets forth information concerning the number and
value of securities underlying unexercised options held on June 30, 1999.
Neither Mr. Carr nor Mr. Dugan exercised stock options during our 1999 fiscal
period.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of securities underlying Value of unexercised in-the-money
unexercised options at fiscal year end options at fiscal year-end (1)
-------------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Hunter M.A. Carr 1,250,000 -- -- --
A.W. Dugan -- -- -- --
</TABLE>
- ----------------------------
(1) Based on the difference between the option exercise price and the
closing sale price of $1.875 of our common stock as reported on the
over-the-counter bulletin board on June 30, 1999, the last trading day
in our 1999 fiscal period, multiplied by the number of shares
underlying the options.
10
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
We did not have a compensation committee during our 1999 fiscal period.
During this period, our entire board of directors administered our compensation
program.
OBJECTIVES
Our executive compensation program aimed to:
- support our business objectives to produce consistent earnings
growth;
- attract, reward, motivate and retain talented executives;
- tie compensation to our financial performance; and
- link executives' goals with stockholders' interests.
COMPENSATION
During our 1999 fiscal period, all of our executives, except for Hunter
M.A. Carr, our chairman of the board, president and chief executive officer,
were paid by ITIS under the terms of a management agreement. We paid Mr. Carr as
an independent contractor under the terms of a personal services contact. The
personal services contract was terminated as of July 1, 1999.
We granted options to purchase common stock to Mr. Carr to further our
objective of linking executives' goals with those of our stockholders. In making
this grant, the board did not allocate a fixed percentage of compensation to
these elements, nor did the board use specific qualitative or quantitative
measures or factors in assessing individual performance.
LONG-TERM COMPENSATION
Because today's business decisions affect us over a number of years,
long-term incentive awards are tied to our performance and the long-term value
of our stock. Grants of options to purchase common stock are an important part
of our compensation plan. An executive who receives grants only gains when
stockholders gain--when the value of our stock goes up. During fiscal 1999, the
board did not follow any firmly established formula for the issuance of option
grants. Instead, grants were made based on an assessment of corporate
performance and the executive's performance.
The board granted options to purchase 1,250,000 shares of our common
stock to Mr. Carr during our 1999 fiscal period. The board did not grant options
to any other employee in this period. These options are exercisable for ten
years.
CHIEF EXECUTIVE OFFICER COMPENSATION
The grant of options to Mr. Carr was based on a variety of factors,
including the identification of, and initiation of discussions with, potential
acquisition candidates.
11
<PAGE>
Pursuant to the proxy rules, this section of the proxy statement is not
deemed "filed" with the SEC and is not incorporated by reference into any of our
SEC filings.
THE BOARD OF DIRECTORS
Hunter M.A. Carr
Kelley V. Kirker
Joe H. Reynolds
Jack I. Tompkins
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Hunter M.A. Carr, our chairman of the board, president and chief
executive officer, and Kelley V. Kirker, who was one of our vice presidents
until July 13, 1999, participated in deliberations of our board concerning
executive officer compensation during our 1999 fiscal period.
STOCK PERFORMANCE GRAPH
SEC rules require proxy statements to contain a performance graph
comparing the performance of our common stock against a broad equity market
index and against either a published industry or line-of-business index or group
of peer issuers. We chose the Nasdaq Composite Index as the relevant broad
equity market index and Goldman Sachs Technology Internet Index as the relevant
line-of-business index. The graph assumes the investment of $100 on April 1,
1999, the date our common stock was first listed.
[Graph]
12
<PAGE>
<TABLE>
<CAPTION>
Period Ended
--------------------------------------------------------------------------------
INDEX 4/1/99 4/16/99 4/30/99 5/14/99 5/28/99 6/11/99 6/24/99 6/30/99
---------------------------------------- ------ ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Internet Law Library 100.00 583.33 366.67 383.33 494.57 358.33 341.67 250.00
Goldman Sachs Technology Internet Index 100.00 102.56 102.40 96.25 87.71 73.68 82.02 87.88
Nasdaq Composite Index 100.00 99.63 101.98 101.38 99.08 98.18 102.43 107.73
</TABLE>
STOCK OWNERSHIP
The following table shows how many shares of our common stock were
owned by our directors and A.W. Dugan, who served as our chief executive officer
until March 30, 1999, as of December 31, 1999. The following table also shows
how many shares were owned by beneficial owners of more than 5% of our
outstanding shares of common stock as of December 31, 1999. Unless otherwise
noted, each person has sole voting and investment power over the shares
indicated below, subject to applicable community property laws.
The mailing address for each person identified below is c/o Internet
Law Library, Inc., 4301 Windfern Road, Suite 200, Houston, Texas, 77041.
<TABLE>
<CAPTION>
Shares Beneficially Percentage of
Owned Outstanding Shares (1)
---------------------- -----------------------------
Name
- ----
<S> <C> <C>
Hunter M.A. Carr................................... 15,477,500 (2) 59.1%
Eugene A. Cernan................................... 0 0%
Kelley V. Kirker................................... 200,000 (3) *
Joe H. Reynolds.................................... 15,000 *
George A. Roberts.................................. 0 0%
Paul Thayer........................................ 480,000 1.9%
Jack I. Tompkins................................... 2,905,000 (4) 11.2%
A.W. Dugan......................................... 1,080,091 (5) 4.3%
All executive officers and directors as a group
(11 persons) ................................ 19,122,500 (6) 70.4%
</TABLE>
- -------------------------
* Less than 1%.
(1) Percentage of beneficial ownership is based on 24,920,991 shares of
common stock outstanding as of December 31, 1999. In computing an
individual's beneficial ownership, the number of shares of common stock
subject to options held by that individual that are exercisable as of
or within 60 days of December 31, 1999 are deemed outstanding. Such
shares, however, are not deemed outstanding for the purpose of
computing the beneficial ownership of any other person.
(2) Includes options to purchase 1,250,000 common shares that are currently
exercisable and 600,000 shares held by a limited partnership of which
Mr. Carr is the general partner, for the benefit of Mr. Carr's
children.
(3) Includes 100,000 shares held by Mr. Kirker's spouse, as to which Mr.
Kirker disclaims beneficial ownership.
(4) Includes options to purchase 1,000,000 common shares that are currently
exercisable.
(5) Includes 120,000 shares held by Anglo Exploration Corp., which is
controlled by Mr. Dugan.
(6) Includes options to purchase 2,250,000 common shares that are currently
exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Hunter M.A. Carr, our chairman of the board of directors, chief
executive officer and president, is also the sole stockholder of ITIS, Inc. ITIS
and Mr. Carr provided a variety of services to National Law Library prior to the
13
<PAGE>
merger with us, and continued to provide the same services through June 30,
1999. Set forth below is a summary of the agreements between National Law
Library, ITIS, and Mr. Carr.
In December 1998, National Law Library and ITIS entered into a
continuing service agreement under which ITIS provides database content to
National Law Library. Under the terms of this agreement, ITIS provides National
Law with data files containing case law and statutes that are in the public
domain together with coding and proprietary editing services covering these data
files. National Law Library is charged $.65 per 1,000 characters for those data
files that satisfy certain prescribed quality control requirements. Under the
agreement, National Law Library is obligated for a three-year period to provide
ITIS with minimum orders for data files containing an aggregate of 750 million
characters per month. However, pricing under this agreement is to reflect market
prices for comparable work, and National Law Library may select another vendor
should ITIS's prices not be competitive. During the 1999 fiscal period, National
Law Library incurred charges totaling approximately $691,500 for data files
containing case law, and, at June 30, 1999, National Law Library owed $115,700
to ITIS under this agreement.
Effective beginning in March 1999, National Law Library and ITIS
operated under a management agreement. Under this agreement, ITIS provided
accounting, staffing, and procurement services and office space to National Law
Library. Accounting services were charged at the rate of $85 per hour, staffing
services were charged at 125% of cost, office supplies, equipment, and telephone
services were charged at 120% of cost, and office space rental was based on 120%
of cost. In addition, ITIS was entitled to charge a $3,600 monthly management
fee under the agreement. During the 1999 fiscal period, National Law Library
incurred charges totaling approximately $298,831, and, at June 30, 1999,
National Law Library owed ITIS $97,800 under the agreement.
Effective in December 1998, National Law Library entered into an
agreement with ITIS to receive software development and consulting services for
its database and retrieval. As of December 31, 1999, no work had been performed
or billed to National Law Library under this agreement.
Effective in November 1998, National Law Library and Mr. Carr entered
into a personal service contract. During the 1999 fiscal period, National Law
Library incurred total charges of $55,400 under this agreement. The agreement
was terminated on July 1, 1999 when Mr. Carr became one of our salaried
officers.
Since November 1998, National Law Library has received co-location and
rack space for its Internet servers from an affiliated company in which Mr. Carr
was a member of the board of directors and is a major stockholder. Under a
three-year agreement, National Law Library makes monthly payments of $3,000.
During the 1999 fiscal period, National Law Library was billed charges of
$24,000 under this agreement, and, at June 30, 1999, had recorded a payable of
$12,000 to this affiliated company. The parties to this agreement are
negotiating a new monthly rate, a portion of which may be allocated to months
earlier than June 1999.
Our predecessor, Planet Resources, Inc., paid approximately $70,000 for
accounting and management services and rent to a company controlled by A.W.
Dugan, the then chairman of the board of directors and president and a
significant stockholder of Planet Resources.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe, based solely on a review of the copies of reports furnished
to us during our 1999 fiscal year, that all SEC filing requirements applicable
to our directors, officers, and holders of more than 10% of the outstanding
shares of our common stock were complied with during that period, except for the
following:
<TABLE>
<CAPTION>
Number of
Name Title Late Report Transactions
- ---- ----------------------- ----------- ------------
<S> <C> <C> <C>
Hunter M.A. Carr Chairman of the Board,Chief Form 4 4
Executive Officer and President
Jack I. Tompkins Director Form 4 2
</TABLE>
14
<PAGE>
APPROVAL AND ADOPTION OF THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
(ITEM 2 ON PROXY CARD)
Effective as of December 22, 1999, our board of directors adopted
resolutions that approve and adopt an amended and restated certificate of
incorporation and that recommend that our stockholders approve the proposed
amended and restated certificate of incorporation at the annual meeting. The
proposed amended and restated certificate of incorporation is intended to
protect your interests as stockholders and provide the board with the
flexibility to efficiently manage our affairs, and is intended to be
consistent with the charters of other public companies organized under
Delaware law. A description resulting from the restatement, along with the
reasons for and the general effect of these changes, is set forth below.
Adoption of the amended and restated certificate of incorporation
requires the affirmative vote of the holders of at least 75% of the shares of
our common stock voted at the annual meeting. If the amended and restated
certificate of incorporation is approved at the annual meeting, we intend to
file it with the Delaware Secretary of State as soon as possible. The amended
and restated certificate of incorporation will become effective upon this
filing.
The complete text of the amended and restated certificate of
incorporation is attached to this proxy statement as Annex A. The following
description is subject to the full text of the amended and restated
certificate of incorporation. We urge you to read the entire text carefully.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL AND
ADOPTION OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
<TABLE>
<CAPTION>
CURRENT CERTIFICATE AMENDED AND RESTATED CERTIFICATE
<S> <C>
NUMBER OF AUTHORIZED SHARES OF COMMON AND PREFERRED STOCK
The current certificate of incorporation provides that we The amended and restated certificate of incorporation
may issue up to 31,000,000 shares, consisting of up to would permit us to issue up to 150,000,000 shares,
30,000,000 shares of common stock and up to 1,000,000 consisting of up to 100,000,000 shares of common stock
shares of preferred stock. and 50,000,000 shares of preferred stock.
As of December 31, 1999, we had 24,920,991 shares of common Under Delaware law, the board generally may
stock outstanding and a total of 3,045,000 shares reserved for issue authorized but unissued shares of common
future grant or for issuance upon the exercise of outstanding and preferred stock without your approval. The
options under our stock option plans, employee stock purchase board does not currently intend to seek your
plans, and other options and rights to acquire common stock we approval prior to any future issuance of
assumed in connection with past acquisitions. We have no shares additional shares of common or preferred stock,
of preferred stock outstanding. unless stockholder action is required in a
specific case by applicable law, the rules of
any exchange or market on which our securities
may then be listed, or our certificate of
incorporation or bylaws then in effect.
The additional authorized shares of common
stock would have all the rights and privileges
that the presently outstanding shares of common
stock possess. The board is entitled to
determine the dividend rates, conversion
prices, voting rights, redemption prices, and
other rights, privileges, and preferences of
any shares of preferred stock that are issued
in the future. The increase in authorized
shares would not immediately affect the terms
or rights of holders of existing shares of
common stock. All outstanding shares would
continue to have one vote per share on all
matters to be voted on by you, including the
election of directors.
We do not have any present plans to issue
additional shares of common or preferred stock,
except for shares that may be issued in
acquisitions that may be negotiated and
consummated in the future and under our stock
15
<PAGE>
CURRENT CERTIFICATE AMENDED AND RESTATED CERTIFICATE
option plans, employee stock purchase plans,
and other options and rights to acquire common
stock we assumed in connection with past
acquisitions.
</TABLE>
AS WE IMPLEMENT OUR STRATEGIC GROWTH PLAN, WE ANTICIPATE THAT WE ARE LIKELY TO
MAKE ACQUISITIONS USING STOCK. WE ALSO ANTICIPATE THAT SHARES OF COMMON STOCK
WILL CONTINUE TO BE ISSUED UNDER OUR STOCK OPTION AND STOCK PURCHASE PLANS. WE
MAY ALSO USE THE ADDITIONAL AUTHORIZED SHARES FOR OTHER PURPOSES, INCLUDING THE
ISSUANCE OF STOCK TO OBTAIN ADDITIONAL CAPITAL OR THE ISSUANCE OF STOCK IN
CONNECTION WITH STOCK DIVIDENDS, STOCK SPLITS, OR OTHER EQUITY COMPENSATION OR
EMPLOYEE BENEFIT PLANS THAT WE MAY ADOPT IN THE FUTURE.
IF WE ISSUE ADDITIONAL AUTHORIZED SHARES IN THE FUTURE, EXCEPT IN THE CASE OF A
STOCK SPLIT OR STOCK DIVIDEND, YOUR EXISTING PERCENTAGE EQUITY OWNERSHIP AND
VOTING INTEREST WILL DECREASE AND THE EARNINGS PER SHARE AND BOOK VALUE PER
SHARE OF YOUR OUTSTANDING STOCK OWNERSHIP WILL BE DILUTED. YOU DO NOT HAVE
PREEMPTIVE RIGHTS WITH RESPECT TO THE ISSUANCE OF ADDITIONAL SHARES OF COMMON OR
PREFERRED STOCK.
IN SOME INSTANCES, AN INCREASE IN THE AUTHORIZED NUMBER OF SHARES OF COMMON AND
PREFERRED STOCK COULD HAVE AN ANTI-TAKEOVER EFFECT BY MAKING IT MORE DIFFICULT
FOR A THIRD PARTY TO OBTAIN CONTROL OF US AND REMOVE INCUMBENT MANAGEMENT BY
MEANS OF A TENDER OFFER, MERGER, OR OTHER TRANSACTION. FOR EXAMPLE, IF WE ISSUE
ADDITIONAL SHARES, WE WOULD DILUTE THE EQUITY INTEREST AND VOTING POWER OF A
THIRD PARTY WHO IS ATTEMPTING TO OBTAIN CONTROL OF US. BY POTENTIALLY
DISCOURAGING THE INITIATION OF AN ATTEMPT BY A THIRD PARTY TO OBTAIN CONTROL OF
US, THE PROPOSED INCREASE IN THE AUTHORIZED NUMBER OF SHARES COULD LIMIT YOUR
ABILITY TO DISPOSE OF YOUR SHARES AT THE HIGHER PRICES THAT ARE SOMETIMES
AVAILABLE IN TAKEOVER ATTEMPTS OR SIMILAR TRANSACTIONS.
THE BOARD IS NOT PROPOSING AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES IN
RESPONSE TO ANY KNOWN EFFORT TO OBTAIN CONTROL OF US. THE BOARD DOES NOT
PRESENTLY INTEND TO ADOPT OR PROPOSE OTHER ANTI-TAKEOVER PROVISIONS NOT
DESCRIBED IN THIS PROXY STATEMENT.
THE BOARD OF DIRECTORS BELIEVES THAT THE ADDED FLEXIBILITY OF HAVING ADDITIONAL
SHARES AVAILABLE FOR THESE PURPOSES, WITHOUT THE EXPENSE AND DELAY OF OBTAINING
STOCKHOLDER APPROVAL AT THE TIME OF ISSUANCE, FAR OUTWEIGHS THE DISADVANTAGES
DESCRIBED ABOVE.
<TABLE>
<CAPTION>
CHANGES IN THE SIZE OF AND FILLING VACANCIES ON THE BOARD OF DIRECTORS
<S> <C>
Under our current certificate of incorporation, the board Under the amended and restated certificate of
by a vote of at least two-thirds of the directors then in incorporation, the vote required to take these
office may: actions by a vote of a majority would be reduced
from two-thirds of the directors then in office
to a majority of the directors then in office.
</TABLE>
- - decrease or increase the number of directors;
- - fill vacancies on the board of directors; and
- - appoint directors to fill newly created directorships.
EFFECTIVE JANUARY 1, 2000, OUR BOARD OF DIRECTORS WAS EXPANDED FROM FOUR TO
SEVEN DIRECTORS, AND GEORGE A. ROBERTS, PAUL THAYER, AND EUGENE A. CERNAN WERE
APPOINTED TO FILL THE VACANCIES ON THE BOARD. THE BOARD OF DIRECTORS BELIEVES
THAT THE PROPOSED CHANGE TO OUR CURRENT CERTIFICATE OF INCORPORATION TO REDUCE
THE VOTE REQUIRED TO MAKE FURTHER CHANGES TO THE SIZE OF THE BOARD AND TO
APPOINT NEW DIRECTORS SHOULD INCREASE BOARD DEMOCRACY. THE PROPOSED CHANGE IS
ALSO CONSISTENT WITH DELAWARE LAW, WHICH PERMITS CHANGES IN THE NUMBER OF
DIRECTORS AND VACANCIES ON THE BOARD TO BE FILLED BY A MAJORITY OF THE DIRECTORS
THEN IN OFFICE, EVEN THOUGH LESS THAN A QUORUM. DELAWARE LAW ALSO PROVIDES THAT
IF, AT THE TIME OF FILLING ANY VACANCY, THE DIRECTORS THEN IN OFFICE CONSTITUTE
LESS THAN A MAJORITY OF THE BOARD, AS CONSTITUTED IMMEDIATELY PRIOR TO ANY SUCH
INCREASE, THE DELAWARE COURT OF CHANCERY MAY, UPON APPLICATION OF ANY HOLDER OR
HOLDERS OF AT LEAST 10% OF THE TOTAL NUMBER OF SHARES AT THE TIME OUTSTANDING
HAVING THE RIGHT TO VOTE FOR DIRECTORS, SUMMARILY ORDER A SPECIAL ELECTION TO BE
HELD TO FILL ANY SUCH VACANCY OR TO REPLACE DIRECTORS CHOSEN BY THE BOARD TO
FILL SUCH VACANCIES.
16
<PAGE>
<TABLE>
<CAPTION>
WE DO NOT CURRENTLY HAVE ANY AGREEMENT OR PLAN WITH RESPECT TO INCREASING OR DECREASING THE SIZE OF THE BOARD OF DIRECTORS.
REMOVAL OF DIRECTORS
<S> <C>
Our current certificate of incorporation provides that The amended and restated certificate of incorporation
holders of at least 75% of the voting power of our does not contain a provision regarding removal of
outstanding capital shares entitled to vote generally directors. Removal of directors would therefore be
in the election of directors may remove any director governed by Delaware law applicable to corporations,
or all of the directors of a single class (but not the such as us, that have a classified board of directors.
entire board of directors) at any time only for cause. Under Delaware law, a director of a corporation with
a classified board of directors may be removed only for
cause by the holders of a majority of our shares
entitled to vote at an election of directors.
THE PROPOSED CHANGE TO OUR CURRENT CERTIFICATE OF INCORPORATION IS INTENDED TO ENHANCE OUR STOCKHOLDERS' RIGHTS TO REMOVE
DIRECTORS BY DECREASING THE VOTE REQUIRED TO TAKE THIS ACTION. THE BOARD OF DIRECTORS BELIEVES THAT STAGGERING THE TERMS OF
DIRECTORS AND THE AMENDED PROVISIONS REGARDING REMOVAL OF DIRECTORS WILL SERVE TO MODERATE THE PACE OF ANY CHANGE OF CONTROL OF
THE BOARD AND SHOULD FACILITATE CONTINUITY AND STABILITY OF LEADERSHIP, WHICH THE BOARD BELIEVES IS IN YOUR BEST INTERESTS.
APPROVAL AND EVALUATION OF BUSINESS COMBINATIONS
Our current certificate of incorporation provides The amended and restated certificate of incorporation
that a business combination with a person or entity does not contain similar provisions. Approval of business
that owns more than 10% or more of our outstanding combinations would therefore be governed by
stock, or someone affiliated with that a person or Delaware law.
entity, must be approved by the holders of at least:
- - 75% of our outstanding stock; and Delaware law generally requires that a majority of the
stockholders of both acquiring and target corporations
- - a majority of the shares of our outstanding approve a merger or a sale of all or substantially all
stock, not including the shares beneficially of the assets of a corporation. Delaware law does not
owned by the 10% owner. require a stockholder vote of the surviving corporation
in a merger if:
Our current certificate of incorporation also provides - the merger agreement does not amend the existing
that the board, when evaluating any business combination certificate of incorporation;
or tender or exchange offer, must consider the following
factors: - each share of stock of the surviving corporation
outstanding before the merger is an identical share
- - the adequacy of the amount to be paid in the after the merger; and
transaction;
- the number of shares to be issued by the surviving
- - the social and economic effects of the corporation in the merger does not exceed 20% of the
transaction on us and our employees, customers, shares outstanding prior to the merger.
creditors, and other elements of the
communities in which we operate or are located; Also, Section 203 of the Delaware General Corporation Law
prohibits us from engaging in a business combination with a
- - the business and financial condition and person or entity that owns 15% or more of our outstanding
earnings prospects of the acquirer; and voting stock for three years following the date that the
person or entity acquired our stock. The three-year
- - the competence, experience, and integrity of the moratorium imposed on business combinations by Section 203
acquirer and its management. does not apply in a number of circumstances, including the
following:
17
<PAGE>
CURRENT CERTIFICATE AMENDED AND RESTATED CERTIFICATE
- prior to the date that the 15% owner acquired our
stock, the board approves either the business
combination or the transaction that resulted in the
person or entity acquiring our stock; or
- after the date that the 15% owner acquired our stock,
the board and holders of at least two-thirds of our
voting stock not owned by the 15% owner approve the
business combination.
Furthermore, Delaware law and our bylaws provide that we may
enter into a transaction in which one of our directors or
officers has a financial interest if:
- the material facts as to the relationship or interest
are disclosed to the board and the board in good faith
authorizes the transaction by the affirmative vote of
a majority of the disinterested directors;
- the material facts as to the relationship are disclosed
or known to our stockholders and the transaction is
approved in good faith by our stockholders; or
- the transaction is fair to us as of the time it is
approved by the board or our stockholders.
In addition, Delaware statutes and court decisions impose
fiduciary duties on directors and officers. With respect to all
decisions, including those relating to business combinations,
Delaware law requires that directors act with requisite care in
the discharge of their duties and protect the interests of the
corporation and refrain from conduct that would injure the
corporation and its stockholders or deprive them of profit or
advantage.
THE PROPOSED CHANGES ARE INTENDED TO ENSURE THAT OUR BOARD'S ACTIONS ARE CONSISTENT WITH THE FIDUCIARY DUTY REQUIREMENTS UNDER
DELAWARE LAW. THIS SHOULD ENSURE THAT DIRECTORS WILL ACT IN OUR BEST INTERESTS AND THE BEST INTERESTS OF OUR STOCKHOLDERS. THE
BOARD ALSO BELIEVES THAT THE INTERESTS OF STOCKHOLDERS CAN BE PROTECTED THROUGH A SIMPLE MAJORITY VOTE REQUIREMENT.
THE BOARD FURTHER BELIEVES THAT SECTION 203 SHOULD ENCOURAGE ANY POTENTIAL ACQUIRER TO NEGOTIATE WITH THE BOARD. SECTION 203
SHOULD BE SUFFICIENT TO LIMIT THE ABILITY OF A POTENTIAL ACQUIRER TO MAKE A TWO-TIERED BID FOR US IN WHICH ALL STOCKHOLDERS WOULD
NOT BE TREATED EQUALLY AND MAY ALSO DISCOURAGE POTENTIAL ACQUIRERS WHO ARE UNWILLING TO COMPLY WITH ITS PROVISIONS.
WE DO NOT HAVE ANY PLAN OR AGREEMENT TO ENGAGE IN ANY BUSINESS COMBINATION OF ANY KIND THAT WOULD REQUIRE YOUR APPROVAL, OR ANY
TRANSACTION IN WHICH A DIRECTOR OR OFFICER WILL HAVE A FINANCIAL INTEREST.
IT IS POSSIBLE THAT THE ELIMINATION OF THE 75% VOTING REQUIREMENT MAY ASSIST A PERSON OR GROUP IN OBTAINING CONTROL OF US.
HOWEVER, THE BOARD BELIEVES THAT OTHER PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, INCLUDING THE
STAGGERED BOARD PROVISION, AND DELAWARE LAW SHOULD PROTECT YOU AGAINST UNFAIR TAKEOVER ATTEMPTS.
18
<PAGE>
CURRENT CERTIFICATE AMENDED AND RESTATED CERTIFICATE
INDEMNIFICATION
The current certificate of incorporation provides for The amended and restated certificate of incorporation does not
indemnification of our officers, directors, employees contain a provision relating to indemnification. Our bylaws do,
and agents to the full extent permitted by law. however, provide for indemnification of present and former
directors, officers, employees, or agents to the full extent
permitted by Delaware law. An indemnified party must have acted
in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, our best interests. With respect to
criminal action, the indemnified party must have had no reasonable
cause to believe that his or her conduct was illegal. In addition,
our bylaws require that we are in general not obligated to
indemnify any person in connection with a proceeding initiated by
that person, unless authorized by the board.
DIRECTORS', OFFICERS' AND EMPLOYEES' INDEMNIFICATION RIGHTS UNDER OUR BYLAWS ARE SIMILAR TO THE RIGHTS AFFORDED IN OUR CURRENT
CERTIFICATE OF INCORPORATION. HOWEVER, OUR BYLAWS CONTAIN THE LIMITATIONS DESCRIBED ABOVE, WHICH REQUIRE THAT AN INDEMNIFIED
PARTY MUST HAVE ACTED IN GOOD FAITH AND IN A MANNER NOT OPPOSED TO OUR BEST INTERESTS. THE PROPOSED CHANGES ARE CONSISTENT WITH
DELAWARE LAW AND ARE INTENDED TO ENHANCE OUR STOCKHOLDERS' BEST INTERESTS.
AMENDMENT OF OUR BYLAWS
Our current certificate of incorporation provides that our The amended and restated certificate would permit our
bylaws may be amended by: bylaws to be amended by:
- - a vote of at least two-thirds of the board of - a vote of at least a majority of the board of
directors; or directors; or
- - a vote of the holders of at least 75% of our - a vote of the holders of at least a majority
outstanding shares. of our outstanding shares.
THESE REVISIONS ARE INTENDED TO FACILITATE EITHER OUR BOARD OR OUR STOCKHOLDERS IN MAKING CHANGES TO OUR BYLAWS.
AMENDMENT OF OUR CERTIFICATE OF INCORPORATION
Our current certificate of incorporation provides The amended and restated certificate would permit any
that any amendment to provisions of our certificate of provision of our certificate of incorporation to be
incorporation regarding the following matters requires amended by the vote of the holders of at least a
approval by holders of at least 75% of our outstanding majority of our outstanding shares voting on the matter.
shares voting on the matter:
</TABLE>
- - ability of stockholders to vote by written
consent;
- - limitations on the calling of special
stockholder meetings;
- - absence of cumulative stockholder voting;
- - advance notice requirements for stockholder
proposals and nominations for the election
of directors;
- - number of directors;
19
<PAGE>
<TABLE>
<S> <C>
CURRENT CERTIFICATE AMENDED AND RESTATED CERTIFICATE
</TABLE>
- - filling vacancies on the board of directors;
- - staggered board;
- - removal of directors;
- - approval of business combinations;
- - the board's evaluation of business combinations;
- - indemnification of officers, directors, and employees;
- - limitations on directors' liability;
- - amendment of our bylaws; and
- - amendment of our certificate of incorporation.
THESE REVISIONS ARE INTENDED TO MAKE IT EASIER FOR STOCKHOLDERS TO AMEND OUR
CERTIFICATE OF INCORPORATION. THIS MAY FACILITATE A CHANGE OF CONTROL
TRANSACTION. IN ADDITION, THE ELIMINATION OF THE 75% VOTE REQUIREMENT WILL
IMPEDE THE HOLDERS OF A MINORITY OF OUR VOTING INTERESTS TO PREVENT HOLDERS OF A
MAJORITY OF OUR SHARES FROM AMENDING OUR CERTIFICATE OF INCORPORATION. WE ARE
NOT AWARE OF ANY PENDING OR THREATENED EFFORTS TO OBTAIN CONTROL OF US.
APPROVAL OF AMENDMENT TO OUR STOCK OPTION PLAN
(ITEM 3 ON PROXY CARD)
Prior to our merger with National Law Library, Planet Resources adopted
the 1999 Stock Option Plan, which authorized the issuance of a total of 300,000
shares of our common stock to our or our subsidiaries' employees who are
executive, administrative, professional or technical personnel who have
responsibilities affecting our management, direction, development or financial
success.
Effective January 1, 2000, the plan has been administered by the
compensation committee of the board of directors. Prior to that time, the plan
was administered by the entire board of directors. The compensation committee,
and prior to its establishment, the board, determines the employees to whom
awards are granted, the number of awards granted, the exercise price of the
award, the method of exercise and the specific terms and conditions of each
grant, in each case subject to the terms of the plan.
Adjustments in the number and kind of shares granted under the plan
will be made if we merge or consolidate with another entity and we are the
surviving corporation. In the case of a merger, reorganization or consolidation
where we are not the surviving corporation or in the case of our liquidation or
dissolution, all outstanding options granted under the plan will be immediately
exercisable during the 30-day period following the effective date of the
transaction, unless other provisions are made in connection with the transaction
for assumption of the options.
As of December 31, 1999, no options to purchase shares of our common
stock were granted under the option plan, and 300,000 shares were available for
future grants under the option plan.
In December 1999, the board of directors amended the stock option plan
to increase by 2,700,000, the number of shares of common stock authorized for
issuance in connection with options granted under the plan, subject to your
approval at the annual meeting. If this proposal is approved, the total number
of shares authorized for issuance under the option plan will be 3,000,000.
20
<PAGE>
This proposal will be approved if it receives the affirmative vote of
the holders of at least a majority of the shares of our common stock voted at
the meeting.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE AMENDMENT TO
OUR STOCK OPTION PLAN.
SELECTION OF INDEPENDENT AUDITORS
(ITEM 4 ON PROXY CARD)
In December 1999, the board of directors changed the end of our fiscal
year from June 30 to December 31. We are asking you to ratify the board's
selection of Harper & Pearson Company as our independent auditors for the fiscal
year ended December 31, 1999.
Harper & Pearson Company audited our financial statements during the
1999 fiscal. In addition, Harper & Pearson Company audited the financial
statements of our predecessor, Planet Resources, Inc., for three years.
Representatives of Harper & Pearson Company will be present at the annual
meeting and will have the opportunity to make a statement if they desire to do
so. These representatives will also be available to respond to appropriate
questions.
This proposal will be approved if it receives the affirmative vote of
the holders of at least a majority of our shares of common stock voted at the
meeting.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE SELECTION OF HARPER &
PEARSON COMPANY AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDED DECEMBER
31, 1999.
STOCKHOLDER PROPOSALS
We must receive any stockholder proposal intended for inclusion in the
proxy materials for our annual meeting to be held in 2001 no later than May 15,
2000 to have your proposal included in our Proxy Statement for the 2001 Annual
Meeting. You must submit your proposal in writing to our Secretary, c/o Internet
Law Library, 4301 Windfern Road, Suite 200, Houston, Texas 77041.
ANNUAL REPORT
Our annual report on Form 10-K, including the amendment to the report,
which includes our consolidated financial statements, is being mailed to you
along with this proxy statement. To obtain a copy of any exhibit to this report
or amendment, please write to:
Internet Law Library, Inc.
4301 Windfern Road, Suite 200
Houston, Texas 77041
Attention: Carol A. Wilson
21
<PAGE>
ANNEX A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
INTERNET LAW LIBRARY, INC.
ARTICLE I
NAME
The name of the Corporation is Internet Law Library, Inc.
(herein the "Corporation").
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is the
Corporation Trust Center at 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware. The name of its registered agent at
such address is The Corporation Trust Company.
ARTICLE III
POWERS
The purpose for which the Corporation is organized is to transact all
lawful business for which corporations may be incorporated pursuant to the laws
of the State of Delaware The Corporation shall have all the powers of a
corporation organized under the General Corporation Law of the State of
Delaware.
ARTICLE IV
TERM
The Corporation is to have perpetual existence.
ARTICLE V
CAPITAL STOCK
The aggregate number of shares of all classes of capital stock which
the Corporation has authority to issue is 150,000,000 of which 100,000,000 are
to be shares of common stock, $.001 par value per share, and of which 50,000,000
are to be shares of preferred stock, $.001 par value per share. The shares may
be issued by the Corporation from time to time as approved by the board of
directors of the Corporation without the approval of the stockholders except as
otherwise provided in this Article V or the rules of a national securities
exchange if applicable. The consideration for the issuance of the shares shall
be paid to or received by the Corporation in full before their issuance and
shall not be less than the par value per share. The consideration for the
issuance of the shares shall be cash, services rendered, personal property
(tangible or intangible), real property, leases of real property or any
combination of the foregoing. In the absence of actual fraud in the transaction,
the judgment of the board of directors as to the value of such consideration
shall be conclusive. Upon payment of such consideration such shares shall be
deemed to be fully paid and nonassessable. In the case of a stock dividend, the
part of the surplus of the Corporation which is transferred to stated capital
upon the issuance of shares as a stock dividend shall be deemed to be the
consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
A. COMMON STOCK. Except as provided in this Certificate, the holders of
the common stock shall exclusively posses all voting power. Subject to the
provisions of this Certificate, each holder of shares of common stock shall be
entitled to one vote for each share held by such holders.
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<PAGE>
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class or series of
stock having preference over the common stock as to the payment of dividends,
the full amount of dividends and sinking fund or retirement fund or other
retirement payments, if any, to which such holders are respectively entitled in
preference to the common stock, then dividends may be paid on the common stock,
and on any class or series of stock entitled to participate therewith as to
dividends, out of any assets legally available for the payment of dividends, but
only when and as declared by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having preference
over the common stock in any such event, the full preferential amounts to which
they are respectively entitled, the holders of the common stock and of any class
or series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the remaining assets
of the Corporation available for distribution, in cash or in kind.
Each share of common stock shall have the same relative powers,
preferences and rights as, and shall be identical in all respects with, all the
other shares of common stock of the Corporation.
B. PREFERRED STOCK. Except as provided in this Certificate, the board
of directors of the Corporation is authorized, by resolution or resolutions from
time to time adopted, to provide for the issuance of preferred stock in series
and to fix and state the powers, designations, preferences and relative,
participating, optional or other special rights of the shares of each such
series, and the qualifications, limitation or restrictions thereof, including,
but not limited to determination of any of the following:
(1) the distinctive serial designation and the number of shares
constituting such series;
(2) the rights in respect of dividends, if any, to be paid on the
shares of such series, whether dividends shall be cumulative and, if so, from
which date or dates, the payment or date or dates for dividends, and the
participating or other special rights, if any, with respect to dividends;
(3) the voting powers, full or limited, if any, of the shares of such
series;
(4) whether the shares of such series shall be redeemable and, if so,
the price or prices at which, and the terms and conditions upon which such
shares may be redeemed;
(5) the amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(6) whether the shares of such series shall be entitled to the benefits
of a sinking or retirement fund to be applied to the purchase or redemption of
such shares, and, if so entitled, the amount of such fund and the manner of its
application, including the price or prices at which such shares may be redeemed
or purchased through the application of such funds;
(7) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or any other series of
the same or any other class or classes of stock of the Corporation and, if so
convertible or exchangeable, the conversion price or prices, or the rate or
rates of exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such conversion
or exchange;
(8) the subscription or purchase price and form of consideration for
which the shares of such series shall be issued; and
(9) whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of preferred stock and
whether such shares may be reissued as shares of the same or any other series of
preferred stock.
A-2
<PAGE>
Each share of each series of preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series,
except the times from which dividends on shares which may be issued from time to
time of any such series may begin to accrue.
ARTICLE VI
PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series of
stock or of other securities of the Corporation shall have any preemptive right
to purchase or subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock or carrying any right to purchase
stock may be issued pursuant to resolution of the board of directors of the
Corporation to such persons, firms, corporations or associations, whether or not
holders thereof, and upon such terms as may be deemed advisable by the board of
directors in the exercise of its sole discretion.
ARTICLE VII
REPURCHASE OF SHARES
The Corporation may from time to time, pursuant to authorization by the
board of directors of the Corporation and without action by the stockholders,
purchase or otherwise acquire shares of any class, bonds, debentures, notes,
scrip, warrants, obligations, evidences or indebtedness, or other securities of
the Corporation in such manner, upon such terms, and in such amounts as the
board of directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.
ARTICLE VIII
MEETINGS OF STOCKHOLDERS; CUMULATIVE VOTING
A. Any action required or permitted by law to be taken at any annual or
special meeting of stockholders of the Corporation may be effected by written
consent of stockholders in lieu of a meeting of stockholders.
B. Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by the board of directors of the
Corporation, or by a committee of the board of directors which has been duly
designated by the board of directors and whose powers and authorities, as
provided in a resolution of the board of directors or in the bylaws of the
Corporation, include the power and authority to call such meetings, but such
special meetings may not be called by another person or persons.
C. There shall be no cumulative voting by stockholders of any class or
series in the election of directors of the Corporation.
D. Meetings of stockholders may be held at such place as the bylaws may
provide.
ARTICLE IX
NOTICE FOR NOMINATIONS AND PROPOSALS
A. Nominations for the election of directors and proposals for any new
business to be taken up at any annual or special meeting of stockholders may be
made by the board of directors of the Corporation or by any stockholder of the
Corporation entitled to vote generally in the election of directors. In order
for a stockholder of the Corporation to make any such nominations and/or
proposals at an annual meeting or such proposals at a special meeting, he or she
shall give notice thereof in writing, delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of the Corporation of less than
thirty days nor more than sixty days prior to any such meeting; provided,
however, that if less than forty days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as prescribed,
to the Secretary of the Corporation not later than the close of the tenth day
following the day on which notice of the meeting was mailed to stockholders.
Each such notice given by a stockholder with respect to nominations for the
election of directors shall set forth (1) the name, age, business address and,
if known, residence address of each nominee proposed in such notice, (2) the
principal occupation or
A-3
<PAGE>
employment of each such nominee, and (3) the number of shares of stock of the
Corporation which are beneficially owned by each such nominee. In addition,
the stockholder making such nomination shall promptly provide any other
information reasonably requested by the Corporation.
B. Each such notice given by a stockholder to the Secretary with
respect to business proposals to bring before a meeting shall set forth in
writing as to each matter: (1) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
meeting; (2) the name and address, as they appear on the Corporation's books, of
the stockholder proposing such business; (3) the class and number of shares of
the Corporation which are beneficially owned by the stockholder; and (4) any
material interest of the stockholder in such business. Notwithstanding anything
in this Certificate to the contrary, no business shall be conducted at the
meeting except in accordance with the procedures set forth in this Article.
C. The Chairman of the annual or special meeting of stockholders may,
if the facts warrant, determine and declare to such meeting that a nomination or
proposal was not made in accordance with the foregoing procedure, and, if he
should so determine, he shall so declare to the meeting and the defective
nomination or proposal shall be disregarded and laid over for action at the next
succeeding adjourned, special or annual meeting of the stockholders taking place
thirty days or more thereafter. This provision shall not require the holding of
any adjourned or special meeting of stockholders for the purpose of considering
such defective nomination or proposal.
ARTICLE X
DIRECTORS
A. NUMBER, VACANCIES. The number of directors of the Corporation shall
be such number, not less than one nor more than 15 (exclusive of directors, if
any, to be elected by holders of preferred stock of the Corporation), as shall
be provided from time to time in a resolution adopted by the board of directors,
provided that no decrease in the number of directors shall have the effect of
shortening the term of any incumbent director. Exclusive of directors, if any,
elected by holders of preferred stock, vacancies in the board of directors of
the Corporation, however caused, and newly created directorships shall be filled
by a vote of the majority of the directors then in office, whether or not a
quorum, and any director so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of the class to which the
director has been chosen expires and when the director's successor is elected
and qualified. The board of directors shall be classified in accordance with the
provisions of Section B of this Article X.
B. CLASSIFIED BOARD. The board of directors of the Corporation (other
than directors which may be elected by the holders of preferred stock), shall be
divided into three classes of directors which shall be designated Class I, Class
II and Class III. The members of each class shall be elected for a term of three
years and until their successors are elected and qualified. Such classes shall
be as nearly equal in number as the then total number of directors constituting
the entire board of directors shall permit, exclusive of directors, if any,
elected by holders of preferred stock, with the terms of office of all members
of one class expiring each year. Should the number of directors not be equally
divisible by three, the excess director or directors shall be assigned to
Classes I or II as follows: (1) if there shall be an excess of one directorship
over the number equally divisible by three, such extra directorship shall be
classified in Class I; and (2) if there be an excess of two directorships over a
number equally divisible by three, one shall be classified in Class I and the
other in Class II. At the organizational meeting of the Corporation, directors
of Class I shall be elected to hold office for a term expiring at the first
annual meeting of stockholders, directors of Class II shall be elected to hold
office for a term expiring at the second succeeding annual meeting of
stockholders and directors of Class III shall be elected to hold office for a
term expiring at the third succeeding annual meeting thereafter. Thereafter, at
each succeeding annual meeting, directors of each class shall be elected for
three-year terms. Notwithstanding the foregoing, the director whose term shall
expire at any annual meeting shall continue to serve until such time as his
successor shall have been duly elected and shall have qualified unless his
position on the board of directors shall have been abolished by action taken to
reduce the size of the board of directors prior to said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the position(s) to
be abolished. Notwithstanding the foregoing, no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Should the number of directors of the Corporation be increased, other
than directors which may be elected by the holders of preferred stock, the
additional directorships shall be
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<PAGE>
allocated among classes as appropriate so that the number of directors in
each class is as specified in the immediately preceding paragraph.
Whenever the holders of any one or more series of preferred stock of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the board of directors shall include said
directors so elected and not be in addition to the number of directors fixed as
provided in this Article X. Notwithstanding the foregoing, and except as
otherwise may be required by law, whenever the holders of any one or more series
of preferred stock of the Corporation elect one or more directors of the
Corporation, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.
ARTICLE XI
INDEMNIFICATION
The Corporation shall have the power to indemnify the persons in the
actions, suits or proceedings in each case as from time to time provided in the
bylaws of the Corporation.
ARTICLE XII
LIMITATIONS ON DIRECTORS' LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except: (A) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (B) for acts or omissions that are not
in good faith or that involve intentional misconduct or a knowing violation of
law, (C) under Section 174 of the General Corporation Law of the State of
Delaware, or (D) for any transaction from which the director derived any
improper personal benefit. If the General Corporation Law of the State of
Delaware is amended after the date of filing of this Certificate to further
eliminate or limit the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE XIII
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
adopt, repeal, alter, amend and rescind the bylaws of the Corporation by a vote
of a majority of the entire board of directors. Notwithstanding any other
provision of this Certificate or the bylaws of the Corporation, the bylaws shall
be adopted, repealed, altered, amended or rescinded by the stockholders of the
Corporation only by the vote of the holders of not less than a majority of the
outstanding shares of capital stock of the Corporation entitled to vote thereon,
or, as set forth above, by the board of directors.
ARTICLE XIV
AMENDMENT OF CERTIFICATE OF INCORPORATION
Subject to the provisions hereof, the Corporation reserves the right to
repeal, alter, amend or rescind any provision contained in this Certificate in
the manner now or hereafter prescribed by law, and all rights conferred on
stockholders herein are granted subject to this reservation.
A-5
<PAGE>
INTERNET LAW LIBRARY, INC.
FORM OF PROXY FOR ANNUAL MEETING
TO BE HELD FEBRUARY 28, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Hunter M.A. Carr or Malcolm F. McNeill,
or either of them, proxies of the undersigned, with full powers of substitution
to vote all of the shares of common stock of Internet Law Library, Inc. that the
undersigned is entitled to vote at the annual meeting to be held on February 28,
2000 and at any adjournment thereof, and authorizes and instructs said proxies
to vote as set forth on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN
PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
Nominees:
1. Election of Directors Instruction: FOR WITHHOLD ---------
To withhold authority to vote for / / AUTHORITY Hunter M. A. Carr
any individual nominee, write in FOR ALL Kelley V. Kirker
that nominee's name on the lines NOMINEES George A. Roberts
below. / /
----------------------------------
----------------------------------
----------------------------------
2. Approval and adoption of the FOR AGAINST ABSTAIN
Amended and Restated Certificate / / / / / /
of Incorporation
3. Approval of the amendment to the FOR AGAINST ABSTAIN
1999 Stock Option Plan to increase / / / / / /
by 2,700,000 the number of shares
of common stock authorized for
issuance thereunder.
4. Ratification of the appointment of FOR AGAINST ABSTAIN
Harper & Pearson Company as / / / / / /
independent auditors.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any
adjournment or postponement thereof.
This Proxy when properly executed will be
voted in the manner directed herein by the
undersigned stockholder. If no direction is
made, this Proxy will be voted FOR all
nominees listed in Proposal 1 and FOR
Proposals 2, 3 and 4.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE OR
BY FACSIMILE TO (713) 462-7519.
-------------------------------
Signature
Dated: __________________, 2000
NOTE: Please sign name exactly as it appears
on the share certificate. Only one of
several joint owners need to sign.
Fiduciaries should give full title.
