As filed with the Securities and Exchange Commission on October __, 2000
Registration No. 333-______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(AMENDMENT NO. __)
______________
LEGALOPINION.COM
(Name of small business issuer in its charter)
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NEVADA . . . . . . . . . . . . 48130200 87-0550824
(State or jurisdiction of. . . (Primary Standard Industrial (IRS Employer
Incorporation or organization) Classification Code Number) Identification No.)
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230-2000 SPALL ROAD, KELOWNA, BRITISH COLUMBIA V1Y 9P6
(250) 763-5560
(Address of principal place of business)
4325 WARWICK, KANSAS CITY, MISSOURI 64111
(816) 531-7279
(Address and telephone number of executive offices)
JOHN M. MARENCIK, PRESIDENT
230-2000 SPALL ROAD, KELOWNA, BRITISH COLUMBIA V1Y9P6
(250) 763-5560
(Name, address and telephone number of agent for service)
______________
Copies to:
legalopinion.com
c/o David Emerick
4110 Central St., Kansas City, MO 64111
(816) 531-1378
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement in
the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of each class of securities . . . . Number of Proposed Proposed Amount of
to be registered. . . . . . . . . . . . . shares maximum offering maximum registration fee
to be price aggregate offering
registered(1) per unit(2) price(2)
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Common Stock ($.001 par value per share). 44,174,965 $ .17 $ 7,509,744.05 $ 1,982.57
----------------------------------------- ------------- ------------------ -------------------- -----------------
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(1) The number of shares to be registered includes (i) 34,000,000 shares
based on a good faith estimate of the maximum amount issuable pursuant to the
floating conversion rate of the registrant's 6% convertible debentures, and (ii)
5,500,000 shares issuable upon the exercise of stock purchase warrants delivered
in connection with the issuance of the 6% convertible debentures. The
provisions of Rule 416 shall apply to this registration statement and the number
of shares registered on this registration statement automatically shall increase
or decrease as a result of stock splits, stock dividends, or similar
transactions.
(2) Estimated solely for purposes of calculating registration fee, based on
$ .17 the average of the bid and asked prices per share of the stock as reported
by the Over the Counter Bulletin Board on October 20, 2000, pursuant to Rule
457(c) under the Securities Act of 1933.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS [Subject to completion - dated October ___, 2000)]
44,174,965 SHARES
LEGALOPINION.COM
COMMON STOCK
This prospectus may be used only in connection with the resale by the
parties identified under "Selling Stockholders" beginning on page 31 of this
prospectus or their assigns of shares of the common stock of legalopinion.com as
follows:
* up to 4,642,465 shares of common stock that are held by some of our current
stockholders;
* up to 34,000,000 shares of common stock that are or may be issuable upon
conversion of our 6% convertible debentures due July 17, 2005 and September 19,
2005.
* up to 5,500,000 shares of common stock that are or may be issuable upon the
exercise of warrants to purchase common stock.
- * up to 32,500 shares of common stock that are issuable for consulting
services rendered to us
The selling stockholders from time to time may offer their shares of our
common stock through public or private transactions at prevailing market prices
or at privately negotiated prices. legalopinion.com will not receive any
proceeds from the sale of shares by the selling stockholders, nor will we
receive any proceeds from the conversion of the convertible debentures into
shares of common stock. We will receive $1.50 per share of common stock issued
upon the exercise of the warrants, except when the warrant exercise price is
paid in shares of common stock.
_________________________
Our common stock currently is quoted for trading on the OTC Bulletin Board
under the symbol "LAWW". On October 20, 2000, the closing sale price of our
common stock, as quoted on the OTC Bulletin Board, was $ .17 per share.
_________________________
AN INVESTMENT IN THESE SECURITIES IS RISKY. SEE "RISK FACTORS" BEGINNING
ON PAGE 5 FOR A DISCUSSION OF FACTORS THAT YOU SHOULD CONSIDER BEFORE YOU INVEST
IN THE COMMON STOCK BEING SOLD WITH THIS PROSPECTUS.
_________________________
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
The date of this prospectus is October 25, 2000.
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TABLE OF CONTENTS
Page
Summary 4
Risk Factors 5
Our Company 12
Use of Proceeds 12
Dividend Policy 12
Price Range Of Our Common Stock 12
Capitalization 13
Selected Financial Information 14
Management's Discussion and
Analysis or Plan of Operation 15
Business 17
Management 25
Certain Relationships and Related
Transactions 30
Selling Stockholders 31
Description of Securities 38
Restrictions on Sale or Other Transfer of
the Shares 41
Plan of Distribution 41
Legal Matters 42
Experts 43
Additional Information 43
Exhibit 10.1 - Employment Agreement 44
Exhibit 10.2 - Employment Agreement 55
Exhibit 10.3 - Stock Option Plan 65
Exhibit 10.4 - Legal Opinion 75
_______________________________________
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell,
and seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of common stock.
WHERE YOU CAN GET MORE INFORMATION
If you would like more information about us, please write or call:
Mr. John M. Marencik
President
legalopinion.com
4325 Warwick
Kansas City, MO
Telephone: (816) 531-4260
The information on our website, www.legalopinion.com, does not constitute a
part of this prospectus and is not incorporated by reference herein.
We intend to furnish our stockholders with annual reports containing
financial statements audited by an independent public accounting firm. In
addition, we intend to make available to our stockholders quarterly reports
containing unaudited financial information for each of the first three quarters
of each fiscal year. Our fiscal year ends December 31. We are a reporting
company subject to the informational requirements of the Securities and Exchange
Act of 1934 and file special, annual and quarterly reports as well as proxy
statements and other information with the Commission. You may read and copy any
reports, statements or other information we file at the following locations of
the Commission:
Public Reference Room . Regional Office Regional Office
450 Fifth Street N.W. . 500 West Madison St 7 World Trade Ctr
Room 1024 . . . . . . . Suite 1400 Suite 1300
Washington, D.C. 20549 Chicago, IL 60661 New York, NY 10048
You can request copies of such material, upon payment of a duplication fee, from
the public reference section of the Commission at 450 Fifth Street, NW,
Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for
further information on the operation of the public reference rooms. Materials
also may be obtained from the Commission's internet website
(http://www.sec.gov).
DEALER PROSPECTUS DELIVERY OBLIGATION
Until November 19, 2000 (25 days after the date of this prospectus) all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
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SUMMARY
This summary highlights information contained elsewhere in this prospectus.
It is not complete and may not contain all of the information that you should
consider before investing in our common stock. You should read the entire
prospectus carefully, including "Risk Factors" and our financial statements and
related notes.
OUR COMPANY
Our principal offices house our consumer operations located at 230-2000
Spall Road, Kelowna, British Columbia V1Y 9P6. Our telephone number is (250)
763-5560. Our executive offices are located at 4325 Warwick, Kansas City,
Missouri 64111.
RISK FACTORS
Our company and its business, and an investment in our common stock, will
be subject to a high degree of risk, including the various risks described under
"Risk Factors."
THE OFFERING
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Securities offered by the selling 44,174,965 shares of our common stock, par value $.001 per share,
Stockholders:. . . . . . . . . . including:.
. . . . . . . . . . . . . . . . . * up to 4,642,465 shares that are held by some of our current
. . . . . . . . . . . . . . . . . stockholders;
. . . . . . . . . . . . . . . . . * up to 34,000,000 shares that are or may be issuable upon
. . . . . . . . . . . . . . . . . conversion of our 6% convertible debentures due July 17, 2005 and
. . . . . . . . . . . . . . . . . September 19, 2005;
. . . . . . . . . . . . . . . . . *. up to 5,500,000 shares that are or may be issuable upon the
. . . . . . . . . . . . . . . . . exercise of warrants to purchase common stock;
. . . . . . . . . . . . . . . . . *. up to 32,500 shares of common stock that are issuable for
. . . . . . . . . . . . . . . . . consulting services rendered to us.
Use of proceeds:. . . . . . . . . We will not receive any proceeds from the offering of shares by the
. . . . . . . . . . . . . . . . . selling stockholders or from the conversion of the convertible
. . . . . . . . . . . . . . . . . debentures into shares of common stock. We, however, will receive
. . . . . . . . . . . . . . . . . 1.50 per share of common stock issued upon the exercise of the
. . . . . . . . . . . . . . . . . warrants, except when the warrant exercise price is paid in shares of
. . . . . . . . . . . . . . . . . common stock. We plan to use the net proceeds received, if any, from
. . . . . . . . . . . . . . . . . the exercise of the warrants for the funding of operating losses and for
. . . . . . . . . . . . . . . . . general corporate purposes.
Shares issued and outstanding:. . 33,604,442 as of October 20, 2000
Over the Counter Symbol:. . . . . LAWW
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SUMMARY FINANCIAL INFORMATION
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STATEMENT OF OPERATIONS
INFORMATION:. . . . . . . . . . FROM INCEPTION
--------------------
FROM INCEPTION SIX MONTHS THREE MONTHS THREE MONTHS (APRIL 7, 1999)
(APRIL 7, 1999) TO ENDED ENDED ENDED TO
JUNE 30, 2000 JUNE 30, 2000 JUNE 30, 2000 MARCH 31, 2000 DECEMBER 31
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) 1999
------------------------------- -------------------- ------------------- --------------- ----------------
Revenue
Directory fees $ 9,295 $ 8,856 $ 4,981 $ 3,875 $ 439
Expenses 12,677,815 12,025,456 8,821,133 3,204,323 652,359
Net loss (12,668,520) (12,016,600) (8,816,152) (3,200,448) (651,920)
Weighted avg. number of shares 23,244,118 31,488,275 32,248,619 31,083,942 22,170,899
Loss per share $ (0.55) $ (.38) $ (.27) $ (0.10) $ (0.03)
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BALANCE SHEET DATA:
JUNE 30, 2000 . . MARCH 31, 2000
(UNAUDITED) (UNAUDITED) DECEMBER 31, 1999
Cash $ 2,046 $ 56,851 $ 23,080
Prepaid Expenses 3,600 7,025,669 10,000,920
Total assets 33,937 7,107,953 10,049,558
Current liabilities 108,438 73,941 141,979
Long term debt 427,419 854,780 527,899
Total stockholders' equity (501,920) $ 6,179,232 $ 9,379,680
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RISK FACTORSFACTORS
You should carefully consider the risks described below before making a
decision to invest in our common stock. Some of the following factors relate
principally to our business and the industry in which we operate. Other factors
relate principally to an investment in our common stock. The risks and
uncertainties described below are not the only ones facing us. Additional risks
and uncertainties not presently known to us or that we currently deem immaterial
also may impair our business and operations.
If any of the matters included in the following risks were to occur, our
business, financial condition, results of operations, cash flows or prospects
could be materially adversely affected. In such case, the trading price of our
common stock could decline and you could lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT
We launched our web site in October 1999 and operate in a market that is
new and changing rapidly. Because we have an unproven business model and only a
limited operating history, it may be difficult for you to evaluate our business
and prospects. An investor in our common stock must consider the risks,
expenses and difficulties frequently encountered by early stage companies in new
and rapidly evolving markets, including web-based legal referrals, news and
information companies. We believe that an early stage company such as ours
must, among other things:
8maintain relationships with existing advertisers and attract
additional advertisers;
*enhance our brand recognition;
*develop new promotions and services;
*obtain required funding for operations on favorable terms;
*attract, integrate, motivate and retain qualified employees, consultants
and service providers;
*continue to develop and upgrade our systems and infrastructure to
accommodate potential growth;
*maintain and defend our intellectual property rights; and
*respond to changes in government regulations.
We may not be successful in accomplishing these objectives. Our failure to do
so could harm our business, results of operations and financial condition.
WE HAVE A HISTORY OF LOSSES AND WE ANTICIPATE LOSSES WILL CONTINUE
As of June 30, 2000, we had an accumulated deficit of $12,668,520 that
represented our cumulative loss from our inception on April 7, 1999. We have
not achieved profitability and expect to continue to incur net losses in 2000
and subsequent fiscal periods. We expect to continue to incur significant
operating expenses and, as a result, will need to generate significant revenues
to achieve profitability, which may not occur. Even if we do achieve
profitability, we may be unable to sustain or increase profitability on a
quarterly or annual basis in the future.
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WE NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE.
Based upon our current plans, we believe that our existing resources and
anticipated cash flow from operations can satisfy our capital needs for the next
two (2) years. After this period, and possibly earlier, we anticipate that our
business will not produce revenues which, together with our existing cash and
other resources, are adequate to meet our cash needs. Changes in our
development plans and other changes effecting our operating expenses may alter
the timing and amount of expenditures of our capital resources. When we need
additional funding, we may be unable to obtain it on favorable terms, or at all.
If adequate funds are not available, we will have to curtail operations
significantly. In addition, if we raise funds by selling stock or convertible
securities, our existing stockholders could suffer dilution.
OUR FAILURE TO GENERATE SIGNIFICANT REVENUES AND OUR ACCUMULATION OF A DEFICIT
SINCE INCEPTION RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN.
The report of our independent accountants with respect to our December 31, 1999
financial statements contains an explanatory paragraph concerning our generation
of insignificant revenues and accumulation of a deficit since inception. This
factor, among others raises substantial doubt about our ability to continue as a
going concern. Our ability to continue as a going concern is dependent on our
ability to generate future profitable operations and to receive continued
financial support from our stockholders and other investors. We do not expect
to be profitable in 2000 or in subsequent fiscal periods and may not be able to
receive the necessary financial report from our stockholders and other
investors.
IF WE ARE UNABLE TO ATTRACT OR RETAIN PARTICIPATING LAWYERS AS WELL AS
QUALIFIED EDITORIAL STAFF AND OUTSIDE CONTRIBUTORS, OUR BUSINESS COULD BE
HARMED.
Our future success depends on our ability to attract lawyers throughout
North America who agree to participate in the preparation of legal opinions for
our customers and the provision of other professional legal services. Our
success also depends substantially upon the continued efforts of our editorial
staff and outside contributors to produce original, timely, comprehensive and
trustworthy content. If we fail to attract sufficient qualified lawyers to
provide legal opinions and other professional legal services in a timely manner,
or we lose the services of a significant number of our editorial staff and
outside contributors or are unable to continue to obtain additional content for
our website at a reasonable cost, our business, results of operations and
financial condition could be materially adversely affected.
INTENSE COMPETITION COULD REDUCE OUR MARKET SHARE AND HARM OUR FINANCIAL
PERFORMANCE
An increasing number of legal referral, news and information sources
compete for consumers' attention and spending. We expect this competition to
continue to increase. We compete for customers, staff and outside contributors
with many types of companies, including:
*online services or web sites such as Feeadvice.com, Nolo.com, Uslaw.com
and Lawyers.com.
*law firms, lawyers and other legal services providers who have or may
enter the Internet legal market, such as Pre-Paid Legal Services, Inc.
*web "portal" companies, such as Yahoo!, America Online and Microsoft
Network.
*traditional legal forms vendors, such as Office Max.
Our ability to compete depends on many factors, including the timeliness,
comprehensiveness and trustworthiness of our content and that of our
competitors, the ease of use of services developed either by us or our
competitors and the effectiveness of our sales and marketing efforts.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may allow them to devote greater resources than we
can to the development and promotion of their services. These competitors may
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also engage in more extensive research, undertake more far-reaching marketing
campaigns, adopt more aggressive pricing policies (including offering their
legal news for free) and make more attractive offers to existing and potential
employees, outside contributors, strategic partners and advertisers. Our
competitors may develop content that is equal or superior to ours or that
achieves greater customer acceptance than ours. It is also possible that new
competitors may emerge and rapidly acquire significant market share. We may not
be able to compete successfully for advertisers, customers, staff or outside
contributors, which could materially adversely affect our business, results of
operations and financial condition. Increased competition could result in price
reductions, reduced margins or loss of market share, any of which could
materially adversely affect our business, results of operations and financial
condition.
A FAILURE TO ESTABLISH AND MAINTAIN STRATEGIC RELATIONSHIPS WITH OTHER WEB SITES
COULD DECREASE OUR SUBSCRIBER AND CUSTOMER BASE, WHICH MAY HARM OUR BUSINESS
We depend on establishing and maintaining subscription distribution
relationships with online firms and content syndication relationships with
high-traffic web sites for a significant portion of our subscriber and customer
base. There is intense competition for relationships with these firms and
placement on these sites, and we may have to pay significant fees to establish
additional content syndication relationships or maintain existing relationships
in the future. We may be unable to enter into relationships with these firms or
sites on commercially reasonable terms or at all. Even if we enter into these
relationships, they may not attract significant numbers of customers. Therefore,
our site may not receive a significant number of additional subscribers or
customers from such relationships. Our business, results of operations and
financial condition could be materially adversely affected if we do not
establish additional, and maintain existing, strategic relationships on
commercially reasonable terms or if any of our strategic relationships do not
result in an increase in the number of subscribers or customers of our web site.
POTENTIAL FLUCTUATIONS IN OUR QUARTERLY FINANCIAL RESULTS MAKE FINANCIAL
FORECASTING DIFFICULT
Our quarterly operating results may fluctuate significantly in the future
as a result of a variety of factors, including the following factors and those
discussed in this "Risk Factors" section, many of which are outside our
control:
*changes in the demand for our services;
*the introduction of competitive services;
*the pricing of our services, including the listing fee for our
participating attorneys; and
*depreciation expense from capital expenditures.
We believe that quarter-to-quarter comparisons of our operating results may not
be a good indication of our future performance, nor would our operating results
for any particular quarter be indicative of future operating results. In some
future quarters our operating results may be below the expectations of public
market analysts and investors. In such an event, the price of our common stock
may fall, possibly by a significant amount.
OUR FUTURE SUCCESS DEPENDS ON MAINTAINING AND INCREASING OUR CUSTOMER BASE
Our future success is highly dependent on an increase in the number of customers
who are willing to subscribe online for legal referral, news and information
publications, including legal forms. The number of Internet users willing to
pay for online legal referral, news and information may not increase. If the
market for online legal referral, news and information develops more slowly than
we expect, our business, results of operations and financial condition could be
materially adversely affected.
OUR FUTURE SUCCESS DEPENDS ON THE CONTINUED SERVICES AND EFFECTIVE INTEGRATION
OF OUR KEY MANAGEMENT PERSONNEL
Our future success depends upon the continued service of certain key management
personnel. The loss of one or more of our key management personnel could
materially adversely affect our business, results of operations and financial
condition. Our employees may leave us and work for our competitors or start
their own competing business.
UNEXPECTED INCREASES IN TRAFFIC MAY STRAIN OUR SYSTEMS
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Our web site must accommodate a high volume of traffic, often at unexpected
times. Our web site may experience slower response times than usual or other
problems for a variety of reasons. These occurrences could cause our customers
to perceive our web site as not functioning properly and, therefore, cause them
to use other methods to obtain legal referral, news and information. In such a
case, our business, results of operations and financial condition could be
materially adversely affected.
WE FACE A RISK OF SYSTEM FAILURE THAT MAY RESULT IN REDUCED TRAFFIC, REDUCED
REVENUE AND HARM TO OUR REPUTATION
Our ability to provide timely information depends on the efficient and
uninterrupted operation of our computer and communications hardware and software
systems. These systems and operations are vulnerable to damage or interruption
from human error, natural disasters, telecommunication failures, break-ins,
sabotage, computer viruses, intentional acts of vandalism and similar events.
Any system failure, including network, software or hardware failure, that causes
an interruption in our service or a decrease in responsiveness of our web site
could result in reduced traffic, reduced revenue and harm to our reputation,
brand and our relations with our advertisers. Our business, results of
operations and financial condition could be materially adversely affected by any
event, damage or failure that interrupts or delays our operations.
DIFFICULTIES ASSOCIATED WITH OUR BRAND DEVELOPMENT MAY HARM OUR ABILITY TO
ATTRACT CUSTOMERS
We believe that maintaining and growing awareness about the legalopinion.com
brand is an important aspect of our efforts to continue to attract customers.
The importance of brand recognition will increase in the future because of the
growing number of web sites providing legal referral, news and information. We
cannot assure you that our efforts to build brand awareness will be successful.
FAILURE TO MAINTAIN OUR REPUTATION FOR TRUSTWORTHINESS MAY REDUCE THE NUMBER OF
OUR CUSTOMERS, WHICH MAY HARM OUR BUSINESS
It is very important that we maintain our reputation as a trustworthy legal
resource or provider. The occurrence of events, including providing inaccurate
content, could harm our reputation for trustworthiness. These events could
result in a significant reduction in the number of our customers, which could
materially adversely affect our business, results of operations and financial
condition.
POTENTIAL LIABILITY FOR INFORMATION OBTAINED THROUGH OUR WEB SITE MAY REQUIRE US
TO DEFEND AGAINST LEGAL CLAIMS, WHICH MAY CAUSE SIGNIFICANT OPERATIONAL
EXPENDITURES
We may be subject to claims for defamation, libel, copyright or trademark
infringement or based on other theories relating to the information we publish
on our web site. These types of claims have been brought, sometimes
successfully, against online services as well as other print publications in the
past. We could also be subject to claims based upon the content that is
accessible from our web site through links to other web sites. Our insurance
may not adequately protect us against these claims.
FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD HARM OUR
BRAND-BUILDING EFFORTS AND ABILITY TO COMPETE EFFECTIVELY
To protect our rights to our intellectual property, we rely on a combination of
trademark and copyright law, trade secret protection, confidentiality agreements
and other contractual arrangements with our employees, affiliates, clients,
strategic partners and others. The protective steps we have taken may be
inadequate to deter misappropriation of our proprietary information. We may be
unable to detect the unauthorized use of, or take appropriate steps to enforce,
our intellectual property rights. We have registered our trademarks in the
United States and we have pending U.S. applications for other trademarks.
Effective trademark, copyright and trade secret protection may not be available
in every country in which we offer or intend to offer our services. Failure to
adequately protect our intellectual property could harm our brand, devalue our
proprietary content and affect our ability to compete effectively. Further,
defending our intellectual property rights could result in the expenditure of
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significant financial and managerial resources, which could materially adversely
affect our business, results of operations and financial condition.
WE MAY HAVE TO DEFEND AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH
MAY CAUSE SIGNIFICANT OPERATIONAL EXPENDITURES
Although we believe that our proprietary rights do not infringe on the
intellectual property rights of others, other parties may assert infringement
claims against us or claims that we have violated a patent or infringed a
copyright, trademark or other proprietary right belonging to them. We
incorporate licensed third-party technology in some of our services. In these
license agreements, the licensors have generally agreed to defend, indemnify and
hold us harmless with respect to any claim by a third party that the licensed
software infringes any patent or other proprietary right. We cannot assure you
that these provisions will be adequate to protect us from infringement claims.
Any infringement claims, even if not meritorious, could result in the
expenditure of significant financial and managerial resources on our part, which
could materially adversely affect our business, results of operations and
financial condition.
DIFFICULTIES IN DEVELOPING NEW AND ENHANCED SERVICES AND FEATURES FOR OUR WEB
SITE COULD HARM OUR BUSINESS
We may introduce additional and enhanced services in order to retain our current
customers and attract new customers. If we introduce a service that is not
favorably received, our current customers may choose a competitive service over
ours. We may also experience difficulties that could delay or prevent us from
introducing new services. These difficulties may include the loss of, or
inability to obtain or maintain, third-party technology license agreements.
Furthermore, the new services we may introduce could contain errors that are
discovered after these services are introduced. In these cases, we may need to
significantly modify the design or implementation of such services on our web
site to correct these errors. Our business, results of operations and financial
condition could be materially adversely affected if we experience difficulties
in introducing new services or if these new services are not accepted by our
customers.
RISKS RELATED TO OUR INDUSTRY
OUR ABILITY TO MAINTAIN AND INCREASE OUR CUSTOMER BASE DEPENDS ON THE
CONTINUED GROWTH IN USE AND EFFICIENT OPERATION OF THE WEB
The web-based information market is new and rapidly evolving. Our business
would be materially adversely affected if web usage does not continue to grow or
grows slowly. Web usage may be inhibited for a number of reasons, such as:
*inadequate network infrastructure;
*security concerns;
*inconsistent quality of service; and
*unavailability of cost-effective, high-speed access to the Internet.
Our customers depend on Internet service providers, online service
providers and other web site operators for access to our web site. Many of
these services have experienced significant service outages in the past and
could experience service outages, delays and other difficulties due to system
failures unrelated to our systems. These occurrences could cause our customers
to perceive the web in general or our web site in particular as an unreliable
medium and, therefore, cause them to use other media to obtain their legal
referral, news and information, which could materially adversely affect our
business, results of operations and financial condition.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES RELATING TO THE WEB COULD INCREASE
OUR COSTS OF TRANSMITTING DATA AND INCREASE OUR LEGAL AND REGULATORY
EXPENDITURES AND COULD DECREASE OUR CUSTOMER BASE
Existing domestic and international laws or regulations specifically regulate
communications or commerce on the web. Further, laws and regulations that
9
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address issues such as user privacy, pricing, online content regulation,
taxation and the characteristics and quality of online products and services are
under consideration by federal, state, local and foreign governments and
agencies. Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and online
services providers in a manner similar to the regulation of long distance
telephone carriers and to impose access fees on such companies. This
regulation, if imposed, could increase the cost of transmitting data over the
web. Moreover, it may take years to determine the extent to which existing laws
relating to issues such as intellectual property ownership and infringement,
libel, obscenity and personal privacy are applicable to the web. The Federal
Trade Commission and government agencies in certain states have been
investigating certain Internet companies regarding their use of personal
information. We could incur additional expenses if any new regulations
regarding the use of personal information are introduced or if these agencies
chose to investigate our privacy practices. Any new laws or regulations
relating to the web, or certain application or interpretation of existing laws,
could decrease the growth in the use of the web, decrease the demand for our web
site or otherwise materially adversely affect our business.
CONCERNS ABOUT WEB SECURITY COULD DECREASE OUR CUSTOMER BASE AND INCREASE
OUR WEB SECURITY EXPENDITURES
Concern about the transmission of confidential information over the
Internet has been a significant barrier to electronic commerce and
communications over the web. Any well-publicized compromise of security could
deter more people from using the web or from using it to conduct transactions
that involve the transmission of confidential information, such as purchasing
goods or services. Our business, results of operations and financial condition
could be materially adversely affected if Internet users significantly reduce
their use of the web because of security concerns. We may also incur
significant costs to protect ourselves against the threat of security breaches
or to alleviate problems caused by these breaches.
RISKS RELATED TO THIS OFFERING
OUR ISSUANCE OF SHARES AT PRICES BELOW THE MARKET PRICE FOR OUR COMMON
STOCK WILL HAVE A DILUTIVE IMPACT ON OUR STOCKHOLDERS
We have issued, and in the future will issue, shares of our common stock at a
discount to the then-prevailing market price of our stock. For example, we have
issued $500,000 in principal amount of debentures that may be converted into
common stock at a discount to the then-prevailing market price of our common
stock. Accordingly, the issuance of shares upon conversion of principal and
interest under the debentures, and in other instances when the issuance price is
less than the prevailing market price, will have a dilutive impact on out
stockholders. Discounted sales resulting from the conversion of the debentures
and in other instances could have an immediate adverse effect on the market
price of our common stock.
CONTROL BY PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS COULD ADVERSELY AFFECT
OUR STOCKHOLDERS
Our officers, directors and greater-than-five-percent stockholders (and their
affiliates), in the aggregate, beneficially own approximately 56% of the
outstanding common stock. As a result, these persons, acting together, have the
ability to control substantially all matters submitted to our stockholders for
approval (including the election and removal of directors and any merger,
consolidation or sale of all or substantially all of our assets) and to control
our management and affairs. Accordingly, this concentration of ownership may
have the effect of delaying, deferring or preventing a change in control of us,
impeding a merger, consolidation, takeover or other business combination
involving us or discouraging a potential acquirer from making a tender offer or
otherwise attempting to obtain control of us, which in turn could materially
adversely affect the market price of the common stock.
POSSIBLE VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR STOCKHOLDERS
Our stock price has been and will likely continue to be highly volatile,
particularly due to our relatively limited trading volume. For example, during
the first nine months of 2000, our common stock traded at a high price of $ 3.75
and a low price of $ .24. Our stock price could fluctuate significantly due to
a number of factors that are beyond our control, including:
*Variations in our anticipated or actual quarterly operating results;
10
<PAGE>
*The gain or loss of significant contracts;
*Changes in management;
*Sales of substantial amounts of our stock;
*Announcements about us or about our competitors; and
*Changes in securities analysts' estimates of our performance, or our
failure to meet analysts' expectations.
The stock market has experienced significant price and volume fluctuations
and the market prices of securities of technology companies, particularly
Internet-related companies, have been highly volatile. These broad market and
industry conditions may adversely affect the market price for our common stock,
regardless of our operating performance. Investors may not be able to resell
their shares at or above the price they paid for them.
STOCKHOLDERS MAY NOT BE ABLE TO SELL THEIR POSITIONS IN OUR COMMON STOCK IF OUR
STOCK DOES NOT ACHIEVE AND SUSTAIN SIGNIFICANT TRADING VOLUME
In the past, our common stock has not experienced significant trading volume on
a consistent basis and has not been actively followed by stock market analysts.
The average trading volume in our common stock may not increase or sustain even
its current levels. As a result, we cannot be certain that an adequate trading
market will exist to permit stockholders to sell their positions in our common
stock.
WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain any future earnings to fund the development and
growth of our business and, therefore, do not expect to pay any dividends in the
foreseeable future. See "Dividend Policy".
WE MAY FACE OTHER RISKS NOT DESCRIBED IN THE FOREGOING RISK FACTORS WHICH MAY
IMPAIR OUR BUSINESS OPERATIONS
The risks and uncertainties described in the foregoing risk factors may not be
the only ones facing us. Additional risks and uncertainties not presently known
to us may also impair our business operations. If any of the following risks
actually occur, our business, financial condition and results of operations
could be materially adversely affected. In this case, the trading price of our
common stock could decline, and you may lose all or part of your investment.
FORWARD LOOKING STATEMENTS
This prospectus contains certain "forward-looking statements" based on our
current expectations, assumptions, estimates and projections about us and our
industry. These forward-looking statements involve risks and uncertainties.
Our actual results could differ materially from those anticipated in such
forward-looking statements as a result of factors more fully described in this
section and elsewhere in this prospectus. We undertake no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
Forward-looking statements related to our company and the Internet may be
based on a number of assumptions. These assumptions may include that:
*no catastrophic failure of the Internet will occur;
*the number of people online and the total number of hours spent online will
increase significantly over the next five years;
*the value of online advertising dollars spent per online user hour will
increase; and
*Internet security and privacy concerns will be adequately addressed.
If any one or more of these assumptions turns out to be incorrect, actual
results may differ materially from the projections based on these assumptions.
11
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OUR COMPANY
We are an online directory service offering consumers the convenience and
quality of legal consultation from their homes or offices. Through our website,
www.legalopinion.com, we provide consumers with the means to interact with an
U.S. attorney through the Internet and obtain a legal opinion.
We were formed as a Nevada corporation on July 28, 1999. Our predecessor,
Eurotronics Holdings Incorporated, was formed in the State of Utah on January 7,
1982. Prior to August 9, 1999, we were a non-operating public shell corporation
with nominal net assets. See "Business-- Background and Formation of our
Company."
Our principal offices house our consumer operations located at 230-2000
Spall Road, Kelowna, British Columbia V1Y 9P6. Our telephone number is (250)
763-5560. Our executive offices are located at 4325 Warwick, Kansas City,
Missouri 64111.
USE OF PROCEEDSOF PROCEEDS
The selling stockholders and Venture Capital Firms will receive all of the
net proceeds from the sale of the shares of common stock owned by such selling
stockholders and offered hereby. We will not receive any of the proceeds from
the sale of such shares of common stock or from the conversion of the
convertible debentures into shares of common stock. We, however, will receive
$1.50 per share of common stock issued upon the exercise of the warrants, except
when the warrant exercise price is paid in shares of common stock. We plan to
use the net proceeds received, if any, from the exercise of the warrants for the
funding of operating losses and for general corporate purposes.
DIVIDEND POLICYPOLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain any future earnings to fund the development and
growth of our business and, therefore, do not expect to pay any dividends in the
foreseeable future. Any payment of cash dividends in the future will depend on
our:
*financial condition;
*results of operations;
*current and anticipated cash requirements;
*plans for expansion;
*existing or future debt obligations and any restrictions imposed by such
obligations; and
*other factors deemed relevant by our board of directors.
PRICE RANGE OF OUR COMMON STOCK RANGE OF OUR COMMON STOCK
Our common stock was approved for quotation on the Over the Counter
Bulletin Board on August 9, 1999, and began trading on August 9, 1999. Trading
has occurred in a predecessor, Eurotronics Holding, Inc. Our common stock
currently is quoted for trading on the Over the Counter Bulletin under the
symbol "LAWW". The following table sets forth, for the periods indicated, the
high and low bid information for our common stock as reported by the Over the
Counter Bulletin Board. These quotations reflect inter-dealer prices.
<TABLE>
<CAPTION>
<C> <S> <C> <C>
2000 HIGH.. . LOW
------------------------------------------- ---- ----
Fourth Quarter (through October 20, 2000). . . $ .31 $ .17
Third Quarter. . . . . . . . . . . . . . . . . .71 0.24
Second Quarter . . . . . . . . . . . . . . . . 1.81 0.37
First Quarter. . . . . . . . . . . . . . . . . 3.75 1.75
1999 HIGH.. . LOW
------------------------------------------- ---- ----
Fourth Quarter . . . . . . . . . . . . . . . . $3.90 $ 1.10
Third Quarter. . . . . . . . . . . . . . . . . 4.00 0.40
Second Quarter (since April 7, 1999 inception) 0.30 0.005
</TABLE>
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<PAGE>
On October 20, 2000, the closing bid price of our common stock as reported
on the Over the Counter Bulletin Board was $ .17 per share. As of October 20,
2000, we had issued and outstanding, 33,604,442 shares of common stock, which
were held of record by approximately 597 stockholders.
CAPITALIZATION
The following table sets forth the capitalization of our company as of June
30, 2000. This table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and related notes thereto and other information
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
As Adjusted for
Issuance of Shares
Upon Repayment As Further
of Stockholders' Adjusted for the
Actual Loans Offering (2)
LONG TERM DEBT- STOCKHOLDERS'
----------------------------------
loans $ 427,419 $ (411,708) $ 15,711
STOCKHOLDERS' EQUITY:
common stock, par value
0.001; 200,000,000 shares
authorized (32,441,942 shares
issued); 39,775,000 shares
issued, as adjusted; 72,217,942
shares issued as further adjusted 32,442 39,775 72,217
Additional paid in capital 12,134,158 15,709,275 27,843.433
Deficit (12,668,520) 0 (12,668,520)
Total stockholders equity (501,920) 15,749,050 15,247,130
Total capitalization $ (74,501) 15,337,342 15,262,841
</TABLE>
(1) Subsequent to June 30 2000, we issued 275,000 shares of common stock at
$1.50 per share for the forgiveness of $411,708 of stockholders' loans.
(2) Includes the issuance of 34,000,000 shares upon conversion of the
debentures and 5,500,000 shares based upon the exercise of the warrants to
purchase common stock.
(3) Net of offering costs.
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<PAGE>
SELECTED FINANCIAL INFORMATION
The selected historical financial information presented below reflects the
1999, 1998 and 1997 operations of our company. The financial information under
the captions "Statement of Operations Information" and "Balance Sheet
Information" as of and for the fiscal years ended December 31 is derived from
our financial statements for the period from January 1, 1996 through December
31, 1999, all of which have been audited by independent certified public
accountants. The summary historical financial information as of June 30, 2000
and for the six months ended June 30, 2000 and 1999 is derived from our
unaudited financial statements. In the opinion of our management, our financial
condition and results of operations set forth herein cannot be relied upon as
being representative of our continuing prospects. The following selected
financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited financial statements and related notes thereto and other information
included elsewhere in this prospectus.
STATEMENT OF OPERATIONS INFORMATION:
From Inception Six months
(April 7, 1999) to ended From Inception
June 30, 2000 June 30, 2000 (April 7, 1999) to
(unaudited) (unaudited) December 31, 1999
------------------------------------------------------------
Revenue
Directory fees $ 9,295 $ 8,856 $ 439
Expenses
Accounting and legal 176,962 97,539 79,423
Advertising and Promotion 11,351,820 11,283,337 68,483
Attorney directory enrollment 116,882 58,432 58,450
Cost of recapitalization 100,000 0 100,000
Investor Relations 337,929 309,455
Management fees paid to
related party 107,285 46,646 60,639
Other 201,275 154,084
Web-site and technology
maintenance 285,662 75,963 209,699
Total Expenses 12,677,815 12,025,456 652,359
Net loss (12,668,520) (12,016,600) (651,920)
Weighted average number of
shares 23,244,118 31,488,275 22,170,899
Loss per share $ (0.55) $ (0.38) $ (0.03)
BALANCE SHEET DATA:
June 30, 2000 December 31, 1999
(unaudited)
------------------- --------------------
Assets
Cash $ 2,046 $ 23,080
Prepaid Expenses 3,600 10,000,920
Fixed Assets 28,291 25,558
Total assets 33,937 10,049,558
Current liabilities
Accounts payable and accrued liabilities 108,438 141,979
Long term debt
Stockholders' loan 427,419 527,899
Total liabilities 535,857 669,878
Total stockholders' equity $ (501,920) $ 9,379,680
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<PAGE>
FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
You should read the following discussion of our financial condition and
results of operations with the financial statements and the related notes
included elsewhere in this prospectus. This discussion contains forward-looking
statements based on our current expectations, assumptions, estimates and
projections. See "Forward Looking Statements" on page 11 above. These
forward-looking statements involve risks and uncertainties. Our actual results
differ materially from those anticipated in these forward-looking statements as
a result of numerous factors, many of which are described in the "Risk Factors"
section and elsewhere in this prospectus. We are under no duty to update any of
the forward-looking statements after the date of this prospectus to conform
these statements to actual results, unless required by applicable securities
laws.
OVERVIEW
We are an on-line directory service offering consumers the convenience and
quality of legal consultation through our website, www.legalopinion.com. Our
website provides consumers with direct access to an on-line written opinion from
an appropriately licensed attorney experienced in the particular problem area
and located in the consumer's geographical jurisdiction. We generate revenues
from visitors to our website who subscribe for an on-line written opinion.
Prior to August 9, 1999, we were a non-operating public shell corporation with
nominal net assets. See "Business- Background and Formation of our Company."
We were not an operating entity until October 31, 1999, although we regard April
7, 1999, the date our Alberta, Canada subsidiary was formed, as the date of
inception of our operations. From our inception until December 31, 1999, we
were engaged in start-up activities and incurred approximately $652,357 of
operating expenses. These operating expenses consisted of investments in
technology, personnel, and limited marketing efforts. We generated only $439 of
revenue for the period from April 7, 1999 to December 31, 1999. Therefore,
comparison of current periods with previous periods would not provide a
meaningful or useful analysis of our financial results.
PLAN OF OPERATIONS
General. Over the twelve months ending August, 2001 we plan to continue to
attract customers to our website through both off-line and on-line marketing
initiatives, broaden and deepen the content of our website, expand and enhance
services, nurture an online Internet community of people interested in legal
issues, expand the number of attorneys listed in our directory and institute new
services and programs such as LegalCare, a proposed subscriber services package,
and TaxPert, a tax issues question-and-answer offshoot of our existing online
legal opinion service. For a more complete discussion of our business strategy
see the discussion of our business below under the caption "Business."
In order for us to carry out and institute our business plan, additional funds
will be needed. Over the next twelve months we anticipate $9,500,000 will be
needed to implement our business strategy. We intend to continue to invest in
marketing and promotion, technology, personnel and the development of products
and services. When possible, we attempt to do this through an exchange of
services or the issuances of our securities. Additionally, we will leverage the
opportunities presented in the market by "correction " in tech stocks to add
associated product and service offerings from firms we can reasonably acquire
that complement our professional services space.
Organizationally, LEGALOPINION.COM is in the process of being restructured into
operating divisions representing our current potential four (4) key profit
centers
1. Legalcare - consumer legal and financial services.
2. Lawyers Homepage Network - Attorney services and Virtual Private Network
3. Affiliate, Joint Ventures, and Strategic Partnerships
4. IT Services - fulfilling our internal needs and providing build-out and
maintenance services to our strategic partners.
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We have generated insignificant revenues and have accumulated a deficit of
$ 12,668,520 from inception to June 30, 2000. This factor, among others raises
substantial doubt about our ability to continue as a going concern. Our future
capital requirements will depend on many factors, including but not limited to,
results of operations and the availability of additional financing. To the
extent that existing resources and future earnings are insufficient to fund our
activities, we will need to raise additional funds through debt or equity
financings. We cannot assure you that such additional financing will be
available or that, if available, it can be obtained on terms favorable to us and
our stockholders. In addition, any equity financing could result in dilution to
our stockholders. Our inability to obtain adequate funds would adversely affect
our operations and ability to implement our business strategy.
During 1999 , we have received loans to date from two stockholders, Bondock
Capital (a British Columbia real estate, auctioning and merchant banking company
owned and operated by the Lovig family trust) and Baycove Investments, in the
aggregate amount of approximately $796,000.00. In June and July 2000, the
majority of these loans were discharged in exchange for the issuance of 315,000
shares of our common stock and warrants to purchase an additional 315,000 shares
with a total cash value of $551,250 leaving an outstanding balance of $12,698.
These stockholders have indicated that they will continue to financially support
us, although they are not contractually bound to do so. We believe our
understanding with these stockholders will allow us to have the funds needed to
continue our operations over the next twelve months, however, these stockholders
cannot meet our optimal needs for expansion and penetration of our intended
markets nor allow us to implement our entire business strategy.
In July 2000, we entered into a securities purchase agreement with several
investors under which we agreed to issue and sell to them for $500,000 our 6%
convertible debentures in the aggregate principal amount of $500,000. In August
, 2000 we issued our 6% convertible debentures in the aggregate principal amount
of $500,000. All or any part of the principal amount of the debenture, plus any
accrued interest, may be converted at any time by any holder of the debenture
into shares of our common stock at a conversion price per share equal to either
$ .51 (120% of the closing bid price on the date the debentures were issued) or
80% of the average closing bid prices of our common stock for any three days of
the five trading days immediately preceding the date of the conversion, as
determined by the holder. On the July 17, 2005 maturity date of the debentures,
the unpaid balance of each of the debentures and any accrued and unpaid interest
will convert automatically into shares of our common stock at the conversion
price on the maturity date.
Summary of Product Research and Development. As our website has already been
completed and is operating and the majority of the development work is complete,
on-going changes and enhancements may be made as we receive feedback from both
lawyers and consumers and to accommodate new programs and services. We are
planning to expand to provide further services, including LegalCare, a prepaid
legal services benefits package that could be offered by employers to their
employees, and TaxPert, a question-and-answer tax issues offshoot of our
existing online legal opinion service.
Expected Purchase or Sale of Plant and Significant Equipment. We do not
anticipate making any significant purchases or sales of plant and equipment
within the next 12 months.
Expected Significant Change in the Number of Employees. We anticipate that we
will staff at least eight new positions within the next 12 months. Further
employees hirings may be required if demand increases significantly for customer
support and sales.
ANTICIPATED EXPENDITURES OVER THE NEXT 12 MONTHS
1. Marketing and media - including formation of a direct, B2B sales force
($3,000,000)
2. New Products and Programs ($2,000,000)
3. Management Team, Infrastructure and equipment ($1,000,000)
4. Working capital and Acquisitions ($5,000,000)
16
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BUSINESS
OVERVIEW
Legalopinion.com is an online directory service offering consumers the
convenience and quality of legal consultation from their homes or offices. Our
website, www.legalopinion.com, was launched on October 31, 1999. It provides
consumers and attorneys the ability to interact in a new, simple and convenient
way. Our website provides consumers with direct access to an online written
opinion from an appropriately licensed attorney experienced in the particular
problem area and located in the consumer's geographical jurisdiction.
Currently, we serve consumers from the United States and Canada who wish to
secure an opinion by an attorney. As of June 30, 2000, we have over 6,000
attorneys available to answer questions throughout all 50 states and in all
Canadian provinces except Quebec. As a result of our August 2000 entry into a
joint venture with the Venezuelan law firm of Teran and Teran, we intend to
expand our business into Latin America.
We do not practice law in any jurisdiction and are not licensed to do so. We do
not become involved in any attorney-client relationship that may be established
between our customer users and attorneys participating in our database.
Our common stock is publicly traded on the OTC Bulletin Board under the symbol
"LAWW".
BACKGROUND AND FORMATION OF OUR COMPANY
Although we were incorporated in Nevada on July 28, 1999, we trace our
origin to Eurotronics Holdings Incorporated, a Utah corporation incorporated on
January 7, 1982. Eurotronics Holdings was formed for the primary purpose of
investigating and evaluating prospective mineral properties for possible
acquisition, although it existed only as a non-operating shell corporation with
nominal assets until August 9, 1999. On that date, we acquired all of the
outstanding capital stock of legalopinion.com, Inc., a corporation formed under
the laws of Alberta, Canada. We regard the date of inception of our operations
to be the April 7, 1999, date on which this Alberta, Canada subsidiary
corporation was formed. On the same date of the above acquisition, Eurotronics
Holdings merged into our company to effect a change in the state of
incorporation from Utah to Nevada and the name of the surviving corporation
became "legalopinion.com."
INDUSTRY OVERVIEW
THE INTERNET. The growth of the Internet as a new means of communicating,
accessing information and engaging in commerce has been rapid and we expect it
to accelerate. Jupiter Communications, a research, consulting and publishing
firm specializing in emerging consumer online and interactive technologies,
estimates in an April 1999 study that the number of Internet users in the U.S.
alone is expected to grow from approximately 100 million in 1999 to
approximately 160 million by 2003, and the number of worldwide Internet users is
expected to reach 250 million by the end of 2002. This growth is being driven
by a number of factors, including a growing base of personal computers in the
home and workplace, improvements in network infrastructure, more convenient,
faster and inexpensive Internet access, technological advances in PCs and
modems, increased quantity and quality of content available on the Internet and
the overall increased public awareness of the Internet. Due to its large
audience, the Internet represents a significant channel for advertisers and
product and service marketers.
THE LEGAL INDUSTRY. According to Legal Needs and Civil Justice (1994), one
of every two American families will require the advice of an attorney each year.
As busy consumers search for a way to save time and money in the face of
spiraling legal fees, they have increasingly searched for information about
their legal questions and have attempted to resolve their legal problems without
the assistance of an attorney. The Internet allows consumers to access large
quantities of legal information quickly and easily, but the information, once
obtained, is often difficult to interpret and apply effectively. With the
growth in the Internet, lawyers and other legal service providers have begun to
recognize the inefficiencies in the typical legal services delivery model and
accept the Internet as a tool enabling them to more effectively and efficiently
provide legal services to their clients.
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OUR SOLUTION
Through our website, we address the needs of both consumers and legal
service providers.
In the typical legal services delivery model, an attorney will have an initial
discussion with a potential client over the phone to gather preliminary
information, he or she will then perform a conflicts check and schedule an
appointment with the prospective client -- usually within the 8 a.m. to 5 p.m.
business hours window. The attorney then meets with the prospective client to
conduct a fact-finding interview. Finally, if the issue is within the
attorney's area of expertise, the attorney provides a verbal opinion or written
proposal to secure the client (and often asks for a retainer from the client).
The attorney then performs the work required. This process can be
time-consuming, with costs to both the attorney and the client easily
approaching several hundred dollars.
We are primarily an online directory and communication service. We have
established a directory of attorneys across North America. For $39.95, a
consumer can go to our website, select an attorney from the directory and
structure a question regarding any legal issue. After a successful conflict of
interests test, within two business days, the chosen attorney will provide a
written opinion to the consumer through online forms on our website.
Essentially we offer an online duplication of the existing professional services
delivery model with a scale and efficiency that can be provided only through the
Internet.
Our online directory service also provides value to any attorney who has the
capacity to take on additional clients. Attorneys can be listed in the
directory at no charge until January 1, 2001. After the fourth quarter
acquisition of Lawyers Homepage Network, we anticipate that participating
attorneys will be able to access a substantial base of potential client by
presenting a virtual, visual image via our web hosting services. By
participating in our directory, attorneys avoid the costs associated with the
initial client-screening process and have a steady source of referrals.
Attorneys who respond to customer questions do not receive any part of the fees
paid to us because of applicable state bar and provincial law society rules.
However, by demonstrating knowledge in answering customer questions, laying out
options for the customer's case, and perhaps estimating the costs for taking the
case forward, attorneys may be retained by the customer for future services or
those services offered at reduced rate through LegalCare. LegalCare is a
subscriber service program, designed to allow convenient and affordable legal
and financial membership services (for more information, see p. 21).
OUR BUSINESS STRATEGY
Our objective is to be the leading provider of online legal
question-and-answer services and other related legal information and services
for the individual and business community. We use leading Internet technologies
to provide a unique, efficient and cost-effective service. The following are
the key elements of our strategy:
PROVIDE A UNIQUE SERVICE. Our uniqueness comes from providing consumers
with direct access to an online, written opinion from a licensed attorney
experienced in the consumer's problem area. The attorney will be an individual
located in the consumer's geographic jurisdiction, who could be subsequently
retained to act on a problem. Our basic concept is to provide a valuable
service with our directory of attorneys, divided into practice areas and
geographic regions, providing answers in "real-time" that can only be provided
efficiently through the use of a virtual environment.
Other websites give consumers cookie-cutter replies to general legal
questions. The responses to questions given by the attorneys in our directory
are not stock answers-they are personalized replies tailored to a specific
situation. Our system provides consumers with decision-enabling information.
Our core technology can be selectively adapted to service the needs of special
interest groups whose legal and financial requirements may differ from
mainstream America. Content can be scaled and tailored to address specific
issues attributable to varying cultural subsets or demographic profiles within
any subset of society. This flexibility will be extremely valuable as we grows.
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<PAGE>
PROVIDE TIME AND COST SAVINGS. The core technology that we offer provides
value to both the consumer and the attorney, first and foremost, by simplifying
and streamlining communication processes. As mentioned above, the initial
interview, conflicts check and fact-finding interview typically conducted at the
beginning of an attorney-client relationship can be time-consuming, with costs
to both the attorney and the client that could approach several hundred dollars.
We collect sufficient information beforehand to dramatically condense the
timeline for most of these initial steps. Our website lists attorneys
experienced in a consumer's problem area, and provides a two-day window for the
attorney to perform a conflicts check, research the answer and get a reply back
to the client. Attorneys review the details of the case and provide legal
advice based on the identified issues. The motivation being, that by
demonstrating knowledge in answering the question, laying out options for the
consumer's case, and estimating the costs to proceed, the consumer will retain
their services if action is taken.
Attorneys are committed to respond to all questions received through our secure
system within two business days of receipt (excluding weekends and legal
holidays). Response times are closely monitored. Both our company and our
participating attorneys believe fast response times are an important part of our
process and a key factor in making the service unique. There may be some
situations in which the attorney has a conflict of interest or is unable to
answer a question. If such a situation occurs, the question is returned to the
consumer and they may then select another attorney from the directory.
If an attorney does not accept, or simply does not respond to, a question, the
question will automatically be returned to the consumer. The consumer will then
be given the option to select another attorney from the directory, and the
original attorney will receive a late warning. Three such warnings are grounds
for termination of the contract between the attorney and our company.
PROVIDE CONVENIENCE. Through our website, consumers can describe their legal
situation from the privacy of their home or office, on their own timetable.
They can then secure a quick and low-cost assessment of their legal rights or
liabilities by a licensed attorney before committing significant amounts of time
or money to retain an attorney.
Attorneys participating in the program also are afforded the opportunity to
respond to questions according to their schedule-optimizing the critical 8 a.m.
to 5 p.m. window for billable activities.
If attorneys know in advance that they are going to be unavailable to respond to
questions, they simply mark their account as inactive and are temporarily
removed from the directory of available providers. If they are signed in and
receive notification that a question is pending, they have two business days in
which to respond.
PROVIDE KNOWLEDGEABLE AND LICENSED ATTORNEYS. Attorneys listed in our
directory are required to demonstrate that they:
- Maintain an active license to practice law in their jurisdiction;
- Are in good standing with their respective Bar Associations;
- Maintain an office for the practice of law and are regularly engaged in
the practice of law; and
- Maintain at least the minimum professional liability insurance required by
their Bar Association.
Attorneys are required to agree to the Terms and Conditions of our Attorney
Participation Agreement, confirming the above, to be listed in our directory.
Attorneys only list, and as such, only receive questions in, the areas of law in
which they practice.
BUILD AN ONLINE COMMUNITY. In addition to our lawyer directory and reply
service, we are committed to building and growing an online Internet community
of people interested in legal issues. To this end, we have created a public
chat room and a list of over 200 law-related links. See "Services - Links to
Other Websites and Access to Chat Rooms" below. We also are open to suggestions
from our visitors for improving the community aspects of our service. Our
visitors can email us at [email protected] with any comments or questions
they may have.
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BUILD STRONG BRAND NAME AWARENESS. We believe that establishing brand
awareness is critical to attracting and retaining visitors and advertisers. We
seek to build its brand by creating a superior visitor experience and creating
broad awareness of our name as the trusted on-line source for legal information.
We intend to achieve this goal by expanding our marketing efforts through both
off-line and on-line marketing initiatives.
ENHANCE THE VISITOR EXPERIENCE. We are committed to continually improving
the utility and perceived value of our website. We seek to:
*broaden and deepen the content of our website;
*improve the navigability of our website environment;
*expand and enhance our suite of complementary services; and
*tailor our website to meet the needs and preferences of our visitors.
SERVICES
In addition to the legal question and answer service, which is the main
service provided by us and which is explained in detail above, we provide the
following services:
LEGAL FORMS SERVICE. We, in partnership with U.S. Legal Forms, Inc., provide
over 12,000 legal forms on our website, which are available for immediate
downloading. We believe that U.S. Legal Forms has one of the best selections of
legal forms on the Internet. Most forms can be downloaded in Word, WordPerfect
and Text formats. The small number of forms that are not immediately available
for downloading are provided by email. For a small fee, our visitors can access
form wills for all states, powers of attorney, promissory notes, deeds,
healthcare directives and incorporation documents, to name just a few. We use
authorize.net to process all credit cards. All processing is on an "authorize
only" basis. This means a credit card is not actually charged at the time a
form is ordered or downloaded. We usually finalize the charge 24 hours after
the form has been ordered or downloaded.
LINKS TO OTHER WEBSITES AND ACCESS TO CHAT ROOMS. Through the legal resource
section on our website, our visitors can connect to a variety of related
websites as well as over 200 legal links on the Internet, allowing our visitors
to quickly access a multitude of additional legal resources. The legal links
are divided into three main categories: the United States, Canadian and
International. Each category is further divided into sections such as national,
government, state/local, legal research and additional area-specific resources.
The legal resource section includes links to websites such as the American Bar
Association, the American Association of Law Libraries, the Consumer Law
Organization, the Consumer Product Safety Commission, the Internal Revenue
Service, and the U.S. Senate.
The legal resources section on our website also allows our visitors to
participate in live chats with other legalopinion.com visitors. After
registering with our website, our visitors can chat with other site visitors
about legal issues in a live format. Registration is easy and it's free. In
our live chat room, visitors may find someone who has faced a similar legal
situation and may be able to benefit from their experience.
SERVICES UNDER DEVELOPMENT
We currently are in the process of planning or developing additional
services that it may provide to our customers. These include the following
services:
- LEGALCARE. This is a subscriber service program, designed to allow
convenient and affordable legal nad financial membership services, targeted at
consumers and corporations. Services that come with a LegalCare membership
(offerings differ with each plan) include online legal and financial opinions,
phone consultations, motor vehicle services, assistance with tax issues, wills,
small claims and a range of other bundled financial and legal resources. The
programs will be targeted to handle 90% of the average person's legal and
financial resource requirements.
- TAXPERT. This is a proposed question-and-answer tax issues offshoot of
our existing online written legal opinion service. We intend to offer our
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customers the means to access the advice of a tax attorney or certified public
accountant in much the same way as we now do in other areas of the law. A
letter of intent has been signed with Equity Search Inc. for the joint
development of this service
- VIRTUAL PRIVATE NETWORKS. Although not presently under development, we
intend to search for ways that would allow our member attorneys to utilize our
website to build their client data bases and access legal management software.
These services would be provided through an exclusive virtual private network
that we would develop and maintain as an application service provider to our
member attorneys. We would seek to provide practice-facilitating options
desired by our member attorneys as well as financial, tax and business
management resources and utilities.
- MULTIPLE FORMAT LEGAL FORMS. Building upon the over 12,000 legal forms
available on our website, we intend to develop multiple format legal forms.
These would include fill-in-the-blank forms, interactive computer generated
forms, and forms bundled with the services of an attorney to assist in the
completion of the form. We intend to extend this service to include online
small claims processing assistance through the proposed launch of a website at
www.mylawsuitonline.com.
We are unable to give any assurance that we will be successful in developing any
new services.
SALES AND MARKETING
ADVERTISING CAMPAIGN. Until October of 2000, we were a party to an
advertising services agreement with Venture Capital Media, Ltd. Under this
agreement, Venture Capital Media had agreed to provide us with up to $42 million
in advertising services in exchange for shares of our common stock. See
"Selling Stockholders - The Venture Capital Media Group" below. In October,
2000, our company and Venture Capital Media terminated this agreement in order
to bring to a close our ongoing private placement of common stock. Through our
Venture Capital Media advertising campaign, we had access to an inventory of
advertising consisting of:
*Consumer, trade, and in-flight publications;
*Radio and television advertising;
*Billboards and banner ads; and
*Event sponsorships, such as our sponsorship of a NASCAR racing auto.
We anticipate that we will continue to utilize one or more of these
advertising media from time to time. We intend to focus our advertising efforts
in five major markets in the United States having relatively high concentrations
of Internet users, including California, Florida, Texas, New York and
Washington. We intend to expand beyond these advertising efforts to utilize the
efforts of direct business development representatives and strategic alliances.
AFFILIATE PROGRAM. Through our website affiliate program, we encourage others
to associate their websites to our website. Websites that associate with us
become eligible to receive a commission for customer click-throughs from their
site to our website. We pay a $10 sales commission each time an order for
$39.95 is transacted by a consumer that links to us from a site that has
associated with ours. The affiliate program is free, and there is no minimum
number of questions that need to be asked. Currently, we are in the process of
developing and implementing a program in which we will retain agents on a
commission basis to recruit affiliates and attorneys.
With the upcoming launch of LegalCare, a number of sites have enlisted to market
the program to their registered consumer contingent. As of the date of this
prospectus, more than 20 sites with collective membership rosters that we
believe exceed 40,000,000 people, have been signed-up for the LegalCare rollout
in fourth quarter, 2000.
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COMPETITION
There are many companies that provide Internet and non-Internet based legal
information, content and marketing services to the public. All of these
companies compete with us for customers and the Internet companies providing
these services also compete with us for visitor traffic. We expect competition
to continue to increase as there are no substantial barriers to entry in our
markets. Increased competition could result in reductions in the fees we
receive for our services, lower margins, loss of customers, reduced visitor
traffic to our website, or loss of market share. Any of these occurrences could
materially and adversely affect our business, financial condition and results of
operations. Competition is also likely to increase significantly, not only as
new entities enter the market, but also as current competitors expand their
services. Our principal competitors include:
*websites that deliver consumer and professional legal information, either
as their sole focus or as part of a more broadly-based site, such as
Feeadvice.com, Nolo.com, Uslaw.com and Lawyers.com;
*law firms, lawyers and other providers of legal services and forms that
have entered the Internet legal market or have announced an intention to do so,
such as Pre-paid Legal Services, Inc.;
*general purpose consumer online service providers and web "portal"
companies, such as Yahoo!, America Online and Microsoft Network; and
*Traditional legal forms vendors, such as Officemax, as well as other
potential new competitors in this business, such as H & R Block.
Our ability to compete depends on a number of factors, many of which are
outside of our control. These factors include quality of service, ease of use,
timing and market acceptance of new and enhanced services, and level of sales
and marketing efforts.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, existing
relationships with lawyers and other legal service providers and significantly
greater financial, technical and marketing resources than we do. This may allow
them to devote greater resources than us to the development and promotion of
their services. These competitors may also engage in more extensive development
efforts, undertake more far-reaching marketing campaigns, adopt more aggressive
pricing policies and make more attractive offers to existing and potential
customers, employees, advertisers and alliance partners. Our competitors may
develop services that are equal or superior to those provided by us or that
achieve greater market acceptance and brand recognition that we achieve. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase
their ability to address the needs of customers and advertisers. It is possible
that new competitors may emerge and rapidly acquire significant market share.
We may not be able to compete successfully or competitive pressures may have a
material adverse effect on our business, results of operations and financial
condition. If the public perceives the Internet generally or our website to be
a relatively limited or ineffective medium, individuals may stop visiting our
website and companies may be reluctant to devote a significant portion of their
budgets to Internet advertising or to advertise on our website.
INFRASTRUCTURE, OPERATIONS & TECHNOLOGY
Our technological infrastructure is built and maintained for reliability,
security and flexibility. It was designed to provide a seamless link between
the attorney and the client. All screens containing sensitive data are
transmitted securely over the Internet using 40-bit SSL technology. Question
and Answer information is stored behind a firewall and is encrypted using
Blowfish (an encryption algorithm). Only the consumer and attorney involved in
a transaction can view the information, maintaining the integrity of the
attorney-client privilege. This infrastructure is hosted primarily at Exodus
Communications' facility in Seattle, Washington, which is equipped with a power
supply that is intended to be uninterruptible.
Mindquake Software, a Vancouver based software developer, is the contractor that
designed and implemented our website. Mindquake continues to update and modify
our website periodically. Saultmine Creative, a Seattle creative company, is
responsible for the artistic design of our website.
Our operations are dependent on our ability and that of Exodus to protect our
systems against damage from fire, earthquakes, power loss, telecommunications
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failure, break-ins, computer viruses, hacker attacks and other events beyond our
control. See "Risk Factors-We Face a Risk of System Failure that May Result in
Reduced Traffic, Reduced Revenue and Harm to Our Reputation."
INTELLECTUAL PROPERTY
To protect our rights to intellectual property, we rely on a combination of
trademark, copyright law, trade secret protection, confidentiality agreements
and other contractual arrangements with our employees, affiliates, clients,
strategic partners and others. We have registered our domain name in the United
States and have obtained a trademark registration in the United States of the
"legalopinion.com" mark. We also have a worldwide patent pending relating to
the expert systems for computerized delivery of legal advice. The protective
steps we have taken may be inadequate to deter misappropriation of our
proprietary information. We may be unable to detect the unauthorized use of, or
take appropriate steps to enforce, our intellectual property rights. We have
registered certain of our trademarks in the United States and we have pending
U.S. applications for other trademarks. Effective trademark, copyright and
trade secret protection may not be available in every country in which we offer
or intend to offer our services. Failure to adequately protect our intellectual
property could harm our brand, devalue our proprietary content and affect our
ability to compete effectively. Further, defending our intellectual property
rights could result in the expenditure of significant financial and managerial
resources, which could materially adversely affect our business, results of
operations and financial condition. Although we believe that our proprietary
rights do not infringe on the intellectual property rights of others, other
parties may assert infringement claims against us or claims that we have
violated a patent or infringed a copyright, trademark or other proprietary right
belonging to them. These claims, even if not meritorious, could result in the
expenditure of significant financial and managerial resources on our part, which
could materially adversely affect our business, results of operations and
financial condition. We incorporate certain licensed third-party technology in
some of our services. In these license agreements, the licensors have generally
agreed to defend, indemnify and hold us harmless with respect to any claim by a
third party that the licensed software infringes any patent or other proprietary
right. We cannot assure you that these provisions will be adequate to protect us
from infringement claims. Any infringement claims, even if not meritorious,
could result in the expenditure of significant financial and managerial
resources on our part, which could materially adversely affect our business,
results of operations and financial condition. [See "Risk Factors-Failure to
Protect Our Intellectual Property Rights Could Harm Our Brand-Building Efforts
and Ability to Compete Effectively."]
EMPLOYEES
As of October 20, 2000, we had 16 employees, of which 5 were employed on a
part-time or contractual basis. We have entered into a management agreement
with Paradigm Financial Services Ltd. under which Paradigm manages the day to
day operations of our business, including paying bills, collecting and managing
revenues, managing the solicitation of legal providers, keeping records and
providing financial statements to our independent accountants. In exchange for
Paradigm's services, we have agreed to make monthly payments to Paradigm of
$17,500 (Canadian). This agreement was terminated in April, 2000. Two of our
directors -- Don Crompton and Rae Meier -- are employed by Paradigm and have
received compensation pursuant to the management agreement as described below
under "Certain Relationships and Related Transactions-Paradigm Financial
Services Ltd." We have never had a work stoppage and none of our personnel are
represented under collective bargaining agreements. We consider our relations
with our employees to be satisfactory.
FACILITIES
We currently lease offices located at #230 and #250-2000 Spall Road,
Kelowna British Columbia. V1Y 9P6, that contain approximately 2,750 square feet
of space. We also lease an office located at Two Union Square, 42nd Floor, 601
Union Street, Seattle, Washington 98101 that contains approximately 500 square
feet of space and an office in Kansas City, Missouri at 4325 Warwick, Kansas
City, Missouri 64111. We believe that the condition of our facilities presently
is adequate for our business and that our facilities are adequately covered by
insurance.
GOVERNMENT REGULATION
GENERAL. Currently, we are not subject to any direct governmental
regulation other than the securities laws and regulations applicable to all
publicly owned companies, and laws and regulations applicable to businesses
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generally. We do not practice law in any jurisdiction. All relationships
between participating attorneys and initiating clients are subject to the laws
of the state or jurisdiction in which the client resides and under which the
attorney is admitted to practice. Few laws or regulations are directly
applicable to access to, or commerce on, the Internet. Due to the increasing
popularity and use of the Internet, it is likely that a number of laws and
regulations may be adopted at the local, state, national or international levels
with respect to the Internet, including the possible levying of tax on
e-commerce transactions. Any new legislation could inhibit the growth in use of
the Internet and decrease the acceptance of the Internet as a communications and
commercial medium, which could in turn decrease the demand for our services or
otherwise have a material adverse effect on our future operating performance and
business. [ See "Risk Factors - Government Regulation and Legal Uncertainties
Relating to the Web Could Increase Our Costs of Transmitting Data and Increase
Our Legal and Regulatory Expenditures and Could Decrease Our Customer Base." ]
Liability for Information Retrieved from our Website and from the Internet.
Content may be accessed on our website and this content may be downloaded by
visitors and subsequently transmitted to others over the Internet. This could
result in claims against us based on a variety of theories, including
defamation, practicing law without a license, malpractice, negligence, copyright
or trademark infringement or other theories based on the nature, publication and
distribution of this content. Some of these types of claims have been brought,
sometimes successfully, against providers of Internet services in the past. We
could also be exposed to liability with respect to third-party content that may
be posted by visitors in chat rooms or bulletin boards offered on our website.
It is also possible that if any information contains errors or false or
misleading information, third parties could make claims against us for losses
incurred in reliance on such information. In addition, we may be subject to
claims alleging that, by directly or indirectly providing links to other
websites, we are liable for copyright or trademark infringement or the wrongful
actions of third parties through their respective websites. The Communications
Decency Act of 1996 provides that, under certain circumstances, a provider of
Internet services shall not be treated as a publisher or speaker of any
information provided by a third-party content provider. This safe harbor has
been interpreted to exempt certain activities of providers of Internet services.
Our activities may prevent us from being able to take advantage of this safe
harbor provision. While we attempt to reduce our exposure to such potential
liability through, among other things, visitor policies and disclaimers, the
enforceability and effectiveness of such measures are uncertain. Any claims
brought against us in this respect may have a material and adverse effect on our
business.
PRIVACY CONCERNS. The Federal Trade Commission (the "FTC") is considering
adopting regulations regarding the collection and use of personal identifying
information obtained from individuals when accessing websites, with particular
emphasis on access by minors. Such regulations may include requirements that
companies establish certain procedures to, among other things: (i) give adequate
notice to consumers regarding information collection and disclosure practices,
(ii) provide consumers with the ability to have personal identifiable
information deleted from a company's database, (iii) provide consumers with
access to their personal information and with the ability to rectify inaccurate
information, (iv) clearly identify affiliations or a lack thereof with third
parties that may collect information or sponsor activities on a company's
website and (v) obtain express parental consent prior to collecting and using
personal identifying information obtained from children under 13 years of age.
Such regulation may also include enforcement and redress provisions. While we
have implemented or intend to implement programs designed to enhance the
protection of the privacy of our visitors, including children, there can be no
assurance that such programs will conform with any regulations adopted by the
FTC. The FTC's regulatory and enforcement efforts may adversely affect the
ability to collect demographic and personal information from visitors, which
could have an adverse effect on our ability to provide highly targeted
opportunities for clients, advertisers and e-commerce marketers.
It is also possible that "cookies" (information keyed to a specific server, file
pathway or directory location that is stored on a visitor's hard drive, possibly
without the visitor's knowledge) used to track demographic information and to
target advertising may become subject to laws limiting or prohibiting their use.
A number of Internet commentators, advocates and governmental bodies in the
United States and other countries have urged the passage of laws limiting or
abolishing the use of cookies. Limitations on or elimination of our use of
cookies could limit the effectiveness of our targeting of advertisements, which
could have a material adverse effect on our business, results of operations and
financial condition.
The European Union (the "EU") has adopted a directive that imposes restrictions
on the collection and use of personal data. Under the directive, EU citizens
are guaranteed certain rights, including the right of access to their data, the
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right to know where the data originated, the right to have inaccurate data
rectified, the right to recourse in the event of unlawful processing and the
right to withhold permission to use their data for direct marketing. The
directive could, among other things, affect U.S. companies that collect
information over the Internet from individuals in EU member countries, and may
impose restrictions that are more stringent than current Internet privacy
standards in the United States. In particular, companies with offices located
in EU countries will not be allowed to send personal information to countries
that do not maintain adequate standards of privacy. The directive does not,
however, define what standards of privacy are adequate. As a result, there can
be no assurance that the directive will not adversely affect the activities of
entities, such as our company, which engage in data collection from visitors in
EU member countries.
DOMAIN NAMES. Domain names are Internet "addresses." The current system for
registering, allocating, and managing domain names has been the subject of
litigation, including trademark litigation, and of proposed regulatory reform.
We have registered as our URL, the domain name "legalopinion.com", in addition
to other domain names that we may use in connection with our development of
additional products and services Although we have registered "LEGALOPINION.COM"
as a trademark, third parties may bring claims for infringement against us for
the use of this trademark. There can be no assurance that our domain name will
not lose its value, or that we will not have to obtain an entirely new domain
name in addition to or in lieu of our current domain name if reform efforts
result in a restructuring of the current system.
Additionally, we hold ownership of a variety of domain names which may be used
in connection with the introduction of new products and services through our
website.
JURISDICTIONS. Due to the global nature of the Internet, it is possible that,
although transmissions by us over the Internet originate primarily in the United
States, the governments of other states and foreign countries might attempt to
regulate such transmissions or prosecute us for violations of their laws. These
laws may be modified, or new laws enacted, in the future. Any of the foregoing
developments could have a material adverse effect on our business, results of
operations and financial condition. In addition, as our service is available
over the Internet in multiple states and foreign countries, these jurisdictions
may claim that we are required to qualify to do business as a foreign
corporation in each state or foreign country. We have not qualified to do
business as a foreign corporation in any jurisdiction. This failure to qualify
as a foreign corporation in a jurisdiction where we are required to do so could
subject us to taxes and penalties and could result in our inability to enforce
contracts in such jurisdictions. Any new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not
currently apply to our business, or the application of existing laws and
regulations to the Internet and other online services could have a material
adverse effect on our business, financial condition and results of operations.
LEGAL PROCEEDINGS
There currently are no material pending legal proceedings to which we are a
party or to which any of its property is subject.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The names of the current directors and executive officers of our company,
their ages and present positions and offices with us are as follows:
Name Age Position and Offices Held
---- --- ----------------------------
John M. Marencik 48 President, Chief Executive Officer and
Director [Nominee]
Brian L. Lovig 50 Chairman of the Board, Treasurer and
Director
Donald J. Crompton 53 Director
Rae K. Meier 54 Director
Jose L. Guerra, Jr 44 Director [Nominee]
David A. Emerick 39 Chief Financial Officer
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Set forth below is a description of the business experience of each of our
directors and executive officers.
JOHN M. MARENCIK has served as our President and Chief Executive Officer since
March 2000. Mr. Marencik has over twenty years of experience in sales,
marketing and management of various technology enterprises. Prior to joining
us, he served as President and Chief Executive Officer of EnviroQuest
Technologies, a provider of statistical leak detection services to the petroleum
industry, for ten years. Mr. Marencik has a Bachelors Degree in Chemistry from
the University of Missouri at Kansas City and a Masters in Business
Administration form Rockhurst University. Mr. Marencik has been nominated for
election as a director at the 2000 annual meeting of stockholders.
BRIAN L. LOVIG has served as our Treasurer and Chairman of the Board of
Directors since August 1999, and of our subsidiary, legalopinion.com, Inc.,
since April 7, 1999. Mr. Lovig began a career in the auction business, and has
been employed by Bondock Capital, Ltd., a British Columbia real estate,
auctioning and merchant banking business. He has served as president of Bondock
Capital since December 29, 1982. He is a member of the Professional Auctioneers
Association in both the United States and Canada. Mr. Lovig is the author of
Bright Business Ideas I and II, and has served as a motivational speaker for
companies and educational institutions. He is a citizen of Canada. Mr. Lovig
has been nominated for re-election as a director at the 2000 annual meeting of
stockholders.
DONALD J. CROMPTON has served as one of our directors since August 1999. He has
served as President of the Kelowna, BC branch of Royal LePage, since February,
1999. Mr. Crompton has a Bachelors Degree in Commerce (urban land economics)
from the University of British Columbia - Vancouver. Mr. Crompton's term of
office as a director will expire at the 2000 annual meeting of stockholders.
RAE K. MEIER has served as one of our directors since August 1999. He is
employed by Paradigm Financial, a mortgage brokerage firm located in Kelowna,
British Columbia, and has served as the President/Manager of Paradigm since May
1994. Mr. Meier attended the University of Saskatchewan. Mr. Meier's term of
office as a director will expire at the 2000 annual meeting of stockholders.
JOSE L. GUERRA, JR. is a licensed real estate broker in the State of Texas and
has spent the past seventeen years in real estate and business development.
Most recently, he has been a principal in and the project manager of the Canyon
Springs planned residential, commercial and golf community in San Antonio,
Texas. Mr. Guerra attended San Antonio College and the University of Texas -
San Antonio. Mr. Guerra has been nominated for election as a director at the
2000 annual meeting of the stockholders.
DAVID A. EMERICK has served as our Chief Financial Officer since May 2000. He
is the owner and president of the accounting firm of Emerick & Company, Inc.,
having served in that capacity for the last ten years. Mr. Emerick is serving
as our Chief Financial Officer pursuant to an agreement between us and Emerick
and Company. Mr. Emerick is a certified public accountant who obtained his B.S.
degree from William Jewell College.
Officers are elected annually by the board of directors and serve until their
respective successors are duly elected and qualified. Our board of directors
currently consists of three directors: Messrs. Crompton, Lovig and Meier. The
members of the board of directors are elected for one-year terms expiring at the
annual meeting of stockholders or until their respective successors are duly
elected and qualified, unless sooner removed or disqualified. Messrs. Marencik,
Lovig, and Guerra have been nominated for election as directors of our company
at the 2000 annual meeting of stockholders.
LIMITATION ON LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Nevada law, directors and officers are immune from liability to a
corporation or its stockholders for monetary liabilities unless such immunity is
specifically limited by the corporation's articles of incorporation. Our
articles of incorporation does not limit the immunity from liability afforded to
our directors and officers. The immunity from liability provided under Nevada
law does not apply in the case of:
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*a willful failure to deal fairly with the corporation or its stockholders
in connection with a matter in which the director has a material conflict of
interest;
*a violation of criminal law (unless the director had reasonable cause to
believe that his or her conduct was lawful or no reasonable cause to believe
that his or her conduct was unlawful);
*a transaction from which the director derived an improper personal profit;
and
*willful misconduct.
Under certain circumstances, Nevada law provides for indemnification of our
officers, directors, employees and agents against liabilities that they may
incur in such capacities. In general, any officer, director, employee or agent
may be indemnified against expenses, fines, settlements or judgments arising in
connection with a legal proceeding to which such person is a party, if that
person's actions were in good faith, were believed to be in our best interest,
and were not unlawful. Unless such person is successful upon the merits in such
action, indemnification may be awarded only after a determination by independent
decision of the board of directors, by legal counsel in a written opinion, or by
a vote of the stockholders, that the applicable standard of conduct was met by
the person to be indemnified.
The circumstances under which indemnification is granted in connection with an
action brought on behalf of us is generally the same as those set forth above
except that indemnification is granted only with respect to expenses actually
and reasonably incurred in connection with the defense or settlement of the
action. In such actions, the person to be indemnified must have acted in good
faith and in a manner believed to have been in our best interest, and must not
have been adjudged liable for negligence or misconduct.
The foregoing is only a summary description of the applicable Nevada statutory
law provisions. Our articles of incorporation and bylaws contain no provisions
that limit or expand upon the indemnification of our directors and officers
afforded by Nevada law. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of our company pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
DIRECTOR COMPENSATION
Our bylaws provide that no compensation shall be paid to directors for
their services to us as such. However, each director may be reimbursed for such
director's reasonable out-of-pocket expenses incurred in the performance of
service to us as a director if authorized by the board of directors as well a
fixed sum for actual attendance at each regular or special meeting of the board.
No such payments have been authorized by the board to date.
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December 31, 1999, 1998
and 1997, respectively, the compensation paid or accrued by us to our current
and former chief executive officer. None of our executive officers received
compensation for 1999 in excess of $100,000 for services to us in all
capacities.
27
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
. . . . LONG TERM COMPENSATION
ANNUAL COMPENSATION. AWARDS PAYOUTS
------ ---------------
. . . . . . . . . . . . . . Other Restricted Securities
. . . . . . . . . . . . . . Annual Stock Underlying All Other
Name and Principal. . . . . Compen- Award(s) Options/ LTIP Compen-
Position. . . . . . . Year Salary ($) Bonus ($) sation ($) ($) SARs (#) Payouts sation
--------------------- ------ --------------- ---------- ----------- ------------ ------------ ------------- --------
John M. Marencik. . . 1999 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
President and Chief . 1998 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Executive Officer (1) 1997 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Donald J. Crompton. . 1999 $ _____ $ _____ $ _____ $ _____ $ _____ $ _____ $ _____
--------------------- ------ --------------- ---------- ----------- ------------ ------------ ------------- --------
Former Chief. . . . . 1998 $ _____ $ _____ $ _____ $ _____ $ _____ $ _____ $ _____
Executive Officer (2) 1997 $ _____ $ _____ $ _____ $ _____ $ _____ $ _____ $ _____
</TABLE>
(1) Mr. Marencik joined us in March, 2000, and therefore he did not receive
any compensation for service to us prior to that date. Commencing in April
2000, he receives a salary at the rate of $84,000 per year in addition to other
compensation described below under "Management-Marencik Employment Agreement."
(2) Mr. Crompton served as our chief executive officer from October, 1999
until March, 2000.
OPTION GRANTS IN LAST YEAR
No stock options or stock appreciation rights were granted to our current
and former chief executive officer during the year ended December 31, 1999. The
following table sets forth certain information with respect to our current and
former chief executive officer concerning grants of stock options and stock
appreciation rights during the period beginning January 1, 2000 and ending June
30, 2000.
OPTION GRANTS FROM JANUARY 1, 2000 THROUGH JUNE 30, 2000 (1)
<TABLE>
<CAPTION>
<S> <C>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants . . . . Option Term (2)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
% of Total
Number of Options/
Securities SARs
Underlying Granted to
Options/ Employees Exercise or
SARs in Fiscal Base Price Expiration
Name . . . . . . . Granted Year ($/Share) Date(2) 5% ($) 10% ($)
------------------ ---------- ----------- ------------- ----------- ------- --------
John M. Marencik . _________ ____% $ ____ __/__/__ $ $
Donald J. Crompton _________ ____% $ ____ __/__/__ $ $
</TABLE>
(1) No stock appreciation rights have ever been granted by us.
(2) _________________.
28
<PAGE>
STOCK OPTION PLAN
Effective January 1, 2000, we have adopted the 2000 Compensatory Stock
Option Plan to provide for the granting of non-statutory common stock purchase
options which are not intended to qualify as "incentive stock options" under
Section 422A of the Internal Revenue Code of 1986. The purpose of the Stock
Option Plan is to aid in attracting and retaining able and experienced persons
in our service, to encourage a sense of proprietorship in these persons and to
stimulate the active interest of these persons in the development and success of
our company. We have granted options to purchase a total of 704,500 shares of
common stock pursuant to the Stock Option Plan, including options to purchase
492,500 shares that were exercisable as of August 31, 2000.
The Stock Option Plan is administered by the Compensation Committee of our Board
of Directors. The Compensation Committee has the power to determine the persons
to whom options are granted under the Stock Option Plan, the number of shares
covered by those options, and the time at which an option becomes exercisable,
subject in each case to the limitations set forth in the Stock Option Plan.
Options can be granted under the Stock Option Plan to officers, directors and
full- or part-time employees of our company, consultants, advisors or agents of
our company, and any lawyer, law firm, accountant, accounting firm or other
professional or professional firm engaged by our company or any subsidiary. The
period during which an option may be exercised - up to five years -- and the
time at which it becomes exercisable are fixed by the Compensation Committee at
the time the option is granted. No option granted under the Stock Option Plan
is transferable by the holder other than by will, by the laws of descent and
distribution or by qualified domestic relations order.
The number of shares which may be issued and sold pursuant to options granted
under the Stock Option Plan may not exceed an aggregate of 3,000,000 shares,
subject to adjustment for any stock dividend, stock split, combination or
reclassification of shares, or similar transaction. Shares subject to options
granted under the Stock Option Plan which expire or terminate without being
exercised in full become available, to the extent unexercised, for future grants
under the Stock Option Plan. The per share exercise price for an option granted
under the Stock Option Plan is 80% of the average trading price of our common
stock during the four week period ending on the Friday before the option is
exercised. The Stock Option Plan provides for automatic adjustments to prevent
dilution or enlargement of the optionee's rights in the event of a stock split,
stock dividend, reorganization, merger, consolidation, liquidation, combination
or exchange of shares, or other change in our capital structure. We currently
intend to register all shares underlying options granted under the Stock Option
Plan pursuant to the Securities Act of 1933 and any applicable state securities
laws.
MARENCIK EMPLOYMENT AGREEMENT
On March 17, 2000, We entered into an employment agreement with John
Marencik. The agreement does not have a specified termination date, but instead
provides that Mr. Marencik will be employed as our president and chief executive
officer until either party terminates the agreement.
The agreement provides for an annual base salary of $84,000, which amount is
subject to annual review and adjustment, as well as the provision of 20 days'
paid vacation per year and such other benefits as are generally available to our
other employees. As additional compensation, each month during the term of the
agreement Mr. Marencik will be entitled to receive irrevocable options to
purchase 5,000 shares of our common stock at an exercise price of $0.01 per
share. These options are not being provided pursuant to our 2000 Compensatory
Stock Option Plan, however, he also is entitled to receive options to purchase
100,000 shares of our common stock pursuant to our Stock Option Plan, which
options vest in quarterly installments of 25,000 shares each commencing December
1, 2000. The agreement provides Mr. Marencik with the use of a company car and
a $500 per month car allowance to cover operating expenses. If he is required
to relocate to perform his duties under the agreement, Mr. Marencik will be
reimbursed for up to $24,000, which amount will be made either in a lump sum to
cover moving expenses or in twelve monthly payments of $2,000 to cover housing
expenses.
The agreement may be terminated by us in the event of Mr. Marencik's physical or
mental disability or for cause (as defined). Under the agreement, if employment
is terminated by us other than for cause, Mr. Marencik will be entitled to
receive a severance payment equal to six months' salary and benefits plus any
accrued and unpaid salary, bonus, vacation pay and expenses. Mr. Marencik also
will be entitled to this severance payment if he resigns within one year after
the occurrence of specified events, including any change in his title, position,
compensation or other factors that would reasonably be considered a demotion,
29
<PAGE>
any person acquires 50% or more of our outstanding shares, any material breach
of the agreement by us, any transaction in which our assets become the property
of a person with at least the same amount of assets, or a plan of liquidation of
our company is adopted.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BONDOCK CAPITAL, LTD.
Brian L. Lovig, the Chairman of the Board, Treasurer and a director of our
company, is the president and sole owner of Bondock Capital, Ltd., a British
Columbia real estate, auctioning and merchant banking company. Bondock Capital
owned 50% of the outstanding capital stock of our Alberta, Canada subsidiary,
legalopinion.com, Inc., until August 9, 1999. On that date, we acquired
legalopinion.com, Inc. and paid Bondock Capital 4,500,000 shares of our common
stock plus $50,000 in cash in exchange for Bondock Capital's interest in that
company.
Bondock Capital loaned $ 571,768 to us, of which $ 12,698 remains owing. This
unsecured loan does not bear interest and does not have specified repayment
terms. Bondock Capital has indicated in writing that they will not request
repayment of the loan during the fiscal year ending December 31, 2000.
On April 11, 2000, Bondock Capital purchased 105 units consisting of stock and
warrants in exchange for a total purchase price of $551,250. Each unit
contained 3,000 shares of our common stock and warrants to purchase an
additional 3,000 shares of our common stock. As a result, in this private
placement transaction Bondock Capital received 315,000 shares of our common
stock and warrants to purchase an additional 315,000 shares. Bondock Capital
paid for the units by forgiving $551,250 of the outstanding loan made by Bondock
Capital to us.
PARADIGM FINANCIAL SERVICES LTD.
We have entered into a management agreement with Paradigm Financial
Services Ltd. under which Paradigm manages the day to day operations of our
business, including paying bills, collecting and managing revenues, managing the
solicitation of legal providers, keeping records and providing financial
statements to our independent accountants. In exchange for Paradigm's services,
we have agreed to make monthly payments to Paradigm of $17,500 (Canadian). This
arrangement enabled our firm to compensate certain employees for their services
provided to legalopinion.com from its inception. This agreement was terminated
in April, 2000. We have subsequently established a formal legalopinion.com
payroll and we now employ a staff of sixteen (16). Don Crompton and Rae Meier,
directors of our company, are employed by Paradigm. Pursuant to the terms of
the of the management agreement, we issued 150,000 shares of our common stock to
each of Don Crompton and Rae Meier.
VENTURE CAPITAL MEDIA, LTD.
In November 1999, we entered into an advertising agreement with Venture
Capital Media, Ltd. under which we agreed to issue shares of our common stock in
exchange for media advertising. A total of 5,000,000 shares of our common stock
were issued pursuant to the advertising agreement prior to its termination by
the parties in October, 2000. Of these 5,000,000 shares, 4,642,465 shares have
been registered pursuant to a registration statement of which this prospectus is
a part, but they remain subject to contractual restrictions on resale.
Venture Capital Media is included among the selling stockholders. See "Selling
Stockholders -The Venture Capital Media Group."
THREE EFF CORPORATION
In 1999, Three Eff Corporation loaned approximately $ 573,000 to us, part
of which debt was discharged in exchange for stock and warrants as described
below. On April 11, 2000, Three Eff purchased 28 units consisting of stock and
warrants in exchange for a total purchase price of $147,000. Each unit
contained 3,000 shares of our common stock and warrants to purchase an
additional 3,000 shares of our common stock. As a result, in this private
placement transaction Three Eff received 84,000 shares of our common stock and
warrants to purchase an additional 84,000 shares. Three Eff paid for the units
by forgiving $147,000 of the outstanding loan made by Three Eff to us.
30
<PAGE>
MEDALLION CAPITAL
We entered into a management consulting agreement with Medallion Capital to
provide certain corporate planning and consulting services, including the
coordination of our investor relations program. The contract calls for payment
of $3,000 per month plus expenses.
SELLING STOCKHOLDERS
This prospectus was prepared for use in connection with the resale by The
May Davis Group, Ltd. of up to 39,500,000. shares of our common stock. These
selling stockholders have not had any material relationship with us or any of
our officers, directors or controlling stockholders within the last three years
other than the transactions described below.
THE VENTURE CAPITAL MEDIA GROUP
In November 1999, we entered into an advertising agreement with Venture
Capital Media, Ltd. Under this agreement, Venture Capital Media agreed to
provide us with media advertising throughout the United States and Canada in
exchange for shares of our common stock. The media advertising available
consisted of television, radio, billboard, print, internet, sponsorships,
promotions and other advertising. Under the agreement, we were permitted to
transact up to $42 million of media advertising on or before June 30, 2001, with
such advertising being valued up to the maximum published rate for the
particular media advertising product.
Our agreement with Venture Capital Media required us to issue shares of our
common stock in a dollar amount equal to the value of approved media advertising
obtained through Venture Capital Media. For purposes of calculating the number
of shares to be issued, our common stock was valued quarterly. For the quarter
commencing January 1, 2000 and ending on March 31, 2000, the value of our common
stock was set at $2.00 per share. The valuation for each subsequent quarter was
75% of the average closing price of our stock for the last month of the
immediately preceding calendar quarter. A total of 5,000,000 shares of our
common stock were issued pursuant to the advertising agreement based on a per
share valuation of $2.00, and a portion of these shares represent advance
payment for $915,068.45 of advertising that remains to be provided as of August
31, 2000.
In October, 2000, our company and Venture Capital Media terminating our
advertising agreement in order to bring to a close our ongoing private placement
of our common stock. However, Venture Capital Media remains obligated to
provide any media advertising for which it has already been paid. In connection
with the termination of the advertising agreement, we agreed to register
4,642,465 of the 5,000,000 shares of our common stock issued in exchange for
media advertising provided under the advertising agreement. The 4,642,465
shares have been registered pursuant to a registration statement of which this
prospectus is a part. Venture Capital Media has agreed, however, that these
shares will remain subject to certain contractual restrictions on resale. These
restrictions limit the number of shares that may be sold during specified
periods as follows:
- 1,052,381 shares will be released from the restrictions on resale in the
month of September 2000;
- an additional 107,143 shares per month will be released from the
restrictions on resale for the months of October 2000 through January 2001, plus
an additional 1,369,192 shares will be released from the restrictions on resale
on December 17, 2000;
- an additional 109,524 shares per month will be released from the
restrictions on resale for the months of February through July 2001;
- an additional 111,905 shares per month will be released from the
restrictions on resale for the months of August 2000 through January 2002;
- an additional 114,286 shares per month will be released from the
restrictions on resale for the months of February through May 2002; and
- an additional 6,602 shares will be released from the restrictions on
resale in the month of June 2002.
31
<PAGE>
THE MAY DAVIS GROUP
JULY 2000 DEBENTURE FINANCING
In July of 2000, we entered into a placement agency agreement with The May Davis
Group, Inc. under which May Davis agreed to use their best efforts to find
purchasers for up to $500,000 in aggregate principal amount of our 6%
convertible debentures. For the performance by May Davis of its services under
the placement agency agreement, we paid May Davis a commission equal to 9% of
the gross proceeds that we received from the sale of the debentures and issued
to May Davis a five-year warrant to purchase up to 630,000 shares of our common
stock at an exercise price of $1.50 per share, subject to adjustment to prevent
dilution. We will pay all of May Davis' reasonable legal, administrative, and
escrow fees associated with the sale of the debentures, estimated to be
$ 70,000. In addition, we have agreed to indemnify May Davis against certain
civil liabilities, including liabilities under the Securities Act.
In July 2000, we entered into a securities purchase agreement with the
individuals listed below. Under this agreement, we agreed to issue and sell to
these persons for $500,000 one or more of our 6% convertible debentures in the
aggregate principal amount of $500,000. All or any part of the principal amount
of the debenture, plus any accrued interest, may be converted at any time by any
holder of the debenture into shares of our common stock at a conversion price
per share equal to either 120% of the closing bid price on the date the
debentures were issued or 80% of the average closing bid prices of our common
stock for any three days of the five trading days immediately preceding the date
of the conversion, as determined by the holder. On July 17, 2005 maturity date
of the debentures, the unpaid balance of each of the debentures and any accrued
and unpaid interest will convert automatically into shares of our common stock
at the conversion price on the maturity date.
PURCHASERS OF THE DEBENTURES:
- Gerald Simpson
- Kenneth Rogers
- John Bolliger
- Anand Dhanda
- Daniel Kane
- William Murphy
- Loni Spurkeland
- John Millard
- Wm. Schoenbachler
- John Martin
- Mohammad Hossain
- Ronald Horner
- James Ratliff
- Richard Green
The table below sets forth the number of shares of our common stock that the
holders of the debentures would acquire if they elected to convert the entire
$500,000 aggregate principal amount of the debentures. The share amounts are
32
<PAGE>
based on our closing bid price of $.17 on October 20, 2000, and on assumed
closing bid prices of $.13, $.09 and $.04, which prices represent a 25%, 50% and
75% decline, respectively, in our October 20, 2000 closing share price. There
were 33,604,442 shares of our common stock outstanding on October 20, 2000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percentage Decline in. Assumed Shares of Common Outstanding Percentage of
October 20, 2000 . . . Closing Bid Stock Issued Upon Common Stock if Outstanding
Closing Bid Price. . . Price Conversion issued Common Stock
---------------------- ------------ ----------------- --------------- --------------
-- . . . . . . . . . . $ 0.17 2,941,176 36,545,618 8.05%
25%. . . . . . . . . . $ 0.13 3,921,569 37,526,011 10.45%
50%. . . . . . . . . . $ 0.09 5,882,353 39,486,795 14.90%
75%. . . . . . . . . . $ 0.04 11,764,706 45,369,148 25.93%
</TABLE>
In addition to issuing the debentures pursuant to the securities purchase
agreement, we also issued to Persia Consulting Group, Inc. a five-year warrant
to purchase up to 120,000 shares of our common stock at an exercise price of
$1.50 per share, subject to adjustment to prevent dilution. This warrant was
issued as compensation to Persia Consulting for service to us as a finder.
At the time of our issuance of the debentures and the warrants referred to
above, we entered into a registration rights agreements with May Davis, and
each of the holders of the debentures under which we agreed to register under
the Securities Act up to 4,000,000 shares of our common stock that may be
issuable upon the conversion of all of the debentures and up to 2,000,000 shares
of our common stock that may be issued upon the exercise of the warrants.
SEPTEMBER 2000 EQUITY LINE OF CREDIT FINANCING
In September 2000, we entered into a placement agency agreement with The May
Davis Group, Inc. under which May Davis agreed to use their best efforts to find
purchasers for up to $15,000,000 in aggregate principal amount of our 6%
convertible debentures to be issued from time to time under an equity line of
credit agreement. For the performance by May Davis of its services under the
placement agency agreement, we have agreed to pay May Davis a commission equal
to 9% of the gross proceeds that we receive from the sale of the debentures,
which commission is payable in cash or in shares of our common stock. In
addition, upon the closing a the sale of debentures, we have agreed to issue to
May Davis a five-year warrant to purchase up to 3,500,000 shares of our common
stock at an exercise price of $1.50 per share, subject to adjustment to prevent
dilution. We will pay all of May Davis' reasonable legal, administrative, and
escrow fees associated with the sale of the debentures. In addition, we have
agreed to indemnify May Davis against certain civil liabilities, including
liabilities under the Securities Act.
In September 2000, we entered into an equity line of credit agreement with GMF
Holdings. Under this agreement, these persons have agreed to purchase up to
$15,000,000 in aggregate principal amount of our 6% convertible debentures
during a period of up to 30 months commencing on September 19, 2000, the date
the registration statement of which this prospectus is a part was declared
effective by the SEC. From time to time during such period, we can request an
advance under the agreement and require these persons to purchase at least
$50,000 in principal amount of debentures until the total of all such debenture
purchases reaches $15,000,000. The maximum principal amount of debentures that
may be issued at any one time pursuant to an advance request will be determined
at the time that the debentures are to be issued and sold based on the average
trading volume of our common stock during the 30 days preceding the date of the
requested advance multiplied by the market price for our common stock at that
time. After determining this 30-day average trading volume, the maximum
principal amount of debentures that may then be issued will be equal to the
difference between (i) the maximum advance amount set forth opposite the
applicable 30-day average daily trading volume in the table below, reduced by
(ii) the total of all advances made in exchange for our debentures during the 30
days preceding the date that we make a request for an advance.
33
<PAGE>
30-DAY AVERAGE DAILY TRADING VOLUME MAXIMUM ADVANCE AMOUNT
--------------------------------------- ------------------------
$25,000 - 50,000 $50,000
$50,000 - 100,000 $100,000
$100,001 - 200,000 $200,000
$200,001 - $300,000 $300,000
$300,001 - 400,000 $400,000
$400,001 - 500,000 $500,000
$500,001 - 600,000 $600,000
$600,001 - 800,000 $700,000
$800,001 - 1,000,000 $850,000
$1,000,000 - Over $1,000,000
Our rights to make an advance request under the equity line of credit
agreement and the obligation of GMF Holdings to acquire and pay for the
debentures is subject to various conditions, including the following:
- Our delivery into escrow of the original debenture and our payment to May
Davis of the 9% commission referred to above;
- The registration statement of which this prospectus is a part shall have
been declared effective by the SEC, and, except for certain limited exceptions,
there shall not have occurred any stop order or suspension of the effectiveness
of such registration statement that has not been withdrawn or superceded by an
order of effectiveness;
- Our common stock, including any shares that are issued upon a conversion
of the debentures, shall be authorized for quotation in the over-the counter
market Bulletin Board;
- The offer and sale of any common stock that is issued upon a conversion of
the debentures shall be legally permitted by all laws and regulations to which
we is subject, and any permits and qualifications required by applicable state
laws shall be obtained;
- No law, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority
that prohibits or directly and adversely affects any of the transactions
contemplated by the equity line of credit agreement, and no proceeding shall
have been commenced that may have the effect of prohibiting or adversely
affecting any of the transactions contemplated thereby; and
- No event that had or is reasonably likely to have a material adverse
effect on our business, operations, properties, prospects, or financial
condition shall have occurred.
On September 19, 2000 we issued $ 500,000 in aggregate principal amount of
our 6% convertible to these persons. See "Description of Securities."
All or any part of the principal amount of the debenture, plus any accrued
interest, may be converted at any time by any holder of the debenture into
shares of our common stock at a conversion price per share equal to either 120%
of the closing bid price on the date the debentures were issued or 80% of the
average closing bid prices of our common stock for any three days of the five
trading days immediately preceding the date of the conversion, as determined by
the holder. On the maturity date of the debentures, the unpaid balance of each
of the debentures and any accrued and unpaid interest will convert automatically
into shares of our common stock at the conversion price on the maturity date.
The table below sets forth the number of shares of our common stock that the
holders of the debentures would acquire if they elected to convert the entire
$15,000,000 aggregate principal amount of the debentures that are issuable under
the equity line of credit agreement. The share amounts are based on our closing
bid price of $.17 on October 20, 2000, and on assumed closing bid prices of
$.13, $.09 and $.04, which prices represent a 25%, 50% and 75% decline,
respectively, in our October 20, 2000 closing share price. There were
33,604,442 shares of our common stock outstanding on October 20, 2000.
34
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percentage Decline in. Assumed Shares of Common Outstanding Percentage of
October 20, 2000 . . . Closing Bid Stock Issued Upon Common Stock if Outstanding
Closing Bid Price. . . Price Conversion issued Common Stock
---------------------- ------------ ----------------- --------------- --------------
-- . . . . . . . . . . $ 0.17 88,235,294 121,839,736 72.42%
25%. . . . . . . . . . $ 0.13 117,647,059 151,251,501 77.78%
50%. . . . . . . . . . $ 0.09 176,470,588 210,075,030 84.00%
75%. . . . . . . . . . $ 0.04 352,941,176 386,545,618 91.31%
</TABLE>
At the time we entered into the equity line of credit agreement referred to
above, we entered into registration rights agreements with May Davis and GMF
Holdings, under which we agreed to register under the Securities Act up to
30,000,000 shares of our common stock that may be issuable upon the conversion
of all of the debentures contemplated by the equity line of credit agreement and
up to 3,500,000 shares of our common stock that may be issued upon the exercise
of the warrants.
STEPHEN J. BURNS
OCTOBER 2000, SHARES FOR SERVICES AGREEMENT
On October 11th, 2000, we entered into agreement with Stephen J. Burns whereas
pursuant to the agreement we have issued 32,500 shares of free trading
legalopinion.com stock in payment for consulting services rendered. The
Consultant provided recruitment services for us and remuneration was based upon
the total compensation package for the executive hired.
STOCK OWNERSHIP TABLE
The following table sets forth certain information as of October 20, 2000
regarding the beneficial ownership of our common stock by:
*each of the selling stockholders;
*each person who we know owns beneficially more than 5% of our common stock;
*each of our directors and director nominees;
*our chief executive officer
*each of our executive officers, other than our chief executive officer, who
were serving as executive officers at the end of 1999 and whose total annual
salary and bonus was more than $100,000; and
*all of our executive officers and directors as a group.
All information with respect to beneficial ownership has been furnished by the
respective stockholders. Information with respect to shares owned beneficially
prior to the offering and available for sale in the offering assumes:
*the conversion by the selling stockholders of all debentures held by them
based on our closing bid price of $ .17 on October 20, 2000; and
*the exercise by the selling stockholders of all warrants held by them at
the $1.50 per share exercise price.
The actual number of shares of common stock issuable upon conversion of the
debentures is indeterminate, and could be materially less or more than the
amount estimated due to the conversion price adjustments explained "Selling
Stockholders - The May Davis Group" beginning on page 32 and "Description of
Securities - 6% Convertible Debentures" beginning on page 38. We agreed to
register at least 39,500,000 shares issuable upon the conversion of the
debentures and warrants; the additional shares covered by this prospectus are to
accommodate the possibility that the actual number of shares issuable upon
conversion of the debentures increases as a result of adjustments in the
conversion price. The share amounts included in the following table, however,
assume that there have been no adjustments to the conversion price. Information
35
<PAGE>
with respect to shares owned beneficially after the offering assumes the sale of
all of the shares offered by the selling stockholders and no other purchase or
sales of common stock.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NAME AND ADDRESS OF SHARES BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY
BENEFICIAL OWNER. . PRIOR TO THE OFFERING SHARES OWNED AFTER THE
BEING . . . . . OFFERING
OFFERRED
NUMBER PERCENT. . NUMBER PERCENT
------------------- ------------------------- --------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Venture Capital Media. . . . . . . . . . . . 4,642,465 5.97 % 4,642,465 0 0.00%
46 Micoud Street
Castries, Saint Lucia West Indies
The May Davis Group, Inc.. . . . . . . . . . 5,380,000 6.92% 5,380,000 0 0.00%
1 World Trade Centre
Suite 8735
New York, New York 10048
Baycove Investments Ltd. . . . . . . . . . . 4,500,000 5.79 % 0 4,500,000 5.79 %
1177 West Hastings
Vancouver, British Columbia V6E 2K3
Bondock Capital Ltd. . . . . . . . . . . . . 4,500,000 5.79 % 0 4,500,000 5.79 %
P.O Box 20059, TCM
Kelowna, BC V1Y 9H2
John M. Marencik . . . . . . . . . . . . . . 0 0 % 0 0 0%
Two Union Square, 42nd Floor
601 Union Street
Seattle, Washington 98101
Donald J. Crompton . . . . . . . . . . . . . 150,000 0.19 % 0 150,000 0.19 %
c/o Royal LePage Real Estate Services, Ltd.
1-1890 Cooper
Kelowna, British Columbia V1Y 8B7
Rae K. Meier . . . . . . . . . . . . . . . . 150,000 0.19 % 0 150,000 0.19 %
c/o Royal LePage Real Estate Services, Ltd.
1-1890 Cooper
Kelowna, British Columbia V1Y 8B7
GMF Holdings . . . . . . . . . . . . . . . . 30,000,000 38.57 % 30,000,000 0 0.00%
131 Frederick Street
Nassau, Bahamas
Persia Consulting Group, Inc.
120,000 0.15 % 120,000 0 0.00%
Gerald Simpson . . . . . . . . . . . . . . . 320,000 0.41 % 320,000 0 0.00%
202 S. Broadway
Tyler, TX 75701
Kenneth Rogers . . . . . . . . . . . . . . . 80,000 0.10 % 80,000 0 0.00%
P.O. Box 947
Salmon, ID 83467
36
<PAGE>
John Bolliger. . . . . . . . . . . . . . . . 40,000 0.05 % 40,000 0 0.00%
1775 North Elk Road
Pocatello, ID 83204
David Hungerford . . . . . . . . . . . . . . 400,000 0.51 % 400,000 0 0.00%
10715 Hotspring Valley Road
Cockeysville, MD 21203
Anand Dhanda . . . . . . . . . . . . . . . . 280,000 0.36 % 280,000 0 0.00%
5565 Grossmont Ctr. Drive
La Mesa, CA 91942
Daniel Kane. . . . . . . . . . . . . . . . . 400,000 0.51 % 400,000 0 0.00%
133 Nassau Street NW
Atlanta, GA 30303
William Murphy . . . . . . . . . . . . . . . 200,000 0.26 % 200,000 0 0.00%
1809 WSW Loop 323
Tyler, TX 75701
Loni Spurkeland. . . . . . . . . . . . . . . 400,000 0.51 % 400,000 0 0.00%
2080 Mummasburg Road
Gettysburg, PA 17325
John Millard . . . . . . . . . . . . . . . . 200,000 0.26 % 200,000 0 0.00%
107 Medinah Drive
Easley, SC 29642
WM. Schoenbachler. . . . . . . . . . . . . . 80,000 0.10 % 80,000 0 0.00%
3616 Glasgow Drive
Lansing, MI 48910
John Martin. . . . . . . . . . . . . . . . . 160,000 0.21 % 160,000 0 0.00%
Long Shore Way West
Naples, FL 34119
Mohammad Hossain . . . . . . . . . . . . . . 80,000 0.10 % 80,000 0 0.00%
35 Minuteman Circle
Orangeburg, NY 10962
Ronald Horner. . . . . . . . . . . . . . . . 80,000 0.10 % 80,000 0 0.00%
610 University Drive
Pocatello, ID 83201
James Ratliff. . . . . . . . . . . . . . . . 320,000 0.41 % 320,000 0 0.00%
P.O. Box 6460
Lubbock, TX 79493
37
<PAGE>
Richard Green. . . . . . . . . . . . . . . . 80,000 0.10 % 80,000 0 0.00%
C/O The May Davis Group
One World Trade Center
New York, NY 10048
All directors and executive. . . . . . . . . 4,800,000 6.17 % 0 4,800,000 6.17%
-------------------------------------------- ------------------- ---------- -----------------
officers as a group (3 persons)
</TABLE>
____________________________
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities. Unless otherwise
indicated, the persons or entities identified in this table have sole voting and
investment power with respect to all shares shown as beneficially owned by them.
Percentage ownership calculations are based on 33,604,442 shares of common stock
outstanding.
(2) Includes 4,500,000 shares held by a family trust, of which Mr. Lovig's
wife is trustee. These shares are the same as those indicated as owned by
Bondock Capital Ltd. above.
(3) Consists of shares of our common stock that would be issued upon the
conversion of our debentures based on our closing bid price of $.17 on October
20, 2000.
(4) Consists of shares of our common stock that would be issued upon the
exercise of warrants.
DESCRIPTION OF SECURITIES
COMMON STOCK
GENERAL We presently are authorized to issue 200,000,000 shares of common
stock having a par value of $0.001 per share. Each share of our common stock
has the same relative rights as, and is identical in all respects with, each
other share of common stock. We presently are not authorized to issue any other
class or classes of capital stock.
Nevada law does not require stockholder approval for the issuance of our
authorized but unissued shares of common stock. Such issuances may be made for
a variety of corporate purposes, including future private and public offerings
to raise additional capital or to facilitate corporate acquisitions.
DISTRIBUTIONS The holders of outstanding shares of our common stock are
entitled to receive dividends out of assets legally available for this purpose
at the times and in the amounts as our board of directors may determine from
time to time. We currently do not expect to pay any dividends in the
foreseeable future. See "Dividend Policy."
VOTING RIGHTS The holders of our common stock possess exclusive voting rights
in our company. They elect our board of directors and act on any other matters
as are required to be presented to them under applicable law or as are otherwise
presented to them by the board of directors. Each stockholder is entitled to one
vote for each share of common stock held on all matters submitted to a vote of
stockholders. Cumulative voting for the election of directors is not provided
for in our articles of incorporation, which means that the holders of a majority
of the shares voted can elect all of the directors then standing for election.
38
<PAGE>
LIQUIDATION In the event of liquidation, dissolution or winding up of our
company, the holders of our common stock would be entitled to share ratably in
all of our assets remaining available for distribution after satisfaction of all
its debts and liabilities.
PREEMPTIVE RIGHTS Holders of our common stock are not entitled to preemptive
rights with respect to any shares that may be issued. Also, they have no rights
to convert their common stock into other securities.
NO REDEMPTION OR ASSESSMENT Our common stock is not entitled to preemptive
rights and is not subject to conversion, call or redemption. Each outstanding
share of our common stock is, and all shares of our common stock to be
outstanding upon completion of this offering will be, fully paid and
nonassessable.
TRANSFER AGENT Signature Stock Transfer serves as our transfer agent. Its
address is 14675 Midway Rd, Suite 221, Addison, Texas 75001, and its telephone
number at this location is (972) 788-4193.
LISTING Our common stock currently is quoted for trading on the OTC Bulletin
Board under the symbol "LAWW". There has been only limited trading activity for
our common stock, and no assurances can be given that an active trading market
for our common stock will ever develop. We do not intend to apply for listing
of the shares on a national securities exchange in the foreseeable future.
STOCK OPTIONS
As of October 20, 2000, we had granted options to purchase a total of
704,500 shares of common stock pursuant to our 2000 Compensatory Stock Option
Plan, including options to purchase 517,500 shares that were exercisable as of
that date. Options for up to an additional 2,295,500 shares of common stock may
be granted under the Stock Option Plan. Of the options granted under the Stock
Option Plan as of October 20, 2000, Mr. Marencik has been granted options to
purchase 50,000 shares of common stock. All of the options granted under the
Stock Option Plan contain standard anti-dilution provisions. See
"Management-Stock Option Plan." In addition to the options granted under the
Stock Option Plan, as of October 20, 2000 we had granted options to purchase a
total of 25,000 shares of common stock pursuant to employment contracts and
other agreements, including options for shares granted to Mr. Marencik pursuant
to his employment agreement. See "Management-Marencik Employment Agreement."
6% CONVERTIBLE DEBENTURES
Pursuant to a securities purchase agreement with a group of investors (see
page 32)., on July 17, 2000 we issued our 6% convertible debentures in the
aggregate principal amount of $500,000 to these persons. Also, pursuant to a
securities purchase agreement with GMF Holdings on September 19 2000, we issued
our 6% convertible debentures in the principle amount of $15,000,000 to these
persons. The debentures have the terms, rights and privileges described below.
INTEREST The debentures accrue interest on the unpaid principal of the
debenture at the rate of 6% per year from the date of issuance on each agreement
until paid. Interest is payable upon conversion of the debenture into common
stock and at maturity. We, at our discretion, may elect to pay interest in cash
or in shares of our common stock, with the shares being valued for this purpose
based on the closing bid price on the date the interest is paid.
CONVERSION All or any part of the principal amount of the debenture, plus any
accrued interest, may be converted at any time by any holder of the debenture
into shares of our common stock at a conversion price per share equal to either
120% of the closing bid price on the date the debentures were issued or 80% of
the average closing bid prices of our common stock for any three days of the
five trading days immediately preceding the date of the conversion, as
determined by the holder. The debentures provide that the holder of the
debenture cannot convert the debenture into common stock to the extent that
doing so would result in the holder being deemed the beneficial owner of 10% or
more of our then outstanding shares of common stock. On the July 17, 2000
maturity date of the debentures, the unpaid balance of each of the debentures
and any accrued and unpaid interest will convert automatically into shares of
our common stock at the conversion price on the maturity date. We are obligated
to reserve and keep available out of its authorized but unissued shares of
common stock, sufficient shares to effect the conversion of the debentures. The
debentures contain standard anti-dilution provisions.
39
<PAGE>
REDEMPTION Subject to the satisfaction of notice and other requirements, we may
redeem the debentures by causing an amount equal to 120% of the unpaid principal
of and accrued interest on the debentures to be converted into shares of our
common stock.
SUBORDINATION The debentures, including principal or interest thereon, are
subordinate and junior in right of payment to all current bank debt and all
indebtedness acquired by us after the date of issuance of the debentures, other
than indebtedness to any officer, director or owner of 10% or more of our common
stock, but only to the following extent:
- upon the maturity or installment due date of any such current bank debt or
indebtedness, all such bank debt or indebtedness then due must first be paid in
full before any payment is made on the debentures; and
- in the event of any insolvency, bankruptcy or other similar proceedings
affecting us or any proceedings for the liquidation, dissolution or other
winding up of our company, then any such current bank debt or indebtedness must
be paid in full before any payment is made in the debentures.
WARRANTS
In connection with the issuance of our 6% convertible debentures, on July
17, 2000 we issued a warrant for the purchase of shares of our common stock to
The May Davis Group, Inc. Each of the warrants is substantially identical and is
exercisable for five years from the date of issuance. The exercise price of the
warrants is $1.50 per share, subject to standard anti-dilution provisions. As
an alternative to paying the exercise price in cash, the holder of the warrant
may elect a cashless exercise option in which the number of shares of our common
stock issuable upon the exercise of the warrant is reduced by a number of shares
having an aggregate market value equal to the aggregate exercise price of shares
for which the warrant is being exercised. The warrants provide that they are not
exercisable to the extent that after giving effect to the exercise the holder
and its affiliates would beneficially own, or during the 60 days then ended
would have acquired, more than 4.9% of our outstanding common stock.
In connection with the issuance of our 6% convertible debentures, on September
19, 2000 we issued a warrant for the purchase of shares of our common stock to
The May Davis Group, Inc. Each of the warrants is substantially identical and is
exercisable for five years from the date of issuance. The exercise price of the
warrants is $1.50 per share, subject to standard anti-dilution provisions.
REGISTRATION RIGHTS
At the time of our issuance of the debentures and the warrants referred to
above, we entered into a registration rights agreements with May Davis, and each
of the holders of the debentures under which we agreed to register under the
Securities Act up to 44,000,000 shares of our common stock that may be issuable
upon the conversion of all of the debentures and up to 4,500,000 shares of our
common stock that may be issued upon the exercise of the warrants. If we are
unable to register these shares under the Securities Act by November 3, 2000,
then the conversion percentage to be used in determining the conversion price
for the debentures will be reduced by 2% for the first 30 days following such
date and an additional 2% each thirty 30 days thereafter until the shares are
registered. In addition, if the shares are not registered by that date, and
during any period following effectiveness when sales cannot be made pursuant to
an effective registration statement (other than as a result of filing a
post-effective amendment), then we will pay to the holders of the debentures an
amount equal to 2% of the aggregate purchase price of all of the debentures then
held by the holder for the first 30 calendar days that sales cannot be made
under an effective registration statement and 3% of the aggregate purchase price
for every 30 calendar days thereafter. We will pay all registration expenses
incurred in connection with the above registration.
40
<PAGE>
RESTRICTIONS ON SALE OR OTHER TRANSFER OF THE SHARES
SECURITIES LAWS
Any shares owned by our "affiliates" are subject to restrictions on resale
imposed by the Securities Act and must be held indefinitely unless they are
registered under the Act or an exemption from registration is then available.
We are the only party who may register its common stock under the Act. The term
"affiliate" is defined to mean a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under our common
control. The Securities and Exchange Commission ordinarily would presume,
without limitation, that an officer, director or the beneficial owner of five
percent or more of our outstanding voting securities would fall within this
definition
Section 4(1) of the Securities Act provides an exemption from registration under
the Act for the resale of securities in the event that the seller of such
securities is not then an "issuer", "dealer" or "underwriter" of the securities
proposed to be resold. Rule 144 was adopted by the Securities and Exchange
Commission as a safe harbor for determining whether a seller would be considered
an "underwriter" for purposes of that exemption. Sales of "restricted" shares
or shares owned by an "affiliate" cannot be made under Rule 144 unless each of
its requirements are satisfied at the time of such sale. Although Rule 144
provides a means for reselling restricted shares and shares owned by affiliates,
it is not the exclusive means for reselling such securities.
In general, Rule 144 currently provides an exemption from registration
under that Act if all of its conditions are met. Under Rule 144 as currently in
effect, a person who has beneficially owned shares of our common stock for at
least one year would be entitled to sell within any three month period a number
of shares that does not exceed the greater of:
- 1% of the number of shares of common stock then outstanding; and
- the average weekly trading volume of the common stock during the four
calendar weeks preceding the filing of a notice on Form 144 with respect to such
sale.
Sales under Rule 144 also are subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us
Under Rule 144(k), a person who is not deemed to have been one of our affiliates
at any time during the 90 days preceding a sale by that person, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell those shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.
AGREEMENT WITH VENTURE CAPITAL MEDIA, LTD.
In connection with the October 24, 2000 termination of our advertising
agreement with Venture Capital Media, Venture Capital Media agreed that
4,642,465 shares our common stock issued to them will remain subject to
contractual restrictions on resale. These restrictions limit the number of
shares that may be sold in each month, commencing September 2000 and ending June
2002, as more specifically described under "Selling Stockholders-The Venture
Capital Media Group."
PLAN OF DISTRIBUTION
The selling stockholders may offer and sell the shares covered by this
prospectus at various times. As used in this prospectus, the term "selling
stockholders" includes donees, pledgees, transferees or other
successors-in-interest selling shares received from a named selling stockholder
as a gift, partnership distribution, or other non-sale-related transfer after
the date of this prospectus. The selling stockholders will act independently of
us in making decisions with respect to the timing, manner and size of each sale.
The shares may be sold by or for the account of the selling stockholders in
transactions on the over-the-counter market, or otherwise. These sales may be
made at fixed prices, at market prices prevailing at the time of sale, at prices
related to prevailing market prices, or at negotiated prices. The shares may be
sold by means of one or more of the following methods:
*a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
*purchases by a broker-dealer as principal and resale by that broker-dealer
for its account pursuant to this prospectus;
*ordinary brokerage transactions in which the broker solicits purchasers;
*in connection with short sales, in which the shares are redelivered to
close out short positions;
*in connection with the loan or pledge of shares registered hereunder to a
broker-dealer, and the sale of the shares so loaned or the sale of the shares so
pledged upon a default;
*in connection with the writing of call options, in hedge transactions and
in settlement of other transactions in options;
*privately negotiated transactions; or
*in a combination of any of the above methods.
If required, we will distribute a supplement to this prospectus to describe
material changes in the terms of the offering.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate in resales. Broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders or from the purchasers of the shares or from both.
This compensation may exceed customary commissions.
The selling stockholders and any broker-dealers, agents or underwriters that
participate with the selling stockholders in the distribution of the shares may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933.
Any commissions paid or any discounts or concessions allowed to any of those
persons, and any profits received on the resale of the shares purchased by them,
may be deemed to be underwriting commissions or discounts under the Securities
Act.
Furthermore, in the event of a "distribution" of its shares, the selling
stockholders, any selling broker or dealer and any affiliated purchasers may be
subject to Regulation M under the Securities Exchange Act of 1934 until its
participation in the distribution is completed.
To comply with the securities laws of certain jurisdictions, if applicable, the
shares of common stock will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the shares of common stock may not be offered or sold unless they
have been registered or qualified for sale in such jurisdictions or an exemption
from registration or qualification is available and is complied with. Upon
request of the selling stockholders, we will make all applicable filings under
state securities or blue-sky laws.
The selling stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the shares of common stock by
a selling stockholder. The foregoing may affect the marketability of the shares
of common stock.
We will pay all expenses of registration of the shares other than fees and
expenses, if any, of counsel or other advisors to the selling stockholders. Any
commissions, discounts, concessions or other fees, if any, payable to
broker-dealers in connection with any sale of the shares will be borne by the
selling stockholders selling those shares.
LEGAL MATTERSMATTERS
William Stocker, Capistrano Beach, CA 92624, will pass upon the validity of
the shares offered for us.
41
<PAGE>
EXPERTS
Our financial statements of as of December 31, 1999 and for the year ended
December 31, 1999 included herein and elsewhere in the registration statement of
which this prospectus is a part, have been included herein and in the
registration statement in reliance upon the report of KPMG, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATIONADDITIONAL INFORMATION
This prospectus constitutes an integral part of a Registration Statement on Form
SB-2 (No. 333-______) (which, together with all amendments, exhibits and
schedules thereto, is referred to as the "Registration Statement") filed by us
with the Commission in Washington, D.C. under the Securities Act of 1933, as
amended, with respect to the shares being offered by this prospectus. This
prospectus does not contain all information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. For further information with respect to us
and the shares offered hereby, reference is made to the Registration Statement
and related exhibits. The Registration Statement, including the exhibits and
schedules thereto, may be inspected and copied at the Commission's offices
located at the addresses set forth above under the caption "Where You Can Get
More Information". Copies of the Registration Statement or any portion thereof
can be obtained at prescribed rates from the Public Reference Section of the
Commission located at the address set forth above under that caption.
42
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the individual capacities and on the date indicated.
LEGALOPINION.COM
formerly Eurotronics Holdings, Inc.
Dated: October 24, 2000
_________/s/____________ _________/s/_____________
John Marencik David Emerick
President / CEO Chief Financial Officer
_________/s/____________ _________/s/_____________
Brian Lovig Don Crompton
Director Director
_________/s/_____________
Rae Meier
Secretary/Director
EXHIBIT 10-.1
-------------
EMPLOYMENT AGREEMENT
JOHN MARENCIK
43
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT made as of the 17th day of March 2000.
---------
BETWEEN:
LEGALOPINION.COM, a Corporation incorporated under the laws of the State of
Nevada,
(Hereinafter referred to as the "Corporation"),
OF THE FIRST PART,
- and -
John Marencik, a businessman of
Suite #7E 4618 Warwick Street,
Kansas City, Missouri, 64112
(Hereinafter referred to as "Employee"),
OF THE SECOND PART.
WHEREAS the Corporation wishes to retain the services of the Employee to
provide the services hereinafter described during the term hereinafter set out;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements here contained and for other good and valuable
consideration, the Parties agree as follows:
1. TERM
----
The corporation shall employ the Employee commencing on the date of April 1
2000, and continuing thereafter until such employment shall be terminated as
hereinafter provided.
2. DUTIES
------
The Employee shall serve the Corporation and any subsidiaries of the
Corporation as Chief
Executive Officer (CEO) and President and shall perform such duties and exercise
such powers pertaining to the management and operation of the Corporation as may
be determined from time to time by the Board of Directors of the Corporation
consistent with the office of the Employee. Without limiting the foregoing, the
Employee shall occupy the office of CEO and President of the Corporation. The
Employee shall:
(a) devote the Employee's full time and attention and the Employee's best
efforts to the business and affairs of the Corporation;
44
<PAGE>
(b) perform those duties that may reasonably be assigned to the Employee
diligently and faithfully to the best of the Employee's abilities and in the
best interests of the Corporation including the development and execution of a
business plan, ,,ales and marketing responsibilities and other functions
assigned by the Board of Directors, consistent with the office of the CEO and
President; and
(c) use the Employee's best efforts to promote the interests and goodwill of
the Corporation.
(d) be responsible for the Corporation maintaining all reporting and filings
required by all regulatory authorities having jurisdiction.
The Employee acknowledges and agrees that the employment relationship
will be governed by and subject to the terms of the Corporation's policies as
amended from time to time and agrees to comply with the terms of such policies.
The Employee undertakes to review the details of such policies and any
amendments made thereto from time to time and make recommendations to the Board
of Directors as to policies and direction of the Corporation's business.
3. REPORTING PROCEDURES
---------------------
The Employee shall report to the Board of Directors. The Employee shall
report fully on the management, operations and business affairs of the
Corporation and advise to the best of the Employee's ability and in accordance
with reasonable business standards on matters that may arise from time I-lo time
during the term of this agreement. The Employee shall comply with all
Securities and Exchange Commission (SEC) reporting requirements as they apply to
the Exchange.
4. REMUNERATION
------------
(a) The annual base salary payable to the Employee for the Employee's
services hereunder shall be $84,000.00 exclusive of bonuses, benefits and other
compensation. The annual base salary payable to the Employee pursuant to the
provisions of this section 4 shall be payable in equal semimonthly installments
in arrears on the 1st and 15th day of each month or in such other manner as may
be mutually agreed upon, less, in any case, any deductions or withholdings
required by law.
(b) The annual base salary payable to the Employee for the Employee's
services hereunder shall be subject to annual review. The review shall be based
on the Employee's performance and the Employer's success in meeting its
objectives under its business plan.
(c) The employee shall be entitled during his employment hereunder to the
benefits generally available to employees of the Corporation from time to time.
(d) As additional compensation the Employee shall receive irrevocable
options of 5,000 common shares per month, executable at a price of $0.01(US) per
share. The Corporation shall forthwith make the necessary filings with the SEC
to cause these shares to be free trading and will make subsequent filings as
required to enable the delivery of free trading shares each month to the
Employee during the Term of this Agreement.
45
<PAGE>
(e) The Employee's Remuneration shall be reviewed each year on the
anniversary date of this Agreement and changed or amended by the Board of
Directors as is agreed upon by the Board and the Employee.
5. STOCK OPTION
-------------
The Board of Directors shall grant the Employee an option to acquire
100,000 common shares of the Corporation in accordance with the terms of the
Corporation's 2000 Compensatory Stock Option Plan. Said option to vest 25,000
shares quarterly commencing December 1, 2000.
6. VACATION
--------
The Employee shall be entitled to 20 days' paid vacation per calendar year
of the Corporation
at a time approved in advance by the Board of Directors, which approval shall
not be unreasonably withheld but shall take into account the staffing
requirements of the Corporation and the need for the timely performance of the
Employee's responsibilities. In the event that the Employee decides not to take
all the vacation to which the Employee is entitled in any calendar year, the
Employee shall be entitled to take up to one week of such vacation in the next
following calendar year at a time approved in advance by the Board of Directors.
7. AUTOMOBILE
----------
The Employee shall supply a vehicle for the Employee's use in connection
with the
Corporation's business. In lieu of reimbursement for all expenses associated
with the operation and maintenance of such vehicle including leasing costs,
insurance, maintenance, gas and oil, the Corporation shall pay the Employee a
car allowance of $500.00 per month.
8. EXPENSES
--------
(a) The Employee shall be reimbursed for all reasonable out-of-pocket
expenses actually and properly incurred by the Employee from time to time 'in
connection with carrying out the Employee's duties hereunder. For all such
expenses the Employee shall furnish to the Corporation originals of all invoices
or statements in respect of which the Employee seeks reimbursement.
(b) In the event that the Employee shall be required to relocate in order to
carry out his responsibilities hereunder, the Corporation shall reimburse the
Employee up to $24,000,00 in moving expenses or, at the Employee's discretion,
pay up to $2,000.00 (US) per month in housing expenses on the Employee's behalf
The maximum amount to be payable shall in any event not exceed $24,000.00.
46
<PAGE>
9. TERMINATION
-----------
(a) The Corporation may terminate the employment of the Employee
without notice or any payment in lieu of notice for cause, which, without
limiting the generality of the foregoing, shall include:
(i) if there is a repeated and demonstrated failure on the part of the
Employee to perform the material duties of the Employee's position in a
competent manner and where the Employee fails to substantially remedy the
failure within a reasonable period of time after receiving written notice of
such failure from the Corporation;
(ii) if the Employee is convicted of a criminal offence involving fraud or
dishonesty,
(iii) if the Employee or any member of the Employee's family makes any
personal profit arising out of or in connection with a transaction to which the
Corporation is a party or with which it is associated without making disclosure
to and obtaining the prior Written consent of the Corporation;
(iv) if the Employee fails to honor the Employee's fiduciary duties to the
Corporation, including the duty to act in the best interests of the Corporation;
or
(v) if the Employee disobeys reasonable instructions given in the course of
employment by the Board of Directors of the Corporation that are not
inconsistent with the Employee's management position and not remedied by the
Employee within a reasonable period of time after receiving written notice of
such disobedience.
(b) This agreement may be immediately terminated by the Corporation
by notice to the Employee if the Employee becomes permanently disabled. The
Employee shall be deemed to have become permanently disabled if in any year
during the employment period, because of ill health, physical or mental
disability, or for other causes beyond the control of the Employee, the Employee
has been continuously unable or unwilling or has failed to perform the
Employee's duties for 60 consecutive days, or if, during any year of the
employment period, the Employee has been unable or unwilling or has failed to
perform the Employee's duties for a total of 120 days, consecutive or not. The
term "any year of the employment period" means any period of 12 consecutive
months during the employment period- This agreement shall terminate without
notice upon the death of the Employee.
10. SEVERANCE PAYMENTS
-------------------
(a) Upon termination of the Employee's employment: (i) for cause- or (ii) by
the voluntary termination of employment by the Employee, the Employee shall not
be entitled to any notice, pay in lieu of notice or severance other than (iii)
compensation earned by the Employee before the date of termination calculated
pro rata up to and including the date of termination, and (iv) any amount to
which the Employee is entitled under any Regulatory Act or Regulation, as
amended and in force from time to time.
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<PAGE>
For great certainty, the Employee shall be paid or reimbursed for any earned and
unpaid salary (including credit for any vacation pay earned but not taken),
earned bonuses, expenses, and other payment payable to or earned by the Employee
up to the date of termination.
(b) If the Employee's employment is terminated for any other reason other
than the reason set forth subsection 10(a), the Employee shall be entitled to
receive 6 months' salary and benefits at the then applicable base salary rate
provided that in no case will the Employee receive less than the amount to which
the Employee is entitled under any Regulatory Act or Regulation. The Employee
will also be paid all unpaid salary, bonuses, vacation pay and expenses. It is
hereby agreed by the parties that the stock purchase plan will cease immediately
upon termination of this contract and no further vesting of stock will occur.
(c) Upon giving notice to the Corporation, the Employee will be entitled to
resign without the Employer's prior written consent within one year of the
occurrence of:
(i) any change which, in the Employee's reasonable opinion, is material and
adverse in the title, status, position@ job function, job responsibilities,
reporting responsibilities or compensation at the Corporation from and after the
date hereof which may be reasonably considered a demotion and for greater
certainty include the hiring of a new CEO;
(ii) the acquisition, directly or indirectly by any means whatsoever by a
corporation or person or group of corporations or persons acting jointly of
equal to or greater than 50% of the total issued shares of the Corporation;
(iii) by a material breach of the Corporation of its' obligation contained
herein;
(iv) the failure of the Corporation to obtain in the Employee's favored a
written and binding assumption of the Agreement from any of its successors.
(v) The adoption of a plan relating to the liquidation or dissolution of
the Corporation.
(vi) Any transaction or series of transactions, whether by reconstitution,
reorganization,
consolidation, amalgamation, arrangement, merger, transfer sale or
otherwise, whereby
the Corporation's assets become the property of another person if said
assets, which
became the property of any other person have a fair market value equal to
or greater than
the fair market value of the assets of the Corporation which are not so
transferred-
(vii) Any other event or circumstances, whether or not the same nature as
any of the foregoing, which may reasonably be considered to constitute into
constructive termination or dismissal.
If the Employee resigns for any of the above reasons, the Employee shall be
entitled to receive
on the date of termination a lump sum cash payment equivalent to the amount in
10(b).
The Employee will also be paid all unpaid salary, vacation pay, bonuses and
expenses.
48
<PAGE>
(d) The payment described in this subsection 10(b) is the only notice, pay
in lieu of notice or severance the Employee will receive in the event of the
termination of this agreement for reasons contemplated in this subsection 10(b).
11. NO MITIGATION
--------------
In the event that (4) the Employee's employment is terminated by the
Corporation in circumstances where there is no cause or;(b) the Employee resigns
because of circumstance(s) outlined in ID (c), in either case the Employee
shall not be required to or under any duty to:
(i) mitigate Employee's damages;
(ii) seek alternate employment- or
(iii) account for alternate sources of income, whether or not applicable to
employment.
12. CONFIDENTIALITY
---------------
The Employee acknowledges and agrees that:
(a) in the course of performing the Employee's duties and responsibilities
as an officer of the Corporation, the Employee has had and will continue in the
future to have access to and has been or will be entrusted with detailed
confidential information and trade secrets (printed or otherwise) concerning
past, present, future and contemplated products, services, operations and
marketing techniques and procedures of the Corporation and its subsidiaries,
including, without limitation, information relating to addresses, preferences,
needs and requirements of past, present and prospective clients, suppliers
(which for all purposes of this agreement, shall be deemed to include, without
limitation, employees of the Corporation and its subsidiaries (collectively,
"Trade Secrets"), the disclosure of any of which to competitors of the
Corporation or to the general public, or the use of same by the Employee or any
competitor of the Corporation or any of its subsidiaries, would be highly
detrimental to the interests of the Corporation;
(b) in the course of performing the Employee's duties and responsibilities
for the Corporation, the Employee has been and will continue in the future to be
a representative of the Corporation to its customers, clients and suppliers and
as such has had and will continue in the future to have significant
responsibility for maintaining and enhancing the goodwill of the Corporation
with such customers, clients and suppliers and would not have, except by virtue
of the Employee's employment with the Corporation, developed a close and direct
relationship with the customers, clients and suppliers of the Corporation;
(c) the Employee, as the CEO of the Corporation, owes fiduciary duties to
the Corporation, including the duty to act in the best interests of the
Corporation; and
49
<PAGE>
(d) the right to maintain the confidentiality of the Trade Secrets, the
right to preserve the goodwill of the Corporation and the right to the benefit
of any relationships that developed between the Employee and the customers,
clients and suppliers of the Corporation by virtue of the Employee's employment
with the Corporation constitute proprietary rights of the Corporation, which the
Corporation is entitled to protect.
. In acknowledgement of the matters described above and in consideration of the
payments to be
received by the Employee pursuant to this agreement, the Employee hereby
agrees that the Employee
will not, for a period of 12 months from the date of termination, directly or
indirectly disclose to any
person or in any way make use of (other than for the benefit of the
Corporation), in any manner, any of
the Trade Secrets, provided that such Trade Secrets shall be deemed not to
include information that is
or becomes generally available to the public other than as a result of
disclosure by the Employee.
13. NON-COMPETITION
---------------
The Employee agrees with and for the benefit of the Employer that for a
period of one year
from the date of termination of the Employee's employment, however caused,
whether such termination is occasioned by the Employee, by the Employer with or
without cause, or by mutual agreement, the Employee will not directly or
indirectly, either as an individual or as a partner or joint venture or as an
employee, principal, consultant, agent, shareholder, officer, director, or as a
salesman for any person, firm, association, organization, syndicate, company or
corporation, or in any manner whatsoever, carry on, control, be engaged in,
concerned with, interested in, advise, lend money to, guarantee the debts or
obligations of, or permit the Employee's name or any part thereof to be used or
employed in a business which is the same as, or competitive with, the business
of the Employer.
14. NON-SOLICITATION
----------------
The Employee hereby agrees that the Employee will not, during the period
commencing on the date hereof and ending one year following the expiration
of the terms of this agreement, seek in any way to persuade or entice any
employee of the Corporation or any of its subsidiaries to leave that employment
or to be a party to or abet any such action.
15. DISCLOSURE
----------
During the employment period, the Employee shall promptly disclose to the Board
of Directors full information concerning any interest, direct or indirect,of the
Employee (as owner, shareholder, partner, lender or other investor, director,
officer, employee, consultant or otherwise) or any member of the Employee's
family in any business that is reasonably known to the Employee to purchase or
otherwise obtain services or products from, or to sell or otherwise provide
services or products to the Corporation or to any of its suppliers or customers.
50
<PAGE>
16. PLACE OF EMPLOYMENT
---------------------
The Corporation's head office is located in the City of Seattle,
Washington, USA. The head office may be changed with the agreement of
the Board of Directors.
17. INTELLECTUAL PROPERTY
----------------------
(a) The Employee acknowledges and agrees that the Employer owns all works
that may be developed by the Employee during the course of the Employee's
employment with the Employer. The Employee agrees to waive all moral rights to
any such works. The Employee acknowledges that performance of this Agreement
may result in the development of new proprietary and secret concepts, methods,
techniques, processes, adaptations and ideas. The Employee understands and
agrees that the same shall belong solely to the Employer without regard to the
origin thereof
(b) All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disk, software products and fists
(including lists of customers, suppliers, products and prices pertaining to the
business of the Corporation or any of its subsidiaries and associates that may
come into the possession or control of the Employee shall at all times remain
the property of the Corporation or such subsidiary or associate, as the case may
be. On termination of the Employee's employment for any reason, the Employee
agrees to deliver promptly to the Corporation all such property of the
Corporation in the possession of the Employee or directly or indirectly under
the control of the Employee. The Employee agrees not to make for the Employee's
personal or business use or that of any other party, reproductions or copies of
any such property or other property of the Corporation.
18. GOVERNING LAW
--------------
This agreement shall be governed by and construed in accordance with the
laws of the State
of Washington.
19. SEVERABILITY
------------
If any provision of this agreement, including the breadth or scope of such
provision, shall be
held by any court of competent jurisdiction to be invalid or unenforceable, in
whole or in part, such invalidity or unenforceability shall not affect the
validity or enforceability of the remaining provisions, or part thereof, of this
agreement and such remaining provisions, or part thereof, shall remain
enforceable and binding.
20. ENFORCEABILITY
--------------
The Employee hereby confirms and agrees that the covenants and restrictions
pertaining to the Employee contained in this agreement, including, without
limitation those contained in sections 12, 13 and 14 hereof, are reasonable and
valid and hereby further acknowledges and agrees that the Corporation would
suffer irreparable injury in the event of any breach by the Employee of the
51
<PAGE>
Employee's obligations under any such covenant or restriction. Accordingly, the
Employee hereby acknowledges and agrees that damages would be an inadequate
remedy at law in connection with any such breach and that the Corporation shall
therefore be entitled in lieu of any action for damages, temporary and permanent
injunctive relief enjoining and restraining the Employee from any such breach.
21. NO ASSIGNMENT
--------------
The Employee may not assign, pledge or encumber the Employee's interest in
this agreement
nor assign any of the rights or duties of the Employee under this agreement
without the prior written consent of the Corporation.
22. SUCCESSORS
----------
This agreement shall be binding on and enure to the benefit of the
successors and assigns of the Corporation and the heirs, executors, personal
legal representatives and permitted assigns of the Employee.
23. NOTICES
-------
Any notice or other communication required or permitted to be given
hereunder shall be in
writing and either delivered by hand or mailed by prepaid registered mail. At
any time other than during a general discontinuance of postal service due to
strike, lock-out or otherwise, a notice so mailed shall be deemed to have been
received three business days after the postmarked date thereof or, if delivered
by hand, shall be deemed to have been received at the time it is delivered. ff
there is a general discontinuance of postal service due to strike, lock-out or
otherwise, a notice sent by prepaid registered mail shall be deemed to have been
received three business days after the resumption of postal service. Notice
shall be addressed as follows:
(a) If to the Corporation:
LEGALOPINION.COM
Two Union Square
42nd Floor, 601 Union Street
Seattle, Washington
USA 98101
Phone: (206) 652-'3390
Fax: (206) 652-'3395
Attention: Brian Lovig
(b) If to the Employee:
Mr. John M. Marencik
4618 Warwick Street - #7E
Kansas City, MO
USA 64112
Phone: (816) 531-7279
Fax: (816) 531-7279
52
<PAGE>
24. LEGAL ADVICE
-------------
The Employee hereby represents and warrants to the Corporation and
acknowledges and
agrees that the Employee had the opportunity to seek and was not prevented nor
discouraged by the Corporation from seeking independent legal advice prior to
the execution and delivery of this agreement and that, in the event that the
Employee did not utilize that opportunity prior to signing
this agreement, the Employee did so voluntarily without any undue pressure and
agrees that the Employee's failure to obtain independent legal advice shall not
be used by the Employee as a defense to the enforcement of the Employee's
obligations under this agreement.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of
the date first above written.
legalopinion.com
Per: /s/_________________________
------------------------------
Brian Lovig
_/s/_____________ _/s/_________________________
--- ----------------------------
WITNESS JOHN M MARENCIK
53
<PAGE>
EXHIBIT 10.2
------------
EMPLOYMENT AGREEMENT
EMERICK AND COMPANY, INC.,
a professional corporation
54
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMEENT made as of the 24th day of April, A.D. 2000.
----
BETWEEN:
LEGALOPINION.COM, a Corporation incorporated under the laws of the State of
Nevada,
(hereinafter referred to as the "Corporation"), PARTY OF THE FIRST PART,
- and -
EMERICK AND COMPANY, INC. a professional corporation
4110 Central
Kansas City Missouri
64111
(Hereinafter referred to as "Employee"), PARTY OF THE SECOND PART.
WHEREAS the Corporation wishes to retain the services of the Employee to
provide the services hereinafter described during the term hereinafter set out;
NOW THEREFORE THIS AGREENMNT WITNESSES that in consideration of the mutual
covenants and agreements here contained and for other good and valuable
consideration, the parties agree as follows:
1. TERM
----
The corporation shall employ the Employee commencing on the date of April
24,2000, and continuing thereafter until such employment shall be terminated as
hereinafter provided.
2. DUTIES
------
The Employee shall serve the Corporation and any subsidiaries of the
Corporation as acting Chief Financial Officer (CFO) and shall perform such
duties and exercise such powers pertaining to the financial management and
operation of the Corporation as may be determined from time to time by the board
of directors and the President of the Corporation consistent with the office of
the Employee. Without limiting the foregoing, the Employee shall occupy the
office of CFO of the Corporation. The Employee shall:
55
<PAGE>
(a) devote such time and attention to the financial affairs of the
corporation as is needed to accomplish the firm's goals and the Employee's best
efforts to the business and affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the Employee
diligently and faithfully to the best of the Employee's abilities and in the
best interests of the Corporation including preparation of financial statements,
sourcing of funds, interaction with the firm's auditors and investor relations
firm, direction of the accounting staff, and any other duties determined by the
Board of Directors, consistent with the office of the CFO and in the best
profitable interest of the firm; and
(c) use the Employee's best efforts to promote the interests and goodwill of
the Corporation.
(d) be responsible for the Corporation maintaining all reporting and filings
required by all regulatory authorities having jurisdiction.
The Employee acknowledges and agrees that the employment relationship
will be governed by and subject to the terms of the Corporation's policies as
amended from time to time and agrees to comply with the terms of such policies.
The Employee undertakes to review the details of such policies and any
amendments made thereto from time to time and make recommendations to the Board
of Directors as to policies and direction of the Corporation's business and
financial affairs.
3. REPORTING PROCEDURES
---------------------
The Employee shall report to President and CEO. The Employee shall report
fully on the business and financial affairs of the Corporation and advise to the
best of the Employee's ability and in accordance with reasonable business
standards on matters that may arise from time to time during the term of this
agreement. The Employee shall comply with all Securities and Exchange
Commission (SEC) reporting requirements as they apply to the Exchange.
4. REMUNERATION
------------
(a) The initial monthly base compensation payable to the Employee for the
Employee's services hereunder shall be $100.00 per hour, for those hours which
the employee spends in the performance of his duties under this agreement, to be
reimbursed as follows:
* Up to $1,000.00 (US) cash for the first 10 hours ($100/hour) of time
expended per month.
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<PAGE>
* For time spent In the performance of company business in excess of 10
hours and up to 40 hours per month, said compensation shall be conveyed in
company stock reimbursed at the hourly rate of$100/hour which such shares being
delivered in the form of irrevocable stock options at the strike price of
$0.01/share.
* The Corporation hereby gives consent to the Employee to have said options
delivered to the Employee, his heirs, successors or assigns pursuant to
Paragraph Eighteen (18) of this Employment Agreement
* For any hours in excess of 40 hours per month, said compensation shall be
conveyed in the form of a 50:50 ratio of cash to stock.
* The share value used to offset any billings in excess of 10 hours per
month, shall be the average market price of the shares for the month in which
services were performed.
* The Corporation shall forthwith make the necessary filings with the SEC
to cause these shares to be free trading, and will make subsequent filings as
required to enable the delivery of free trading shares each month to the
Employee, should he desire to execute said options, during the Term of this
Agreement.
* Employee agrees that said options shall be executed by Employee no later
than January 31, 2005.
* All compensation earned under this agreement is subject to the approval
of the President, CEO and Board of Directors of the corporation.
The monthly base salary payable to the Employee pursuant to the provisions of
this section 4 shall be payable in monthly installments in arrears on the 1st
day of each month or in such other manner as may be mutually agreed upon, less,
in any case, any deductions or withholdings required by law.
(b) The base salary payable to the Employee for the Employee's services
hereunder shall be subject to annual review. The review shall be based on the
Employee's performance and the Employer's success in meeting its objectives
under its business plan.
(c) The Employee's Remuneration shall be reviewed each year on the
anniversary date of this Agreement and changed or amended by the President
and/or Board of Directors as is agreed upon between the parties.
5. EXPENSES
--------
The Employee shall be reimbursed for all reasonable out-of-pocket expenses
actually and properly incurred by the Employee from time to time in connection
with carrying out the Employee's duties hereunder. For all such expenses the
Employee shall furnish to the Corporation originals of all invoices or
statements in respect of which the Employee seeks reimbursement.
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<PAGE>
6. TERMINATION
-----------
(a) The Corporation may terminate the employment of the Employee
without notice or any payment in lieu of notice for cause, which, without
limiting the generality of the foregoing, shall include:
(i) if there is a repeated and demonstrated failure on the part of the
Employee to perform the material duties of the Employee's position in a
competent manner and where the Employee fails to substantially remedy the
failure within a reasonable period of time after receiving written notice of
such failure from the Corporation;
(ii) if the Employee is convicted of a criminal offence involving fraud or
dishonesty;
(iii) if the Employee or any member of the Employee's family makes any
personal profit arising out of or in connection with a transaction to which the
Corporation is a party or with which it is associated without making disclosure
to and obtaining the prior written consent of the Corporation;
(iv) if the Employee fails to honour the Employee's fiduciary duties to the
Corporation, including the duty to act in the best interests of the Corporation
or;
(v) if the Employee disobeys reasonable instructions given in the course of
employment by the President, CEO or Board of Directors of the Corporation that
are not inconsistent with the Employees management position and not remedied by
the Employee within a reasonable period of time after receiving written notice
of such disobedience.
(b) This agreement may be immediately terminated by the Corporation by
notice to the Employee if the Employee becomes permanently disabled. The
Employee shall be deemed to have become permanently disabled if in any year
during the employment period, because of ill health, physical or mental
disability,or for other causes beyond the control of the Employee, the Employee
has been continuously unable or unwilling or has failed to per-form the
Employee's duties for 60 consecutive days, or if, during, any year of the
employment period, the Employee has been unable or unwilling or has failed to
perform the Employee's duties for a total of 120 days, consecutive or not. The
term "any year of the employment period" means any period of 12 consecutive
months during the employment period. This agreement shall terminate without
notice upon the death of the Employee.
58
<PAGE>
7. SEVERANCE PAYMENTS
-------------------
(a) Upon termination of the Employee's employments (i) for cause; or (ii) by
the voluntary termination of employment by the Employee, the Employee shall not
be entitled to any notice, pay in lieu of notice or severance other than (iii)
compensation earned by the Employee before the date of termination calculated
pro rata up to and including the date of termination, and (iv) any amount to
which the Employee is entitled under any Regulatory Act or Regulation, as
amended and in force from time to time.
For great certainty,the Employee shall be paid or reimbursed for any earned and
unpaid salary, expenses, and other payment payable to or earned by the Employee
up to the date of termination.
(b) Upon giving notice to the Corporation, the Employee will be entitled to
resign without the Employer's prior written consent within one year of the
occurrence of:
(i) any change which, in the Employee's reasonable opinion, is material and
adverse in the title, status, position, job function, job responsibilities,
reporting responsibilities or compensation at the Corporation from and after
the date hereof which may be reasonably considered a demotion and for greater
certainty include the hiring of a new CFO;
(ii) the acquisition, directly or indirectly by any means whatsoever by a
corporation or person or group of corporations or persons acting jointly of
equal to or greater than 50% of the total issued shares of the Corporation;
(iii) by a material breach of the Corporation of its' obligation contained
herein;
(iv) the failure of the Corporation to obtain in the Employee's favoured a
written and binding assumption of the Agreement from any of its successors.
(v) The adoption of a plan relating to the liquidation or dissolution of the
Corporation.
(vi) Any transaction or series of transactions, whether by reconstitution,
reorganization, consolidation, amalgamation, arrangement, merger, transfer sale
or otherwise, whereby the Corporation's assets become the property of another
person if said assets, which became the property of any other person have a
fair market value equal to or greater than the fair market value of the assets
of the Corporation which are not so transferred;
(vii) Any other event or circumstances, whether or not the same nature as
any of the foregoing, which may reasonably be considered to constitute into
constructive termination or dismissal.
If the Employee resigns for any of the above reasons, the Employee shall be
Paid all unpaid salary and expenses.
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<PAGE>
8. NO MITIGATION
--------------
In the event that (a) the Employee's employment is terminated by the
Corporation in circumstances where there is no cause or; (b) the Employee
Resigns because of circumstance (s) outlined in 11 (c), in either case the
Employee shall not be required to or under any duty to:
(i) mitigate Employee's damages;
(ii) seek alternate employment; or
(iii) account for alternate sources of income, whether or not applicable to
employment.
9. CONFIDENTIALITY
---------------
the Employee acknowledges and agrees that:
(a) in the course of performing the Employee's duties and responsibilities
as an officer of the Corporation, the Employee has had and will continue in the
future to have access to and has been or will be entrusted with detailed
confidential information and trade secrets (printed or otherwise) concerning
past, present, future and contemplated products, services, operations and
marketing techniques and procedures of the Corporation and its subsidiaries,
including, without limitation, information relating to addresses, preferences,
needs and requirements of past, present and prospective clients, suppliers
(which for all purposes of this agreement shall be deemed to include, without
limitation, employees of the Corporation and its subsidiaries (collectively,
"Trade Secrets"), the disclosure of any of which to competitors of the
Corporation or to the general public, or the use of same by the Employee or any
competitor of the Corporation or any of its subsidiaries, would be highly
detrimental to the interests of the Corporation;
(b) in the course of performing the Employee's duties and responsibilities
for the Corporation, the Employee has been and will continue in the future to
be a representative of the Corporation to its customers, clients and has had
and will continue in the future to have significant responsibility for
maintaining and enhancing the goodwill of the Corporation with such customers,
clients and suppliers and would not have, except by virtue of the Employee's
employment with the Corporation, developed a close and direct relationship with
the customers, clients and suppliers of the Corporation;
(c) the Employee, as the CFO of the Corporation, owes fiduciary duties to
the Corporation, including the duty to act in the best interests of the
Corporation; and
(d) the night to maintain the confidentiality of the Trade Secrets, the
right to preserve the goodwill of the Corporation and the right to the benefit
of any relationships that developed between the Employee and the customers,
clients and suppliers of the Corporation by virtue of the Employee's employment
with the Corporation constitute proprietary rights of the Corporation, which
the Corporation is entitled to protect.
60
<PAGE>
In acknowledgement of the matters described above and in consideration of
the payments to be received by the Employee pursuant to this agreement, the
Employee hereby agrees that the Employee will not, for a period of 12 months
from the date of termination, directly or indirectly disclose to any person or
in any way make use of (other than for the benefit of the Corporation), in any
manner, any of the Trade Secrets, provided that such Trade Secrets shall be
deemed not to include information that is or becomes generally available to the
public other than as a result of disclosure by the Employee.
10. NON-COMPETITION
---------------
The Employee agrees with and for the benefit of the Employer that for a
Period of one year from the date of termination of the Employee's employment,
however caused, whether such termination is occasioned by the Employee, by the
Employer with or without cause, or by mutual agreement, the Employee will not
directly or indirectly, either as an individual or as a partner or joint
venture or as an employee, principal, consultant, agent, shareholder, officer,
director or as a salesman for any person, firm, association, organization,
syndicate, company or corporation, or in any manner whatsoever, carry on,
control, be engaged in, concerned with, interested in, advise, lend money
to, guarantee the debts or obligations of, or permit the Employee's name or any
part thereof to be used or employed in a business which is the same as,
or competitive with, the business of the Employer.
11. NON-SOLICITATION
----------------
The Employee hereby agrees that the Employee will not, during the period
commencing on the date hereof and ending one year following the expiration of
the terms of this agreement, seek in any way to persuade or entice any employee
of the Corporation or any of its subsidiaries to leave that employment or to be
a party to or abet any such action.
12. DISCLOSURE
----------
During the employment period, the Employee shall promptly disclose to the
President and/or Board of Directors full information concerning any interest,
direct or indirect, of the Employee (as owner, shareholder, partner, lender or
other investor, director, officer, employee, consultant or otherwise) or any
member of the Employee's family in any business that is reasonably known to the
Employee to purchase or otherwise obtain services or products from, or to sell
or otherwise provide services or products to the Corporation or to any of its
suppliers or customers.
13. PLACE OF EMPLOYMENT
---------------------
It is understood that the primary location from which the employee will work is
Kansas City, Missouri, USA.
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<PAGE>
14. INTELLECTUAL PROPERTY
----------------------
(a) The Employee acknowledges and agrees that the Employer owns all works
that may be developed by the Employee during the course of the Employee's
employment with the Employer. The Employee agrees to waive all moral rights to
any such works. The Employee acknowledges that performance of this Agreement
may result in the development of new proprietary and secret concepts, methods,
techniques, processes, adaptations and ideas. The Employee understands and
agrees that the same shall belong solely to the Employer without regard to the
origin thereof.
(b) All files, forms, brochures, books, materials, written correspondence,
memoranda, documents, manuals, computer disk, software products and lists
(including lists of customers, suppliers, products and prices) pertaining to the
business of the Corporation or any of its subsidiaries and associates that may
come into the possession or control of the Employee shall at all times remain
the property of the Corporation or such subsidiary or associate, as the case may
be. On termination of the Employee's employment for any reason, the Employee
agrees to deliver promptly to the Corporation all such property of the
Corporation in the possession of the Employee or directly or indirectly under
the control of the Employee. The Employee agrees not to make for the Employee's
personal or business use or that of any other party, reproductions or copies of
any such property or other property of the Corporation.
15. GOVERNING LAW
--------------
This agreement shall be governed by and construed in accordance with the
laws of the State of Washington,
16. SEVERABILITV
------------
If any provision of this agreement, including the breadth or scope of such
provision, shall be held by any court of competent jurisdiction to be invalid or
unenforceable,in whole or in part, such invalidity or unenforceability shall not
affect the validity or enforceability of the remaining provisions, or part
thereof, of this agreement and such remaining provisions, or part thereof, shall
remain enforceable and binding.
17. ENFORCEABILITV
--------------
The Employee hereby confirms and agree that the covenants and restrictions
pertaining to the Employee contained in this agreement, including, without
limitation those contained in sections 9, 10 and 11 hereof, are reasonable and
valid and hereby further acknowledges and agree that the Corporation would
suffer irreparable injury in the event of any breach by the Employee of the
Employee's obligations under any such covenant or restriction.
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Accordingly, the Employee hereby acknowledges and agrees that damages would
be an inadequate remedy at law in connection with any such breach and that the
Corporation shall therefore be entitled in lieu of any action for damages,
temporary and permanent injunctive relief enjoining and restraining the Employee
from any such breach.
18. NO ASSIGNMENT
--------------
The Employee may not assign, pledge or encumber the Employee's interest
in this agreement nor assign any of the rights or duties of the Employee under
this agreement without the prior written consent of the Corporation.
19. SUCCESSORS
----------
This agreement shall be binding on and enure to the benefit of the
successors and assigns of the Corporation and the heirs, executors, personal
legal representatives and permitted assigns of the Employee.
20. NOTICES
-------
Any notice or other communication required or permitted to be given
hereunder shall be in writing and either delivered by hand or mailed by prepaid
registered mail. At any time other than during a general discontinuance of
postal service due to strike, lock-out or otherwise, a notice so mailed shall be
deemed to have been received three business days after the postmarked date
thereof or, if delivered by hand, shall be deemed to have been received at the
time it is delivered. If there is a general discontinuance of postal service
due to strike, lock-out or otherwise, a notice sent by prepaid registered mail
shall be deemed to have been received three business days after the resumption
of postal service. Notice shall be addressed as follows:
(a) If to the Corporation:
LEGALOPINION.COM
Two Union Square
42nd Floor, 601 Union Street
Seattle, Washington
USA 98101
Phone: (206) 652-3390
Fax: (206) 652-3395
Attention: John M. Marencik
(b) If to the Employee:
EMERICK AND COMPANY, INC. a professional corporation
4110 Central
Kansas City, MO 64111
816-531-4646
Attention: David Eme6ck
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21. LEGAL ADVICE
-------------
The Employee hereby represents and warrants to the Corporation and
acknowledges and agrees that the Employee had the opportunity to seek and was
not prevented nor discouraged by the Corporation from seeking independent legal
advice prior to the execution and delivery of this agreement and that, in
the event that the Employee did not utilize that opportunity prior to signing
this agreement, the Employee did so voluntarily without any undue pressure
and agrees that the Employee's failure to obtain independent legal advice shall
not be used by the Employee as a defense to the enforcement of the Employee's
obligations under this agreement.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of
The date first above written.
LEGALOPINION.COM
Per: John M. Marencik
------------------
President, CEO
---------------
/S/ /S/
----------------- -----------------
WITNESS
EMERICK & COMPANY, INC.
Per: David Emerick, CPA
--------------------
President, CEO
---------------
/S/ /S/
----------------- -----------------
WITNESS
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EXHIBIT 10.3
------------
LEGALOPINION.COM
2000 COMPENSATORY STOCK OPTION PLAN
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SCHEDULE "A"
LEGALOPINION.COM
2000 COMPENSATORY STOCK OPTION PLAN
1. PURPOSE OF THIS PLAN.
This Compensatory Stock Option Plan ("Plan") is intended as an employment
incentive, to aid in attracting and retaining in the employ or service of
legalopinion.com ("Company"), a Nevada corporation, and any Affiliated company,
persons of experience and ability and whose services are considered valuable, to
encourage the sense of proprietorship in such persons, and to stimulate the
active interest of such persons in the development and success of the Company.
This Plan provides for the issuance of non-statutory stock options ("CSOs" or
"Options") which are not intended to qualify as incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
("Code"). Certain other terms also are defined in Paragraph 17 and elsewhere of
this Plan.
2. ADMINISTRATION OF THIS PLAN.
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of this Plan the Compensation Committee ("Committee") of the Board
which shall consist of at least two members of the Board. At any time that the
Committee is not duly constituted, the Board itself shall have and fulfill the
duties herein allocated to the Committee. The Committee shall have full power
and authority to designate Plan participants, to determine the provisions and
terms of respective CSOs (which need not be identical as to number of shares
covered by any CSO, the method of exercise as related to exercise in whole or in
installments, or otherwise), including the CSO price, and to interpret the
provisions and supervise the administration of this Plan. The Committee may in
its discretion provide that certain CSOs not vest (that is, become exercisable)
until expiration of a certain period after issuance or until other conditions
are satisfied, so long as not contrary to this Plan.
A majority of the members of the Committee shall constitute a quorum. All
decisions and selections made by the Committee pursuant to this Plan's
provisions shall be made by a majority of its members. Any decision reduced to
writing and signed by all of the members shall be fully effective as if it had
been made by a majority at a meeting duly held. The Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as it deems advisable. Each Option shall be evidenced by a written
agreement containing terms and conditions established by the Committee
consistent with the provisions of this Plan.
3. DESIGNATION OF PARTICIPANTS
Only Employees as defined in sections 6.b and 17.g shall be eligible for
participation in this Plan. The Committee shall have full power to designate,
from among eligible individuals, the persons to whom CSOs may be granted. A
person who has been granted a CSO hereunder may be granted an additional CSO or
CSOs, if the committee shall so determine. Persons eligible
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under this Plan additionally may be granted one or more options under any other
compensation or stock option plan or awarded shares under any other benefit plan
of the Company. No Option shall confer any right upon the Optionee with respect
to the continuation of his employment (or his position as an Employee) with the
Company or any Affiliated Company, and shall not interfere with the right of the
Company or any Affiliated Company to terminate such relationship(s) at any time
in accordance with law and any agreements then in force.
4. STOCK RESERVED FOR THIS PLAN.
Subject to adjustment as provided in Paragraph 9 below, a total of
3,000,000 Shares of Common Stock of the Company ("Option Stock or "Option
Shares") shall be subject to this Plan. The Option Stock subject to this Plan
shall consist of unissued shares of Common Stock or previously issued shares of
Common Stock reacquired and held by the Company or any Affiliated Company, and
such number of Option Shares shall be and is hereby reserved for sale for such
purpose. Any Option Shares which may remain unsold and which are not subject to
outstanding CSOs at the termination of this Plan shall cease to be reserved for
the purpose of this Plan, but until termination of this Plan the Company shall
at all times reserve a sufficient number of shares to meet the requirements of
this Plan. Should any CSO expire or be cancelled prior to its exercise in full,
the unexercised Option Shares theretofore subject to such CSO may again be
subjected to a CSO under this Plan.
5. OPTION EXERCISE PRICE.
The purchase (grant) price of each share of Option Stock made subject to an
Option shall be equal to 80% of the market price based upon the average trading
price during the four-week period ending on the Friday before the Option is
granted.
6. EXERCISE PERIOD; VESTING.
(a) An Option shall have a term of not more than five (5) years from
the date of grant and shall automatically terminate:
(i) Upon termination of the Optionee's employment with the Company
for cause;
(ii) At the expiration of a period to be determined by the
Committee at the time of grant which is not to exceed six (6) months following
the date of termination of the Optionee's employment with the Company without
cause for any reason other than death; provided that if no such period is
specified in the Option, the Option shall automatically terminate thirty days
following termination of Optionee's employment; provided, further, that if the
Optionee dies within such period, sub-clause (iii) below shall apply; or
(iii) At the expiration of twelve (12) months after the date of
death of the Optionee; provided, that the Committee may in its discretion
provide that any Option not be exercisable after the Optionee's death or may be
exercised for a further period which shall be not less than twelve months.
(iv) Unless otherwise specified in the Option, if termination is
due to the Optionee's
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permanent and total disability within the meaning of Section 422(c)(6) of the
Code, an Option may be exercised at any time within twelve (12) months following
termination of employment or the relationship.
(b) "Employee" and "Employment with the Company" as used in this Plan
shall include employment or relationship as an officer, director, employee,
consultant or adviser with the Company or any Affiliated Company in any such
capacity, even if employment or engagement in another capacity ceases. Options
granted under this Plan shall not be affected by an employee's transfer of
employment among the Company and any one or more Affiliated Companies. An
Optionee's employment with the Company shall not be deemed interrupted or
terminated by a bona fide leave of absence (such as sabbatical leave or
employment by the Government) duly approved, military leave or sick leave. As to
consultants, advisers or other non-employee providers of services, employment
with the Company shall be deemed to cease upon formal termination of the
Optionee's engagement.
(c) Each Option may be made exercisable (that is, vest) in whole or in
installments, cumulative or otherwise, during its term, or subject to other
restrictions or limitations. Unless otherwise set forth in the granting
resolution, an Option shall vest immediately upon grant. If an Option is made to
vest over time, any portion not vested at the time of termination of employment
or relationship as an Employee with the Company shall lapse as if never granted.
Nothing contained in this Section shall be construed to extend the term of any
Option or to permit anyone to exercise an Option after expiration of its term,
nor shall it be construed to increase the number of shares as to which any
Option is exercisable from the amount exercisable on the date of termination of
the Optionee's employment or the relationship.
7. EXERCISE OPTIONS.
(a) The Committee, in granting CSOs, shall have discretion to determine
the terms upon which CSOs shall be exercisable, subject to applicable provisions
of this Plan. Once available for purchase, unpurchased Option Shares shall
remain subject to purchase until the CSO expires or terminates in accordance
with Paragraph 6 above. Unless otherwise provided in the CSO, a CSO may be
exercised in whole or in part, one or more times, but no CSO may be exercised
for a fractional share. Resulting fractions shall be rounded up or down, as
appropriate.
(b) CSOs may be exercised solely by the Optionee or a permitted
transferee during his lifetime or by a spouse or former spouse pursuant to a
qualified domestic relations order, or if the Option permits, after his death
(with respect to the number of shares which the Optionee could have purchased at
the time of death) by the person or persons entitled thereto under the
decedent's will or the laws of descent and distribution.
(c) The purchase price of the Option Shares as to which a CSO is
exercised shall be paid or delivered in full at the time of exercise and no
Option Shares shall be issued until full payment is made therefore. Payment
shall be made by any one or more of the following means:
(i) in cash, represented by bank or cashier's check, certified
check or money order, or made by bank wire transfer;
(ii) by offsetting against the purchase price of a cash obligation
of the Company
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which is both liquidated (meaning the dollar amount is fixed and
known or easily determinable) and uncontested;
(iii) with the prior approval of the Committee, by delivering
shares of the Company's Common Stock which have been beneficially owned by the
Optionee, the Optionee's spouse or both of them, for a period of at least six
(6) months prior to the time of exercise (the "Delivered Stock"), the Delivered
Stock to be valued by the Committee in good faith at its Fair Market Value on
the date of exercise;
(iv) with the prior approval of the Committee, by delivery of
shares of corporate stock which are freely tradable without restriction and
which are part of a class of securities which has been listed for trading on the
NASDAQ National Market System, the NASDAQ Small Cap Market or a national
securities exchange, with an aggregate Fair Market Value on the date of exercise
equal to or greater than the exercise price of the Option Shares being purchased
under the Option ("Other Shares"); or
(v) with the prior approval of the Committee, by delivering to the
Company the Optionee's personal recourse promissory note, adequately secured by
property other than the Option Shares thereby purchased, containing such terms
and conditions as the Committee shall determine.
(d) An Option shall be deemed exercised when written notice thereof,
accompanied by the appropriate payment in full, is received by the Company. No
holder of an Option shall be, or have any of the rights and privileges of, a
shareholder of the Company in respect of any Option Shares purchasable upon
exercise of an Option unless and until certificates evidencing such shares shall
have been issued by the Company to him, her or it.
8. Non-Transferability of Options.
No Option shall be assignable or otherwise transferable except by will or
by operation of law, pursuant to a qualified domestic relations order (as
defined in Rule 16b-3 of the Securities and Exchange Commission, or any
successor rule), or pursuant to Title I of the Employee Retirement Income
Security Act of 1974, as amended (ERISA), or rules thereunder. No CSO shall be
pledged or hypothecated in any manner, whether by operation of law or otherwise,
nor be subject to execution, attachment or similar process. The same
restrictions on transfer or assignment shall apply to any heirs, devisees,
beneficiaries, legal representatives or other persons acquiring this Option or
an interest herein under such an instrument or by operation of law. Any attempt
to transfer or otherwise dispose of an Option in contravention of its terms
shall void the Option.
9. Reorganization and Recapitalization of the Company.
(a) No Limit Imposed on Corporate Powers. The existence of this Plan
and Options granted hereunder shall not affect in any way the right or power of
the Company or its shareholders to make or authorize any and all adjustments,
recapitalizations, reorganizations or
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other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures or other
indebtedness, or any preferred or prior preference stocks senior to or affecting
the Common Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale, exchange or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
(b) Certain Adjustments to be made. The Option Shares with respect to
which Options may be granted hereunder are shares of the Common Stock of the
Company as currently constituted. In certain instances, the number of shares
purchasable upon exercise of Options and the exercise price shall be adjusted as
provided herein. All adjustments made under this Section shall be made by the
Committee in good faith in its sole discretion. Every adjustment in outstanding
options shall be made without change in the total price applicable to the
unexercised portion of the Option but with a corresponding adjustment in the
exercise price per share and numbers (and if applicable, kind) of share
purchasable.
(c) Stock Splits, Stock Combinations, Etc. If, and whenever, prior to
delivery by the Company of all of the Option Shares which are subject to Options
granted hereunder, the Company shall effect a split or combination of the Common
Stock or other capital readjustment, the payment of a Common Stock dividend, or
recapitalization, reclassification or other increase or reduction of the number
of shares of the Common Stock outstanding without receiving compensation
therefor in money, services or property, then the number of Option shares
available under this Plan and the number of Option shares with respect to which
Options granted hereunder may thereafter be exercised shall (i) in the event of
an increase in the number of outstanding shares of Common Stock, be
proportionately increased , and the cash consideration payable per share shall
be proportionately reduced; and (ii) in the event of a reduction in the number
of outstanding shares of Common Stock, be proportionately reduced, and the cash
consideration payable per share shall be proportionately increased.
(d) Certain Other Changes in the Common Stock. If the outstanding
Common Stock shall be hereafter increased or decreased, or changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation, by reason of reorganization, merger,
consolidation, share exchange or other business combination in which the Company
is the surviving parent corporation, appropriate adjustment shall be made by the
Committee in the number and kind of shares for which Options may be granted
under the Plan. In addition, the Committee shall make appropriate adjustment in
the number and kind of shares as to which outstanding and unexercised Options
shall be exercisable, to the end that the proportionate interest of the holder
of the Option shall, to the extent practicable, be maintained as before the
occurrence of such event.
(e) Certain Defined Reorganization. For purposes of this Section, the
term "Reorganization" shall mean any reorganization, merger, consolidation,
share exchange, or other business combination pursuant to which the Company is
not the surviving parent corporation after the effective date of the
Reorganization, or any sale or lease of all or substantially all of the assets
of the Company, and the term "Reorganization Agreement" shall mean a plan or
agreement with respect to a Reorganization. Nothing herein shall require the
Company to adopt a Reorganization Agreement, or to make provision for the
adjustment, change, conversion, or exchange of any Options, or the shares
subject thereto, in any Reorganization Agreement which
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it does adopt. In the event of a Reorganization (as hereinafter defined), then,
(i) If there is no Reorganization Agreement, or if the
Reorganization Agreement does not specifically provide for the adjustment,
change, conversion, or exchange of the outstanding and unexercised options for
cash or other property or securities of another corporation, then any
outstanding and unexercised options shall terminate as of a future date to be
fixed by the Committee; or,
(ii) If there is a Reorganization Agreement, and the
Reorganization Agreement specifically provides for the adjustment, change,
conversion, or exchange of the outstanding and unexercised options for cash or
other property or securities of another corporation, the Committee shall adjust
the shares under such outstanding and unexercised options, and shall adjust the
shares remaining under the Plan which are then available for the issuance of
options under the Plan of Reorganization Agreement for the adjustment, change,
conversion, or exchange of such options and shares.
(iii) The Committee shall provide to each Optionee then holding an
outstanding and unexercised Option not less than thirty (30) calendar days'
advance written notice of any date fixed by the Committee pursuant to this
Section 13 and of the terms of any Reorganization Agreement providing for the
adjustment, change, conversion, or exchange of outstanding and unexercised
Options. Except as the Committee may otherwise provide, each Optionee shall have
the right during such period to exercise his Option only to the extent that the
Option was exercisable on the date such notice was provided to the Optionee.
(f) Dissolution or Liquidation. In the event of the dissolution or
liquidation of the Company, any outstanding and unexercised options shall
terminate as of a future date to be fixed by the Committee.
(g) No Adjustments to be Made. Except as expressly provided above, the
Company's issuance of shares of its capital stock of any class, or securities
convertible into shares of its capital stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into or exchangeable for shares of capital stock or
other securities of the Company, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of Option shares subject to
CSOs granted hereunder or the purchase price of such shares.
10. PURCHASE FOR INVESTMENT.
Unless the Option Shares covered by this Plan have been registered under
the Act prior to issuance, each person exercising a CSO under this Plan may be
required by the Company to give a representation in writing that he is acquiring
such shares for his or her own account for investment and not with a view to, or
for sale in connection with, the distribution of any part thereof.
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11. EFFECTIVE DATE AND EXPIRATION OF THIS PLAN.
This Plan shall be effective as of January 1,2000 the date of its adoption
by the Board, and no CSO shall be granted pursuant to this Plan after its
expiration. This Plan shall expire on December 31, 2005 except as to CSOs then
outstanding, which shall remain in effect until they have expired or been
exercised.
12. AMENDMENTS OR TERMINATION.
The Committee or Board may amend, alter or discontinue this Plan at any
time in such respects as it shall deem advisable in order to conform to any
change in any other applicable law, or in order to comply with the provisions of
any rule or regulation of the Securities and Exchange Commission required to
exempt this Plan or any CSOs granted thereunder from the operation of Section
16(b) of the Exchange Act, or in any other respect not inconsistent with Section
16(b) of the Exchange Act; provided, that no amendment or alteration shall be
made which would impair the rights of any participant under any CSO theretofore
granted, without his consent (unless made solely to conform such CSO to, and
necessary because of, changes in the foregoing laws, rules or regulations), and
except that no amendment or alteration shall be made without the approval of
shareholders which would increase the total number of shares reserved for the
purposes of this Plan (except as provided in Paragraph 9) or extend the
expiration date of this Plan as set forth in Paragraph 11.
13. GOVERNMENT REGULATIONS.
This Plan, and the granting and exercise of CSOs hereunder, and the
obligation of the Company to sell and deliver Option Shares under such CSOs,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
14. LIABILITY.
No member of the Board of Directors or the Committee, nor any Employees or
agents of the Company or any Affiliated Company shall be personally liable for
any action, omission or determination made in good faith in connection with this
Plan.
15. OPTIONS IN SUBSTITUTION FOR OTHER OPTIONS.
The Committee may, in its sole discretion, at any time during the term of
this Plan, grant new options to an Employee as defined under this Plan or any
other stock option plan of the Company on the condition that such Employee shall
agree to and surrender for cancellation one or more outstanding options which
represent the right to purchase (after giving effect to any previous partial
exercise thereof) a number of shares, in relation to the number of shares to be
covered by the new conditional grant hereunder, determined by the Committee. The
Employee's consent to the substitution of a new option plan must be obtained or
the terms of this Option Plan shall remain in effect as to the Employee. Options
may be granted under this Plan from time to time in substitution for similar
rights held by employees of other corporations who are about to become employees
of the Company or an Affiliated Company as a result of a merger or consolidation
of the employing corporation with the Company or an Affiliated Company, or the
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acquisition by the Company or an Affiliated Company of the assets of the
employing corporation, or the acquisition by the Company or an Affiliated
Company of stock of the employing corporation as the result of which such other
corporation becomes an Affiliated Company.
16. WITHHOLDING TAXES.
Pursuant to applicable federal and state laws, the Company may be required
to collect withholding taxes upon the exercise of a CSO. The Company may
require, as a condition to the exercise of a CSO, that the Optionee concurrently
pay to the Company the entire amount or a portion of any taxes which the Company
is required to withhold by reason of such exercise, in such amount as the
Committee or the Company in its discretion may determine. In lieu of part or all
of any such payment, the Optionee may elect to have the Company withhold from
the shares to be issued upon exercise of the option that number of shares having
a Fair Market Value equal to the amount which the Company is required to
withhold.
17. OTHER DEFINITIONS.
Whenever used in this Plan, except where the context might clearly indicate
otherwise, the following terms shall have the meanings set forth below:
a. "ACT" means the U.S. Securities Act of 1933, as amended.
b. "AFFILIATED COMPANY" means any Parent or Subsidiary of the Company.
c. "AWARD" or GRANT" means any grant of a CSO (Option) made under this
Plan.
d. "BOARD OF DIRECTORS" means the Board of Directors of the Company.
The term "COMMITTEE" is defined in Section 2 of this Plan.
e. "COMMON STOCK" or "COMMON SHARES" means the common stock of the
Company par value per share, of $0.001, or in the event that the outstanding
Common shares are hereafter changed into or exchanged for different shares or
securities of the Company or any other issuer, such other shares or securities.
f. "DATE OF GRANT" means the day the Committee authorizes the grant of
a CSO or such later date as may be specified by the Committee as the date a
particular grant will become effective.
g. "EMPLOYEE" OR "EMPLOYEES" means and includes the following persons:
(i) executive officers, officers and directors (including advisory and other
special directors) of the Company or an Affiliated Company, (ii) full-time and
part-time employees of the Company or an Affiliated Company (iii) persons
engaged by the Company or an Affiliated Company as a consultant, advisor or
agent; and (iv) a lawyer, law firm, accountant or accounting firm, or other
professional or professional firm engaged by the Company or an Affiliated
Company.
h. "OPTIONEE" means an Employee to whom a CSO is granted.
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i. "PARENT" means any corporation owning 50% or more of the total combined
voting stock of all classes of the Company or of another corporation qualifying
as a Parent within this definition.
j. "SUBSIDIARY" means a corporation in which more than 50% of the total
combined capital stock of all classes is held by the Company or by another
corporation qualifying as a Subsidiary within this definition.
18. LITIGATION.
In the event that any Optionee or Optionee's successor should bring any
lawsuit or other action or proceeding ("Action") against the Company or an
Affiliated Company based upon or arising in relation to an Option, an Optionee,
or successor, as the case may be, and the Optionee does not prevail in such
Action, then the Optionee shall be required to reimburse the Company or
Affiliated Company's costs and expenses, including reasonable attorneys' fees,
incurred in defending such action and appealing any award by a lower court.
19. MISCELLANEOUS PROVISIONS.
The place of administration of this Plan shall be in the State of
Washington (or subsequently, wherever the Company's principal executive offices
are located), and the validity, construction, interpretation and effect of this
Plan and of its rules, regulations and rights relating to it, shall be
determined solely in accordance with the laws of the State of Nevada or
subsequent state of domicile, should the Company be redomiciled. Without
amending this Plan, the Committee may issue Options and Options Shares to
Employees of the Company who are foreign nationals or employed outside the
United States, or both, on such terms and conditions different from those
specified in this Plan but consistent with the purpose of this Plan, as it deems
necessary and desirable to create equitable opportunities given differences in
tax laws in other countries. All expenses of administering this Plan and issuing
Option and Option Shares shall be borne by the Company.
By signature below, the undersigned officers of the Company hereby certify
that the foregoing is a true and correct copy of the 2000 Compensatory Stock
Option Plan of the Company.
DATED: January 3, 2000
LEGALOPINION.COM
By: Don Crompton By: Rae Meier
------------- ----------
Authorized Officer Secretary
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EXHIBIT 10.4
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LEGAL OPINION
WILLIAM STOCKER
Attorney at Law
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LAW OFFICES OF
WILLIAM STOCKER
PHONE (949) 248-9561 34700 PACIFIC COAST HIGHWAY, FAX (949) 248-1688
SUITE 303
CAPISTRANO BEACH CA 92624
October 26, 2000
Board of Directors
legalopinion.com
Two Union Square, 42nd Floor
Union Street
Seattle, WA 98101
Gentlemen:
You have requested our opinion, as special securities counsel for
legalopinion.com, a Nevada corporation (the Company ), in connection with the
registration statement on Form SB-2 (the Registration Statement ),under the
Securities Act of 1933, filed by the Company with the Securities and Exchange
Commission for the sale of 53,174,965 shares (the Registered Shares ) of common
stock, $.001 par value (the Common Stock ), by the selling security holders
named in the Registration Statement.
We have examined such records and documents and made such examinations of law as
we have deemed relevant in connection with this opinion. In our examination, we
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such copies.
Based upon the foregoing and in reliance thereon, we are of the opinion that the
outstanding registered shares are, and the registered shares issuable upon
conversion of certain Convertible Debentures as described in the Registration
Statement, in accordance with their respective terms, when issued will be duly
and validly authorized, legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We hereby further consent to the reference to us under
the caption Legal Matters in the prospectus included in the Registration
Statement.
Sincerely,
William Stocker
Attorney at Law
