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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 13, 1995
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(Date of Report - date of earliest event reported)
Legal Research Center, Inc.
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(Exact name of registrant as specified in charter)
Minnesota 0-26548 41-1680384
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(State or other (Commission (IRS Employer
jurisdiction of file number) Identification No.)
incorporation)
700 Midland Square Building
331 Second Avenue South
Minneapolis, Minnesota 55401 55447
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(Address of principal executive offices) (Zip Code)
(612) 332-4950
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On May 13, 1996, Legal Research Center, Inc. (the "Company") acquired
all of the outstanding capital stock of The Law Office, Inc., a Washington
corporation ("TLO"), from TLO's existing shareholders, Gordon and Sydney Jones,
and William and Lorie Harris. TLO is engaged in the business of providing on-
line legal services through computer networks such as The Microsoft Network. It
is a full-service on-line commercial center offering a variety of law-related
goods and services to legal professionals and the general public. Prior to the
transaction, the Company owned 33% of the outstanding shares of TLO. The
purchase price for the remaining TLO shares was $50,750 in cash, 121,800 shares
of LRC Common Stock and options to purchase an additional 101,500 shares of the
Company's Common Stock at $3.50 per share. The Company used cash raised in its
initial public offering to consummate the acquisition. Christopher R.
Ljungkull, the Company's Chief Executive Officer, is the Chairman of the Board
and an officer of TLO.
Effective May 15, 1996, Arun K, Dube, the Company's Chairman of the Board,
was appointed the Chief Executive Officer and President of TLO.
(b) TLO owns various computer equipment which it uses in its business and
which the Company intends to continue to use for the on-going business of TLO.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired:
(4) It is impractical at this time to file the required financial
statements for the acquired business. Such statements will be filed as they
become available.
(b) Pro forma financial information:
It is impractical at this time to file the required financial statements
for the acquired business. Such statements will be filed as they become
available.
(c) Exhibits:
2.1 Stock Purchase Agreement dated January 31, 1996, by and among
Legal Research Center, Inc., The Law Office, Inc., Gordon and
Sydney Jones, and William and Lorie Harris
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2.2 Amendment No. 1 to Stock Purchase Agreement effective May 13,
1996, by and among Legal Research Center, Inc., The Law Office,
Inc., Gordon and Sydney Jones, William and Lorie Harris, and
Joseph Giberson
10 Employment Agreement effective May 15, 1996 between The Law
Office, Inc. and Arun Dube
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 24, 1996.
LEGAL RESEARCH CENTER, INC.
By /s/ Christopher R. Ljungkull
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Christopher R. Ljungkull,
Chief Executive Officer
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 31st day
of January, 1996 by and among LEGAL RESEARCH CENTER, INC., a Minnesota
corporation whose address is 700 Midland Square, 331 Second Avenue South,
Minneapolis, Minnesota 55401 ("LRC" or "Buyer"), and THE LAW OFFICE, INC., a
Washington corporation whose address is 2825 Eastlake Avenue East, Suite 205,
Seattle, Washington 98102 (the "Company") GORDON AND SYDNEY JONES, an individual
whose address is 2236 Yale Avenue East, Unit B, Seattle, Washington 98102 (the
"Joneses"), and WILLIAM AND LORIE HARRIS, individuals whose address is 11251
Arroyo Beach Place Southwest, Seattle, Washington 98146 (the "Harrises"). The
Joneses and the Harrises are collectively referred to herein as "Sellers." The
Joneses, the Harrises and the Company are collectively referred to herein as
"Selling Parties."
RECITALS:
WHEREAS, the Joneses, on the one hand, and the Harrises, on the other, each
own 25 shares (50 shares in the aggregate, the "Shares") of the outstanding
Common Stock, no par value, of the Company; and
WHEREAS, Buyer is willing to purchase from Sellers, and each of Sellers are
willing to sell to Buyer, the Shares for the consideration specified and subject
to the terms, conditions and provisions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 SALE AND TRANSFER OF SHARES. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date (as defined in Section 8.1 below),
Sellers will transfer and convey the Shares to Buyer, and Buyer will acquire the
Shares from Sellers.
1.2 CONSIDERATION FROM BUYER AT EXECUTION/CLOSING. As payment for the
transfer of the Shares from Sellers to Buyer, Buyer shall pay to each of The
Joneses and the Harrises as follows:
(i) LRC STOCK. Sixty Thousand (60,000) shares of its fully paid and non-
assessable Common Stock (120,000 shares in the aggregate), payable at
Closing.
(ii) LRC STOCK OPTIONS. Immediately exercisable stock options to purchase
50,000 shares of LRC Common Stock (100,000 shares in the aggregate). The
Options will be exercisable for a period commencing immediately and ending
three years from the date of grant, in whole or in part from time to time
at any
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time throughout the option period at the closing high bid price for LRC
Common Stock as reported on the Nasdaq SmallCap Market for the date of the
Letter of Intent (December 14, 1995), which was $3.50.
(iii) CASH. Twenty-five Thousand Dollars ($25,000) cash ($50,000 in
the aggregate), payable upon execution of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants that:
2.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington and has all necessary corporate power to own its properties and to
operate its business as now owned and operated by it; and neither the ownership
of its properties nor the nature of its business requires the Company to be
qualified in any jurisdiction other than the State of Washington.
2.2 FINANCIAL STATEMENTS. Exhibit 2.2 to this Agreement sets forth the
unaudited balance sheets and related statements of income and retained earnings
of the Company, as of December 31, 1995. The March 31, 1996 statements shall be
attached prior to closing. Each of the foregoing financial statements has
been/will be prepared on a consistent basis throughout the periods indicated and
fairly present the financial position as of the respective dates of the balance
sheets included and the results of operations for the respective periods
indicated. The Company has no debt, liability or obligation of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due, that is not reflected in the financial statements attached as Exhibit 2.2.
2.3 ABSENCE OF SPECIFIC CHANGES. Since December 31, 1995, there have not
been any:
(a) transactions by the Company outside the ordinary course of
business as conducted on that date;
(b) capital expenditures by the Company exceeding $5000 except for
tradeshow booth of approximately $17,000;
(c) material adverse change in the financial condition, liabilities,
assets, business or prospects of the Company;
(d) significant or material destruction, damage to or loss of any
asset of the Company:
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(e) labor trouble including but not limited to charges of unfair
labor practices, grievances filed under any collective
bargaining agreement, arbitration awards, EEOC charges, state
employment discrimination charges, OSHA compliance issues,
wrongful discharge claims or other event or condition of any
character which would materially affect the financial condition,
business, assets, or prospects of the Company's business;
(f) changes in accounting methods or practices;
(g) sale or transfer of any asset of the Company, except in the
ordinary course of business or used as a trade on purchase of new
equipment;
(h) amendment or termination of any contract, agreement or license,
except in the ordinary course of business and all of such
amendments or terminations in the ordinary course of business are
identified on exhibits hereto;
(i) mortgages, pledges or other encumbrances upon any asset of the
Company;
(j) agreement by any of the Selling Parties to do any of the
foregoing; or
(k) payment of any dividends or distributions.
2.4 TAX RETURNS AND AUDITS. Within the time and manner prescribed by
law, the Company has filed all federal, state and local tax returns required by
law and has paid all taxes, assessments and penalties due and payable. The
charges, accruals and reserves which have been made by the Company in respect to
federal, state, county, local and foreign taxes, including, but not limited to
any sales taxes, are adequate to cover the payment of the taxes accrued and
unpaid for all periods through and including the last day prior to the Closing
Date, whether or not disputed. The Company is not a party to any pending action
or proceeding, nor is any such action or proceeding threatened by any government
authority, for the assessment or collection of any taxes, interest, assessment
or deficiencies and no claims for assessment or collection of any taxes has been
asserted against the Company.
2.5 TANGIBLE PERSONAL PROPERTY. Except as stated in Exhibit 2.5,
attached hereto, no personal property used by the Company in connection with its
business is held under any lease, security agreement, conditional sales
contract, or other title retention or security agreement, or is located other
than in the possession of the Company at its place of business specified in
Section 15.6 below or delivered at Closing (with respect to certain back-up
records of the Company).
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2.6 ACCOUNTS RECEIVABLE. Exhibit 2.6 to this Agreement is a complete and
accurate schedule of the accounts receivable of the Company as of the Date of
Closing, together with an accurate aging of these accounts. These accounts
receivable arose from valid transactions in the ordinary course of business. The
Company represents that, to its best knowledge, all the accounts receivable
identified in such Exhibit are collectible, are not disputed, and represent
valid obligations of the named account obligor.
2.7 TRADE NAMES, TRADEMARKS, COPYRIGHTS AND PATENTS. All copyright,
trademark or trade name registrations, patents and all applications pending
thereon, which are owned or used by the Company and all material trademark,
trade name, copyright, patent or know-how licenses granted by or to the Company
are set forth on Exhibit 2.7 attached hereto together with all registration,
patent numbers or other identification information with respect thereto. The
Company owns or possesses adequate rights to use all trademarks, trade names,
copyrights, patents, know-how and other proprietary information used or held for
use in connection with its business as currently being conducted and the
validity and the rights thereto of the Company have not been questioned in any
litigation to which the Company or any affiliate is a party nor is any such
litigation threatened. The Company has not infringed and/or is not now
infringing, on any of the trade names, trademarks, service marks, copyrights, or
patents belonging to any other person, firm, or corporation.
2.8 TITLE TO ASSETS. Except as specified on Exhibit 2.8 hereof, the
Company has good and marketable title to all of its assets, whether real,
personal or mixed, tangible and intangible. The assets are free and clear of
restrictions on or conditions to transfer or assignment, and free and clear of
mortgages, liens, pledges, charges, encumbrances, conditions, restrictions, etc.
2.9 CUSTOMERS AND SALES. Exhibit 2.9 to this Agreement is a correct and
current list of customers of the Company, together with summaries of the sales
made to each such customer during the Company's most recent fiscal year. The
Company has no information, nor is aware of any facts, indicating that any of
these customers intend to cease doing business with the Company, or materially
alter the amount of business that they are presently doing with the Company.
2.10 NO REGULATORY VIOLATION. The Company has received no notice of any
violation of any law, order, rule, regulation, writ, injunction or decree of any
governmental authority or court, domestic or foreign, and, to the best of the
Company's knowledge, there are no such violations. In addition, the execution
of this Agreement and the consummation of the transactions contemplated hereby
will not result in any such violation.
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2.11 PENDING LITIGATION. There is no suit, action, arbitration or legal,
administrative or other proceeding or government investigation pending or
threatened against or affecting the Company's business, assets or financial
condition.
2.12 AUTHORITY AND CONSENT. The Company has the right, power, legal
capacity and authority to enter into, and perform its obligations under this
Agreement. All approvals and consents of any party necessary in connection with
this transaction have been obtained by the Company. Sellers, together with
Buyer, are the sole shareholders of the Company subject to the stock grant to
Joe Giberson as reflected in exhibit 2.12. The execution and delivery of this
Agreement by the Company has been duly authorized by the Company's Board of
Directors and shareholders and constitutes a valid and binding agreement of
Selling Parties, enforceable in accordance with its terms.
2.13 INTERESTS IN CUSTOMERS. To the best of Selling Parties' knowledge,
no officer or employee of the Company has a financial interest, either directly
or indirectly, in any customer of the Company. Excepting that William Harris and
Lorie Harris have an ownership interest in and manage Brother Harris
Enterprises, Inc. which has a relationship with the Company.
2.14 CONTRACT DOCUMENTS. All agreements and contracts to which the Company
is a party are scheduled and identified on Exhibit 2.14 attached hereto
(collectively hereinafter referred to as "Contract Documents"). Copies of the
Contract Documents shall be furnished by the Company to Buyer immediately upon
its request.
2.15 SUPPLIERS. All of the Company's suppliers or vendors are set forth
on Exhibit 2.15 attached hereto and the Company is not aware of any fact or
circumstance that would inhibit or prohibit such suppliers or vendors continuing
to supply the Company on a similar ongoing basis subsequent to the Date of
Closing.
2.16 EMPLOYMENT MATTERS. Attached hereto as Exhibit 2.16(a) is a true
and accurate list (the "Employee List") of the names and addresses of all
employees of the Company together with employee's name, home address, job
position, rate of pay, date and amount of last salary increase, date of hire and
social security number. Exhibit 2.16(b) sets forth a description of all
employment and consulting agreements, executive compensation plans, deferred
compensation agreements, profit sharing plans, employee pension and other
retirement plans, death benefit plans, sickness or disability plans, severance
plans, educational assistance plans, employee stock options or stock purchase
plans and group life, health and accident insurance and other employee benefit
plans, agreements, arrangements or commitments, whether or not legally binding,
including without limitation fringe benefit programs or practices, holiday,
vacation and other bonus practices, whether written or oral, and whether express
or implied, to which the Company is or has been a party.
2.17 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in violation of any
applicable federal, state or local statute, law or regulation relating to
environmental
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matters or occupational health and safety matters, no expenditures are or will
be, as of the Date of Closing, required in order to comply with any such
statute, law or regulation relating to the Company's business.
2.18 SUBSIDIARIES. The Company has no subsidiaries.
2.19 NO CONTRACTUAL VIOLATIONS. Neither the execution of this Agreement
nor the performance of Selling Parties' obligations pursuant hereto or the
consummation of the transactions contemplated hereby, will conflict with, or
result in a breach or violation of any of the terms or provisions of, or
constitute, or with the passage of time or the giving of notice constitute, a
default under any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument to which the
Company is a party, or by which it is bound, or the Company's Articles of
Incorporation or Bylaws.
2.20 CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 100 shares of Common Stock, no par value, of which 75 shares are
issued and outstanding subject to the stock grant to Joe Giberson as reflected
in exhibit 2.12. Twenty-five (25) shares, formerly owned by Gordon Jones, have
been redeemed by the Company. All outstanding shares are validly issued fully
paid and non- assessable, and such shares have been issued in full compliance
with all federal and state securities laws. There are no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements or commitments obligating the Company to issue or to transfer any
additional shares of its capital stock of any class.
2.21 SELLERS' AUTHORITY. Sellers have all requisite right, power,
legal capacity and authority to enter into and perform their obligations under
this Agreement. All approvals and consents of any parties necessary in
connection with this transaction have been obtained by Sellers.
2.22 TITLE TO SHARES. Sellers are the owners, beneficially and of record,
of all of the Shares, free and clear of all liens, encumbrances, security
agreements, equities, options, claims, charges and restrictions whatsoever.
2.23 REAL PROPERTY. Except as set forth on Exhibit 2.23 to this Agreement,
the Company does not own or lease any real property.
2.24 COMPANY ACCOUNTS. Exhibit 2.25 lists the names and addresses of
all banks or other financial institutions in which the Company has an account,
deposit or safe deposit box, with the names of all persons authorized to draw on
these accounts or deposits or to have access to theses boxes.
2.25 FULL DISCLOSURE. None of the representations and warranties made by
any of the Selling Parties, or made in any certificate or memorandum furnished
or to be
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furnished pursuant to this Agreement, contains or will contain any untrue
statement of a material fact, or omit any statement or fact the omission of
which would be misleading.
ARTICLE III
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants that:
3.1 ORGANIZATION. Buyer is a corporation duly organized, existing and in
good standing under the laws of the State of Minnesota. The execution and
delivery of this Agreement and the consummation of the transaction by Buyer have
been duly authorized and no further corporate authorization is necessary on the
part of Buyer.
3.2 FINANCING. Buyer will make reasonable best efforts to obtain at least
$1.5 million in debt or equity financing for the Company.
ARTICLE IV
COMPANY'S OBLIGATIONS BEFORE CLOSING
The Company covenants that from the date of this Agreement (unless a
different date is indicated) until the Closing:
4.1 BUYER'S ACCESS TO PREMISES AND INFORMATION. Buyer, its counsel, its
accountants and other representatives shall have full access during normal
business hours to all properties, accounts, records, contracts and documents of
or relating to the Company's business or as may be necessary to determine the
accuracy of the Company's representations and warranties. The Company shall
furnish or cause to be furnished to Buyer and its representatives all data and
information concerning the business, finances and properties of the Company as
Buyer shall reasonably request. The Company shall provide Buyer with copies of
all of its Contract Documents and Trademark and Trade Name registrations within
15 days of the date hereof.
4.2 CONDUCT OF BUSINESS IN NORMAL COURSE. The Company will carry on
its business and activities diligently and in substantially the same manner as
previously had been carried out and shall not make or institute any unusual or
novel business practice which varies from the methods used by the Company as of
the date hereof. The Company shall not pay any dividend or other distribution
with respect to its stock nor any compensation, bonus or other consideration to
its shareholders or employees other than salaries and benefits which are in
effect as of December 31, 1995, subject to Exhibit 2.16(a).
4.3 PRESERVATION OF BUSINESS AND RELATIONSHIPS. The Company will use its
best efforts to preserve its business intact and to preserve the present
relationships with its customers, suppliers and employees.
4.4 REPRESENTATIONS AND WARRANTIES AT CLOSING. All representations and
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warranties of Selling Parties set forth in this Agreement and any written
statements delivered to Buyer under this Agreement will be true and correct as
of the Date of Closing as if made on that date.
4.5 EXCLUSIVE DEALINGS. The Company agrees that prior to the Date of
Closing it shall not enter into or conduct any discussions, directly or
indirectly, with any prospective purchaser, suitor or other entity interested in
acquiring, merging with, consolidating or conducting any other type of business
combination with the Company or its assets, other than those conducted in the
ordinary course of business.
4.6 PROMPT ACTION. Selling Parties will promptly take all action
necessary to complete the transactions contemplated by this Agreement.
4.7 CONFIDENTIALITY. Selling Parties will treat this Agreement, and the
transactions contemplated hereby, as confidential, and will not issue any press
release or otherwise provide any information regarding such transactions without
the prior written consent of Buyer.
4.8 CORPORATE MATTERS. Except as contemplated by this Agreement, the
Company shall not (i) amend its Articles of Incorporation to Bylaws, (ii) issue
any shares of its capital stock, (iii) issue or create any warrants,
obligations, subscriptions, options, convertible securities or other commitments
under which any additional shares of its capital stock of any class might be
directly or indirectly authorized, issued or transferred from treasury, or (iv)
agree to do any of the acts listed above.
4.9 MAINTENANCE OF INSURANCE. The Company does not carry insurance as of
the date of this Agreement.
4.10 PAYMENT OF LIABILITIES AND WAIVER OF CLAIMS. The Company will not,
other than in the ordinary course of business, pay any obligation or liability,
fixed or contingent, or waive or compromise any right or claim, or cancel,
without full payment, any note, loan or other obligation owning to it.
4.11 CONTRACT DOCUMENTS. The Company will not modify, amend, cancel or
terminate any of the Contract Documents, or agree to do any of the foregoing.
ARTICLE V
BUYER'S OBLIGATIONS BEFORE CLOSING
5.1 COOPERATION IN SECURING CONSENTS OF THIRD PARTIES. Buyer will use
its best efforts to assist the Company in obtaining the consent of any necessary
third persons or agencies to the transaction contemplated hereby.
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ARTICLE VI
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
6.1 OBLIGATION TO PURCHASE. The obligation of Buyer to purchase the
Shares and proceed pursuant to this Agreement are subject to the satisfaction at
or before the Closing of all of the conditions set forth within this Agreement
and within this Article. Buyer may waive any or all of these conditions in in
whole or in part without prior notice, provided, however, that no such waiver of
a condition shall constitute a waiver by Buyer of any of the other rights or
remedies, at law or in equity, if Selling Parties shall be in default of any of
the representations, warranties or covenants under this Agreement.
6.2 ACCURACY OR REPRESENTATIONS. Except as otherwise permitted by this
Agreement, all representations and warranties of the Selling Parties contained
in this Agreement, or in any written statement, shall be true on and as of the
Date of Closing as though made at such time.
6.3 SELLING PARTIES' PERFORMANCE. Each of the Selling Parties shall have
performed, satisfied and complied with all of the terms and conditions of this
Agreement.
6.4 NO ADVERSE CHANGE. During the period from the date of execution until
the Date of Closing, there shall have been no material adverse change in the
financial condition or business of the Company.
6.5 OPINION OF THE COMPANY'S COUNSEL. Buyer shall have received from
counsel to the Company an opinion dated the Closing Date, in form and substance
reasonably satisfactory to Buyer and its counsel.
6.6 ABSENCE OF LITIGATION. No action, suit or proceeding before any
court or government body, pertaining to the transaction contemplated by this
Agreement or the Company, shall have been instituted or threatened on or before
the Date of Closing.
6.7 EMPLOYMENT AGREEMENTS. The Company will have entered into
employment agreements with each of The Joneses and William Harris as described
in Article IX hereof, which agreements will have non-compete provisions and
contain such other terms and conditions as Sellers and Buyer deem appropriate.
6.8 DUE DILIGENCE REVIEW. Buyer and its representatives will
complete a due diligence review of the Company within 30 days of the Execution
of this Agreement in order to determine that all representations and warranties
of Selling Parties relative to the Company are true and correct.
6.9 NO CHANGE IN STATUS OR CONDITION OF ASSETS. There shall have been no
casualty or other material physical change in the condition of any of the assets
of the Company and no proceeding in condemnation shall be pending with respect
to any of the assets.
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6.10 CONSENTS. The Company having obtained the consents of any third
parties necessary for consummation of this Agreement and the transactions
contemplated hereby.
ARTICLE VII
CONDITIONS PRECEDENT TO SELLERS' PERFORMANCE
The obligations of the Sellers to consummate their obligations under this
Agreement are subject to the satisfaction, on or before the Date of Closing, of
all of the following conditions:
7.1 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Buyer contained within this Agreement or in
any written statement delivered by Buyer under this Agreement shall be true on
and as of the Date of Closing as though such representations and warranties were
made on such date.
7.2 BUYER'S PERFORMANCE. Buyer shall have performed and complied with all
of the covenants and agreements and satisfied all conditions that it is required
by this Agreement to perform, comply with or satisfy before the Date of Closing.
7.3 EMPLOYMENT AGREEMENTS. The Company will have entered into Employment
Agreements with Gordon Jones and William Harris as described in Article IX
hereof, which agreements will have non-compete provisions and contain such other
terms and conditions as Sellers and Buyer deem appropriate.
ARTICLE VIII
THE CLOSING
8.1 TIME AND PLACE. The transfer of the Shares by Sellers to Buyer (the
"Closing") shall take place at the offices of Parsinen Bowman Kaplan & Levy,
P.A. at 100 South Fifth Street, Suite 1100, Minneapolis, Minnesota 55402, at
10:00 a.m. local time sixty (60) days from the execution of this document, or at
such other time and place as the parties shall agree (the "Closing Date" or the
"Date of Closing").
8.2 COMPANY'S OBLIGATIONS AT CLOSING. At the Closing, Company shall
deliver or cause to be delivered to Buyer:
(a) Certificate representing the Shares together with appropriate
documents of assignment thereof.
(b) The employment agreements described in Article IX hereof, duly
executed.
(c) Such other agreements, contracts, certificates and/or exhibits as
are required and/or contemplated pursuant to this Agreement.
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(d) An opinion of the Company's counsel dated the Date of Closing as
provided for in Section 6.5.
(e) Certified resolutions of the Company's Board of Directors and
Shareholders in form satisfactory to Buyer's counsel, authorizing
the execution and performance of this Agreement and all action to
be taken by the Company to effectuate the terms hereof.
(f) The original of the Company's Minute Books.
(g) Any and all back-up records of the Company which are not kept at
the Company's place of business.
8.3 BUYER'S OBLIGATION AT CLOSING. At the Closing, Buyer shall deliver
to the Sellers the following instruments and documents against delivery of the
items specified in Article 8.2.
(a) The LRC Stock.
(b) The LRC Options.
(c) Certified resolutions of Buyer's Board of Directors in form
satisfactory to counsel for the Company, authorizing the
execution and performance of this Agreement and all actions to be
taken by the Buyer hereunder.
(d) Such other agreements, contracts, certificates and/or exhibits as
are required and/or contemplated pursuant to this Agreement.
ARTICLE IX
EMPLOYMENT AGREEMENT
9.1 EMPLOYMENT AGREEMENT. As a condition to Buyer's obligations under
this Agreement, each of Gordon Jones and William Harris shall enter into an
employment agreement substantially in the form attached hereto as Exhibit 9 (the
"Employment Agreement.)
ARTICLE X
COMPANY'S OBLIGATIONS AFTER CLOSING
10.1 COMPANY'S INDEMNITY. Company agrees to indemnify, defend and
hold harmless Buyer against and in respect to all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and attorney's fees that Buyer may incur or suffer
which arise, result from, or relate to any
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breach of, or failure of Company to perform any of its representations,
warranties, covenants or agreements contained within this Agreement or on any
schedule, certificate, exhibit or other instrument furnished or to be furnished
by it under this Agreement and/or relating to the operation of the Company's
business prior to the Date of Closing.
10.2 SELLER'S INDEMNITY. Sellers agree to indemnify, defend and hold
harmless Buyer against and in respect to all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and attorney's fees that Buyer may incur or suffer
which arise, result from, or relate to any breach of, or failure of Sellers to
perform any of their representations, warranties, covenants or agreements
contained within this Agreement or on any schedule, certificate, exhibit or
other instrument furnished or to be furnished by them under this Agreement
and/or relating to the operation of the Company's business prior to the Date of
Closing.
10.3 NOTICE OF INDEMNITY. Buyer shall promptly notify Company and Sellers
of the existence of any claim, demand or other matter for which indemnification
would apply, and shall give Company reasonable opportunity to defend the same in
its own name with counsel of its selection; provided that Buyer shall, at all
times, have the right to fully participate in the defense at its own expense.
If Company shall, within a reasonable time after notice, fail to defend, Buyer
shall have the right, but not the obligation, to undertake the defense of, and
to compromise or settle (exercising reasonable business judgment) the claims or
other matters on behalf; for the account, and at the risk of Company. If the
claim is one that cannot be, by its nature, defended solely by Company, then
Buyer shall make available all information and assistance that Company may
reasonably request.
10.4 COMPLIANCE WITH AGREEMENTS. Sellers and Company agree that they will
comply at all times with the terms and provisions of the Employment Agreement.
ARTICLE XI
BUYER'S OBLIGATION AFTER CLOSING
11.1 BUYER'S INDEMNITY. Buyer shall indemnify, defend and hold harmless
Sellers against and respect of all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies, including
interest, penalties and attorney's fees that they may incur or suffer which
arise, result from, or relate to any breach of, or failure of Buyer to perform
any of its representations, warranties, covenants or agreements contained within
this Agreement or on any schedule, certificate, exhibit or other instrument
furnished or to be furnished by Buyer under this Agreement and/or relating to
the operation of Buyer's business prior to the Date of Closing.
11.2 NOTICE OF INDEMNITY. Sellers shall promptly notify Buyer of the
existence of any claim, demand or other matter for which indemnification would
apply, and shall give Buyer reasonable opportunity to defend the same in its own
name with counsel of its selection; provided that Sellers shall, at all times,
have the right to fully participate in the defense at their own expense. If
Buyer shall, within a reasonable time after notice, fail to defend, Sellers
shall have the right, but not the obligation, to undertake
12
<PAGE>
the defense of, and to compromise or settle (exercising reasonable business
judgment) the claims or other matters on behalf, for the account, at the risk of
Buyer. If the claim is one that cannot be, by its nature, defended solely by
Buyer, then Sellers shall make available all information and assistance that
Buyer may reasonably request.
ARTICLE XII
PUBLICITY
12.1 CONFIDENTIALITY. Selling Parties agree not to make any public
disclosure of the transaction contemplated by this Agreement without the advance
consent of Buyer.
12.2 PUBLIC ANNOUNCEMENTS. All notices to third parties and all other
public announcements concerning the transaction contemplated by this Agreement
shall be jointly planned and coordinated by and between Buyer and the Company.
Sellers acknowledge and understand that Buyer is require under applicable
securities regulations to publicly disclose the existence of this Agreement.
ARTICLE XIII
COSTS
13.1 FINDERS AND BROKERS FEES. Each of the parties represents and warrants
that he or it has dealt with no broker or finder in connection with any of the
transactions contemplated by this Agreement and, insofar as each party is aware,
no broker or other person is entitled nor is any broker or other person claiming
any commission or finder's fees in connection with this transaction.
13.2 EXPENSE. Each of the parties shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing this Agreement and
in Closing and carrying out the transaction contemplated by this Agreement.
ARTICLE XIV
REMEDIES
14.1 SPECIFIC PERFORMANCE. Each party's obligation under this Agreement is
unique. If any party shall default in its obligations under this Agreement, the
parties each acknowledge that it would be extremely impractical to measure the
resulting damages; accordingly, the non-defaulting party, in addition to any
other available rights or remedies, shall have the right to obtain, in a court
of competent jurisdiction, specific performance of this Agreement.
14.2 WAIVER OF RESCISSION RIGHTS. Notwithstanding any breach or default by
any of the parties of any of their respective representations, warranties,
covenants or agreements under this Agreement, if the purchase and sale
contemplated hereby shall be consummated at the Closing, each of the parties
waives any rights that it or he may have to rescind this Agreement or the
transactions contemplated hereby; provided, however,
13
<PAGE>
this waiver shall not affect any other rights or remedies available to the
parties under this Agreement or under the law.
14.3 RECOVERY OF LITIGATION COSTS. If any legal action or any arbitration
or other proceeding is brought for the enforcement of this Agreement or because
of an alleged dispute breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they maybe entitled.
14.4 DEFAULTS PERMITTING TERMINATION. If either Buyer or Selling Parties
materially default in the due and timely performance of any of their respective
warranties, covenants or agreements under this Agreement, the non-defaulting
party or parties may not later than five days prior to the Closing Date, give
notice of termination of this Agreement (unless the default shall occur after
such date, in which case the notice shall be furnished as soon as practicable
thereafter), in the manner provided in Section 16.6. The notice shall specify
with particularity the default or defaults on which the notice is based. The
termination shall be effective on the Closing Date, unless the specified default
or defaults have been cured on or before the Closing Date.
ARTICLE XV
MISCELLANEOUS
15.1 EFFECT OF HEADINGS. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.
15.2 ENTIRE AGREEMENT: MODIFICATION: WAIVER. This Agreement constitutes
the entire agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties and their agents and
representatives. No supplement, modification or amendment of this agreement
shall be binding unless executed in writing by all the parties. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver. The Letter of Intent executed by and
between the Company and agents of Buyer shall merge into this Agreement and
shall not survive the execution hereof. All of the terms of such Letter of
Intent shall be extinguished by execution of this Agreement.
5.3 COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.4 PARTIES IN INTEREST. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement
14
<PAGE>
on any persons other than the parties to it and their respective successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any part to this Agreement, nor
shall any provision give any third persons any right of subrogation or action
over against any party to this Agreement.
15.5 SURVIVAL OF REPRESENTATIONS. The Closing of this transaction will not
extinguish any of the representations, warranties, covenants and/or agreements
of the parties contained in this Agreement, or in any instrument, certificate,
opinion or other writing provided for herein and such representations,
warranties, covenants and/or agreements of the parties shall not be merged into
the Warranty Deed.
15.6 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the second day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
To the Company at: 2825 Eastlake Avenue East
Suite 205
Seattle, WA 98102
With a copy to: William Harris
11251 Arroyo Beach Place SW
Seattle, WA 98146
To Buyer at: Legal Research Center, Inc.
700 Midland Square
331 Second Avenue South
Minneapolis, MN 55401
With a copy to: John C. Levy, Esq.
Parsinen Bowman Kaplan & Levy P.A.
100 South Fifth Street
Suite 1100
Minneapolis, MN 55402
Any party may change its address for purposes of this paragraph by giving the
other parties written notice of the new address in the manner set forth above.
15.7 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the substantive laws of the State of Washington.
15
<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the day and year first above written.
BUYER:
LEGAL RESEARCH CENTER, INC.,
a Minnesota corporation
/s/ Christopher Ljungkull
- ------------------------------
By: Christopher Ljungkull
Its: CEO
THE COMPANY:
THE LAW OFFICE, INC.,
a Washington corporation
/s/ Christopher Ljungkull
- ------------------------------
Christopher Ljungkull
/s/ Gordon Jones
- ------------------------------
Gordon Jones
/s/ William Harris
- ------------------------------
William Harris
SELLERS:
/s/ Gordon Jones
- ------------------------------
Gordon Jones
/s/ William Harris
- ------------------------------
William Harris
16
<PAGE>
/s/ Lorie Harris
- ------------------------------
Lorie Harris
/s/ Sydney S. Jones
- ------------------------------
Sydney S. Jones
17
<PAGE>
AMENDMENT NO. 1
TO
STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 (the "Amendment") is effective as of the 13th day of
May, 1996, by and among LEGAL RESEARCH CENTER, INC., a Minnesota corporation
("LRC" or "Buyer"), THE LAW OFFICE, INC., a Washington corporation (the
"Company"), GORDON AND SYDNEY JONES, each an individual (the "Joneses"), WILLIAM
AND LORIE HARRIS, each an individual (the "Harrises"), and JOSEPH GIBERSON, an
individual ("Giberson").
WHEREAS, LRC, the Joneses and the Harrises are the owners of all of the
issued and outstanding shares of the common stock of the Company;
WHEREAS, the Company, LRC, the Joneses and the Harrises entered in the
Stock Purchase Agreement dated January 31, 1996 (the "Stock Purchase Agreement")
whereby LRC agreed to purchase and the Joneses and the Harrises agreed to sell
to LRC, all of the common stock of the Company owned by the Joneses and the
Harrises (the "Shares") on the terms and conditions stated therein (the
"Transaction"), which Transaction has not yet been consummated; and
WHEREAS, the Stock Purchase Agreement states that each of LRC, the Joneses
and the Harrises own 25 shares of common stock of the Company, however, as of
that date, the Joneses owned 50 shares of common stock of the Company;
WHEREAS, since the date of the Stock Purchase Agreement and until this
date, the parties have adjusted their ownership in the Company so that the
Harrises now own 25 shares of common stock of the Company; and
WHEREAS, the shareholdings of the Company are now owned equally by each of
LRC, the Joneses and the Harrises and the parties desire to consummate the
Transaction;
WHEREAS, Joseph Giberson has been employed by the Company since August 24,
1995 as its Vice President, Product Development and pursuant to the terms and
conditions of Giberson's employment as set forth in correspondence between
Gordon Jones and Giberson dated August 10, 1995 and August 16, 1995, it was
agreed that Giberson would receive a total of 4% of the common stock of the
Company over a period of one year commencing with his date of employment (the
"Giberson Shares"), none of which has been issued yet to Giberson; and
WHEREAS, in lieu of Giberson receiving the Giberson Shares, and to
effectuate the Transaction so that the Company is a wholly owned subsidiary of
LRC, the Company, LRC, the Joneses and the Harrises desire that Giberson receive
an equivalent interest in LRC as set forth herein, and Giberson is willing to
receive such interest in LRC in lieu of the Giberson Shares; and
<PAGE>
WHEREAS, the parties desire to amend the Stock Purchase Agreement to
include the payment to Giberson of an interest in LRC as part of the
consideration from LRC for the purchase by it of the Shares, to delete the
exhibits and add a disclosure statement to the Stock Purchase Agreement and to
otherwise amend such agreement as provided for herein. Unless otherwise defined
herein, capitalized terms used herein shall have the same meaning as set forth
in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. AMENDMENT TO STOCK PURCHASE AGREEMENT. Unless otherwise provided for in
this Amendment, all rights and obligations of the parties and all terms and
conditions of the Stock Purchase Agreement shall remain in full force and
effect. The parties agree that the Stock Purchase Agreement shall be amended by
the following provisions:
1.1 GIBERSON ADDED AS PARTY. Giberson is hereby made a party to the Stock
Purchase Agreement and shall be referred to as "Giberson."
1.2 CONSIDERATION FROM BUYER AT EXECUTION/CLOSING. Section 1.2 of the
Stock Purchase Agreement is hereby amended to read in its entirety as follows:
"1.2 CONSIDERATION FROM BUYER AT EXECUTION/CLOSING. As
payment for the transfer of the Shares from Sellers to
Buyer, Buyer shall pay to the Sellers and Giberson at the
Closing the following:
(i) LRC STOCK. A total of One Hundred Twenty One Thousand
Eight Hundred (121,800) shares of its fully paid and
nonassessable Common Stock payable as set forth below:
Holder Number of LRC Shares
------ --------------------
The Harrises 58,200
The Joneses 56,400
Giberson 7,200
------------ -------
Total: 121,800
(ii) LRC STOCK OPTION. Immediately exercisable stock
options to purchase a total of One Hundred One Thousand Five
Hundred (101,500) shares of LRC Common Stock. Such options
shall be exercisable for a period commencing immediately and
ending three years from the date of grant, in whole or in
part, from time to time, and at anytime throughout the
option period at the closing
2
<PAGE>
high bid price for LRC Common Stock as reported on the NASDAQ SmallCap
Market for the date of the Letter of Intent (December 14, 1995, which
was $3.50 per share) issuable as follows:
Holder Number of LRC Stock Options
------------ ---------------------------
The Harrises 48,500
The Joneses 47,000
Giberson 6,000
------------ -------
Total: 101,500
(iii) CASH. A total of Fifty Thousand Seven Hundred Fifty
Dollars ($50,750), payable on the Closing as follows:
Payee Cash Amount
------------ -----------
The Harrises $ 0
The Joneses 0
Giberson 3,000
------------ --------
The Harrises hereby acknowledge the they have already
received $24,250 from LRC consisting of an original payment
by LRC of $25,000 reduced by a repayment from the Harrises
to LRC of $750. The Joneses hereby acknowledge the they
have already received $23,500 from LRC consisting of an
original payment by LRC of $25,000 reduced by a repayment
from the Joneses to LRC of $1,500.
Total: $50,750 (including payment already made to the Joneses and
the Harrises)
1.3 AUTHORITY AND CONSENT. Section 2.12 of the Stock Purchase Agreement
is hereby amended to delete the words "subject to the stock grant to Joe
Giberson as reflected in exhibit 2.12" in the third sentence thereof.
1.4 CAPITAL STRUCTURE. Section 2.20 of the Stock Purchase Agreement is
hereby amended in its entirety to read as follows:
"2.20 CAPITAL STRUCTURE. The authorized capital stock of
the Company consists of 50,000 shares of Common Stock, no
par value, of which 75 shares are issued and outstanding and
held by the Sellers and LRC. All outstanding shares are
validly issued, fully paid and non-assessable and such
shares have been issued in full compliance with all federal
and state securities laws. There are no outstanding
subscriptions, options, rights, warrants,
3
<PAGE>
convertible securities, or other agreements or commitments obligating
the Company to issue or transfer any additional shares of its capital
stock of any class."
1.5 TITLE TO SHARES. Section 2.22 of the Stock Purchase Agreement is
hereby amended by adding the following to the end thereof:
"No option, pledge or other right to transfer any interest
in the Company Giberson may have as a result of his
employment with the Company has been granted by Giberson to
any third party."
1.6 DISCLOSURE STATEMENT. Information required to be set forth on an
exhibit to the Stock Purchase Agreement shall not be attached as an exhibit
thereto. LRC acknowledges that it has received a separate disclosure statement
containing all of the information required to be set forth on any exhibit to the
Stock Purchase Agreement (the "Disclosure Statement"). Each reference in the
Stock Purchase Agreement to "Exhibit" is hereby amended by replacing such term
with "the Disclosure Statement" and each sentence shall be appropriately amended
to accommodate such change.
2. TERMINATION OF AGREEMENTS. Upon the execution of this Agreement and the
consummation of the transaction contemplated by the Stock Purchase Agreement and
this Agreement, the following agreements shall no longer be in full force and
effect and shall be terminated: (i) Stock Option Agreement dated November 9,
1995 between the Buyer and LRC, (ii) Shareholder and Director Agreement dated
May 3, 1995 between LRC, the Company, the Joneses and the Harrises, and (iii)
the Shareholders' Buy/Sell Agreement dated May 17, 1995 between the Buyer, the
Joneses and the Harrises.
3. ENTIRE AGREEMENT; MODIFICATION; WAIVER. Except as amended herein, the Stock
Purchase Agreement shall remain in full force and effect. This Amendment
constitutes the entire agreement between the parties pertaining to the subject
matter contained herein and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties respecting the subject matter
contained herein. No supplement, modification or amendment of this Amendment
shall be binding unless executed in writing by all of the parties. No waiver
shall be binding unless executed in writing by the party making the waiver.
4. GOVERNING LAW. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of Washington.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day and year first above written.
BUYER: LEGAL RESEARCH CENTER, INC.
By: /s/ Christopher Ljungkull
--------------------------------
Name: Christopher Ljungkull
Title: Chief Executive Officer
THE COMPANY: THE LAW OFFICE, INC.
By:
--------------------------------
Name:
Title:
SELLERS:
-----------------------------------
Gordon Jones
-----------------------------------
Sydney Jones
-----------------------------------
William Harris
-----------------------------------
Lorie Harris
ADDITIONAL PARTY:
-----------------------------------
Joseph Giberson
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day and year first above written.
BUYER: LEGAL RESEARCH CENTER, INC.
By:
--------------------------------
Name: Christopher Ljungkull
Title: Chief Executive Officer
THE COMPANY: THE LAW OFFICE, INC.
By: /s/ Gordon S. Jones
--------------------------------
Name: Gordon S. Jones
Title: President
SELLERS: /s/ Gordon S. Jones
-----------------------------------
Gordon Jones
/s/ Sydney J. Jones
-----------------------------------
Sydney Jones
-----------------------------------
William Harris
-----------------------------------
Lorie Harris
ADDITIONAL PARTY:
-----------------------------------
Joseph Giberson
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day and year first above written.
BUYER: LEGAL RESEARCH CENTER, INC.
By:
--------------------------------
Name: Christopher Ljungkull
Title: Chief Executive Officer
THE COMPANY: THE LAW OFFICE, INC.
By:
--------------------------------
Name:
Title:
SELLERS:
-----------------------------------
Gordon Jones
-----------------------------------
Sydney Jones
/s/ William Harris
-----------------------------------
William Harris
/s/ Loretta A. Harris
-----------------------------------
Lorie Harris
ADDITIONAL PARTY:
-----------------------------------
Joseph Giberson
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day and year first above written.
BUYER: LEGAL RESEARCH CENTER, INC.
By:
--------------------------------
Name: Christopher Ljungkull
Title: Chief Executive Officer
THE COMPANY: THE LAW OFFICE, INC.
By:
--------------------------------
Name:
Title:
SELLERS:
-----------------------------------
Gordon Jones
-----------------------------------
Sydney Jones
-----------------------------------
William Harris
-----------------------------------
Lorie Harris
ADDITIONAL PARTY: /s/ Joseph Giberson
-----------------------------------
Joseph Giberson
8
<PAGE>
THE LAW OFFICE
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into effective as of the 15th day of
May, 1996, by and between THE LAW OFFICE, INC., a Washington corporation
("Employer") and ARUN DUBE ("Employee").
WHEREAS, Employer is in the business of providing an online legal forum for
consumers, corporations, law firms and individual lawyer practitioners;
WHEREAS, The parties desire to enter into this Agreement to provide for the
terms and conditions of Employee's employment as CEO and President of the
Employer;
WHEREAS, the parties acknowledge that the terms and provisions of this
Agreement, including the severance package and stock options contained herein,
provide separate and valuable consideration for the Non-Compete Covenant
contained herein.
NOW, THEREFORE, in consideration of the premises, it is agreed as follows:
1. DUTIES. Employee agrees to serve as a full-time employee of Employer
in the capacity of President. Employee agrees to faithfully and diligently
perform the acts and duties of his office and devote his best efforts on a full-
time basis. Employee shall also perform such other duties as are consistent
with his position as are reasonably assigned to him by the BOD of the Employer.
Employer recognizes that Employee has existing business interests and they are
expected to continue.
2. TERM. The term of Employee's employment under this Agreement will
begin immediately and will be "at will."
3 . COMPENSATION AND RELATED MATTERS. Employer shall pay Employee
compensation and benefits as follows:
- - BASE COMPENSATION. During the Employment Period, Employer shall pay to
Employee an annual base salary of $100,000. Employee's salary may be
further reviewed and adjusted periodically.
- - BONUS. Beginning May 15, 1996, Employee shall also be entitled to a bonus,
payable quarterly, equal to 1 % of the increase in gross revenue, plus 4 %
of the increase in net revenue, in the prior quarter over the corresponding
quarter in the prior year. For example, the bonus in 2nd quarter 1997 will
be equal to 1 % of the difference between 1st quarter 1997 gross revenue
and 1st quarter 1996 gross revenue, plus 4 % of the difference between 1st
quarter 1997 net revenue and 1st quarter 1996 net revenue. The 4th
quarter bonus, if any, shall be equal to the difference between (i) the
applicable percentage increase in gross revenue and net revenue for the
year then ended over the prior year and (ii) the sum of the three preceding
quarterly bonuses paid to Employee in the year then ended, it being
understood that if such annual computation discloses that the Company has
overpaid Employee, Employee shall promptly refund to the Company the
overpaid amount. Notwithstanding anything stated previously in this
paragraph, the Board of Directors reserves the final authority to decide
the appropriateness of this bonus on a quarterly basis.
<PAGE>
- - SIGNING BONUS. Employer shall pay to Employee a $10,000 bonus upon
the execution of this Agreement.
- - OPTIONS. 50,000 LRC shares, granted and vesting immediately, market price
as of May 15, 1996, which was $2.00 per share. 1.25% of TLO stock when
financing is in place, 1.25% of TLO stock after 2 consecutive profitable
quarters, vesting upon grant, market price on date of grant.
- - EXPENSES. During the Employment Period, Employee shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by
Employee in performing services hereunder; provided, however, that Employee
complies with Employer's policies and procedures established from time to
time to document such expense.
- - VACATION AND OTHER BENEFITS. Employee shall be entitled to such paid
vacation and other benefits as shall be in effect from time to time for
senior executive officers of Legal Research Center.
4. TERMINATION AND COMPENSATION DUE ON TERMINATION. Employee's employment
is at will. Upon termination of employment, Employer shall have no further
obligations to Employee except for salary and bonus accrued, and Options vested
through the date of termination, and any other obligations provided by law.
5. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Employee agrees that he
will not use or disclose, or permit others to use or disclose (other than other
employees or representatives of Employer), any trade secrets, confidential
information, data or records relating to the business, techniques, operations
and conditions (financial or otherwise) of Employer which is not generally known
or available through other lawful sources.
6. PROPERTY RIGHTS. Subject to the last sentence in this Paragraph,
Employer shall acquire exclusive right, title, and interest to all inventions,
discoveries, improvements, designs, ideas, know-how, technology and the like
developed, conceived, or invented by Employee, in whole or in part, whether
written or in some other form and whether or not patentable or eligible for
protection under any copyright law. Without limiting the generality of the
foregoing, Employee hereby assigns to Employer (i) all rights to any inventions,
or to improvements, and all rights to apply for United States and/or foreign
letters of patent granted upon such inventions; and (ii) any copyrights Employee
may have in materials created by Employee or otherwise generated during the
period in which Employee is performing services for Employer, and Employer shall
have the sole right to apply for and obtain copyright protection for any
materials for which such protection can be obtained and to obtain such copyright
renewals. Despite any of the foregoing, nothing in this Paragraph 6 shall apply
to an invention for which no equipment, supplies, facility or trade secret
information of Employer is used and which is developed entirely on Employee's
own time, and (i) does not relate (a) directly to the business of Employer or
(b) to Employer's actual or demonstrably anticipated research or development, or
(h) which does not result from any work performed by Employee for Employer.
7. NON-COMPETE COVENANT. During the Employment Period and for a period of
18 months after the termination of employment for any reason Employee shall not
(i) directly or indirectly, whether as a principal, owner, agent, employee or in
any other capacity whatsoever, engage in the business of an online legal forum,
(ii) solicit for employment or employ any employee or independent contractor of
Employer, or (iii) contact any present or contemplated customers of Employer
regarding the business of Employer.
<PAGE>
8. REMEDIES FOR BREACH. Employee acknowledges that he has carefully read
and considered all of the terms and conditions of this Agreement. Employee
further acknowledges that money damages would not be a measurable or adequate
remedy for Employee's breach of any of the covenants contained in this
Agreement, and, accordingly, in addition to and without limiting any other
remedy available to Employer in the event of such a breach, Employee agrees to
submit to the equitable jurisdiction of any court of competent personal and
subject matter jurisdiction in connection with any action to enjoin the Employee
from violating any such covenants. In the event that Employee is found to have
breached any of the terms and conditions of this Agreement, Employee hereby
agrees to pay all costs and expenses incurred by Employer in enforcing the
provisions of this Agreement found to have been breached by Employee, including
Employer's attorney's fees.
9. BENEFIT OF AGREEMENT. This Agreement shall inure to the benefit of and
be enforceable by Employer, it's successors, assigns and affiliates.
10. WAIVER. The failure of Employer to insist on the strict performance of
any provision of this Agreement or to exercise any right, power or remedy upon a
breach by Employee shall not constitute a waiver of that or any other provision
of this Agreement. A waiver on any one occasion shall not be deemed to be a
waiver for subsequent occasions.
11. SURVIVAL AND SEVERABILITY. The terms and conditions of this Agreement
shall survive the termination of Employee's employment with Employer to the
full extent necessary for their enforcement and for the protection of Employer,
it's successors, assigns and affiliates. If for any reason any portion of any
provision of this Agreement is declared invalid, void or unenforceable by a
court of competent jurisdiction, the validity and binding effect of any
remaining provisions of this Agreement shall remain in full force and effect to
the fullest extent possible as if this Agreement had been executed with the
invalid, void or unenforceable portion or provision eliminated. In the event
that any provision of this Agreement relating to time periods and/or areas of
restriction shall be declared by a court of competent jurisdiction to exceed the
maximum time periods or areas such court deems reasonable and enforceable, said
time periods and/or areas of restriction shall be deemed to become and
thereafter be the maximum time periods and/or areas which such court deems
reasonable and enforceable.
12. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Minnesota.
IN WITNESS WHEREOF, the undersigned have hereunto affixed their
signatures.
THE LAW OFFICE, INC.
By: /s/ C.R. Ljunakull
------------------------
Its: Chairman of BOD and CEO
-----------------------
/s/ A.K. Dube 5/15/96
- -------------------------------
Mr. Arun Dube
