SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________ to ____________.
Commission file number 0-26548
Legal Research Center, Inc.
(Name of Small Business Issuer in Its Charter)
Minnesota 41-1680384
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
700 Midland Square Building, 331 Second Ave. So., Minneapolis, MN 55401
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: 612/332-4950
Securities registered under Section 12(b) of the Exchange Act: None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
(Title of Class)
Check whether the issuer filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No ___
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. ___
State issuer's revenues for its most recent fiscal year. $2,760,038
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask prices of such stock, as of a specified date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)
$2,854,813 as of March 7, 1997
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
3,297,633 shares of Common Stock as of March 7, 1997
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security-holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be
clearly described for identification purposes (e.g., annual report to
security-holders for fiscal year ended December 31, 1996).
Definitive Proxy Statement of Legal Research Center, Inc., relating to the
Annual Meeting of Shareholders to be held in June 1997 (the "1997 Proxy
Statement") (incorporated by reference into Part III of this Form 10-KSB).
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Item 13. EXHIBITS AND REPORTS ON FORM 8-K
The following document is filed as part of the report:
2. Exhibits. The following exhibits are being filed as part of this Form
10-KSB/A:
Exhibit No. Title Method of Filing
- ----------- ----- ----------------
10.5 1997 Stock Option Plan Filed herewith
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
LEGAL RESEARCH CENTER, INC.
Dated May 19, 1997 By:/s/ Frank G. Hallowell
--------------------------
Frank G. Hallowell, VP &
Chief Financial Officer
Exhibit 10.5
1997 Stock Option Plan
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LEGAL RESEARCH CENTER, INC.
1997 STOCK OPTION PLAN
ARTICLE 1.
ESTABLISHMENT AND PURPOSE
1.1 Establishment. Legal Research Center, Inc. (the "Company") hereby
establishes a plan providing for the grant of stock options to certain eligible
individuals who have or will render services to the Company. This plan shall be
known as the Legal Research Center, Inc. 1997 Stock Option Plan (the "Plan").
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by enhancing the Company's ability to attract and
retain qualified persons to perform services for the Company, by providing
incentives to such persons to put forth maximum efforts for the Company and by
rewarding persons who contribute to the achievement of the Company's economic
objectives.
ARTICLE 2.
DEFINITIONS
The following terms have the meanings set forth below, unless the context
otherwise requires:
2.1 "Affiliate" means with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by, or under common control with such
Person, (ii) any person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any officer, director, or
general partner of such Person, or (iv) any Person who is an officer, director,
general partner or holder of ten percent (10%) or more of the voting interests
of any Person described in clauses (i) through (iii) of this sentence. For
purposes of this definition, the term "controls," "is controlled by," or "is
under common control with" shall mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person or entity, whether through the ownership of voting securities, by
contract or otherwise.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the group of individuals administering the Plan, as
provided in Article 3 of the Plan.
2.5 "Common Stock" means the common stock of the Company, par value $.01
per share, or the number and kind of shares of stock or other securities into
which such Common Stock may be changed in accordance with Section 4.3 of the
Plan.
2.6 "Disability" means the permanent and total disability of the
Participant within the meaning of Section 22(e)(3) of the Code.
2.7 "Eligible Recipient" means all employees (including, without
limitation, officers and directors who are also employees), Outside Directors,
consultants and independent contractors of the Company or any Subsidiary.
2.8 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.9 "Fair Market Value" means, with respect to the Common Stock, the
following:
(a) If the Common Stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or
admitted but transactions in the Common Stock are reported on the NASDAQ
National Market System, the last sale price of the Common Stock on such
exchange or reported by the
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NASDAQ National Market System as of such date (or, if no shares were traded
on such day, as of the next preceding day on which there was such a trade).
(b) If the Common Stock is not so listed or admitted to unlisted
trading privileges or reported on the NASDAQ National Market System, and
bid and asked prices therefor in the over-the-counter market are reported
by The Nasdaq SmallCap Market7 or the National Quotation Bureau, Inc. (or
any comparable reporting service), the mean of the closing bid and asked
prices as of such date, as so reported by the NASDAQ System, or, if not so
reported thereon, as reported by the National Quotation Bureau, Inc. (or
such comparable reporting service).
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges, or reported on the NASDAQ National Market System, and
such bid and asked prices are not so reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.
2.10 "Incentive Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Article 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.11 "Non-Statutory Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Article 6 or Article 7 of the Plan
that does not qualify as an Incentive Stock Option.
2.12 "Option" means an Incentive Stock Option or a Non-Statutory Stock
Option.
2.13 "Outside Director" means a member of the Board who is not an employee
of the Company or any Subsidiary or Affiliate thereof and who satisfies the
definition of (i) a Non-Employee Director pursuant to Rule 16b-3 of the Exchange
Act, and (ii) an "outside director" pursuant to Section 162(m) of the Code.
2.14 "Participant" means an Eligible Recipient who receives one or more
Options under the Plan.
2.15 "Person" means any individual, corporation, partnership, group,
association or other "person" (as such term is used in Section 14(d) of the
Exchange Act), other than the Company, a wholly owned subsidiary of the Company
or any employee benefit plan sponsored by the Company or a wholly owned
subsidiary of the Company.
2.16 "Previously Acquired Shares" means shares of Common Stock that are
already owned by the Participant and shares of Common Stock that could be
acquired by the Participant pursuant to the exercise of an Option.
2.17 "Retirement" means the retirement of a Participant pursuant to and in
accordance with the regular or, if approved by the Board for purposes of the
Plan, any early retirement plan or practice of the Company or Subsidiary then
covering the Participant.
2.18 "Securities Act" means the Securities Act of 1933, as amended.
2.19 "Subsidiary" means any subsidiary corporation of the Company within
the meaning of Section 424(f) of the Code.
ARTICLE 3.
PLAN ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Board or by a
committee of the Board consisting solely of two or more Outside Directors.
Members of such a committee, if established, shall be appointed from time to
time by the Board, shall serve at the pleasure of the Board and may resign at
any time upon written notice to the Board. A majority of the members of such a
committee shall constitute a quorum. Such a committee shall act by majority
approval of the members, shall keep minutes of its meetings and shall provide
copies of such minutes to the Board. Action of such a committee may be taken
without a meeting if unanimous written consent is given. Copies of minutes of
such a committee's meetings and of its actions by written consent shall be
provided to the Board and kept with the corporate records of the Company. As
used in this Plan, the term "Committee" will refer to the Board or to such a
committee, if established.
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3.2 Authority of the Committee.
(a) In accordance with and subject to the provisions of the Plan, the
Committee shall have the authority to determine (i) the Eligible Recipients
who shall be selected as Participants, (ii) the nature and extent of the
Options to be granted to each Participant (including the number of shares
of Common Stock to be subject to each Option, the exercise price and the
manner in which Options will vest or become exercisable), (iii) the time or
times when Options will be granted, (iv) the duration of each Option, (v)
the restrictions and other conditions to which the exercisability or
vesting of Options may be subject, and (vi) such other provisions of the
Options as the Committee may deem necessary or desirable and as consistent
with the terms of the Plan. The Committee shall determine the form or forms
of the option agreements with Participants which shall evidence the
particular terms, conditions, rights and duties of the Company and the
Participants with respect to Options granted pursuant to the Plan, which
agreements shall be consistent with the provisions of the Plan.
(b) With the consent of the Participant affected thereby, the
Committee may amend or modify the terms of any outstanding Option in any
manner, provided that the amended or modified terms are permitted by the
Plan as then in effect. Without limiting the generality of the foregoing
sentence, the Committee may, with the consent of the Participant affected
thereby, modify the exercise price, number of shares or other terms and
conditions of an Option, extend the term of an Option, accelerate the
exercisability or vesting or otherwise terminate any restrictions relating
to an Option, accept the surrender of any outstanding Option, or, to the
extent not previously exercised or vested, authorize the grant of new
Options in substitution for surrendered Options.
(c) The Committee shall have the authority to interpret the Plan and,
subject to the provisions of the Plan, to establish, adopt and revise such
rules and regulations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee's decisions and
determinations under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are
similarly situated. Each determination, interpretation or other action made
or taken by the Committee pursuant to the provisions of the Plan shall be
conclusive and binding for all purposes and on all persons, including,
without limitation, the Company and its Subsidiaries, the shareholders of
the Company, the Committee and each of its members, the directors, officers
and employees of the Company and its Subsidiaries, and the Participants and
their successors in interest. No member of the Committee shall be liable
for any action or determination made in food faith with respect to the Plan
or any Option granted under the Plan.
ARTICLE 4.
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3
below, the maximum number of shares of Common Stock that shall be authorized and
reserved for issuance under the Plan shall be 700,000 shares of Common Stock.
4.2 Shares Available for Use. Shares of Common Stock that may be issued
upon exercise of Options shall be applied to reduce the maximum number of shares
of Common Stock remaining available for use under the Plan. Any shares of Common
Stock that are subject to an Option (or any portion thereof) that lapses,
expires or for any reason is terminated unexercised shall become available for
use under the Plan. Also, Previously Acquired Shares which are tendered to the
Company in satisfaction or partial satisfaction of the Exercise Price pursuant
to Section 6.6 or in satisfaction or partial satisfaction of withholding
obligations pursuant to Article 9 shall become available for use under the Plan
to the extent permitted by Rule 16b-3 of the Exchange Act.
4.3 Adjustments to Shares. In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other change in the corporate
structure or shares of the Company, the Committee (or, if the Company is not the
surviving corporation in any such transaction, the board of directors of the
surviving corporation) may make appropriate adjustment (which determination
shall be conclusive) as to the number and kind of securities subject to
outstanding Options. Without limiting the generality of the foregoing, in the
event that any of such transactions are effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities or assets, including
cash, with respect to or in exchange for such Common Stock, all Participants
holding outstanding Options shall upon the exercise of such
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Option receive, in lieu of any shares of Common Stock they may be entitled to
receive, such stock securities or assets, including cash, as would have been
issued to such Participants if their Options had been exercised and such
Participants had received Common Stock prior to such transaction.
ARTICLE 5.
PARTICIPATION
Participants in the Plan shall be those Eligible Recipients who, in the
judgment of the Committee, have performed, are performing, or during the term of
an Option will perform, services in the management, operation and development of
the Company or any Subsidiary or Affiliate thereof, and significantly
contributed, are significantly contributing or are expected to significantly
contribute to the achievement of corporate economic objectives. Eligible
Recipients may be granted from time to time one or more Options, as may be
determined by the Committee in its sole discretion. The number, type, terms and
conditions of Options granted to various Eligible Recipients need not be
uniform, consistent or in accordance with any plan, regardless of whether such
Eligible Recipients are similarly situated. Upon determination by the Committee
that an Option is to be granted to an Eligible Recipient, written notice shall
be given such person, specifying the terms, conditions, rights and duties
related thereto. Each Eligible Recipient to whom an Option is to be granted
shall enter into an agreement with the Company, in such form as the Committee
shall determine and which is consistent with the provisions of the Plan,
specifying such terms, conditions, rights and duties. Options shall be deemed to
be granted as of the date specified in the grant resolution of the Committee,
and the related option agreements shall be dated as of such date.
ARTICLE 6.
STOCK OPTIONS
6.1 Grant. An Eligible Recipient may be granted one or more Options under
the Plan, and such Options shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by the
Committee in its sole discretion. The Committee may designate whether an Option
is to be considered an Incentive Stock Option or a Non-Statutory Stock Option;
provided, however, that an Incentive Stock Option shall be granted only to an
Eligible Recipient who is an employee of the Company or a Subsidiary or
Affiliate thereof. The terms of the agreement relating to a Non-Statutory Stock
Option shall expressly provide that such Option shall not be treated as an
Incentive Stock Option. Options shall be granted for no cash consideration
unless minimal cash consideration is required by applicable law.
6.2 Exercise. An Option shall become exercisable at such times and in such
installments (which may be cumulative) as shall be determined by the Committee
in its sole discretion at the time the Option is granted. Upon the completion of
its exercise period, an Option, to the extent not then exercised, shall expire.
6.3 Exercise Price.
(a) Incentive Stock Options. The per share price to be paid by the
Participant at the time an Incentive Stock Option is exercised shall be
determined by the Committee, in its discretion, at the date of its grant;
provided, however, that such price shall not be less than (i) 100% of the
Fair Market Value of one share of Common Stock on the date the Option is
granted, or (ii) 110% of the Fair Market Value of one share of Common Stock
on the date the Option is granted if, at that time the Option is granted,
the Participant owns, directly or indirectly (as determined pursuant to
Section 424(d) of the Code), more than 10% of the total combined voting
power of all classes of stock of the Company or any subsidiary or parent
corporation of the Company (within the meaning of Sections 424(f) and
424(e), respectively, of the Code).
(b) Non-Statutory Stock Options. The per share price to be paid by the
Participant at the time a Non-Statutory Stock Option is exercised shall be
determined by the Committee in its sole discretion at the time the Option
is granted; provided, however, that such price shall not be less than 100%
of the Fair Market Value of one share of Common Stock on the date the
Option is granted.
6.4 Duration.
(a) Incentive Stock Options. The period during which an Incentive
Stock Option may be exercised shall be fixed by the Committee in its sole
discretion at the time such Option is granted; provided,
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however, that in no event shall such period exceed ten (10) years from its
date of grant or, in the case of a Participant who owns, directly or
indirectly (as determined pursuant to Section 424(d) of the Code), more
than 10% of the total combined voting power of all classes of stock of the
Company or any subsidiary or parent corporation of the Company (within the
meaning of Section 424(f) and 424(e), respectively, of the Code), five (5)
years from its date of grant.
(b) Non-Statutory Stock Options. The period during which a
Non-Statutory Stock Option may be exercised shall be fixed by the Committee
in its sole discretion at its date of grant.
(c) Effect of Termination of Employment or Other Service.
Notwithstanding this Section 6.4, except as provided in Articles 7 and 8 of
the Plan, all Options granted to a Participant shall terminate and may no
longer be exercised upon the termination of the Participant's employment or
other status with the Company, its Affiliates or Subsidiaries.
6.5 Manner of Exercise. An Option may be exercised by a Participant
in whole or in part from time to time, subject to the conditions contained
herein and in the agreement evidencing such Option, by delivery, in person or
through certified or registered mail, of written notice of exercise to the
Company at its principal executive office (Attention: Chief Financial Officer),
and by paying in full the total Option exercise price for the shares of Common
Stock purchased. Such notice shall be in a form satisfactory to the Committee
and shall specify the particular Option (or portion thereof) that is being
exercised and the number of shares with respect to which the Option is being
exercised. Subject to compliance with Section 11.1 of the Plan, the exercise of
the Option shall be deemed effective upon receipt of such notice and payment
complying with the terms of the Plan and the agreement evidencing such Option.
As soon as practicable after the effective exercise of the Option, the
Participant shall be recorded on the stock transfer books of the Company as the
owner of the shares purchased, and the Company shall deliver to the Participant
one or more duly issued stock certificates evidencing such ownership. If a
Participant exercises any Option with respect to some, but not all, of the
shares of Common Stock subject to such Option, the right to exercise such Option
with respect to the remaining shares shall continue until its expires or
terminates in accordance with its terms. An Option shall only be exercisable
with respect to whole shares.
6.6 Payment of Exercise Price. The total purchase price of the shares to be
purchased upon exercise of an Option shall be paid entirely in cash (including
check, bank draft or money order); provided, however, that the Committee, in its
sole discretion, may allow such payments to be made, in whole or in part, by
transfer from the Participant to the Company of Previously Acquired Shares. In
determining whether or upon what terms and conditions a Participant will be
permitted to pay the purchase price of an Option in a form other than cash, the
Committee may consider all relevant facts and circumstances, including, without
limitation, the tax and securities law consequences to the Participant and the
Company and the financial accounting consequences to the Company. In the event
the Participant is permitted to pay the purchase price of an Option in whole or
in part with Previously Acquired Shares, the value of such shares shall be equal
to their Fair Market Value on the date of exercise of the Option. No shares of
the Common Stock shall be delivered pursuant to the exercise of any Option until
payment in full of any amount required to be paid pursuant to the Plan or the
applicable option agreement is, or is arranged to be, received by the Company.
6.7 Rights as a Shareholder. The Participant shall have no rights as a
shareholder with respect to any shares of Common Stock covered by an Option
until the Participant shall have become the holder of record of such shares, and
no adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may
determine pursuant to Section 4.3 of the Plan.
6.8 Disposition of Common Stock Acquired Pursuant to the Exercise of
Incentive Stock Options. Prior to making a disposition (as defined in Section
424(c) of the Code) of any shares of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option granted under the Plan before the
expiration of two years after its date of grant or before the expiration of one
year after its date of exercise and the date on which such shares of Common
Stock were transferred to the Participant pursuant to exercise of the Option,
the Participant shall send written notice to the Company of the proposed date of
such disposition, the number of shares to be disposed of, the amount of proceeds
to be received from such disposition and any other information relating to such
disposition that the Company may reasonably request. The right of a Participant
to make any such disposition shall be conditioned on the receipt by the Company
of all amounts necessary to satisfy any federal, state or local withholding and
employment-related tax requirements attributable to such disposition. The
Committee shall
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have the right, in its sole discretion, to endorse the certificates representing
such shares with a legend restricting transfer and to cause a stop transfer
order to be entered with the Company's transfer agent until such time as the
Company receives the amounts necessary to satisfy such withholding and
employment-related tax requirements or until the later of the expiration of two
years from its date of grant or one year from its date of exercise and the date
on which such shares were transferred to the Participant pursuant to the
exercise of the Option.
6.9 Aggregate Limitation of Stock Subject to Incentive Stock Options. To
the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or any parent corporation of the Company (within the meaning of
Sections 424(f) and 424(e), respectively, of the Code)) exceeds $100,000 (or
such other amount as may be prescribed by the Code from time to time), such
excess Options shall be treated as Non-Statutory Stock Options. The
determination shall be made by taking incentive stock options into account in
the order in which they were granted. If such excess only applies to a portion
of an incentive stock option, the Committee, in its discretion, shall designate
which shares shall be treated as shares to be acquired upon exercise of an
incentive stock option.
ARTICLE 7.
EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE
7.1 Termination of Employment or Other Service Due to Death, Disability or
Retirement. In the event a Participant's employment or other service with the
Company and all Subsidiaries or Affiliates is terminated by reason of such
Participant's death, Disability or Retirement, all outstanding Options then held
by the Participant shall become immediately exercisable in full and remain
exercisable after such termination for a period of three months in the case of
Retirement and one year in the case of death or Disability (but in no event
after the expiration date of any such Option).
7.2 Termination of Employment or Other Service for Reasons Other than
Death, Disability or Retirement. Unless otherwise determined by the Committee
either at the time an Option is granted or thereafter, in the event of
termination of the Participant's employment or other status with the Company and
all Subsidiaries or Affiliates in relation to which the Option was granted for
any reason other than death, Disability or Retirement, all rights of the
Participant under the Plan shall immediately terminate without notice of any
kind, and no Options then held by the Participant shall thereafter be
exercisable; provided, however, that if such termination is due to any reason
other than termination by the Company or any Subsidiary or Affiliate for
"cause," all outstanding Options then held by such Participant shall remain
exercisable to the extent exercisable as of such termination for a period of
three months after such termination (but in no event after the expiration date
of any such Option). For purposes of this Section 7.2, "cause" shall be as
defined in any employment or other agreement or policy applicable to the
Participant or, if no such agreement or policy exists, shall mean (a)
dishonesty, fraud, misrepresentation, embezzlement or material or deliberate
injury or attempted injury, in each case related to the Company or any
Subsidiary, (b) any unlawful or criminal activity of a serious nature, (c) any
willful breach of duty, habitual neglect of duty or unreasonable job
performance, or (d) any material breach of a confidentiality or noncompetition
agreement entered into with the Company or any Subsidiary.
7.3 Modification of Effect of Termination. Notwithstanding the provisions
of this Article 7, upon a Participant's termination of employment or other
status with the Company and all Subsidiaries or Affiliates with respect to which
Options were granted, the Committee may, in its sole discretion (which may be
exercised before or following such termination) cause Options, or any portions
thereof, then held by such Participant to become exercisable and remain
exercisable following such termination in the manner determined by the
Committee; provided, however, that no Option shall be exercisable after the
expiration date thereof and any Incentive Stock Option that remains unexercised
more than three months following employment termination by reason of Retirement
or more than one year following employment termination by reason of death or
Disability shall thereafter be deemed to be a Non-Statutory Stock Option.
7.4 Date of Termination. Unless the Committee shall otherwise determine in
its sole discretion, a Participant's employment or other service shall, for
purposes of the Plan, be deemed to have terminated on the date such Participant
ceases to perform services for the Company and all Subsidiaries or Affiliates,
as determined in good faith by the Committee.
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ARTICLE 8.
CHANGE OF CONTROL
8.1 Change in Control. For purposes of this Article 8, a "Change in
Control" of the Company shall mean (a) the sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a corporation that is not
controlled by the Company, (b) the approval by the shareholders of the Company
of any plan or proposal for the liquidation or dissolution of the Company, or
(c) a change in control of the Company of a nature that would be required to be
reported (assuming such event has not been "previously reported") in response to
Item 1(a) of the Current Report on Form 8-K, as in effect on the effective date
of the Plan, pursuant to Section 13 or 15(d) of the Exchange Act, whether or not
the Company is then subject to such reporting requirement; provided, however,
that, without limitation, such a Change in Control shall be deemed to have
occurred at such time as (i) any Person becomes after the effective date of the
Plan the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 20% or more of the combined voting power of the
Company's outstanding securities ordinarily having the right to vote at
elections of directors, or (ii) individuals who constitute the board of
directors of the Company on the effective date of the Plan cease for any reason
to constitute at least a majority thereof, provided that any person becoming a
director subsequent to the effective date of the Plan whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors comprising or deemed pursuant hereto to
comprise the Board on the effective date of the Plan (either by a specific vote
or by approval of the proxy statement of the Company in which such person is
named as a nominee for director) shall be, for purposes of this clause (ii) and
the following sentence, considered as though such person were a member of the
Board on the effective date of the Plan. Notwithstanding anything in the
foregoing to the contrary, no Change in Control shall be deemed to have occurred
for purposes of this Section 8.1 by virtue of any transaction which shall have
been approved by the affirmative vote of at least a majority of the members of
the Board on the effective date of the Plan.
8.2 Acceleration of Vesting. If a Change of Control of the Company shall
occur, the Committee, in its sole discretion, may determine that all outstanding
Options shall become immediately exercisable in full and shall remain
exercisable during the remaining term thereof, regardless of whether the
employment or other status of the Participants with respect to which Options
have been granted shall continue with the Company or any Subsidiary.
8.3 Cash Payment. If a Change of Control of the Company shall occur, then
the Committee, in its sole discretion, and without the consent of any
Participant effected thereby, may determine that some or all Participants
holding outstanding Options shall receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the effective date of
such Change of Control of the Company over the exercise price per share of such
Options.
8.4 Limitation on Change in Control Payments. Notwithstanding anything in
Section 8.2 or 8.3 above to the contrary, if, with respect to a Participant, the
acceleration of the exercisability of an Option as provided in Section 8.2 or
the payment of cash in exchange for all or part of an Option as provided in
Section 8.3 above (which acceleration or payment could be deemed a "payment"
within the meaning of Section 280G(b)(2) of the Code), together with any other
payments which such Participant has the right to receive from the Company or any
corporation which is a member of an "affiliated group" (as defined in Section
1504(a) of the Code without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a "parachute payment" (as defined in
Section 280G(b)(2) of the Code), then the acceleration of exercisability and the
payments to such Participant pursuant to Sections 8.2 and 8.3 above shall be
reduced to the largest extent or amount as, in the sole judgment of the
Committee, will result in no portion of such payments being subject to the
excise tax imposed by Section 4999 of the Code.
ARTICLE 9.
RIGHT TO WITHHOLD; PAYMENT OF WITHHOLDING TAXES
The Company is entitled to (a) withhold and deduct from future wages of the
Participant (or from other amounts which may be due and owing to the Participant
from the Company) or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any and all federal, state and local
withholding and employment-related tax requirements (i) attributable to the
grant or exercise of an Option or to a disqualifying disposition of stock
received upon exercise of an Incentive Stock Option, or (ii) otherwise incurred
with respect liability to an Option, or (b) require the Participant promptly to
remit the amount of such withholding liability to the Company before taking any
action with respect
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to the exercise of an Option or the issuance of any stock certificate either to
the Participant or any transferee. The Committee, in its sole discretion, may
permit a Participant to pay all or a portion of such withholding liability
either by surrendering Previously Acquired Shares already owned by the
Participant or by electing to have the Company retain shares subject to the
Option, provided that the Committee determines that the fair market value of the
surrendered Previously Acquired Shares or the retained shares is equal to such
withholding liability.
ARTICLE 10.
RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS;
TRANSFERABILITY
10.1 Employment or Service. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time, or
confer upon any Eligible Recipient or Participant any right to continue in the
employ or service of the Company or any Subsidiary.
10.2 Restrictions on Transfer. Other than pursuant to a qualified domestic
relations order (as defined by the Code), no right or interest of any
Participant in an Option prior to the exercise of such Options shall be
assignable or transferable, or subjected to any lien, during the lifetime of the
Participant, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise, including execution, levy, garnishment,
attachment, pledge, divorce or bankruptcy. In the event of a Participant's
death, such Participant's rights and interest in Options shall be transferable
by testamentary will or the laws of descent and distribution, and payment of any
amounts due under the Plan shall be made to, and exercise of any Options (to the
extent permitted pursuant to Article 7 of the Plan) may be made by, the
Participant's legal representatives, heirs or legatees. If in the opinion of the
Committee a Participant holding an Option is disabled from caring for his or her
affairs because of mental condition, physical condition or age, any payments due
the Participant may be made to, and any rights of the Participant under the Plan
shall be exercised by, such Participant's guardian, conservator or other legal
personal representative upon furnishing the Committee with evidence satisfactory
to the Committee of such status.
10.3 Non-Exclusivity of the Plan. Nothing contained in the Plan is intended
to amend, modify or rescind any previously approved compensation plans or
programs entered into by the Company. The Plan will be construed to be in
addition to any and all such other plans or programs. Neither the adoption of
the Plan nor the submission of the Plan to the shareholders of the Company for
approval will be construed as creating any limitations on the power or authority
of the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.
ARTICLE 11.
SECURITIES LAW RESTRICTIONS
11.1 Share Issuances. Notwithstanding any other provision of the Plan or
any agreements entered into pursuant hereto, the Company shall not be required
to issue or deliver any certificate for shares of Common Stock under this Plan,
and an Option shall not be considered to be exercised notwithstanding the tender
by the Participant of any consideration therefor, unless and until each of the
following conditions has been fulfilled:
(a) (i) There shall be in effect with respect to such shares a
registration statement under the Securities Act and any applicable state
securities laws if the Committee, in its sole discretion, shall have
determined to file, cause to become effective and maintain the
effectiveness of such registration statement; or (ii) if the Committee has
determined not to so register the shares of Common Stock to be issued under
the Plan, (A) exemptions from registration under the Securities Act and
applicable state securities laws shall be available for such issuance (as
determined by counsel to the Company) and (B) there shall have been
received from the Participant (or, in the event of death or disability, the
Participant's heir(s) or legal representative(s)) any representations or
agreements requested by the Company in order to permit such issuance to be
made pursuant to such exemptions; and
(b) There shall have been obtained any other consent, approval or
permit from any state or federal governmental agency which the Committee
shall, in its sole discretion upon the advice of counsel, deem necessary or
advisable.
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11.2 Share Transfers. Shares of Common Stock issued pursuant to Options
granted under the Plan may not be sold, assigned, transferred, pledged,
encumbered or otherwise disposed of, whether voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise, except pursuant to
registration under the Securities Act and applicable state securities laws or
pursuant to exemptions from such registrations. The Company may condition the
sale, assignment, transfer, pledge, encumbrance or other disposition of such
shares not issued pursuant to an effective and current registration statement
under the Securities Act and all applicable state securities laws on the receipt
from the party to whom the shares of Common Stock are to be so transferred of
any representations or agreement requested by the Company in order to permit
such transfer to be made pursuant to exemptions from registration under the
Securities Act and applicable state securities laws.
11.3 Holding Period Requirements. Any Options granted and any Common Stock
acquired pursuant to the exercise of Options under this Plan may be subject to a
six-month holding requirement from the grant date in order for the transaction
to be exempt from the short-swing trading profits provision of Section 16(b) of
the Exchange Act.
11.4 Legends.
(a) Unless a registration statement under the Securities Act and
applicable state securities laws is in effect with respect to the issuance
or transfer of shares of Common Stock under the Plan, each certificate
representing any such shares shall be endorsed with a legend in
substantially the following form, unless counsel for the Company is of the
opinion as to any such certificate that such legend is unnecessary:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), OR
UNDER APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
SUCH STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
(b) The Committee, in its sole discretion, may endorse certificates
representing shares issued pursuant to the exercise of Incentive Stock
Options with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED
OF ON OR BEFORE [THE LATER OF THE ONE-YEAR OR TWO-YEAR
INCENTIVE STOCK OPTION HOLDING PERIODS], WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMPANY.
ARTICLE 12.
PLAN AMENDMENT; MODIFICATION AND TERMINATION
12.1 Amendment; Modification; Termination. The Board may suspend or
terminate the Plan or any portion thereof at any time, and may amend the Plan
from time to time in such respects as the Board may deem advisable in order that
Options under the Plan shall conform to any change in applicable laws or
regulations or in any other respect the Board may deem to be in the best
interests of the Company; provided, however, that no such amendment shall be
effective, without approval of the shareholders of the Company, if shareholder
approval of the amendment is then required to comply with or obtain exemptive
relief under any tax or regulatory requirement the Board deems desirable to
comply with or obtain exemptive relief under, including without limitation, Rule
16b-3 under the Exchange Act or any successor rule or Section 422 of the Code or
under the applicable rules or regulations of any securities exchange or the
NASD; and provided further that the provisions of Sections 7.1, 7.2 and 7.3
hereof may not be amended more often than once during any six (6) month period
other than to comport with changes in the Code, the Employee Retirement Security
Act, or the rules and regulations thereunder. No termination, suspension or
amendment of the Plan shall alter or impair any outstanding Option without the
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consent of the Participant affected thereby; provided, however, that this
sentence shall not impair the right of the Committee to take whatever action it
deems appropriate under Section 4.3 or Article 8 of the Plan.
ARTICLE 13.
EFFECTIVE DATE OF THE PLAN
13.1 Effective Date. The Plan is effective as of April 15, 1997, the date
adopted by the Board. Notwithstanding any other provision contained herein, if
the company has not obtained shareholder approval of this Plan within 12 months
of the effective date specified above, this Plan shall become null and void as
if it had never been adopted by the Board.
13.2 Duration of the Plan. The Plan shall terminate at midnight on April
14, 2007, and may be terminated prior thereto by Board action, and no Option
shall be granted after such termination. Options outstanding upon termination of
the Plan may continue to be exercised in accordance with their terms.
ARTICLE 14.
MISCELLANEOUS
14.1 Construction and Headings. The use of the masculine gender shall also
include within its meaning the feminine, and the singular may include the plural
and the plural may include the singular, unless the context clearly indicates to
the contrary. The headings of the Articles, Sections and subparts of the Plan
are for convenience of reading only and are not meant to be of substantive
significance and shall not add or detract from the meaning of such Article,
Section or subpart.
14.2 Governing Law. The place of administration of the Plan shall be
conclusively deemed to be within the State of Minnesota, and the rights and
obligations of any and all persons having or claiming to have had an interest
under the Plan or under any agreements evidencing Options shall be governed by
and construed exclusively and solely in accordance with the laws of the State of
Minnesota without regard to conflict of laws provisions of any jurisdictions.
All parties agree to submit to the jurisdiction of the state and federal courts
of Minnesota with respect to matters relating to the Plan and agree not to raise
or assert the defense that such forum is not convenient for such party.
14.3 Successors and Assigns. This Plan shall be binding upon and inure to
the benefit of the successors and permitted assigns of the Company, including,
without limitation, whether by way of merger, consolidation, operation of law,
assignment, purchase or other acquisition of substantially all of the assets or
business of the Company, and any and all such successors and assigns shall
absolutely and unconditionally assume all of the Company's obligations under the
Plan.
14.4 Survival of Provisions. The rights, remedies, agreements, obligations
and covenants contained in or made pursuant to the Plan, any agreement
evidencing an Option and any other notices or agreements in connection
therewith, including, without limitation, any notice of exercise of an Option,
shall survive the execution and delivery of such notices and agreements and the
delivery and receipt of shares of Common Stock and shall remain in full force
and effect.
IN WITNESS WHEREOF, and as evidence of the adoption of this Plan by the
Company, the Company has caused this Plan to be signed by the undersigned
officer, thereunto duly authorized pursuant to the resolutions of the Board of
Directors adopted on April 15, 1997.
Date: April 15, 1997
LEGAL RESEARCH CENTER, INC.
By: /s/ Christopher R. Ljungkull
----------------------------
Name: Christopher R. Ljungkull
Title: Chief Executive Officer
