LEGAL RESEARCH CENTER, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 22, 1999
Notice is hereby given that the Annual Meeting of Shareholders of Legal
Research Center, Inc. will be held at the Minneapolis Athletic Club, 615 Second
Avenue South, Minneapolis, Minnesota 55402 on June 22, 1999 at 2:00 p.m.. for
the following purposes:
1. To elect a Board of four directors, each to serve until the next
Annual Meeting of Shareholders or until their successors are elected
and qualified;
2. To consider and act upon a proposal to ratify the selection of Lurie
Besikof Lapidus & Co., LLP as independent auditors of the Company for
the fiscal year ending December 31, 1999; and
3. To transact other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on April 30, 1999 as
the record date for the determination of shareholders entitled to vote at the
meeting and any adjournment thereof.
To assure your representation at the meeting, please sign, date and return
your proxy in the enclosed envelope whether or not you expect to attend in
person. Your cooperation in promptly signing and returning your proxy will help
avoid further solicitation expense. Shareholders who attend the meeting may
revoke their proxies and vote in person if they so desire.
BY ORDER OF THE BOARD OF DIRECTORS
Arun K. Dube, Chairman
Minneapolis, Minnesota
April 13, 1999
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<PAGE>
PROXY STATEMENT
OF
LEGAL RESEARCH CENTER, INC.
700 Midland Square Building
331 Second Avenue South
Minneapolis, MN 55401
GENERAL MATTERS
Solicitation of Proxies
This Proxy Statement, mailed on or about May 14, 1999, is furnished to the
shareholders of Legal Research Center, Inc. (the "Company") in connection with
the solicitation of proxies by the Board of Directors of the Company to be voted
at the Annual Meeting of the Shareholders to be held on June 22, 1999, or any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The cost of this
solicitation, which is being made on behalf of the Company and the Board of
Directors, will be borne by the Company. In addition to solicitation by mail,
officers, directors and employees of the Company may solicit proxies by
telephone, special communications or in person. The Company may also request
banks and brokers to solicit their customers who have a beneficial interest in
the Company's Common Stock registered in the names of nominees and will
reimburse such banks and brokers for their reasonable out-of-pocket expenses.
Voting, Execution and Revocation of Proxies
Only stockholders of record at the close of business on April 30, 1999 will
be entitled to vote. As of that date, the Company had 3,334,133 shares of Common
Stock outstanding and entitled to vote. Each share is entitled to one vote.
If a proxy is properly executed and returned on time in the form enclosed,
it will be voted at the meeting as specified. Where specification has not been
made, it will be voted FOR the election of the nominees for director, FOR the
ratification of the appointment by the Board of Lurie Besikof Lapidus & Co., LLP
as the Company's independent auditors for the fiscal year ending December 31,
1999, and will be deemed to grant discretionary authority to vote upon any other
matters properly coming before the meeting. The presence in person or by proxy
of the holders of a majority of the shares of stock entitled to vote at the
Annual Meeting of the Shareholders, or 1,667,067 shares, constitutes a quorum
for the transaction of business.
Any proxy may be revoked at any time before it is voted by written notice
to the Secretary, by receipt of a proxy properly signed and dated subsequent to
an earlier proxy, or by revocation of a written proxy by request at the Annual
Meeting. If not so revoked, the shares represented by such proxy will be voted.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth as of March 15, 1999 the number of shares of
Common Stock beneficially owned by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of the Company's
capital stock, by each director and by all directors and executive officers as a
group. Shares not outstanding but deemed beneficially owned by virtue of the
right of an individual to acquire them within 60 days are treated as outstanding
only when determining the amount and percentage owned by such individual. Except
as otherwise indicated, the persons listed possess all of the voting and
investment power with respect to the shares listed for them.
<TABLE>
<CAPTION>
Number of Percent of
Directors, Executive Officers, and 5% Shareholders Shares Class
- -------------------------------------------------- ------ -----
<S> <C> <C>
Christopher R. Ljungkull (1)(2) 1,131,077 31.5%
James R. Seidl (1)(3) 915,585 25.5%
Arun K. Dube (1)(4) 152,800 3.4%
Bruce J. Aho (1)(5) 2,083 *
Robin A. Moles (1) 193,492 5.8%
All executive officers and directors
as a group (4 persons, 2-4) 2,201,545 55%
</TABLE>
* Represents less than 1%
(1) The address of such person is in care of the Company, 700 Midland Square
Building, 331 Second Avenue South, Minneapolis, Minnesota 55401.
(2) Includes 193,492 shares owned by Robin Moles, Mr. Ljungkull's aunt, over
which Mr. Ljungkull exercises voting power, 252,000 shares purchasable upon
exercise of presently exercisable stock options and 7,100 shares
purchasable upon exercise of presently exercisable warrants.
(3) Includes 252,000 shares purchasable upon exercise of presently exercisable
stock options and 7,100 shares purchasable upon exercise of presently
exercisable warrants.
(4) Includes 110,000 shares purchasable upon exercise of presently exercisable
stock options and 10,000 shares purchasable upon exercise of presently
exercisable warrants.
(5) Includes 5,000 shares purchasable upon exercise of presently exercisable
stock options.
3
<PAGE>
ELECTION OF DIRECTORS
(Proposal #1)
Nominees for Election as Directors
The Board of Directors currently consists of four persons. Each director
will be elected to serve until the Annual Meeting of Shareholders to be held in
2000 or until a successor is elected and qualified. Vacancies and newly-created
directorships resulting from an increase of the number of directors may be
filled by a majority of the directors then in office and the directors so chosen
will hold office until the next election.
The Board of Directors has nominated for election the four individuals
named below. Proxies cannot be voted for a greater number of persons than the
number of nominees named below. The Board recommends a vote FOR all such
nominees, and it is intended that, unless contrary written instructions are
provided, proxies accompanying this Proxy Statement will be voted at the 1999
Annual Meeting FOR the election to the Board of all of the nominees named. The
Board of Directors believes that each nominee will be able to serve, but should
any nominee be unable to serve as a director, the persons named in the proxies
have advised that they will vote for the election of such substitute nominee as
the Board of Directors may propose.
The names, ages and respective positions of the nominees, their occupations
and other information is set forth below, based upon information furnished to
the Company by the nominees.
Christopher R. Ljungkull, age 45, has been Chief Executive Officer of the
Company since rejoining it on a full time basis in 1994. From 1987 to 1994, Mr.
Ljungkull served in various capacities with West Publishing Corporation, most
recently as an editor. Mr. Ljungkull is co-founder of the Company and has been a
director of the Company since its inception.
James R. Seidl, age 45, has been the President of the Company since 1988
and served as its Chief Executive Officer prior to Mr. Ljungkull's return in
1994. Mr. Seidl is a co-founder of the Company and has been a director since its
inception.
Arun K. Dube, age 61, has been a director of the Company since May 1995 and
the Chairman of the Board since January 1996. In July 1996, Mr. Dube was hired
as Chief Executive Officer of The CyberLaw Office, Inc. (CLO) an 85% owned
subsidiary of the Company, which was going to manage all of the Company's
Internet-related activities, including The Law Office, Inc., operations of which
have been discontinued. Mr. Dube is a private investor and has been the Chief
Executive Officer of Strategic Alliance International, Inc. since 1983. Mr. Dube
is also a director of Granton Technology Ltd., a publicly traded company.
Bruce J. Aho, age 49, has been a director of the Company since his election
by the Board in December of 1998. Mr. Aho is a private investor and is the
former President and CEO of the Quorum Group, one of the largest suppliers of
litigation support document management services in the country. Quorum was
acquired by Lanier Worldwide, Inc., a subsidiary of the Harris Corporation, in
1997.
4
<PAGE>
Board of Directors and Committees
Meetings. During fiscal 1998, the Board of Directors of the Company held
one meeting and on that occasion took action by written consent. Each director
was present for each meeting held during fiscal 1998. Bruce J. Aho was elected
as a Director December 14, 1998.
Board Committees. The Board of Directors has no standing Committees.
Remuneration of Directors. Non-employee directors are to be paid $125 per
Board or Committee meeting attended and reimbursed for certain expenses in
connection therewith. The Board suspended payment for non-employee directors for
fiscal 1997 and thereafter until the Company has achieved sustained
profitability. Non-employee directors are also compensated with annual stock
option grants of 5,000 shares, exercisable at fair market value on the date of
grant and expiring 10 years after issuance (the "Directors' Options").
Directors' Options are granted at the time of election or reelection at the
Annual Shareholders' Meeting unless a director is elected in between annual
meetings in which case the Directors' Options shall be granted on a pro rata
basis. Mr. Dube has been granted Directors' Options to purchase 20,000 shares of
Common Stock at prices ranging from $0.25 to $3.50 a share under the Company's
1995 Stock Option Plan. Mr. Aho has been granted Director's Options to purchase
2,083 shares of Common Stock at a price of $0.22 a share under the Company's
1995 Stock Option Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
To the knowledge of the Company, based solely upon a review of Forms 3 and
4 furnished to the Company during the fiscal year ended December 31, 1998,
pursuant to Rule 16a-3(e) of the Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Forms 5
and amendments thereto furnished to the Company with respect to the year ended
December 31, 1998, Mister Aho failed to file, on a timely basis, his initial
Form 3 report and Messrs. Ljungkull, Seidl and Dube failed to file, on a timely
basis, one Form 5 report with respect to the Company's fiscal year ended
December 31, 1998.
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<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the cash and non-cash compensation paid to
or earned by Christopher R. Ljungkull, the Company's Chief Executive Officer and
James R. Seidl, the Company's President, the only two executive officers of the
Company. No employee's annual salary and bonus exceeded $100,000 for the
Company's 1998 fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long-term
Name and Principal Fiscal Year Ended Compensation Compensation All Other
Position December 31, Salary Bonus Awards of Options Compensation
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Christopher R. Ljungkull, 1998 $84,000 $0 36,000(1) $0
Chief Executive Officer
1997 $99,176 $4,295 36,000(1) $0
1996 $94,708 $13,303 185,000(2) $0
- ---------------------------------------------------------------------------------------------------------------------------------
James R. Seidl, President 1998 $84,000 $0 36,000(1) $0
1997 $109,954 $12,884 36,000(1) $0
1996 $94,708 $39,909 185,000(2) $0
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of options granted in lieu of salary under the 1997 Employee Stock
Option Plan.
(2) Consists of options granted in 1996 which were canceled in April 1997 with
the consent of the optionees.
Stock Options
The following table summarizes option grants made during the fiscal year
ended December 31, 1998 to the executive officers named in the Summary
Compensation table:
Options Grants in 1998 Fiscal Year
<TABLE>
<CAPTION>
Number of Percent of Total
Shares Underlying Granted to
Options Employees in Exercise Price Expiration
Name Granted(1) Fiscal Year Per Share Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Christopher R. Ljungkull 36,000 24% $0.31 June 2003
James R. Seidl 36,000 24% $0.31 June 2003
</TABLE>
(1) Consists of options granted under the 1997 Employee Stock Option Plan.
6
<PAGE>
The following table summarizes the value of the unexercised options held by
the executive officers named in the Summary Compensation Table as of December
31, 1998.
Aggregated Option Exercises and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised in-the-Money Options at
Acquired Value Options at Fiscal Year-End Fiscal Year-End
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Christopher R. Ljungkull --- --- 252,000(2)/0 $0/$0
- ------------------------------------------------------------------------------------------------------------------------------------
James R. Seidl --- --- 252,000(2)/0 $0/$0
</TABLE>
(1) Value of unexercised options are calculated by determining the difference
between the fair market value of the shares underlying the options at
December 31, 1998 and the exercise price of the options.
(2) Consists of 72,000 options granted under the 1997 Employee Stock Option
Plan and 180,000 options granted in 1995 under the Company's Existing
Officers' Stock Option Plan.
Employment Agreements
The Company entered into three-year employment agreements with each of
Christopher R. Ljungkull and James R. Seidl effective July 1, 1995, which were
renewed July 1, 1998. Effective January 1, 1997, Messrs. Ljungkull and Seidl
waived their right to receive revenue-based incentive compensation due them
under their employment agreements. Effective April 1997, Messrs. Ljungkull and
Seidl salaries were increased to $120,000 per year. Both officers receive
$84,000 under a salary reduction plan effective July 1, 1997, providing for
options in lieu of salary.
In July 1996, Mr. Dube was hired as Chief Executive Officer of The CyberLaw
Office, Inc. (CLO) an 85% owned subsidiary of the Company, which manages all of
the Company's Internet-related activities, including The Law Office, Inc.,
operations of which have been discontinued.
CERTAIN TRANSACTIONS
Lease with URSA Companies, Inc. The Company leases its office space from
URSA Companies, Inc. ("URSA"), a corporation which is owned and controlled by
Messrs. Ljungkull and Seidl, pursuant to the exact same terms and conditions of
a lease between URSA and URSA's landlord for such office space. This arrangement
between the Company and URSA is on terms no more favorable to the Company that
that which could be obtained by an unaffiliated third party from URSA.
7
<PAGE>
SELECTION OF AUDITORS
(Proposal #2)
The Board of Directors has selected Lurie Besikof Lapidus & Co., LLP as
independent auditors to examine the accounts of the Company for the fiscal year
ending December 31, 1999, and to perform other accounting services. Lurie
Besikof Lapidus & Co., LLP has acted as independent auditors of the Company
since February 1998. Representatives of Lurie Besikof Lapidus & Co., LLP are
expected to be present at the 1999 Annual Meeting and will be given an
opportunity to make a statement if so desired and to respond to appropriate
questions.
Effective as of December 17, 1997, the Company's principal accounting firm,
McGladrey & Pullen, LLP resigned. McGladrey & Pullen's reports on the financial
statements of the Company for 1996 and 1995 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. There have been no disagreements between
the Company (including the audit committee of the Board of Directors) and
McGladrey & Pullen on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. Effective as of
February 13, 1998, the Company hired Lurie Besikof, Lapidus & Co., LLP, which
firm audited the Company's 1997 and 1998 financial statements.
SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders of
a company, after notice to the company, to present proposals for shareholder
action in the Company's proxy statement where such proposals are consistent with
applicable law, pertain to matters appropriate for shareholder action and are
not properly omitted by company action in accordance with the proxy rules. The
Legal Research Center, Inc. 2000 Annual Meeting of Shareholders is expected to
be held in June 2000. In order to be considered for inclusion in the Proxy
Statement for the June 2000 Annual Meeting, shareholder proposals prepared in
accordance with the proxy rules must be received by the Company on or before
January 15, 2000.
GENERAL
The Board of Directors of the Company does not intend to present and knows
of no matters other than the foregoing to be brought before the meeting.
However, the enclosed proxy gives discretionary authority in the event that any
additional matters should be presented.
BY ORDER OF THE BOARD OF DIRECTORS
Arun K. Dube, Chairman
8
<PAGE>
LEGAL RESEARCH CENTER, INC.
PROXY
The undersigned shareholder of Legal Research Center, Inc. (the "Company")
hereby constitutes and appoints Christopher R. Ljungkull or James R. Seidl, or
both of them, his or her proxy, with full power of substitution, to attend the
Annual Meeting of shareholders of the Company to be held at the Minneapolis
Athletic Club, 615 Second Avenue South, Minneapolis, Minnesota 55402 on June 22,
1999 at 2:00 p.m., or at any and all adjournments thereof, upon the following
matters:
1. Election of four directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected and qualified;
Bruce J. Aho, Arun K. Dube, Christopher R. Ljungkull, James R. Seidl
FOR all nominees listed above (except as indicated to the contrary below)
WITHHOLD AUTHORITY to vote for all nominees listed above
(INSTRUCTION: To withhold authority to vote for any individual, write that
nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. Selection of Lurie Besikof Lapidus, LLP as independent auditors of the
Company for the fiscal year ending December 31, 1999; and
3. In their discretion, any other business as may properly come before the
meeting.
PLEASE FILL IN, SIGN, DATE AND MAIL IN THE ENCLOSED ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED BY THE
UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED
FOR APPROVAL OF PROPOSALS 1 AND 2 AND GRANT DISCRETIONARY AUTHORITY ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE COMPANY'S NOTICE OF ANNUAL
SHAREHOLDERS MEETING TO BE HELD JUNE 22, 1999 AND PROXY STATEMENT.
Dated: _____________________________________, 1999
__________________________________________________
__________________________________________________
IMPORTANT: Signature(s) should correspond with the
name appearing on the books of the Company. When
signing in a fiduciary capacity, give full title
as such. When more than one owner, each should
sign.
