STOCK SUBSCRIPTION AGREEMENT
THIS AGREEMENT is effective this 3rd day of September, 1996, between Legal
Research Center, Inc., a Minnesota corporation (the 'Company') and James R.
Seidl, an officer and director of the Company ('Seidl').
WHEREAS, Seidl desires to purchase 500,000 additional shares of the
Company's Common Stock (the 'Shares') pursuant to the provisions of this
Agreement and The Board of Directors of the Company has determined that it is in
the best interests of the Company to provide Seidl with an opportunity to
increase his ownership of the Company.
NOW, THEREFORE, the parties agree as follows:
1. ISSUANCE AND SALE OF THE SHARES. In consideration of the execution of
a promissory note for $945,312.50 (or $1.890625 per share, the closing asked
price of the Common Stock on September 4, 1996) in the form attached hereto as
Exhibit A (the 'Promissory Note'), the Company shall issue the Shares to Seidl.
The Promissory Note shall be secured by a pledge of the Shares to the Company
pursuant to a stock pledge agreement in the form attached hereto as Exhibit B,
but shall be otherwise non-recourse to Seidl.
2. REPRESENTATIONS OF SEIDL. Seidl hereby represents and warrants to the
Company that he is purchasing the Shares for investment purposes and not with a
view to their redistribution or resale. He has the full power, right, legal
capacity, and authority to enter into and perform his obligations under this
Agreement, and no approval or consent of any third parties is necessary in
connection herewith. He has had the opportunity to review the merits of the
purchase of the Shares contemplated hereby with tax and legal counsel and
financial advisors as deemed appropriate. Seidl understands that the Shares
acquired pursuant to this Agreement have not been registered under the
Securities Act of 1933, as amended (the 'Act'), and have not been registered
under the blue sky laws of the State of Minnesota or any other state. Seidl
understands that without such registration, the Shares may not be sold, pledged,
hypothecated or otherwise transferred, except pursuant to an exemption from
registration or such registration. The Shares are therefore, what is commonly
referred to as 'restricted stock.'
3. ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement 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. No supplement,
modification, or amendment of this Agreement shall be binding unless executed in
writing by both of 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
4. REGISTRATION RIGHTS. If at any time (and each time) for a period of
five years from the date of repayment of the Promissory Note, the Company files
a registration statement with the Securities and Exchange Commission pursuant to
the Securities Act of 1933 (the 'Securities Act'), or pursuant to any other act
passed after the date of this Agreement (a 'Registration Statement'), which
filing provides for the sale of securities of the Company to the public, or
files a Regulation A Offering Statement under the Securities Act, the Company
shall, subject to the provisions hereof, offer to Seidl the opportunity to
register or qualify the Shares; provided, however, that in the case of a
Regulation A Offering, the opportunity to qualify shall be limited to the amount
of the available exemption after taking into account the securities that the
Company wishes to qualify; and provided further that if in the good faith
judgment of the managing underwriter of such offering, the inclusion of all of
the Shares covered by Seidl's request for registration would reduce the number
of shares to be offered by the Company or interfere with the successful
marketing of the shares by the Company, the number of shares otherwise to be
included in the Registration Statement shall be reduced pro rata among the
selling shareholders in such offering participating in such registration.
Notwithstanding anything to the contrary, the registration rights set forth
herein shall not be applicable to a registration statement on Forms S-4, S-8 or
their successors or any other inappropriate forms filed by the Company with the
SEC. The Company shall bear all expenses of the registration of the Shares.
5. GOVERNING LAW. this Agreement shall be construed in accordance with
and governed by the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
/s/ James R. Seidl
James R. Seidl
LEGAL RESEARCH CENTER, INC.
$945,312.50 SEPTEMBER 3, 1996
FOR VALUE RECEIVED, JAMES R. SEIDL, hereinafter the 'Obligor,' promises to
pay to LEGAL RESEARCH CENTER, INC., a Minnesota corporation ('LRC'), on
September 2, 2003 (the 'Due Date'), the principal sum of Nine Hundred Forty-Five
Thousand Three Hundred Twelve and 50/100 Dollars ($945,312.50) together with
interest accruing on the principal balance hereof at the rate of eight and one-
half percent (8.5%) per annum. No payments of principal or interest shall be
due prior to the Due Date. All payments pursuant to this Note shall be paid in
lawful money of the United States at the principal office of LRC or at such
other place as LRC may designate in writing.
This Promissory Note is given as payment for the purchase, pursuant to a
Stock Subscription Agreement dated of even date herewith, of 500,000 shares of
Common Stock of LRC. This Note is secured by a pledge of the Shares, but is
otherwise non-recourse against the Obligor. This Note may not be prepaid except
in connection with a merger or acquisition of LRC or a sale of substantially all
of its assets.
This Note may not be assigned, nor the securities underlying this Note
transferred, by LRC.
Without affecting the liability of any maker, endorser or guarantor, LRC may,
without notice, renew or extend the time for payment or accept partial payments.
Any maker, endorser or guarantor hereby waives presentment, demand, protest or
notice of intention to accelerate.
IN WITNESS WHEREOF, the Obligor has caused this Note to be executed effective
as of the date and year first above written.
James R. Seidl
STOCK PLEDGE AGREEMENT
THIS AGREEMENT is made as of this 3rd day of September, 1996, by and
between Legal Research Center, Inc., hereinafter referred to as 'Secured Party'
and James R. Seidl, hereinafter referred to as 'Debtor'.
IN CONSIDERATION of the mutual covenants and promises herein contained, the
Secured Party and Debtor agree:
1) SECURITY INTEREST. For value received, Debtor hereby grants Secured
Party a security interest in 500,000 of his shares of Common Stock of Secured
Party, (the shares hereinafter referred to as the 'Shares'), together with all
rights related thereto.
2) OBLIGATION SECURED. The Shares shall secure payment of the
indebtedness and obligations of Debtor (the 'Indebtedness') under the certain
Stock Subscription Agreement of the 3rd day of September, 1996, by and between
the parties hereto (the 'Agreement') and the certain Note (the 'Note') of the
3rd day of September, 1996, issued by Debtor to Secured Party.
3) REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents,
warrants and agrees that:
(a) Debtor will deliver to Secured Party such certificate(s) representing
the Shares, along with duly executed stock powers, in blank.
(b) Debtor is the owner of the Shares free and clear of all liens,
encumbrances, security interests, restrictions on transfer and other
restrictions, except this security interest.
(c) Debtor will keep the Shares free and clear of all liens, encumbrances,
security interests and restrictions, except this security interest,
will defend the Shares against all claims and demands of anyone other
than Secured Party, and will not sell or otherwise dispose of the
Shares or any interest therein.
(d) Debtor will pay, when due, all taxes and other governmental charges
levied or assessed upon or against any Shares.
(e) Debtor will deliver to Secured Party in pledge as additional security
any securities distributed on account of the Shares such as stock
dividends or securities arising from stock splits, reorganizations or
recapitalizations. This subparagraph shall not be construed to
authorize distributions if such distributions are prohibited by any
other agreement between the parties.
4) EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an Event of Default:
(a) Failure by Debtor to honor or perform any of the terms and conditions
of this Stock Pledge Agreement, the Agreement or the Note between the
(b) Default by Debtor in the payment when due of the principal of the
Indebtedness, any installment thereto, or any interest thereon,
whether at maturity, by acceleration, or otherwise.
5) REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of
Default and at any time thereafter, Secured Party may give notice of Event of
Default to Debtor. If said Event of Default is not cured within ten (10) days
after said notice is given, the entire Indebtedness shall, at Secured Party's
option, become immediately due and payable; and Secured Party may exercise and
enforce with respect to the Shares any or all rights and remedies available upon
default to a secured party under the Uniform Commercial Code, including the
right to offer and sell the Shares privately to purchasers who will agree to
take the Shares for investment and not with a view to distribution and who will
agree to the imposition of restrictive legends on the certificates representing
the Shares, and the right to arrange for a sale which would otherwise qualify as
exempt from registration under the Securities Act of 1933. If notice to Debtor
of any intended disposition of the Shares or any other intended action is
required by law in a particular instance, such notice shall be deemed
commercially reasonable if given at least ten (10) calendar days prior to the
date of intended disposition or other action. Nothing in this Agreement shall
abridge Secured Party's right to exercise or enforce any or all other rights or
remedies available to Secured party by law or agreement against the Shares,
against Debtor or against any other person or property.
6) MISCELLANEOUS. Any disposition of the Shares in the manner provided
in Paragraph 5 shall be deemed commercially reasonable. This Agreement can be
waived, modified, amended, terminated or discharged, and this security interest
can be released, only explicitly in a writing signed by Secured Party. A waiver
signed by Secured Party shall be effective only in the specific instance and for
the specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any of Secured Party's rights or remedies. All
rights and remedies of Secured Party shall be cumulative and may be exercised
singularly or concurrently, at Secured Party's option, and the exercise or
enforcement of any one such right or remedy shall neither be a condition to nor
bar the exercise or enforcement of any other. All notices to be given to Debtor
shall be deemed sufficiently given if delivered or mailed by registered or
certified mail, postage prepaid, to Debtor at the most recent address shown on
Secured Party's records. Secured Party's duty of care with respect to the Shares
in its possession (as imposed by law) shall be deemed fulfilled if Secured Party
exercises reasonable care in physically safekeeping the Shares or exercises
reasonable care in the selection of the bailee or other third person as
custodian of the Shares, and Secured Party need not otherwise preserve, protect,
insure or care for the Shares. Secured Party is not obligated to preserve any
rights Debtor may have against prior parties, to realize on the Shares at all or
in any particular manner or order, or to apply any cash proceeds of the Shares
in any particular order of application. This
Agreement shall be binding upon and inure to the benefit of Debtor and Secured
Party and their respective successors and assigns. Except to the extent
otherwise required by law, this Agreement shall be governed by the internal laws
of the State of Minnesota, and, unless the context otherwise requires, all terms
used herein which are defined in Articles 1 and 9 of the Uniform Commercial
Code, as in effect in said State, shall have the meanings therein stated. If
any provision or application of this Agreement is held unlawful or unenforceable
in any respect, such illegality or unenforceability provision or application had
never been contained herein or prescribed hereby. All representations and
warranties contained in this Agreement shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the Indebtedness.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
LEGAL RESEARCH CENTER, INC., SECURED PARTY
James R. Seidl, Debtor