SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [_] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Soliciting Material Under Rule [_] Confidential, For Use of the 14a-12 Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials LEGAL RESEARCH CENTER, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ________________________________________________________________________________ 2) Aggregate number of securities to which transaction applies: ________________________________________________________________________________ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ________________________________________________________________________________ 4) Proposed maximum aggregate value of transaction: ________________________________________________________________________________ 5) Total fee paid: ________________________________________________________________________________ [_] Fee paid previously with preliminary materials: ________________________________________________________________________________ [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. 1) Amount previously paid: ________________________________________________________________________________ 2) Form, Schedule or Registration Statement No.: ________________________________________________________________________________ 3) Filing Party: ________________________________________________________________________________ 4) Date Filed: ________________________________________________________________________________ LEGAL RESEARCH CENTER, INC. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 28, 2001 Notice is hereby given that the Annual Meeting of Shareholders of Legal Research Center, Inc. will be held at the Crowne Plaza Hotel on June 28, 2001 at 2:30 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, 2001; and 3. To transact such other business as may properly come before the meeting. The Board of Directors has fixed the close of business on April 27, 2001 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, Co-Chairman Minneapolis, Minnesota May 12, 2001 1 PROXY STATEMENT OF LEGAL RESEARCH CENTER, INC. 1100 Flour Exchange Building 310 Fourth Avenue South Minneapolis, Minnesota 55415 GENERAL MATTERS Solicitation of Proxies This Proxy Statement, mailed on or about May 12, 2001, 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 28, 2001, 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 27, 2001 will be entitled to vote. As of that date, the Company had 3,614,379 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, 2001, 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 1,807,190 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. 2 PRINCIPAL SHAREHOLDERS The following table sets forth as of March 15, 2001 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. - ----------------------------------------------------------------------------------------------- Number of Percent of Directors, Executive Officers, and 5% Shareholders Shares Class - ----------------------------------------------------------------------------------------------- Christopher R. Ljungkull (1)(2) 1,087,977 28% - ----------------------------------------------------------------------------------------------- James R. Seidl (1)(3) 871,485 23% - ----------------------------------------------------------------------------------------------- Arun K. Dube (1)(4) 162,500 4 % - ----------------------------------------------------------------------------------------------- Bruce J. Aho (1)(5) 27,083 * - ----------------------------------------------------------------------------------------------- Robin A. Moles (1) 193,492 5% - ----------------------------------------------------------------------------------------------- All executive officers and directors as a group (4 persons, 2-4) 2,149,045 51% - ----------------------------------------------------------------------------------------------- * Represents less than 1% (1) The address of such person is in care of the Company, 1100 Flour Exchange Building, 310 Fourth Avenue South, Minneapolis, Minnesota 55415. (2) Includes 193,492 shares owned by Robin Moles, Mr. Ljungkull's aunt, over which Mr. Ljungkull exercises voting power, and 216,000 shares purchasable upon exercise of presently exercisable stock options. (3) Includes 216,000 shares purchasable upon exercise of presently exercisable stock options. (4) Includes 130,000 shares purchasable upon exercise of presently exercisable stock options. (5) Includes 22,083 shares purchasable upon exercise of presently exercisable stock options. 3 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 2002 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 2001 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 47, has been Chief Executive Officer of the Company since 1994, and Co-Chairman of the Board since December, 1999. Mr. Ljungkull is co-founder of the Company and has been a director of the Company since its inception. James R. Seidl, age 47, has been the President of the Company since 1988 and served as its Chief Executive Officer until 1994. Mr. Seidl is a co-founder of the Company and has been a director since its inception. Arun K. Dube, age 63, has been a director of the Company since May 1995, the Chairman of the Board since January 1996 and Co-Chairman since 1999. In July 1996, Mr. Dube was hired as Chief Executive Officer of The CyberLaw Office, Inc. (CLO), then an 85% owned subsidiary of the Company, which the Company sold to Mr. Dube in 1999. Mr. Dube is a private investor. Bruce J. Aho, age 51, has been a director of the Company since 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 in 1997 by Lanier Worldwide, Inc., a subsidiary of the Harris Corporation. 4 Board of Directors and Committees Meetings. During fiscal 2000, the Board of Directors of the Company held six meetings. Each director was present for each meeting held during fiscal 2000. Board Committees. The Board of Directors has no standing Committees. Remuneration of Directors. Non-employee directors are paid $6,000 per year and receive annual stock option grants of 15,000 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 are granted on a pro rata basis. Mr. Dube has been granted Director's Options to purchase 130,000 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 22,083 shares of Common Stock at prices ranging from $0.22 to $2.8125 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, 2000, 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, 2000, Messrs. Aho, Ljungkull, Seidl and Dube each failed to file a form 5 report with respect to the Company's fiscal year ended December 31, 2000. 5 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. Summary Compensation Table - ------------------------------------------------------------ ------------------- Annual Long-term Name and Principal Fiscal Year Ended Compensation Compensation - -------------------------------------------------------------------------------- Position December 31, Salary Bonus Awards of Options(1) - -------------------------------------------------------------------------------- Christopher R. 2000 $100,000 27,500 72,000 Ljungkull, Chief Executive Officer 1999 $84,000 $42,000 72,000 1998 $84,000 $4,295 36,000 - -------------------------------------------------------------------------------- James R. Seidl, 2000 $86,100 84,912 72,000 President 1999 $84,000 $68,039 72,000 1998 $84,000 $12,884 36,000 - -------------------------------------------------------------------------------- (1) Consists of options granted under the 1997 Stock Option Plan. Stock Options The following table summarizes option grants made during the fiscal year ended December 31, 2000 to the executive officers named in the Summary Compensation table: Options Grants in 2000 Fiscal Year - ------------------------------------------------------------------------------------------------------- Number of Percent of Total Shares Underlying Granted to Options Employees in Exercise Price Expiration Name Granted(1) Fiscal Year Per Share Date - ------------------------------------------------------------------------------------------------------- Christopher R. Ljungkull 36,000 21% $2.375 January 2005 36,000 21% $3.00 June 2005 - ------------------------------------------------------------------------------------------------------- James R. Seidl 36,000 21% $2.375 January 2005 36,000 21% $3.00 June 2005 - ------------------------------------------------------------------------------------------------------- (1) Consists of options granted under the 1997 Employee Stock Option Plan. 6 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, 1999. Aggregated Option Exercises and Fiscal Year-End Option Values - ----------------------------------------------------------------------------------------------------------------- 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) - ----------------------------------------------------------------------------------------------------------------- Christopher R. Ljungkull -- -- 216,000(2)/0 $95,670/$0 - ----------------------------------------------------------------------------------------------------------------- James R. Seidl -- -- 216,000(2)/0 $95,670/$0 - ----------------------------------------------------------------------------------------------------------------- (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, 2000 and the exercise price of the options. (2) Consists of 216,000 options granted under the 1997 Employee 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 renew automatically each year. The agreements, as amended, require annual base salaries of $120,000 for each officer, plus goal-oriented incentives, which may be adjusted by the Board of Directors. Incentive compensation expense under the officer employment agreements was approximately $112,412 and $110,000 in 2000 and 1999, respectively. CERTAIN TRANSACTIONS Lease with URSA Companies, Inc. The Company leases its office space from URSA Companies, Inc. (URSA), a corporation that 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. This lease terminates April 30, 2001. INDEPENDENT ACCOUNTANT AND AUDIT COMMITTEE MATTERS General Lurie, Besikof, Lapidus & Co., LLP served as the Company's independent public accountant for the year ended December 31, 2000. Representatives of Lurie, Besikof, Lapidus & Co., LLP are expected to be present at the Annual Meeting and will be given an opportunity to make a statement if so desired and to respond to appropriate questions. Audit Committee Report The Board of Directors performs the equivalent functions of an audit committee. In such capacity, the Board of Directors has (i) reviewed and discussed the Company's audited financial 7 statements with management; (ii) discussed with the Company's independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees); and (iii) received the written disclosures from the Company's independent accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and discussed with the accountants their independence. Based on the review and discussions referred to in items (i) through (iii) above, the Board of Directors recommends that the audited financial statements be included in the Company's annual report for the fiscal year ended December 31, 2000. The Board of Directors Christopher R. Ljungkull James R. Seidl Arun K. Dube Bruce J. Aho Accounting Fees The aggregate fees billed for professional services for the audit of the Company's financial statements for the year ended December 31, 2000 and for the reviews of the financial statements included in its quarterly Reports on Form 10-QSB for such year are $38,000 for audit fees and $8,400 for tax services. SELECTION OF AUDITORS (Proposal #2) The Board of Directors has selected Lurie, Besikof, Lapidus & Co., LLP as independent auditors to audit the accounts of the Company for the fiscal year ending December 31, 2001, and to perform other accounting services. Lurie, Besikof, Lapidus & Co., LLP has acted as independent auditors of the Company since February 1998. The Board of Directors recommends a vote FOR this proposal. 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. 2002 Annual Meeting of Shareholders is expected to be held in June 2002. In order to be considered for inclusion in the Proxy Statement for the June 2002 Annual Meeting, shareholder proposals prepared in accordance with the proxy rules must be received by the Company on or before January 15, 2002. 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. 8 BY ORDER OF THE BOARD OF DIRECTORS Arun K. Dube, Co-Chairman 9 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 Crowne Plaza Hotel, 618 2nd Av. So., Minneapolis, Minnesota 55402 on June 28, 2001 at 2:30 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. __ FOR selection of Lurie, Besikof, Lapidus, LLP as independent auditors of the Company for the fiscal year ending December 31, 2001 __ AGAINST selection of Lurie, Besikof, Lapidus, LLP as independent auditors of the Company for the fiscal year ending December 31, 2001; And, 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 28, 2001 AND PROXY STATEMENT. Dated: _______________ ________________________________________ ________________________________________ 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. 10