Exhibit 10.63

 

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May 18, 2006

 

 

PERSONAL & CONFIDENTIAL

 

Michael J. Jeffery

8 Nichols Road

Landgrove, VT 05148

 

Dear Michael:

 

LECG Corporation, a Delaware corporation, on behalf of itself and its
wholly-owned subsidiary, LECG, LLC (collectively, “LECG” or the “Company”), is
very pleased to confirm its offer for you to join the Company in a senior
management role as its Chief Operating Officer (“COO”). Should you accept our
offer, the commencement of your employment (“Effective Date”) will be May 15,
2006. This letter agreement will set forth the terms of your employment
relationship with LECG, as well as some of LECG’s policies associated with your
work at LECG.

 

Duties and Responsibilities.

 

You will be the COO and will be responsible for managing the operations of the
Company, its subsidiaries and affiliates, as set forth in the job description
attached hereto and incorporated herein by this reference. This is a full-time
position reporting directly to the Chairman of the Board. You will also continue
as a member of the Board of Directors, but will no longer receive cash or equity
compensation for that service.

 

Compensation.

 

You will be compensated based on a salary and bonus plan. Your base salary will
be set at a rate of $550,000 per annum. You are eligible for a target annual
bonus of $550,000 subject to certain financial and management performance
criteria to be established by the Compensation Committee of the Board of
Directors. The  bonus plan objectives for 2006 have not yet been determined but
will be aligned with the objectives established for the Chairman. Your salary
will be reviewed on an annual basis for discretionary adjustment by the
Compensation Committee as part of its overall salary review process for senior
management. As we understand your availability during part of June and
August may be limited due to pre-existing commitments, you have agreed to
approximately 6 weeks of unpaid leave during the period, on such terms as is
agreed with the Company’s Chief Financial Officer.

 

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I will also request that the Compensation Committee approve a grant of 7,500
options to you with a 7 year vesting period at their meeting on July 26-27,
2006. The grant, if approved, would be effective August 1, 2006. These Options
will be granted pursuant to the LECG Corporation’s 2003 Stock Option Plan
(“Plan”), as amended from time to time. A copy of the Plan will be provided to
you. You acknowledge that you will read the Plan, and you and LECG agree that
your respective rights and responsibilities with regard to such Options will be
governed solely by the terms of the Plan, as amended from time to time. These
Options will be subject to, among other things, any splits or other similar
events that may occur in the future which are applicable to these Options as
provided for in the Plan.

 

The exercise price for these Options will be the “Fair Market Value” of LECG
Corporation’s stock on the date of grant under the terms of the Plan. Because
LECG Corporation’s shares are traded on NASDAQ, the Fair Market Value used to
establish the exercise price for your Options will be the closing sales price
for LECG Corporation’s stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system on the day of determination, as reported in
The Wall Street Journal on the date of your Option grant.

 

We will provide you with a customized Non-Qualified Option Agreement. You must
sign and return the customized Non-Qualified Option Agreement to LECG within
fourteen (14) days of your receipt of the Option Agreement.

 

Office Location.

 

It is anticipated that you generally will spend at least three weeks per month
of your time in the Company’s offices, with a focus on the offices in
Emeryville, and Washington, D.C., subject to coordination with my schedule and
the schedules of our Chief Financial Officer and Director of Administration.
However, LECG is also willing to secure a small office space in Manchester,
Vermont to permit you to work from Vermont, subject to cost and logistics
assessment by our Director of Administration. LECG does not intend to request
that you relocate from Vermont to Emeryville, California or Washington, D.C.
Coach airfare reimbursement will be based on travel originating in Albany, New
York or Boston, Massachusetts.

 

Benefits

 

You will be entitled to participate in the employee benefits afforded to all of
the Company’s employees, subject to eligibility requirements. Each of these
benefits is subject to revision from time to time, with respect to the benefit
level, or even whether a particular benefit continues to be offered. To the
extent that you elect to participate in these benefits, you would be subject to
the same revisions and changes to such benefits as other LECG employees.

 

LECG also offers participation for employees in both a 401(k) Plan,
Section 125(k) Flexible Spending Plan and Deferred Compensation Plan. To the
extent LECG provides a match to employees’ 401(k) contributions, this will be
provided to you.

 

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You may elect to receive company group health insurance, vision, dental and
prescription drug coverage. You can purchase additional dependent coverage
through the plan. Currently, LECG employees pay a portion of the costs of
certain insurance benefits for themselves and their families (including a life
and accidental death and dismemberment policy and a long-term disability plan),
and the amounts paid by the employees (via payroll deductions) may vary over
time due to changes in the costs and availability of coverage. You will be
subject to the same requirements to pay a portion of these costs as other LECG
employees. Supplemental life insurance is also available at your own expense.
Your health benefits coverage will begin on the first day of the first full
month following your hire date, provided you enroll within 25 days of your hire
date. Delay in completing enrollment forms could delay entry into the plans
until the next open enrollment period. Open enrollment periods are held once per
year.

 

You will be entitled to thirty (30) days of paid vacation per year. There are
eight (8) paid holidays and two personal days offered each year. LECG does not
define a standard number of sick days; however, we consider 10 business days or
fewer to be reasonable.

 

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Business Expenses

 

LECG will reimburse you for all reasonable and necessary business expenses
incurred in the performance of your duties, subject to submission of appropriate
receipts.

 

Terms

 

Your employment with LECG is based on the mutual consent of you and LECG, and
accordingly either LECG or you may terminate your employment and this agreement
at any time, with or without cause, and without payment of severance. If you
decide to terminate your employment with LECG, you agree that you will provide
LECG with thirty (30) days prior written notice addressed to the Chairman of the
Board if Directors. Upon termination of your affiliation with LECG, you agree
that you will no longer state that you are an employee of LECG.

 

You agree that you will abide by all policies of LECG, as may be amended from
time to time. LECG reserves the right to change any of its policies from time to
time, including policies discussed in this agreement, as business conditions
warrant. Any such changes will be communicated upon their adoption.

 

Confidentiality; Non-Solicitation of Employees

 

You agree to hold confidential and for the sole benefit of LECG and its clients
all non-public information, knowledge (whether verbal or written and howsoever
stored or recorded), documents and other materials which you may create or
acquire or in any way relating to LECG or its business (“Confidential
Information”). Such Confidential Information is strictly confidential and must
not be disclosed to anyone outside LECG or its clients, including family members
or any LECG employee who is not entitled to the information, except as required
by legal process or proceeding. If disclosure is required by law or compelled by
legal proceeding, you agree to notify LECG’s General Counsel as soon as is
practical of any request for the disclosure of Confidential Information.

 

Confidential Information does not include any information, knowledge, document
or other material that is or becomes known to the public generally by means
other than any disclosure thereof by you or any other person under a similar
confidentiality obligation to LECG. Any doubts about whether any information is
confidential should be resolved in favor of confidentiality. You shall not
disclose, use, copy, publish, summarize or remove from the Company’s premises
any Confidential Information except (i) during your employment with LECG to the
extent reasonably necessary to carry out your responsibilities and (ii) after
the termination of your employment with LECG, if and only if you obtain prior
written consent of LECG.

 

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You further agree that during your employment period and for one (1) year after
the termination thereof, you will not directly or indirectly, on your own behalf
or on behalf of any other party, solicit or induce, or cause others to solicit
or induce, any person employed by or affiliated with, or acting as an
independent contractor to LECG, its subsidiaries or affiliated entities, to
terminate his/her relationship with LECG, its subsidiaries or affiliated
entities.

 

Administrative Support

 

LECG will provide you with an appropriate level of executive assistance.

 

Final Agreement.

 

This offer letter is final and supersedes all previous and contemporaneous oral
negotiations, writings and understandings between the parties concerning the
subject matter of this offer letter, and this offer letter and its attachment
constitutes the entire agreement between us.

 

Michael, all of us at LECG very much look forward to having you as part of our
management team. Please sign below to indicate your acceptance of the terms
contained in this letter and its attachment.

 

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Very truly yours,

 

 

 

/s/ David J. Teece

 

 

David J. Teece

 

Chairman of the Board

 

 

 

 

Agreed to and accepted this 26 day of May, 2006.

 

 

 

/s/ Michael J. Jeffery

 

 

Michael J. Jeffery

 

 

 

 

 

DJT/crk

 

Attachment: COO Job Description

 

 

 

cc:

John C. Burke (w/encl.)

 

 

Marvin A. Tenenbaum, Esq. (w/encl.)

 

 

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LECG CORPORATION

CHIEF OPERATING OFFICER

[Job Description]

 

REPORTS TO:

 

The Chairman of the Board of Directors.

 

FUNCTION:

 

Provides overall leadership in implementing the strategic direction of the
Company, and in developing the tactics and business plans necessary to realize
margin improvement, revenue and earnings growth, and to increase shareholder
value.

 

Manages the overall business to ensure strategic and business plans are
effectively implemented, the results are monitored and reported to the Board,
and financial and operational objectives are attained.

 

MANAGEMENT PHILOSOPHY OF THE FIRM:

 

LECG is a professional services firm that operates with a unique “at risk”
business model. The business is organized around the “experts,” and the
“at-risk” model provides them with professional autonomy, flexibility and the
support of a highly capable staff and management team, but without corporate
hierarchy. The “at risk” model is central to the firm’s culture, which maximizes
the potential capabilities and energies of highly talented experts. Corporate
management is intentionally lean, yet experienced in guiding professional
service companies. It is our view that traditional employer-employee authority
structures and bureaucratic policies inhibit the productivity of experts and
often run counter to their professional values.

 

The firm provides a comprehensive support infrastructure, including information
technology and administrative support services, such as marketing, billing,
project accounting, receivables collection and internal and external financial
reporting. The administrative support functions are highly centralized and
integrated, thereby providing seamless support across a large number of offices
and practice disciplines.

 

PERCEIVED MANAGEMENT NEEDS:

 

Over the past several years, the firm has experienced significant growth in the
number of experts and professionals through extensive hires and acquisitions.
The firm has also expanded its practice areas and opened offices in new
locations – domestically and overseas. This requires careful management of an
ever-growing and geographically diverse workforce and places significant demands
on senior management, and on our internal systems, procedures and controls. The
“non-traditional” nature of the firm’s business model, in conjunction with the

 

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rapid rate of growth presents unique management challenges, demanding a premium
on “people skills.”

 

The firm is now at a crucial juncture, following its successful IPO and three
years of 30% growth. It is now poised to implement its long term strategy to be
pre-eminent in the industry, growing revenues from $300 million to in excess of
$1 billion while maintaining its current high quality of service. As such, the
firm seeks a Chief Operating Officer who has the energy, capabilities and
experience to work closely with the Chairman and the Board of Directors to build
shareholder value through the creation of a world-class, world renowned and
highly profitable professional services firm. Key to achieving this success will
be the continued development of high quality process and infrastructure
necessary to support the firm’s growth aspirations.

 

KEY AUTHORITIES AND RESPONSIBILITIES:

 

A.                                   General Functions and Responsibilities

 

1.                                       Responsible for the attainment of long
and short term financial and operational goals, including revenue growth,
expense, and cost control, and margin management.

 

2.                                       Responsible for the overall
administration of the firm with a strong interface with experts and senior
management to ensure future growth and improve margins, and the establishment
and implementation of all policy and operating initiatives.

 

3.                                       Provide effective leadership to the
management and the employees of the firm and establish an effective means of
control and coordination for all operations and activities as follows:

 

a.                                       Establish performance goals, allocates
resources and assesses policies for senior corporate management.

 

b.                                      Interact extensively with Chief
Financial Officer, Chief Accounting Officer, Director of Administration and
General Counsel. Departments reporting to the COO include human resources,
information technology services, facilities (operations), accounting and finance
and legal.

 

c.                                       Direct internal communications with
respect to administrative matters, establishes priorities and objectives with
senior

 

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management team and executes directives from Chairman and Board.

 

d.                                      Direct operations of the firm to meet
plans and financial goals, Sarbanes-Oxley compliance and governance
requirements.

 

4.                                       Foster a corporate culture that
promotes ethical practices, integrity and a positive work climate, enabling the
Company to attract, retain and motivate a diverse group of quality employees
including:

 

a.                                       Delivery of highest level of service
internally to experts and externally to clients in a cost-effective and highly
ethical manner.

 

b.                                      Facilitate the resolution of issues
between practice areas and individual experts in coordination with the Chairman
and the Director of Administration.

 

5.                                       Keep the Chairman and the Board fully
informed on all aspects of the Company’s operational and financial affairs, and
on all matters of significant relevance to the Company including potential
threats, opportunities and recommended actions.

 

6.                                       Direct and participate in acquisition
and growth activities to support overall business objectives and plans including
management of acquisition planning, due diligence, integration and financial and
acquisition monitoring.

 

7.                                       Develop and maintain a sound, effective
organization structure, and ensure capable management succession, progressive
employee training and development programmes, and reports regularly to the Board
on these matters and senior executive performance. Initial focus includes
development of a plan to identify and address current and future organizational
requirements (such as a robust human resources function) and building of
organizational capabilities (particularly in the area of information
technology).

 

8.                                       Ensure that effective communications
and appropriate relationships are maintained with the shareholders of the
Company and other stakeholders as follows:

 

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a.                                       Participate along with the Chairman and
the Chief Financial Officer in investor relations, setting communications
philosophy and strategy.

 

b.                                      Participate in capital market
development, including financing strategies and bank relationships.

 

9.                                       Work with the Chief Financial Officer
to direct short-term and long-range planning and budget development to support
strategic business goals including:

 

a.                                       Develop an operational and financial
strategy that supports strategic vision of the firm as articulated by the
Chairman and the Board.

 

b.                                      Complete annual planning and budgeting
in coordination with the Chief Financial Officer.

 

c.                                       Monitor performance against goals and
objectives to ensure progress in being made and corrective action – if necessary
– is being taken.

 

B.                                     Strategy/Risks

 

1.                                       Develop with the Chairman strategic
plans to ensure the Corporation’s profitable growth and overall success. This
includes updating and making changes as required, and involving the Board in the
early stages of developing strategy.

 

2.                                       Turn the first year of the strategic
plan into a detailed operating plan and budget. The main financial and operating
objectives are then approved by the Board and become the basis by which all
executive and employee pay for performance goals are set and measured.

 

3.                                       Identify, in conjunction with other
senior executives, the key risks with respect to the Company and its businesses
and reviews such risks and strategies for managing them with the Board.

 

4.                                       Ensure that the assets of the Company
are adequately safeguarded and maintained.

 

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C.                                     Financial Reporting

 

1.                                       Oversee the quality and timeliness of
financial reporting. Reports to the Board, in conjunction with the Chief
Financial Officer, on the fairness and adequacy of the financial reporting of
the Company to its shareholders.

 

2.                                       Ensure, in conjunction with the Chief
Financial Officer, that the annual and interim reports of the Company do not
contain any misrepresentations and that the annual and interim financial
statements fairly present, in all materials respects, the financial condition,
results of operations and cash flows of the Company.

 

3.                                       Design (or supervise the design of),
implement, maintain and periodically evaluate, in conjunction with the Chief
Financial Officer and the Chief Accounting Officer, the effectiveness of:

 

a.                                       Internal controls to provide reasonable
assurances that the financial statements of the Corporation are fairly presented
in accordance with generally accepted accounting principles; and

 

b.                                      Disclosure controls and procedures to
provide reasonable assurances that material information relating to the Company
is made known to the Chief Operating Officer by others within the Company.
Reports any deficiencies in such controls and procedures to the Audit Committee
in coordination with the Chief Accounting Officer.

 

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