Document:

Exhibit 10.43

 

SIXTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT

 

This Sixth Amendment to Credit Agreement and Consent (the “Amendment”) is made as of March 10, 2010 among the
undersigned, Smart Business Advisory and Consulting, LLC a Delaware limited
liability company (the “Existing Borrower”),
Smart Business Holdings, Inc., a Delaware corporation (the “Parent”), Bank of Montreal (“BMO”),
individually and as Administrative Agent (BMO being referred to herein in such
capacity as the “Administrative Agent”), the
other Lenders currently party to the Credit Agreement (together with BMO,
collectively referred to herein as the “Lenders”), the
Guarantors party hereto, and LECG, LLC, a California limited liability company
(the “New Borrower,”
and together with the Existing Borrower, collectively referred to herein as the
“Borrowers”).

 

PRELIMINARY STATEMENTS

 

A.            The Existing Borrower, the Parent, the
Administrative Agent and the Lenders entered into a Credit Agreement dated as
of May 15, 2007 (as heretofore amended, the “Credit
Agreement”).  All capitalized
terms used herein without definition shall have the same meanings herein as
such terms have in the Credit Agreement.

 

B.            The Parent, LECG Corporation, a Delaware corporation
(the “LECGC”), Red Sox Acquisition LLC, a
Delaware limited liability company (“Surviving Merger Sub”)
and certain other parties entered into an Agreement and Plan of Merger dated as
of August 17, 2009 (as heretofore amended, the “Merger
Agreement”), pursuant to which (i) the Parent will be merged
with and into the Surviving Merger Sub with the Surviving Merger Sub surviving
the merger, (ii) immediately thereafter LECGC will transfer all of the
issued and outstanding capital stock of the Surviving Merger Sub to the New
Borrower so that the Surviving Merger Sub becomes a direct subsidiary of the
New Borrower and the Existing Borrower becomes a direct subsidiary of the
Surviving Merger Sub, and (iii) the Surviving Merger Sub will change its
name to Smart Business Holdings, LLC (collectively, the “LECG Merger”).

 

C.            The Existing Borrower has requested that the Lenders (i) consent
to the LECG Merger, (ii) amend certain provisions to the Credit Agreement,
and (iii) add the New Borrower as a Borrower under the Credit Agreement,
and the Lenders are willing to do so under the terms and conditions set forth
in this Amendment.

 

D.            The Borrowers acknowledge and agree that the principal
amount of the Obligations as of the Sixth Amendment Effective Date is
$40,759,740 ($39,887,500 in Term Loans and $872,240 in BMO Hedge Termination
Payment), and such amount (together with interest and fees thereon) is justly
and truly owing by the Existing Borrower without defense, offset or
counterclaim.

 

NOW, THEREFORE, for good
and valuable consideration, receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

 

SECTION 1.                CONSENT.

 

Section 1.01.               The Existing Borrower has requested that
the Lenders consent to the LECG Merger. 
Accordingly, subject to the satisfaction of the conditions precedent set
forth in Section 6 below, the Administrative Agent and the Lenders hereby
consent to the LECG Merger.

 

SECTION 2.                AMENDMENTS.

 

Subject to satisfaction
of the conditions precedent set forth in Section 6 hereof, the Credit
Agreement is hereby amended as follows:

 

Section 2.01.               The defined terms “Base Rate”
and “Adjusted LIBOR” appearing in Section 1.4
of the Credit Agreement are hereby amended in their entireties and as so
amended shall be restated to read as follows:

 

“Base Rate” means, for any day, the rate per annum equal to the
greatest of:  (a) the rate of
interest announced or otherwise established by the Administrative Agent from
time to time as its prime commercial rate, or its equivalent, for U.S. Dollar
loans to borrowers located in the United States as in effect on such day, with
any change in the Base Rate resulting from a change in said prime commercial
rate to be effective as of the date of the relevant change in said prime
commercial rate (it being acknowledged and agreed that such rate may not be the
Administrative Agent’s best or lowest rate), (b) the sum of (i) the
rate determined by the Administrative Agent to be the average (rounded upward,
if necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to
the Administrative Agent at approximately 10:00 a.m. (Chicago time) (or as
soon thereafter as is practicable) on such day (or, if such day is not a
Business Day, on the immediately preceding Business Day) by two or more Federal
funds brokers selected by the Administrative Agent for sale to the
Administrative Agent at face value of Federal funds in the secondary market in
an amount equal or comparable to the principal amount for which such rate is
being determined, plus (ii) 1/2 of 1%, (c) 3.0%
and (d) the LIBOR Quoted Rate for such day plus 1.50%.  As used herein, the term “LIBOR
Quoted Rate” means, for any day, the rate per annum equal to the
quotient of (i) the rate per annum (rounded upwards, if necessary, to the
next higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a one-month interest period which appears on the LIBOR01 Page as
of 11:00 a.m. (London, England time) on such day (or, if such day is not a
Business Day, on the immediately preceding Business Day) divided by (ii) one
(1) minus the Eurodollar Reserve Percentage.

 

2

 

“Adjusted LIBOR” means, for any Borrowing of Eurodollar Loans, the
greater of (a) 2.0% per annum and (b) a rate per annum rate
determined in accordance with the following formula:

 

	
  Adjusted LIBOR

  	
  =

  	
  LIBOR

  	
   

  
	
   

  	
   

  	
  1 - Eurodollar
  Reserve Percentage

  	
   

  

 

Section 2.02.               Section 1.8 of the Credit Agreement
is hereby amended in its entirety and as so amended shall be restated to read
as follows:

 

Section 1.8.           Maturity of Loans; Scheduled Payments of
Term B Loans and BMO Hedge Termination Payment.  The Borrowers shall make principal payments
on the Term B Loans and the BMO Hedge Termination Payment in installments
on the last day of each March, June, September,  and
December in each year with the amount of each such principal installment
to equal the amount set forth in Column B below shown opposite of the
relevant due date as set forth in Column A below:

 

	
  COLUMN A

  	
   

  	
  COLUMN B

  	
   

  
	
  PAYMENT DATE

  	
   

  	
  SCHEDULED PAYMENTS

  	
   

  
	
  Sixth Amendment Effective Date

  	
   

  	
  $

  	
  3,500,000

  	
   

  
	
  06/30/2010

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  09/30/2010

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  12/31/2010

  	
   

  	
  $

  	
  3,000,000

  	
   

  

 

, it being agreed that a final payment composed of all principal and
interest not sooner paid on the Term B Loans and the BMO Hedge Termination
Payment shall be due and payable on March 31, 2011, the final maturity for
each of the Term B Loans and the BMO Hedge Termination Payment.  Each such principal payment shall be applied
to the Term B Loans and the BMO Hedge Termination Payment on a ratable basis based
on the outstanding principal amounts thereof, and each such principal payment
of the Term B Loans shall be applied to the Lenders holding the Term B
Loans pro rata based upon their Term B Loan Percentages.

 

Section 2.03.               Sections 1.9(b)(ii), 1.9(b)(iii), 1.9(b)(iv) and
1.9(b)(v) shall be amended in their entirety and as so amended shall be
restated to read as follows:

 

(ii)   If after the Sixth Amendment
Effective Date the Parent, any Borrower or Subsidiary shall issue new equity
securities (whether common or preferred stock or otherwise), other than (A) equity
securities issued in connection with the exercise of employee stock options or
pursuant to an employee stock incentive plan, (B) capital stock of the
Parent the Net Cash Proceeds of which are used in whole or in part to finance a
Permitted Acquisition, (C) capital stock issued to the 

 

3

 

seller of an Acquired Business in connection with a Permitted
Acquisition, (D) capital stock of the Parent the Net Cash Proceeds of
which are used to finance redemptions of equity interests owned by managers of
Parent, any Borrower or Subsidiary upon termination of employment to the extent
permitted by Section 8.12(c) hereof, and (E) capital stock of
the Parent the Net Cash Proceeds of which are used to finance Capital
Expenditures, the Borrowers shall promptly notify the Administrative Agent of
the estimated Net Cash Proceeds of such issuance to be received by or for the
account of Parent, such Borrower or Subsidiary in respect thereof.  Promptly upon receipt by the Parent, such
Borrower or Subsidiary of Net Cash Proceeds of such issuance, the Borrowers
shall prepay the Obligations in an aggregate amount equal to 50% of the amount
of such Net Cash Proceeds.  The amount of
each of such prepayment shall be applied ratably to the outstanding Term B
Loans and BMO Hedge Termination Payment based upon the outstanding principal
amounts thereof until paid in full.  The
Borrowers acknowledge that their performance hereunder shall not limit the
rights and remedies of the Lenders for any breach of Section 8.11
(Maintenance of Subsidiaries) or Section 9.1(i) (Change of Control)
hereof or any other terms of the Loan Documents.

 

(iii)   If after the Sixth Amendment
Effective Date, the Parent, any Borrower or Subsidiary shall issue any
Indebtedness for Borrowed Money, other than Indebtedness for Borrowed Money
permitted by Section 8.7 hereof, the Borrowers shall promptly notify the
Administrative Agent of the estimated Net Cash Proceeds of such issuance to be
received by or for the account of the Parent, such Borrower or Subsidiary in
respect thereof.  Promptly upon receipt
by the Parent, such Borrower or Subsidiary of Net Cash Proceeds of such issuance,
the Borrowers shall prepay the Obligations in an aggregate amount equal to 100%
of the amount of such Net Cash Proceeds. 
The amount of each of such prepayment shall be applied ratably to the
outstanding Term B Loans and BMO Hedge Termination Payment based upon the
outstanding principal amounts thereof until paid in full.  The Borrowers acknowledge that their
performance hereunder shall not limit the rights and remedies of the Lenders
for any breach of Section 8.7 hereof or any other terms of the Loan
Documents.

 

(iv)   If after the Sixth Amendment
Effective Date, the Parent, any Borrower or Subsidiary shall issue any
Subordinated Debt (other than Permitted Subordinated Debt), the Borrowers shall
promptly notify the Administrative Agent of the estimated Net Cash Proceeds of
such issuance to be received by or for the account of the Parent, such Borrower
or Subsidiary in respect thereof. 
Promptly upon receipt by the Parent, such Borrower or Subsidiary of Net
Cash Proceeds of such issuance, the Borrowers shall prepay the Obligations in
an aggregate amount equal to 100% of the amount of such Net Cash Proceeds.  The amount of each of such prepayment shall
be applied ratably to the outstanding Term B Loans and BMO Hedge
Termination Payment based upon the outstanding principal amounts thereof until
paid in full.  The Borrowers acknowledges
that

 

4

 

their performance hereunder shall not limit the rights and remedies of
the Lenders for any breach of Section 8.7 hereof or any other terms of the
Loan Documents.

 

(v)   Within five (5) Business
Days after each Payment Date set forth in Column A below, the Borrowers shall
prepay the Obligations by an amount equal to the amount by which their
aggregate unrestricted cash balances exceed the Threshold Amount set forth in
Column B below:

 

	
  COLUMN A

  	
   

  	
  COLUMN B

  	
   

  
	
  PAYMENT DATE

  	
   

  	
  THRESHOLD AMOUNT

  	
   

  
	
  03/31/2010

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  06/30/2010

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
  09/30/2010

  	
   

  	
  $

  	
  17,000,000

  	
   

  
	
  12/31/2010

  	
   

  	
  $

  	
  20,000,000

  	
   

  

 

The amount of each such prepayment shall be applied ratably to the
outstanding Term B Loans and BMO Hedge Termination Payment based upon the
outstanding principal amounts thereof until paid in full.  In calculating the amount of prepayment to be
made under this paragraph, quarterly cash balance will be pro-forma for the amortization
payment due in such quarter and include any tax refund proceeds received in
such quarter but exclude the net proceeds of any subsequent issuance of equity
by the Parent or issuance of Permitted Subordinated Debt by any Borrower or the
Parent (if any).  Cash balance on each
Payment Date will be reflective of only ordinary course payments being made,
and will preclude any prepayments or other non-ordinary course disbursements
reducing such cash balance.

 

Section 2.04.               Section 5.1 of the Credit Agreement
is hereby amended by adding new defined terms which read as follows:

 

“Existing Borrower” means Smart Business Advisory and Consulting, LLC, a
Delaware limited liability company.

 

“LECGC” means LECG Corporation, a Delaware corporation.

 

“LECG Merger” means (i) on or about the Sixth Amendment
Effective Date, the Parent will be merged with and into the Surviving Merger
Sub with the Surviving Merger Sub surviving the merger, (ii) immediately
thereafter LECGC will transfer all of the issued and outstanding capital stock
of the Surviving Merger Sub to the New Borrower so that the Surviving Merger
Sub becomes a direct subsidiary of the New Borrower and the Existing Borrower
becomes a direct subsidiary of the Surviving Merger Sub, and (iii) the
Surviving Merger Sub will change its name to Smart Business Holdings, LLC.

 

5

 

“Merger Agreement” means that certain Agreement and Plan of Merger dated
as of August 17, 2009, as amended, by and among the Parent, LECGC and
certain other parties thereto.

 

“New Borrower” means LECG, LLC, a California limited liability
company.

 

“Permitted Acquisition” means any Acquisition with respect to
which all of the following conditions shall have been satisfied:

 

(a)           the Acquired Business is in an Eligible
Line of Business;

 

(b)           the Acquisition shall not be a Hostile
Acquisition;

 

(c)           the Borrowers shall have notified the
Administrative Agent and Lenders not less than 10 Business Days prior to any
such Acquisition;

 

(e)           the Acquisition, when taken together with
all other Permitted Acquisitions after the Sixth Amendment Effective Date,
shall not result in the addition of more than ten (10) partners;

 

(f)            if a new Subsidiary is formed or acquired
as a result of or in connection with the Acquisition, the Borrowers shall have
complied with the requirements of Section 4 hereof in connection
therewith;

 

(g)           after giving effect to the Acquisition
and any Credit Event in connection therewith, no Default or Event of Default
shall exist, including with respect to the financial covenants contained in Section 8.22
hereof on a pro forma basis; and

 

(h)           any cash portion of the Total
Consideration paid by the Borrowers in connection with the Acquisition shall
consist solely of Net Cash Proceeds from the issuance of equity by the Parent
or the issuance of Permitted Subordinated Debt by any Borrower and/or the Parent,
in each case after
the Sixth Amendment Effective Date.

 

“Permitted Subordinated Debt” means Indebtedness for Borrowed Money of
the Borrowers or the Parent incurred after the Sixth Amendment Effective Date, in
a principal amount not to exceed $10,000,000 in the aggregate 

 

6

 

at any time outstanding, that (i) is subordinated to the
Obligations, Hedging Liability and Funds Transfer and Deposit Account Liability
on terms reasonably acceptable to the Required Lenders, (ii) has a
maturity date later than March 31, 2011, (iii) does not provide for
any cash payment (whether for principal, interest or otherwise) until the
Obligations have been paid in full in cash, and (iv) contains other terms
reasonably acceptable to the Required Lenders.

 

“Sixth Amendment” means that certain Sixth Amendment to Credit
Agreement and Consent dated as of March 10, 2010, by and among the
Borrowers, the Parent, the Guarantors party thereto, the Lenders and the
Administrative Agent.

 

“Sixth Amendment Effective Date” means the date upon which the Sixth
Amendment becomes effective pursuant to its terms.

 

“Surviving Merger Sub” means Red Sox Acquisition LLC, a
Delaware limited liability company.

 

Section 2.05.               The following defined terms appearing in Section 5.1
of the Credit Agreement are hereby amended in their entireties and as so
amended shall be restated to read as follows:

 

“Applicable Margin” means (i) for Base Rate Loans, a rate per annum
equal to 6.50%, and (ii) for Eurodollar Loans, a rate per annum equal to
7.50%.

 

“Borrower” or “Borrowers” means
and includes the Existing Borrower and the New Borrower.

 

“Change of Control” means any of (a) the acquisition after the Sixth
Amendment Effective Date by any “person” or “group” (as such terms are used in sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) at any time of
beneficial ownership of 40% or more of the outstanding capital stock or other
equity interests of the Parent on a fully-diluted basis, (b) the failure
of individuals who are members of the board of directors (or similar governing
body) of the Parent on the Sixth Amendment Effective Date (together with any
new or replacement directors whose initial nomination for election was approved
by a majority of the directors who were either directors on the Sixth Amendment
Effective Date or previously so approved) to constitute a majority of the board
of directors (or similar governing body) of the Parent, (c) the failure of
the Parent at any time to maintain beneficial ownership of 100% of the
outstanding capital stock or other equity interests of the Borrowers on a
fully-diluted basis or (d) any “Change of Control” (or words of like
import), as defined in any agreement or indenture relating to any issue of
Indebtedness for Borrowed Money of Parent, any Borrower or any Subsidiary shall
occur.

 

7

 

“EBITDA” means, with reference to any period (each, a “Test Period”), Net Income for such Test Period plus the sum of all amounts deducted in arriving at such Net
Income amount in respect of (a) Interest Expense for such Test Period, (b) federal,
state or foreign income tax expense for such Test Period, (c) depreciation
of fixed assets and amortization of intangible assets for such Test Period, (d) non-cash
stock-based compensation expenses and non-cash impairment charges incurred
during such Test Period, (e) goodwill impairment charges incurred during
such Test Period, (f) amortization of signing, performance or retention
bonuses paid during such Test Period, (g) expenses incurred during such
Test Period in connection with the LECG Merger in an aggregate amount not to
exceed $6,000,000, (h) non-recurring non-cash restructuring, integration
or severance charges or expenses incurred during such Test Period, (i) non-recurring
cash restructuring, integration or severance charges or expenses incurred
during such Test Period (including such expenses in an aggregate amount not to
exceed $7,500,000 after the Sixth Amendment Effective Date), and (j) all
amounts paid to FTI Consulting, Inc. or other agents engaged or retained
by or on behalf of the Administrative Agent or the Lenders during such Test
Period, minus the sum of all amounts included in
such Net Income amount in respect of extraordinary gains and non-cash gains
realized during such Test Period and, minus cash used
during such Test Period for payment of multi-year signing, performance or
retention bonuses (whether or not such amounts were included in arriving at Net
Income).  Notwithstanding the foregoing,
EBITDA for (A) the fiscal quarter of the Parent ended December 31,
2009 shall be $7,929,631, (B) the fiscal quarter of the Parent ended September 30,
2009 shall be $4,690,429 and (C) the fiscal quarter of the Parent ended June 30,
2009 shall be $5,036,816.

 

“Fixed Charges” means, with reference to any period, the sum of (a) all
payments of principal made or to be made during such period with respect to
Indebtedness for Borrowed Money of the Parent and its Subsidiaries other than
mandatory prepayments made in accordance with Section 1.9(b) of this
Agreement, (b) Interest Expense for such period payable or paid in cash, (c) federal,
state or foreign income taxes, or Tax Distributions with respect thereto, paid
or payable in cash by the Parent and its Subsidiaries during such period, and (d) payments
permitted by Section 8.12(c) hereof made during such period.

 

“Parent” means Smart Business Holdings, Inc., a Delaware
corporation until the consummation of the Merger and after consummation of the
Merger, Parent means LECGC.

 

“Total Funded Debt” means, at any time the same is to be determined, the
sum (but without duplication) of (a) all Indebtedness for Borrowed Money
of the Parent and its Subsidiaries at such time other than the Indebtedness for
Borrowed Money evidenced by the Parent Subordinated Notes or the Permitted
Subordinated Debt, and (b) all Indebtedness for Borrowed Money of any
other Person which is directly or indirectly guaranteed by the Parent or any of
its 

 

8

 

Subsidiaries or which the Parent or any of its Subsidiaries has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which the Parent or any of its Subsidiaries has otherwise assured a creditor
against loss.

 

Section 2.06.               Each of the defined terms “Interest Expense”, “Net Income”, “Subsidiary” and “Total Funded Debt/EBITDA
Ratio” appearing in Section 5.1 of the Credit Agreement shall
be and hereby is amended by deleting reference to “the
Borrower” wherever it appears in such definitions and inserting in
its place reference to “the Parent”.

 

Section 2.07              Section 6.6 of the Credit Agreement
shall be and hereby is amended and restated to read in its entirety as follows:

 

Section 6.6.           No Material Adverse Change.  Since December 31, 2008 (with respect to the
Existing Borrower) or December 31, 2009 (with respect to LECGC and the New
Borrower), or, if later, the date of the most recent audited financial
statements delivered pursuant to Section 8.5(b) hereof (whichever is
later), there has been no change in the condition (financial or otherwise) or
business prospects of the Parent, any Borrower or Subsidiary except those
occurring in the ordinary course of business, none of which individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.

 

Section 2.08.               Section 8.7 of the Credit Agreement
is hereby amended by (i) amending and restating clause (e) therein
and (ii) adding thereto new clauses (i) and (j), in each case to read as
follows:

 

(e)           intercompany advances from time to time
owing by any Subsidiary to any Borrower or another Subsidiary or by any Borrower
to one of its Subsidiaries in the ordinary course of business; provided, any such intercompany advances by the Borrowers
and Guarantors to their Subsidiaries that are not Guarantors hereunder shall
only be permitted if: (A) proceeds from such intercompany advances are
used solely for expenses incurred in the ordinary course of business then due
or to become due within 10 Business Days from such intercompany advance, (B) the
amount of any intercompany advance shall not exceed ordinary course expenses then
due or to become due within 10 Business Days from such intercompany advance,
and (C) all such intercompany advances, when taken together with any
investments permitted by Section 8.9(f) hereof and net of any
repayments, shall not exceed $10,000,000 in the aggregate from the Sixth
Amendment Effective Date through March 31, 2011;

 

(i)            Permitted Subordinated Debt; and

 

(j)            indebtedness of the New Borrower arising
under certain letters of credit issued by Bank of America, N.A. not to exceed
$1,810,000 in the aggregate at any one time.

 

9

 

Section 2.09.              Section 8.8 of the Credit Agreement
is hereby amended by a new clause (h) thereto to read as follows:

 

(h)           Liens in favor of Bank of America, N.A.
on cash of the New Borrower to collateralize the indebtedness permitted by Section 8.7(j) hereof;
provided, that the amount of cash
subject to such Liens shall not exceed 115% of the outstanding face amount of
the letters of credit permitted by Section 8.7(j).

 

Section 2.10.              Clauses (f) and (h) of Section 8.9
of the Credit Agreement are hereby amended in their entirety and as so amended
shall be restated to read as follows:

 

(f)            the Parent’s or any Borrower’s
investments from time to time in its Subsidiaries, and investments made from
time to time by a Subsidiary in or more of its Subsidiaries; provided, that any investments by the Borrowers and
Guarantors to their Subsidiaries that are not Guarantors hereunder shall only
be permitted if: (A) proceeds from such investments are used solely for
expenses incurred in the ordinary course of business then due or to become due
within 10 Business Days from such investment, (B) the amount of any
investment shall not exceed ordinary course expenses then due or to become due
within 10 Business Days from such investment, and (C) all such
investments, when taken together with any investments permitted by Section 8.7(e) hereof
and net of any dividends and other distributions to any Borrower or Guarantor,
shall not exceed $10,000,000 in the aggregate from the Sixth Amendment
Effective Date through March 31, 2011;

 

(h)           Permitted Acquisitions; and

 

Section 2.11.              Clauses (b) and (e) of Section 8.12
of the Credit Agreement are hereby amended in their entirety and as so amended
shall be restated to read as follows:

 

(b)           the making of non-cash or “PIK” dividends
or distributions on shares of preferred stock issued or sold by any Borrower or
Parent and owned by Great Hill;

 

(e)           so long as no Default or Event of Default
shall exist or result therefrom, the purchase, repurchase or redemption of
shares of common stock issued by any Borrower or the Parent (including but not
limited to shares issued to employees of the Parent, the Borrowers and their
Subsidiaries relating to any stock compensation program) in an aggregate amount
that does not exceed $250,000 during any fiscal year of the Borrowers.

 

Section 2.12.              Section 8.21 of the Credit Agreement
is hereby amended in its entirety and as so amended shall be restated to read
as follows:

 

Section 8.21.        Domestic
EBITDA; Cash.  (a)  Domestic EBITDA.  Each
Borrower shall maintain its business such that not less than 60% of the EBITDA 

 

10

 

of the Parent and its Subsidiaries in any 12
consecutive calendar month period (commencing with the 12 consecutive calendar
month period ending March 31, 2010) is attributable to the Parent and its
Domestic Subsidiaries (excluding any of their respective Foreign Subsidiaries).

 

(b)  Cash.  As of the last
day of each calendar month of the Parent (subject to Section 8.26(a) hereof),
none of the Parent nor any Borrower shall, nor shall they permit any Subsidiary
to, maintain cash in accounts not subject to a perfected first priority lien in
favor of the Administrative Agent, including accounts maintained by
Subsidiaries which are not guarantors hereunder, in an amount greater than
$8,000,000 in the aggregate; provided, that
it shall not be an Event of Default hereunder if such default is remedied
within ten (10) Business Days after the end of such calendar month.

 

Section 2.13.              Section 8.22 of the Credit Agreement
is hereby amended in its entirety and as so amended shall read as follows:

 

(a)           Total Funded Debt/EBITDA Ratio. 
As of the last day of each fiscal quarter of the Parent ending during
the relevant period set forth below, the Borrowers shall not permit the Total
Funded Debt/EBITDA Ratio to be greater than the corresponding ratio set forth
opposite such period below:

 

	
  PERIOD(S) ENDING

  	
   

  	
  TOTAL FUNDED

  DEBT/EBITDA RATIO SHALL

  NOT BE GREATER THAN:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3/31/10

  	
   

  	
  3.40 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6/30/10

  	
   

  	
  3.20 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9/30/10

  	
   

  	
  2.90 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12/31/10

  	
   

  	
  2.80 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3/31/11

  	
   

  	
  2.25 to 1.0

  	
   

  

 

(b)           Fixed Charge Coverage Ratio. 
As of the last day of each fiscal quarter of the Parent specified below,
the Borrowers shall maintain a ratio of (i) EBITDA for the period set
forth below (each, a “Compliance Period”),
less Capital Expenditures (excluding integration-related Capital Expenditures)
for such Compliance Period, to (ii) Fixed Charges for the Compliance
Period set forth below of not less than the corresponding ratio set forth
opposite such Compliance Period below:

 

11

 

	
  COMPLIANCE PERIOD ENDED

  	
   

  	
  FIXED CHARGE COVERAGE RATIO

  SHALL NOT BE LESS THAN:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal Quarters Ended 3/31/10

  	
   

  	
  1.0 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal Quarters Ended 6/30/10

  	
   

  	
  0.80 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal Quarters Ended 9/30/10

  	
   

  	
  0.65 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal Quarters Ended 12/31/10

  	
   

  	
  0.50 to 1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal Quarters Ended 3/31/11

  	
   

  	
  0.90 to 1.0

  	
   

  

 

(c)           Minimum EBITDA. 
The Borrowers shall at all times, maintain EBITDA as of the last day of
each fiscal quarter specified below, for the period specified below, in an
amount not less than the amount set forth opposite such period below:

 

	
  PERIOD

  	
   

  	
  MINIMUM REQUIRED

  AMOUNT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal
  Quarters Ended 3/31/10

  	
   

  	
  $

  	
  11,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal
  Quarters Ended 6/30/10

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal
  Quarters Ended 9/30/10

  	
   

  	
  $

  	
  11,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal
  Quarters Ended 12/31/10

  	
   

  	
  $

  	
  10,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four Fiscal
  Quarters Ended 3/31/11

  	
   

  	
  $

  	
  16,500,000

  	
   

  

 

(d)           Capital Expenditures. 
The Borrowers shall not, nor shall they permit any Subsidiary to, incur
Capital Expenditures (excluding integration-related Capital Expenditures) in an
amount in excess of $3,000,000 in the aggregate in any fiscal year.

 

(e)           Rental Expense. 
The Borrowers shall not, nor shall they permit any Subsidiary to, incur
rental expense in an amount in excess of $5,000,000 in the aggregate in any
fiscal quarter.

 

(f)            Balance Sheet Cash. 
As the last day of each fiscal quarter of the Parent, the Borrowers
shall maintain unrestricted cash on their consolidated balance sheet in an
amount of at least $6,000,000 in the aggregate.

 

Section 2.12.              Section 8.23 of the Credit Agreement
shall be amended in its entirety and as so amended shall be restated to read as
follows:

 

12

 

Section 8.23.  The Borrowers
shall cause Great Hill to deliver to the Administrative Agent an agreement in
form and substance acceptable to the Administrative Agent including an
agreement where Great Hill agrees not sell, pledge, encumber or otherwise
dispose any shares of preferred stock or common stock issued or sold by Parent
to Great Hill until the Obligations have been repaid in full in cash.

 

Section 2.13.              Section 8.25 of the Credit Agreement
shall be amended in its entirety and as so amended shall be restated to read as
follows:

 

Section 8.25.  Provision of Cash Flow Forecasts. 
On or prior to the 3rd day of every other calendar week (commencing
with the first full calendar week after the Sixth Amendment Effective Date),
the Borrowers shall deliver to the Administrative Agent and the Lenders a
thirteen (13) week cash flow forecast which shall include, but not be limited
to, reconciliation (except in the case of the first such cash flow forecast
provided pursuant to the terms hereof) to such thirteen (13) week cash flow
forecast previously delivered to the Administrative Agent and the Lenders as
specified by the Administrative Agent.

 

Section 2.14.              Section 8.26 of the Credit Agreement
shall be amended in its entirety and as so amended shall be restated to read as
follows:

 

Section 8.26.  Deposit Accounts; Stock Certificates.  (a) Not later than 30 days after
the Sixth Amendment Effective Date, the Borrowers shall, and shall cause each
Guarantor to, maintain all deposit accounts (other than those accounts set
forth in Section 4.2(i) hereof) with the Administrative Agent or with
other financial institutions selected by the Borrowers and reasonably
acceptable to the Administrative Agent (which financial institutions have
entered into account control agreements with the Administrative Agent relating
to such accounts on terms reasonably acceptable to the Administrative Agent).

 

(b) Not later than 30 days after the Sixth
Amendment Effective Date, the Borrowers shall, and shall cause each Guarantor
to, deliver to the Administrative Agent original stock certificates or other
similar instruments or securities representing all of the issued and
outstanding shares of capital stock or other equity interests in each
Subsidiary of the Borrowers and Guarantors (65% of such capital stock in the
case of any Foreign Subsidiary as provided in Section 4.2 of the Credit
Agreement) together with stock powers for the Collateral consisting of the
stock or other equity interest in each Subsidiary of the Borrowers and
Guarantors executed in blank and undated,

 

Section 2.15.              Section 13 of the Credit Agreement
shall be and hereby is amended by inserting new Sections 13.26 and 13.27
immediately after Section 13.25 to read in their entirety as follows:

 

13

 

Section 13.26  Joint and Several.  Each of LECG, LLC and Smart Business Advisory and
Consulting, LLC (each a “Borrower Loan Party”)
hereby acknowledge and agree that each reference to “Borrower”
in this Agreement shall be deemed a reference to each Borrower Loan Party
collectively and each Borrower Loan Party hereby acknowledge and agree that it
has joint and several liability on the Term B Loans, the BMO Hedge Termination Payment
and on all other Obligations owed by the Borrowers under this Agreement and the
other Loan Documents (collectively, the “Borrowers’ Obligations”),
and that such liability is absolute and unconditional and shall not in any
manner be affected or impaired by any of acts or omissions whatsoever by the
Lenders, and without limiting the generality of the foregoing, each Borrower
Loan Parties’ joint and several liability on the Borrowers’ Obligations shall
not be impaired by any acceptance by the Lenders of any other security for or
guarantors upon any of the Borrowers’ Obligations, or by any failure, neglect
or omission on the Lenders’ part to resort to any one or all of the Borrower
Loan Parties for payment of any of the Borrowers’ Obligations, or to realize
upon or protect any collateral security therefor.  Each Borrower Loan Party’s joint and several
liability on the Borrowers’ Obligations shall not in any manner be impaired or
affected by who receives or uses the proceeds of the Term B Loans or for what
purposes such proceeds are used, and each Borrower Loan Party waives notice of
borrowing requests issued by, and loans made to, other Borrower Loan
Parties.  Such joint and several
liability of each Borrower shall also not be impaired or affected by (and each
Lender, without notice to anyone, is hereby authorized to make from time to
time) any sale, pledge, surrender, compromise, settlement, release, renewal,
extension, indulgence, alteration, substitution, exchange, change in,
modification or disposition of any collateral security for any of the Borrowers’
Obligations or of any guaranty thereof. 
In order to enforce payment of any of the Borrowers’ Obligation,
foreclose or otherwise realize on any collateral security therefor, and to
exercise the rights granted to the Administrative Agent hereunder and
thereunder and under applicable law, the Administrative Agent shall be under no
obligation at any time to first resort to any collateral security, property,
liens or any other rights or remedies whatsoever, and the Lenders shall have
the right to enforce any of the Borrowers’ Obligations irrespective of whether
or not other proceedings or steps are pending seeking resort to or realization
upon or from any of the foregoing.  By
its acceptance below, each Borrower Loan Party hereby expressly waives and
surrenders any defense to its joint and several liability on the Borrowers’
Obligations based upon any of the foregoing. 
In furtherance thereof, each Borrower Loan Party agrees that wherever in
this Agreement it is provided that a Borrower Loan Party is liable for a
payment such obligation is the joint and several obligation of each Borrower
Loan Party.

 

Section 13.27.      Appointment and Authorization of
Existing Borrower.  Each Borrower Loan Party irrevocably appoints
and authorizes the Existing Borrower to take such action as agent on its behalf
and to exercise such powers under the Loan Documents as are delegated to the
Borrower Loan Parties by the terms thereof, together with all such powers as
are reasonably incidental thereto.  

 

14

 

Each Borrower Loan Party irrevocably agrees that the
Lenders and Administrative Agent may conclusively rely on the authority of the
Existing Borrower in exercising the powers granted to it by the terms of this
Agreement.

 

Section 2.16.  Joinder
of the New Borrower and the New Guarantors. 
(a) New Borrower. The New Borrower hereby elects to be a “Borrower” for all purposes of the Credit Agreement,
effective from the Sixth Amendment Effective Date.  The New Borrower confirms that the
representations and warranties set forth in Section 6 of the Credit
Agreement are true and correct as to it as of the Sixth Amendment Effective
Date and the New Borrower shall comply with each of the covenants set forth in Section 8
of the Credit Agreement applicable to it. 
Without limiting the generality of the foregoing, the New Borrower
hereby agrees to perform all the obligations of a Borrower under, and to be
bound in all respects by the terms of, the Credit Agreement to the same extent
and with the same force and effect as if the undersigned were a signatory party
thereto.

 

(b) Guarantors.  Each of LECGC and each other party signing
the Sixth Amendment under the heading “Guarantors”
(the “New Guarantors”) hereby elects to be a “Guarantor” for all purposes of the Credit Agreement,
effective from the Sixth Amendment Effective Date.  Each of the New Guarantors confirms that the
representations and warranties set forth in Section 6 of the Credit
Agreement are true and correct as to such New Guarantor as of the Sixth
Amendment Effective Date and the each of the New Guarantors shall comply with
each of the covenants set forth in Section 8 of the Credit Agreement
applicable to it.  Without limiting the
generality of the foregoing, each New Guarantor hereby agrees to perform all
the obligations of a Guarantor under, and to be bound in all respects by the
terms of, the Credit Agreement, including without limitation Section 12
thereof, to the same extent and with the same force and effect as if the
undersigned were a signatory party thereto.

 

Section 2.17.  Exhibit E, Schedule 6.2, Schedule
6.5, Schedule 6.10, Schedule 6.11, Schedule 6.14, and Schedule 8.7 to the
Credit Agreement shall be amended in their entirety and as so amended shall be
restated to read in the form of Exhibit E, Schedule 6.2, Schedule 6.5,
Schedule 6.10, Schedule 6.11, Schedule 6.14, and Schedule 8.7, respectively,
attached hereto.

 

SECTION 3.                TERM
LOAN/BMO HEDGE TERMINATION PAYMENT AMORTIZATION

 

Pursuant to the terms of the Capital Contribution Agreement, Great Hill
contributed $5,000,000 to the Existing Borrower in the form of a capital
contribution, the proceeds (the “Capital Contribution
Proceeds”)  of which were
delivered by the Existing Borrower to the Administrative Agent.  As set forth in the First Amendment to
Forbearance Agreement dated as of August 25, 2008, the Capital
Contribution Proceeds were deposited by the Administrative Agent into the
Collateral Account and continue to be held by the Administrative Agent as
security for, and for application by the Administrative Agent to the
Obligations as directed by the Required Lenders.

 

As a condition to the effectiveness of the Sixth Amendment as set forth
in Section 6 below, the parties hereto hereby acknowledge and agree that
the remaining balance ($458,132.00) of the Capital Contribution Proceeds shall
be withdrawn from the Collateral 

 

15

 

Account and applied as and for a mandatory prepayment
of the Obligations, such prepayment (the “Prepayment Amount”)
to be applied pro rata to the Term B Loans and the BMO Hedge Termination
Payment.

 

SECTION 4.                ADDITIONAL
AGREEMENTS.

 

The Borrowers agree that the Administrative Agent shall have the right
to re-engage on behalf of the Lenders FTI Consulting, Inc. (or another
firm acceptable to the Administrative Agent), to evaluate the financial
condition, operating performance, and business prospects of the Borrowers and
their Subsidiaries and to perform such other information gathering or
evaluation acts as may be reasonably requested by the Administrative Agent or
the Required Lenders, and the reasonable costs and expenses of such financial
advisor shall be borne by the Borrowers and shall constitute part of the Obligations;
provided that so long as no Event of
Default shall have occurred and be continuing, the Borrowers shall not be
obligated to pay such costs and expenses in excess of $100,000 in any calendar
year (which cap shall not apply for any billings related to work done from January 1,
2010 through the Sixth Amendment Effective Date).  The Borrowers shall take reasonable steps to
make available to such financial advisor and its representatives such
information respecting the financial condition, operating performance, and
business prospects of the Borrowers and their Subsidiaries as may be reasonably
requested by such financial advisor and shall make its officers, employees, and
requests its independent public accountants to be available with reasonable prior
notice to discuss such information with such financial advisor and its
representatives.

 

SECTION 5.                FEES.

 

Section 5.01.              Upfront Fee. 
The Borrowers shall pay to the Administrative Agent, for the ratable
distribution to each Lender (including Bank of Montreal) which executes and
delivers this Amendment, an upfront fee equal to 1.00% of the aggregate
principal amount of the Term B Loans and the BMO Hedge Termination Payment
outstanding after application of the Prepayment Amount pursuant to Section 3
above (the “Upfront Fee”).  The Upfront Fee shall be payable in two
installments: (i) 0.50% on the Sixth Amendment Effective Date and (ii) 0.50%
on March 31, 2011, or, if earlier, the date of repayment in full of all
Obligations.  The Upfront Fee payable
pursuant to clause (ii) above is in addition to the upfront fee required
to be paid at such time pursuant to the Fifth Amendment to Credit Agreement and
Waiver dated as of November 19, 2008, by and among the Existing Borrower,
the Guarantors party thereto, the Lenders party thereto and the Administrative
Agent.

 

Section 5.02.              Success Fee. 
The Borrowers shall continue to be obligated to pay to the
Administrative Agent, for the ratable benefit of the Lenders, a success fee
(herein, the “Success Fee”) equal to $1,000,000,
which fee shall be due and payable on the earlier to occur of (i) the
final maturity date of the Term B Loans and the BMO Hedge Termination Payment
and (ii) the repayment in full of all Obligations under the Credit
Agreement; provided, however, that the Success Fee
shall be due and payable only to the extent that the Parent’s EBITDA for any
four consecutive fiscal quarters of the Parent ended on or prior to March 31,
2011 is greater than or equal to $15,000,000.

 

16

 

SECTION 6.                CONDITIONS
PRECEDENT.

 

The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:

 

Section 6.01.              The Borrowers, the Parent, the
Administrative Agent and the Required Lenders shall have executed and delivered
this Amendment.

 

Section 6.02.              The Administrative Agent shall have
received an Amended and Restated Security Agreement duly executed by the
Borrowers and the Guarantors, together with (i) to the extent not already
on file, UCC financing statements to be filed against the Borrowers and each
Guarantor, as debtor, in favor of the Administrative Agent, as secured party,
and (ii) patent, trademark, and copyright collateral agreements to the
extent requested by the Administrative Agent.

 

Section 6.03.              The Administrative Agent shall have
received such other closing documents as it shall have reasonably requested in
connection with this Amendment, including (i) the legal opinion of counsel
to the Borrowers and the Guarantors, (ii) a closing balance sheet of the
Borrowers after giving effect to the LECG Merger, (iii) a monthly cash
flow forecast of the Borrowers from the date of this Amendment through the
final maturity date of the Term B Loans and the BMO Hedge Termination Payment
and (iv) a quarterly model reflective of agreed upon terms.

 

Section 6.04.              The Administrative Agent shall have
received copies of the fully-executed Merger Agreement, which shall be in form
and substance satisfactory to the Administrative Agent.  The representations and warranties in the
Merger Agreement shall be true and correct in all material respects as of the
date of the consummation of the LECG Merger thereunder, which shall be
substantially contemporaneous with the date of the Sixth Amendment and which shall
occur without the waiver by the Parent of any material conditions to is
obligations under the Merger Agreement.

 

Section 6.05.              The Administrative Agent shall have
received evidence of repayment in full (or cash collateralization of all
outstanding letters of credit) of all outstanding amounts under, and
cancellation of, the Second Amended and Restated Credit Agreement dated as of December 15,
2006 and amended as of July 16, 2007, December 20, 2007, February 9,
2009, March 30, 2009 and November 4, 2009, among the New Borrower,
the several financial institutions from time to time party thereto (the “LECG Lenders”) and Bank of America, N.A., as administrative
agent for the LECG Lenders.

 

Section 6.06.              Great Hill and its affiliates shall have
purchased 6,313,131 shares of Series A Convertible Redeemable Preferred
Stock of LECGC for an aggregate purchase price of not less than $24,999,998.76
on terms and conditions reasonably acceptable to the Administrative Agent.

 

Section 6.07.              The Administrative Agent shall have
received certified copies of all documents evidencing the Series A
Convertible Redeemable Preferred Stock of LECGC, which

 

17

 

such documents shall be in form and substance
satisfactory to the Administrative Agent and the Required Lenders.

 

Section 6.08.              The Borrowers shall have in the aggregate
a minimum of $6,000,000 in unrestricted cash on their balance sheets as of the
Sixth Amendment Effective Date.

 

Section 6.09.              The Borrower shall have paid to the
Administrative Agent that portion of the Upfront Fee set forth in Section 5.01
above which is due and payable on the closing date of this Amendment.

 

Section 6.10.              Legal matters incident to the execution
and delivery of this Amendment shall otherwise be satisfactory to the
Administrative Agent and its counsel.

 

Section 6.11.              After giving effect to this Amendment, no
Event of Default shall have occurred and be continuing as of the date of this
Amendment that would otherwise take effect.

 

Section 6.12.              The Administrative Agent shall have
received evidence of insurance required to be maintained under the Loan
Documents, naming the Administrative Agent as lender’s loss payee.

 

Section 6.13.              The Administrative Agent shall have
received for each Lender copies of each Borrower’s and each Guarantor’s
certificates of incorporation and bylaws (or comparable organizational
documents) and any amendments thereto, certified in each instance by its
Secretary or Assistant Secretary.

 

Section 6.14.              The Administrative Agent shall have
received for each Lender copies of resolutions of each Borrower’s and each
Guarantor’s Board of Directors (or similar governing body) authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby, together with specimen signatures of the
persons authorized to execute such documents on each Borrower’s and each
Guarantor’s behalf, all certified in each instance by its Secretary or
Assistant Secretary.

 

Section 6.15.              The Administrative Agent shall have
received for each Lender copies of the certificates of good standing for each
Borrower and each Guarantor (dated no earlier than 30 days prior to the
date hereof) from the office of the secretary of the state of its incorporation
or organization and of each state in which it is qualified to do business as a
foreign corporation or organization.

 

Section 6.16.              The Administrative Agent shall have
received for each Lender a list of each Borrower’s Authorized Representatives.

 

Section 6.17.              The Administrative Agent shall have
received financing statement, tax, and judgment lien search results against the
Property of the New Borrower and each Domestic Subsidiary of the New Borrower
evidencing the absence of Liens on its Property except as permitted by Section 8.8
of the Credit Agreement.

 

18

 

Section 6.18.              The Administrative Agent shall have
received payment required by Section 1.8 of the Credit Agreement, as
amended by the Sixth Amendment, and by Section 3 of the Sixth Amendment.

 

Section 6.19.              The Administrative Agent shall have
received a fully executed letter from Great Hill required by Section 8.23
of the Credit Agreement, as amended by the Sixth Amendment, which such letter
shall be in form and substance reasonably acceptable to the Administrative
Agent.

 

SECTION 7.                REPRESENTATIONS.

 

In order to induce the Lenders to execute and deliver this Amendment,
the Borrower and the Guarantors, as applicable, hereby represent to the Lenders
that as of the date hereof, the representations and warranties set forth in Section 6
of the Credit Agreement (as amended hereby) are and shall be and remain true
and correct in all material respects and, unless specifically waived herein,
the Borrower and the Guarantors are in compliance with all of the terms and
conditions of the Credit Agreement after giving effect to this Amendment and no
Event of Default has occurred and is continuing under the Credit Agreement or
shall result after giving effect to this Amendment.

 

SECTION 8.           MISCELLANEOUS.

 

Section 8.01               Release. 
For value received, including without limitation, the agreements of the
Lenders in this Agreement, the Parent and the Borrowers hereby release the
Administrative Agent and each Lender, its current and former shareholders,
directors, officers, agents, employees, attorneys, consultants, and
professional advisors (collectively, the “Released Parties”) of and from any
and all demands, actions, causes of action, suits, controversies, acts and
omissions, liabilities, and other claims of every kind or nature whatsoever,
both in law and in equity, known or unknown, which the Parent or any Borrower
has or ever had against the Released Parties from the beginning of the world to
this date, including, without limitation, those arising out of the existing
financing arrangements between the Parent, the Borrowers and the Lenders, and
the Parent and the Borrowers further acknowledge that, as of the date hereof,
it does not have any counterclaim, set-off, or defense against the Released
Parties, each of which the Parent and the Borrowers hereby expressly waive.

 

Section 8.02.              The Borrower and the Parent heretofore
executed and delivered the Collateral Documents.  The Borrower and the Parent hereby
acknowledge and agree that the Liens created and provided for by the Collateral
Documents continue to secure, among other things, the Obligations arising under
the Credit Agreement as amended hereby; and the Collateral Documents and the
rights and remedies of the Administrative Agent and Lenders thereunder, the
obligations of the Borrower and the Parent thereunder, and the Liens created
and provided for thereunder in each case remain in full force and effect and
shall not be affected, impaired or discharged hereby.  Nothing herein contained shall in any manner
affect or impair the priority of the liens and security interests created and
provided for by the Collateral Documents as to the indebtedness which would be
secured thereby prior to giving effect to this Amendment.

 

19

 

Section 8.03                            Except
as specifically amended herein or waived hereby, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.  Reference to this specific Amendment need not
be made in the Credit Agreement, the Notes, or any other instrument or document
executed in connection therewith, or in any certificate, letter or
communication issued or made pursuant to or with respect to the Credit
Agreement, any reference in any of such items to the Credit Agreement being sufficient
to refer to the Credit Agreement as amended hereby.

 

Section 8.04                            This
Amendment may be executed in any number of counterparts, and by the different
parties on different counterpart signature pages, all of which taken together
shall constitute one and the same agreement. 
Any of the parties hereto may execute this Amendment by signing any such
counterpart and each of such counterparts shall for all purposes be deemed to
be an original.  This Amendment shall be
governed by the internal laws of the State of Illinois.

 

Section 8.05                            The
Borrowers agree to pay all reasonable documented out-of-pocket costs and
expenses incurred by the Administrative Agent in connection with the
preparation, execution and delivery of this Amendment and the documents and transactions
contemplated hereby, including the documented reasonable fees and expenses of
counsel for the Agent with respect to the foregoing.

 

Section 8.06                            The
Borrowers agree to indemnify the Lenders against all losses, liabilities,
claims, damages and expenses relating to or arising out of the loan documents,
the transactions contemplated hereby, or the Borrowers’ use of loan proceeds,
including, without limitation, environmental problems, except if the same is
directly due to the gross negligence or willful misconduct of the party to be
indemnified.  Such indemnity shall
include, without limitation, reasonable documents out-of-pocket attorneys’ fees
and settlement costs, as further described in Section 13.15 (Costs and
Expenses; Indemnification) of the Credit Agreement.

 

[SIGNATURE PAGE TO FOLLOW]

 

20

 

IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment
to Credit Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.

 

 

	
   

  	
  “BORROWERS”

  
	
   

  	
   

  
	
   

  	
  SMART
  BUSINESS ADVISORY AND CONSULTING, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  LECG, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  “PARENT”

  
	
   

  	
   

  
	
   

  	
  SMART BUSINESS
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  

 

21

 

	
   

  	
  “GUARANTORS”

  
	
   

  	
   

  
	
   

  	
  LECG CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  LECG CANADA HOLDING,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  RED SOX ACQUISITION LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  

 

22

 

Accepted and agreed to.

 

	
   

  	
  BANK
  OF MONTREAL, as Administrative Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  BMO
  CAPITAL MARKETS FINANCING, INC., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  MC FUNDING LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Monroe Capital
  Management LLC,

  as Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

23

 

	
   

  	
  GARRISON FUNDING 2008-1
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  MASSACHUSETTS
  MUTUAL LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Babson Capital
  Management LLC,

  as Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  BABSON MID-MARKET CLO
  LTD. 2007-II

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Babson Capital
  Management LLC,

  as Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
					

 

24

 

	
   

  	
  SARGAS CLO I LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Sargas Asset
  Management, LLC, its

  Portfolio Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  CAPITALSOURCE CF LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  
	
   

  	
  COLTS 2005-2 LTD

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Structured Asset
  Investors, LLC

  as Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Ivy Hill Asset
  Management, L.P.

  as Subservicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
					

 

25

 

	
   

  	
  COLTS 2007-1 LTD

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Structured Asset
  Investors, LLC

  as Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Ivy Hill Asset
  Management, L.P.

  as Submanager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
					

 

26

 

EXHIBIT E

 

LECG, LLC

SMART BUSINESS ADVISORY
AND CONSULTING, LLC

 

COMPLIANCE CERTIFICATE

 

To:                              Bank
of Montreal, as Administrative

Agent under, and the Lenders party to,

the Credit Agreement described below

 

This Compliance
Certificate is furnished to the Administrative Agent and the Lenders pursuant
to that certain Credit Agreement dated as of May 15, 2007, among us (as
extended, renewed, amended or restated from time to time, the “Credit Agreement”). 
Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Credit Agreement.

 

THE UNDERSIGNED
HEREBY CERTIFIES THAT:

 

1.            I
am the duly elected                     
of LECG, LLC;

 

2.            I
have reviewed the terms of the Credit Agreement and I have made, or have caused
to be made under my supervision, a detailed review of the transactions and
conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements;

 

3.            The
examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or the occurrence of any event
which constitutes a Default or Event of Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Compliance Certificate, except as set forth below;

 

4.            The
financial statements required by Section 8.5 of the Credit Agreement and
being furnished to you concurrently with this Compliance Certificate are true,
correct and complete as of the date and for the periods covered thereby; and

 

5.            The
Schedule I hereto sets forth financial data and computations evidencing
the Borrower’s compliance with certain covenants of the Credit Agreement, all
of which data and computations are, to the best of my knowledge, true, complete
and correct and have been made in accordance with the relevant Sections of the
Credit Agreement.

 

 

Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which the Borrower has taken, is taking, or
proposes to take with respect to each such condition or event:

 

 

 

The foregoing
certifications, together with the computations set forth in Schedule I
hereto and the financial statements delivered with this Certificate in support
hereof, are made and delivered this                  
day of                          
20    .

 

	
   

  	
  LECG, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  

 

2

 

SCHEDULE I

TO COMPLIANCE CERTIFICATE

 

LECG, LLC

SMART BUSINESS ADVISORY
AND CONSULTING, LLC

 

COMPLIANCE CALCULATIONS

FOR CREDIT AGREEMENT
DATED AS OF MAY 15, 2007

 

CALCULATIONS AS OF                ,
        

 

	
  A.

  	
  Total Funded
  Debt/EBITDA Ratio ( Section 8.22(a))

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Total Funded Debt

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Net Income for past 4
  quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Interest Expense for
  past 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.

  	
  Income taxes for past 4
  quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.

  	
  Depreciation and
  Amortization Expense for past 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.

  	
  Non-cash stock-based
  compensation expenses and non-cash impairment charges for past 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.

  	
  Goodwill impairment
  charges for past 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.

  	
  Amortization of
  signing, performance or retention bonuses for past 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.

  	
  Expenses incurred in
  connection with the LECG Merger in an aggregate amount not to exceed
  $6,000,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.

  	
  Non-recurring non-cash
  restructuring, integration or severance charges or expenses for past 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.

  	
  Non-recurring cash
  restructuring, integration or severance charges or expenses for past 4
  quarters (including such expenses in an aggregate amount not to exceed
  $7,500,000 after the Sixth Amendment Effective Date)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.

  	
  All amounts paid to FTI
  Consulting, Inc. or other agents engaged or retained by or on behalf of
  the Administrative Agent or the Lenders during for past 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.

  	
  Sum of Lines A2, A3,
  A4, A5, A6, A7, A8, A9, A10, A11 and A12

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.

  	
  The sum of all amounts
  included in Net Income amount in respect of extraordinary gains and non-cash
  gains realized 

  	
   

  	
   

  	
   

  
							

 

 

	
   

  	
   

  	
  for past 4 quarters

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.

  	
  Cash used during past 4
  quarters for payment of multi-year signing, performance or retention bonuses
  (whether or not such amounts were included in arriving at Net Income)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  16.

  	
  Line A13 minus Line A14
  minus Line A15 (“EBITDA”)*

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.

  	
  Ratio of Line A1 to A16

  	
   

  	
  :1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  18.

  	
  Line A17 ratio must not
  exceed

  	
   

  	
  :1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  19.

  	
  Compliance (circle yes
  or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
  Fixed Charge
  Coverage Ratio (Section 8.22(b))

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  EBITDA for past
  4 quarters (Line A16 above)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Capital Expenditures
  (excluding integration-related Capital Expenditures) for past 4 quarters

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Line B1 minus Line B2

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.

  	
  Principal payments for
  past 4 quarters

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.

  	
  Interest Expense for
  past 4 quarters

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.

  	
  Income taxes for past 4
  quarters

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.

  	
  Restricted Payments per
  8.12(c) during past 4 quarters

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.

  	
  Sum of Lines B4, B5,
  B6, B7 and B8

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.

  	
  Ratio of Line B3 to
  Line B8

  	
   

  	
  :1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.

  	
  Line B9 ratio must not
  be less than

  	
   

  	
  :1.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.

  	
  Compliance (circle yes
  or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
  Minimum EBITDA
  (Section 8.22(c))

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  EBITDA for past 4
  quarters (Line A16 above)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Minimum Required
  Amount*

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Compliance (circle yes
  or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
  Capital Expenditures
  (Section 8.22(d))

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Year-to-date Capital
  Expenditures

  	
   

  	
  $

  	
   

  	
   

  

 

	
  *

  	
   

  	
  EBITDA for (A) the
  fiscal quarter of the Parent ended December 31, 2009 shall be
  $7,929,631, (B) the fiscal quarter of the Parent ended
  September 30, 2009 shall be $4,690,429 and (C) the fiscal quarter
  of the Parent ended June 30, 2009 shall be $5,036,816.

  

 

2

 

	
   

  	
  2.

  	
  Maximum permitted
  amount

  	
   

  	
  $

  	
   3,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Compliance (circle yes
  or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
  Rental Expense
  (Section 8.22(e))

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Rental Expenses for
  past quarter

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Maximum permitted
  amount

  	
   

  	
  $

  	
   5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Compliance (circle yes
  or no)

  	
   

  	
  yes/no

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
  Balance Sheet Cash
  (Section 8.22(f))

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.

  	
  Unrestricted cash on
  the balance sheet

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Minimum permitted
  amount

  	
   

  	
  $

  	
   6,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Compliance (circle yes
  or no)

  	
   

  	
  yes/no

  	
   

  

 

3

 

SCHEDULE 6.2

 

SUBSIDIARIES

 

	
  NAME

  	
   

  	
  JURISDICTION OF

  ORGANIZATION

  	
   

  	
  PERCENTAGE

  OWNERSHIP

  	
   

  	
  OWNER

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Smart Business and
  Advisory Consulting, LLC

  	
   

  	
  California

  	
   

  	
  100%

  	
   

  	
  Smart Business
  Holdings, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Smart Financial
  Advisors, LLC

  	
   

  	
  Commonwealth of Pennsylvania

  	
   

  	
  100%

  	
   

  	
  Smart Business
  Advisory and Consulting, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Smart Business Advisory
  and Consulting UK Limited

  	
   

  	
  United Kingdom

  	
   

  	
  100%

  	
   

  	
  Smart Business
  Advisory and Consulting, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Smart Business
  Holdings, LLC*

  	
   

  	
  Delaware

  	
   

  	
  100%

  	
   

  	
  LECG, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Canada
  Holding, Inc.

  	
   

  	
  California

  	
   

  	
  100%

  	
   

  	
  LECG, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Hong Kong Limited

  	
   

  	
  Hong Kong

  	
   

  	
  100%

  	
   

  	
  LECG, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Holding Company
  (UK) Ltd.

  	
   

  	
  United Kingdom

  	
   

  	
  100%

  	
   

  	
  LECG, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Limited (UK)

  	
   

  	
  United Kingdom

  	
   

  	
  100%

  	
   

  	
  LECG, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Limited (New
  Zealand)

  	
   

  	
  New Zealand

  	
   

  	
  100%

  	
   

  	
  LECG, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Canada, Ltd.

  	
   

  	
  Ontario

  	
   

  	
  100%

  	
   

  	
  LECG Canada
  Holding, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Consulting France,
  SAS

  	
   

  	
  France

  	
   

  	
  100%

  	
   

  	
  LECG Holding
  Company (UK) Ltd.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Consulting Spain,
  SL

  	
   

  	
  Spain

  	
   

  	
  100%

  	
   

  	
  LECG Holding
  Company (UK) Ltd.

  

 

	
  *

  	
   

  	
  Red Sox Acquisition LLC
  shall change its name to Smart Business Holdings, LLC in connection with the
  LECG Merger.

  

 

 

	
  LECG Consulting
  Belgium, NV

  	
   

  	
  Belgium

  	
   

  	
  100%

  	
   

  	
  LECG Holding
  Company (UK) Ltd.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LECG Italy, SrL

  	
   

  	
  Italy

  	
   

  	
  100%

  	
   

  	
  LECG Holding
  Company (UK) Ltd.

  

 

2

 

SCHEDULE 6.5

 

FINANCIAL STATEMENT
EXCEPTIONS TO GAAP

 

None.

 

 

SCHEDULE 6.10

 

TITLE TO ASSETS

 

The Borrower’s assets are
subject to Liens pursuant to that certain Second Amended and Restated Credit
Agreement, dated as of December 15, 2006, by and among the New Borrower,
the various financial institutions party thereto, as Lenders, Lasalle Bank
National Association, as Administrative Agent, Bank of America, N.A., as
Syndication Agent, and KeyBank National Association, U. S. Bank National
Association and Wells Fargo Bank, N.A., as Co-Documentation Agents, as amended;
the obligations under which will be repaid on the Sixth Amendment Effective Date.

 

 

SCHEDULE 6.11

 

LITIGATION

 

None.

 

 

SCHEDULE 6.14

 

AFFILIATE TRANSACTIONS

 

None.

 

 

SCHEDULE 8.7

 

ASSUMED LIABILITIES

 

All payment obligation
arising out of deferred compensation or pension obligations to the current or
former employees or Members of Borrower or Affiliates.

 

	
  Name

  	
   

  	
  Purpose

  	
   

  	
  Date of Note or

  Obligation

  	
   

  	
  Remaining

  Term

  	
   

  	
  Monthly

  Pension or

  Severance

  Payments

  	
   

  	
  Face

  Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [Individual
  information omitted from copy]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  926,144Exhibit 10.44

 

RETENTION AND SEVERANCE BENEFIT AGREEMENT

 

WHEREAS, LECG, LLC (hereinafter “Company”) and Deanne M. Tully
(hereinafter “Employee”) have agreed that Employee’s employment as General
Counsel & Secretary will end on June 30, 2010 (hereinafter “Separation
Date”); and

 

WHEREAS, the Company desires to provide an incentive to Employee for
Employee to remain with Company until the Separation Date, and continue to
provide services to Company in Employee’s current position;

 

NOW,
THEREFORE, based on the above representations, the parties hereby enter this
Retention and Severance Benefit Agreement (hereinafter the “Severance Agreement”)
as follows:

 

1.             Consideration From Employee.  In order to qualify for the severance
benefits set forth in Paragraph 2 below, Employee must satisfy the following
conditions:

 

a.     Employee must remain employed with Company through the Separation Date,
except that if Employee is terminated by Company without cause prior to the
Separation Date, Employee shall remain eligible for the full benefits set forth
in paragraph 2 below provided that Employee has reasonably satisfied the terms
of this Severance Agreement as of the date of termination.  In the case of a termination by the Company
without cause prior to the Separation Date, the date of Employee’s termination
shall become the Separation Date for all provisions of this Severance
Agreement.  For purposes of this
Severance Agreement, “cause” shall mean: (i) commission of a
felony or a crime involving moral turpitude or the commission of any other act
of omission involving dishonesty or fraud with respect to the Company or any
affiliate thereof or involving harassment of or discrimination against any
employees of the Company or any affiliate thereof; (ii) misappropriation
of funds or assets of the Company or any affiliate thereof for personal use; (iii) continued
substantial and repeated neglect of Employee’s duties 30 days after receipt of
written notice from the Chairman of the Board describing such neglect; (iv) gross
negligence or willful misconduct in the performance of Employee’s duties after
written notice from the Chairman of the Board, and such failure has not been
cured within 10 days after Employee’s receipt of notice thereof; (v) conduct
constituting a material violation of the Company’s Code of Business Conduct and
Ethics, as determined by the Company’s Board of Directors.

 

b.     With respect to a separate portion of the severance benefits, Employee
must achieve certain performance metrics as mutually agreed upon by Employee
and the Executive Vice President and Head of HR and Operations on behalf of the
Company (hereinafter “Performance Based Severance”).  The Company’s Chief Executive Officer and the
Executive Vice President and Head of HR and Operations shall determine if such
metrics have been reasonably achieved by the Separation Date and shall so
advise Employee in writing.

 

1

 

c.     With respect to
another separate portion of the severance benefits (hereinafter the “Discretionary
Severance”), the Company’s Chief Executive Officer and Chairman of the Board
shall determine if Employee is eligible for all or some of the Discretionary
Severance based on the following criteria: (i) Employee working with the
executive management team to assist in integrating the Company with its merger
partner; and (ii) Employee assisting in the transition of the legal
functions.  In the event the Employee’s
performance has fallen below
satisfactory with respect to the Discretionary Severance criteria, the Chief
Executive Officer shall provide a written communication to Employee notifying
Employee of any such deficiency. 
Employee shall be provided a reasonable opportunity to cure any
deficiencies in performance included in such notice.  Should Employee fail to cure such
deficiencies in performance in a reasonable time period, Company shall so
notify Employee in writing.

 

d.     On or after the Separation Date, Employee must sign a general release
in the form substantially similar to that as set forth in Exhibit A hereto
and not revoke the release during the seven day revocation period.  Employee will be provided the final version
of the general release on the Separation Date, and will be provided up to 45
days to consider that release.  Once
signed by Employee, that release shall be considered an exhibit to, and
incorporated by reference into, this Severance Agreement.  Should Employee fail to
sign the release during the 45 day consideration period, or revoke the release
during the seven day revocation period, Employee shall not receive any
severance benefits descried herein.

 

2.             Severance Benefits. 
Company shall provide to Employee the following Severance Benefits:

 

a.     Severance Pay.  Within 16 days of Company’s receipt of the
release   described in Paragraph 1 above
, Company shall pay to Employee in a lumps sum, less standard deductions and
withholdings:

 

(i)            the sum of one hundred and fifty thousand dollars ($150,000.00); and

 

(ii)           provided the performance metrics have been reasonably met as of the
Separation Date, the additional sum of seventy-five thousand dollars
($75,000.00) as Performance Based Severance; and

 

(iii)         in the absence of written notice advising Employee of a failure to cure
a deficiency as specified in paragraph 1.c above, the additional sum of
seventy-five thousand dollars ($75,000.00) as Discretionary Severance.

 

b.     COBRA reimbursement.  If Employee remains employed with the Company
through the Separation Date, Employee’s eligibility for Company health
insurance will terminate effective July 1, 2010.  If Employee elects to participate in COBRA
continuation coverage, Company shall cause to be paid the full cost of Employee’s
COBRA premium, including any dependents currently covered under 

 

2

 

Employee’s health insurance, commencing on July 1,
2010 through and including June 30, 2011. 
At that time, Employee may elect to continue COBRA coverage at Employee’s
own expense, subject to COBRA’s eligibility requirements.

 

c.     Unamortized sign on bonus.  Employee shall not be
obligated to repay any sum representing Employee’s unamortized sign on bonus
with the Company.

 

3.             Effect on Compensation and Benefits.  This Severance Agreement shall not affect
Employee’s rights to any other benefits provided by law, or rights under other
agreements (such as equity agreements), or vested benefits under any retirement
plan maintained by Company.

 

4.             No Admissions of Wrongdoing or Liability.  The parties agree that the execution of this
Severance Agreement and/or the payment of money or benefits required by this
Severance Agreement shall not be construed as an admission of wrongdoing or
liability by either party.

 

5.             Confirmation
of Existing Employee Obligations.  Employee
understands and agrees that this Severance Agreement and attached release does
not cancel or otherwise diminish any of Employee’s post-employment obligations
under any employment agreement with the Company (or any predecessor or
affiliate of the Company) to which the Employee is a party, including, but not
limited to, obligations relating to confidentiality or the protection of
confidential information of the Company, as well as non-disclosure and Company
ownership of trade secrets and intellectual property.

 

6.             At-Will
Employment.  Nothing it
this Severance Agreement shall alter the at-will nature of Employee’s
employment, meaning either Employee or Company may terminate Employee’s
employment at any time, with or without cause or notice.

 

7.             Attorneys’ Fees.  In
the event either party initiates litigation to enforce the provisions of this
Severance Agreement, the prevailing party shall be entitled to recover his or
its costs and expenses, including reasonable attorneys’ fees.

 

8.             Knowing and Voluntary Agreement.  The parties agree that each has had an
adequate opportunity to consult legal counsel regarding this Severance
Agreement, that each has read this Severance Agreement and fully understands
its terms and legal effect and that each is entering into this Severance
Agreement knowingly, voluntarily, freely and without coercion.

 

10.          Binding Effect.  This Severance
Agreement shall be binding upon the parties and their respective heirs,
administrators, representatives, executives, successors and assigns, and shall
inure to the benefit of these parties, and each of them.

 

11.          Governing Law.  This
Severance Agreement is governed by the laws of the state of California.

 

3

 

12.          Complete Agreement.  The
parties understand and agree that this Severance Agreement, including the
attached release, incorporates the entire understanding among the parties with
respect to severance and recites the sole consideration for the promises
exchanged herein.  This Severance
Agreement expressly supersedes any and all prior written or oral agreements,
understandings, covenants or promises between the parties regarding the subject
matter addressed herein.  No modification
of this Severance Agreement shall be effective unless in writing and executed
by both parties.  In negotiating this
Severance Agreement, no party has relied upon any representation or promise
except those expressly set forth herein.

 

 

	
  Date:

  	
  March 9,
  2010

  	
   

  	
  /s/
  Deanne M. Tully

  
	
   

  	
   

  	
   

  	
  Deanne
  M. Tully

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  LECG,
  LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  March 9,
  2010

  	
   

  	
  By:

  	
  /s/
  Garrett F. Bouton

  
	
   

  	
   

  	
   

  	
  Name:
  Garrett F. Bouton

  
	
   

  	
   

  	
   

  	
  Title:
  CHAIRMAN OF THE BOARD OF DIRECTORS

  

 

4

 

EXHIBIT
A

 

GENERAL RELEASE BY EMPLOYEE

 

WHEREAS,
Deanne M. Tully (hereinafter “Employee”) has entered into a Retention and
Severance Benefit Agreement (hereinafter “Severance Agreement”) with LECG, LLC
(hereinafter “Company”), executed by Employee on                   ,
2010; and

 

WHEREAS, in exchange for certain specific severance benefits provided
for in that Severance Agreement, Employee has agreed to provide this general
release (hereinafter “Release”) with respect to those specific benefits
identified as                          ;

 

THEREFORE, in consideration for those specific severance benefits
identified in these recitals and provided by Company to Employee pursuant to
the Severance Agreement, Employee agrees as follows:

 

1.             Release by the Employee.  Employee hereby fully and
forever releases and discharges the Company, its benefit plans, officers,
directors, employees, agents, members, affiliates, parent entities, successors
and assigns from liability for claims, causes of action and obligations of
every nature whatsoever, including, without limitation, claims of negligence,
breach of contract, wrongful discharge, intentional torts, defamation, and
violation of federal, state or local laws, among which are laws which prohibit
discrimination on the basis of race, color, national origin, religion, sex,
age, disability and other protected traits, such as the Title VII of the Civil
Rights Act of 1964, the Americans With Disabilities Act, and the California
Fair Employment and Housing Act.  This
Release covers claims, known or unknown, which are based upon any act, event or
failure to act which occurred before the date on which this Release is signed
and becomes effective, except claims for vested pension benefits or other
claims which cannot, as a matter of law, be released.  Employee expressly waives and relinquishes
all rights and benefits afforded by Section 1542 of the Civil Code of the
State of California, or any analogous state or federal law, and does so
understanding and acknowledging the significance of such specific waiver of Section 1542.
Section 1542 of the Civil Code of the State of California states as
follows:

 

“A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing the
release, which if known by him or her must have materially affected his or her
settlement with the debtor.”

 

Notwithstanding the provisions of Section 1542,
and for the purpose of implementing a full and complete release, Employee
expressly acknowledges that this Release is intended to include in its effect,
without limitation, all claims which the Employee does not know or suspect to
exist at the time this agreement is signed, and that this Release contemplates
the extinguishment of any such claim or claims.

 

Employee understands and agrees that, by entering into this Release
s/he is waiving any rights or claims that s/he might have under the Age
Discrimination in

 

5

 

Employment
Act, as amended by the Older Workers Benefit Protection Act, and that s/he is
not waiving any rights or claims that may arise after the date s/he executes
this Release.

 

2.             Additional
Employee Agreements.  Employee understands,
acknowledges and agrees to the following provisions, each of which is a
material part of this Release, and a condition of the Company’s entering into
the Severance Agreement:

 

·      That the
payments the Company has agreed to provide in the Severance Agreement and
identified herein include payments to which Employee would not be entitled were
it not for that Agreement.

 

·      That s/he has
been given a reasonable period of time (not to exceed 45 days) to consider
whether or not to sign this Release, and/or acknowledges that s/he has been
advised of his right to that 45-day period (and has voluntarily waived it, if
this Release is signed in less than 45 days) and that s/he has not been pressured
to sign this Release in a shorter period of time.

 

·      That s/he has
received Exhibit 1, attached, describing the positions and ages of those
employees in his job class who are laid off and eligible for the severance
program, as well as any employees in his job class that were not laid off.

 

·      That no promises
or representations except those contained in the Severance Agreement have been
made to the Employee in connection with the termination of her employment.

 

·      That s/he has
read and understands each and every provision in this Release and has been
advised to consult with an attorney in connection with his consideration of
this Release, and that s/he is entering into this Release voluntarily and of
his own free will.

 

·      That s/he has
not filed any complaints against the Company in any court, nor any charges with
any governmental agency (such as the EEOC, the DFEH, or Labor Commissioner),
before signing this Release.

 

3.             Non-Disparagement.  Employee agrees that s/he
will not make any disparaging statements to any current, former or potential
customers, contractors, vendors or employees of the Company, to any media or to
any other person about the Company, its parent and their affiliates, their
officers, directors, shareholders and employees. A disparaging statement is any
confidential information or false or misleading communication that, if
publicized, would cause, or tend to cause, the recipient

 

6

 

of
the communication to question the business condition, integrity, competence,
good character or product quality of the person or entity to whom the
communication  relates.

 

4.             Covenant
Not To Sue.  Employee
represents and warrants that he will not file any legal proceedings against any
released party on the basis of any claims within the scope of the releases
contained in this Release.  Employee also
agrees not to permit any other entity to instigate or cause any legal
proceedings to be filed against a released party as to any claims within the
scope of this Release. This covenant not to sue does not bar Employee from
filing a charge with the EEOC or the
California Department of Fair Employment and Housing.  However, in the event such charge is filed,
Employee agrees that this Release waives any claim to damages asserted by, or
on behalf of, Employee in such charge and that Employee will not be entitled to
any monetary relief.  This covenant not
to sue also does not apply to a lawsuit to determine the validity of this
Release as applied to claims under the ADEA.

 

5.             Governing Law. 
This Release shall be
construed and enforced in accordance with the laws of the California, without
regard to its choice of law principles.

 

THE EMPLOYEE MAY REVOKE THIS
RELEASE AT ANY TIME  FOR A PERIOD
OF SEVEN (7) DAYS AFTER THE DATE OF SIGNING BY THE EMPLOYEE.  TO REVOKE THIS RELEASE, THE EMPLOYEE SHOULD
RETURN HIS COPY OF THE RELEASE ALONG WITH A SIGNED STATEMENT OF REVOCATION TO
THE SR. MANAGER EMPLOYEE RELATIONS/BUSINESS PARTNERING, HUMAN RESOURCES, IN
EMERYVILLE, CALIFORNIA.

 

 

	
  BY THE EMPLOYEE:

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Date

  

 

7

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