AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 1, 1998 (this "AGREEMENT") by
and among The ▇▇▇▇▇▇▇ Group, Inc., a Delaware Corporation ("▇▇▇▇▇▇▇"), MGI
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
▇▇▇▇▇▇▇ ("SUB"), and LECG, Inc. a California corporation ("LECG").
RECITALS
A. The Boards of Directors of ▇▇▇▇▇▇▇, Sub and LECG deem it advisable and in
the best interests of each corporation and its respective stockholders or
shareholders, as applicable, that ▇▇▇▇▇▇▇ and LECG combine in order to advance
the long-term business strategies, goals and interests of ▇▇▇▇▇▇▇ and LECG;
B. The combination of ▇▇▇▇▇▇▇ and LECG shall be effected by the terms of
this Agreement through a transaction in which Sub will merge with and into
LECG, LECG will be the surviving corporation and will become a wholly-owned
subsidiary of ▇▇▇▇▇▇▇, and the shareholders of LECG will become shareholders
of ▇▇▇▇▇▇▇ (the "MERGER");
C. The parties mutually intend that this Agreement will constitute a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "CODE"), and mutually intend for the Merger to
qualify as a reorganization under the provisions of Section 368 of the Code;
and
D. The parties intend to cause the Merger to be accounted for as a pooling
of interests pursuant to APB Opinion No. 16, Staff Accounting Series Releases
130, 135 and 146 and Staff Accounting Bulletins Topic Two.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
DEFINITIONS
"BUSINESS DAY" means a Monday through Friday on which banks are generally
open for business in Illinois and California.
"ERISA AFFILIATE" shall mean any corporation or other business entity that
is included in a controlled group of corporations within which LECG is also
included, as provided in Section 414(b) of the Code; or which is a trade or
business under common control with LECG, as provided in Section 414(c) of the
Code; or which constitutes a member of an affiliated service group within
which LECG is also included, as provided in Section 414(m) of the Code; or
which is required to be aggregated with LECG pursuant to regulations issued
under Section 414(o) of the Code. All ERISA Affiliates are listed in the LECG
Disclosure Schedule.
"GAAP" means generally accepted accounting principles as in effect from time
to time, applied consistently with the principles used in preparing financial
statements of the respective party.
"INDEBTEDNESS" of any Person means all obligations of such Person which in
accordance with GAAP should be classified upon a balance sheet of such Person
as liabilities of such Person, and in any event, regardless of how classified
in accordance with GAAP, shall include: (i) all obligations of such Person for
borrowed money or which have been incurred in connection with the purchase of
property or assets; (ii) obligations secured by any Security Interest upon
property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations; (iii)
obligations created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to
repossession or sale of the property; and (iv) that portion of capitalized
lease obligations properly classified as a liability on a balance sheet in
accordance with GAAP.
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"LECG MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations, employee or client relations, properties, assets
(including intangible assets), liabilities (contingent or otherwise),
financial condition or results of operations of LECG and its Subsidiaries
taken as a whole.
"LIABILITY" means any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to
become due), obligation or Indebtedness, including, any liability for Taxes.
"▇▇▇▇▇▇▇ MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations, employee or client relations, properties, assets
(including intangible assets), liabilities (contingent or otherwise),
financial condition or results of operations of ▇▇▇▇▇▇▇.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of LECG
and its Subsidiaries, consistent with past custom and practice of LECG and its
Subsidiaries (including with respect to quantity and frequency).
"PERSON" means any individual, trust, corporation, partnership, limited
partnership, limited liability company or other business association or
entity, court, governmental body or governmental agency.
"PLANS" means: (i) all employee benefit plans as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA");
(ii) all other severance pay, deferred compensation, excess benefit, vacation,
stock, stock option, fringe benefit and incentive plans, contracts, schemes,
programs, funds, commitments, or arrangements of any kind; and (iii) all other
plans, contracts, schemes, programs, funds, commitments, or arrangements
providing money, services, property, or other benefits, whether written or
oral, formal or informal, qualified or nonqualified, funded or unfunded, and
including any that have been frozen or terminated, which pertain to any
employee, former employee, director, officer, shareholder, consultant, or
independent contractor of LECG or any ERISA Affiliate of LECG and (i) to which
LECG or any ERISA Affiliate of LECG is or has been a party or by which any of
them is or has been bound or (ii) with respect to which LECG or any ERISA
Affiliate of LECG has made any payments or contributions since December 31,
1987 or (iii) to which LECG or any ERISA Affiliate of LECG may otherwise have
any Liability (including any such plan or arrangement formerly maintained by
LECG or any ERISA Affiliate of LECG).
"SECURITY INTEREST" means any mortgage, pledge, security interest, charge,
lien or other encumbrance or right of any third party.
"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity, whether incorporated or unincorporated, of which (i) such Person or
any other Subsidiary of such Person is a general partner (excluding
partnerships, the general partnership interests of which held by such Person
or any Subsidiary of such Person do not have a majority of the voting interest
in such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such Person or by any one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries.
"TAX" or "TAXES" means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any Liability for taxes of a predecessor entity.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
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TABLE OF DEFINED TERMS
CROSS REFERENCE
TERMS IN AGREEMENT
----- ---------------
Affiliate....................................................... Section 6.12
Affiliate Letter ............................................... Section 6.12
Alternative Transaction......................................... Article 8
Approval........................................................ Section 6.6
Assumed Option.................................................. Section 2.1(d)
California Department........................................... Section 1.1
Certificate(s).................................................. Section 2.2(b)
Certificates of Merger.......................................... Section 1.1
CGCL............................................................ Section 1.1
Closing......................................................... Section 1.2
Closing Date.................................................... Section 1.2
Cobra........................................................... Article 3
Competing Offer................................................. Section 6.1
Confidentiality Agreement....................................... Section 6.1
Constituent Corporations........................................ Section 1.3
Delaware Department............................................. Section 1.1
DGCL............................................................ Section 1.1
Dissenters' Shares.............................................. Section 2.3
Dissenting Shareholders......................................... Section 2.3
Effective Time.................................................. Section 1.1
Exchange Act.................................................... Section 3.4(b)
Exchange Agent.................................................. Section 2.2(a)
Exchange Fund................................................... Section 2.2(a)
Existing Option................................................. Section 2.1(d)
Final LECG Purchase Date........................................ Article 2
Government Entity............................................... Section 3.4(b)
Include......................................................... Section 9.3
Include without Limitation...................................... Section 9.3
Indemnified Parties............................................. Section 6.16
Latest Balance Sheet............................................ Section 3.5(c)
LECG Balance Sheet.............................................. Section 3.5(b)
LECG Common Stock............................................... Section 3.2(a)
LECG Disclosure Schedule........................................ Article 3
LECG Expenses................................................... Section 8.3(d)
LECG Insiders................................................... Section 6.20
LECG Intellectual Property Rights............................... 3.10(a)
LECG Preferred Stock............................................ Section 3.2(a)
LECG SEC Reports................................................ Section 3.5(a)
LECG Shareholders Meeting....................................... Section 3.23
LECG Stock Option Plan.......................................... Section 2.1(d)
LECG Stock Purchase Plan........................................ Article 2
Made Available.................................................. Section 9.3
Material Contracts.............................................. Article 3
Material Fix-Rate Engagements................................... Article 3
▇▇▇▇▇▇▇ Balance Sheet........................................... Section 4.4(b)
▇▇▇▇▇▇▇ Common Stock............................................ Section 4.2
▇▇▇▇▇▇▇ Disclosure Schedule..................................... Article 4
▇▇▇▇▇▇▇ Expenses................................................ Section 8.3(c)
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CROSS REFERENCE
TERMS IN AGREEMENT
----- ---------------
▇▇▇▇▇▇▇ Option Plans............................................ Section 4.2
▇▇▇▇▇▇▇ Preferred Stock......................................... Section 4.2
▇▇▇▇▇▇▇ SEC Reports............................................. Section 4.4(a)
▇▇▇▇▇▇▇ Stockholders Meeting.................................... Section 3.23
Preferred Proposal.............................................. Section 6.1
Proxy Statement................................................. Section 3.23
Registration Statement.......................................... Section 3.23
Rule 145........................................................ Section 6.12
SEC............................................................. Section 3.4(b)
Securities Act.................................................. Section 3.2(b)
Stockholders Meetings........................................... Section 3.23
Surviving Corporation........................................... Section 1.3
Systems......................................................... Section 3.28
The Date hereof................................................. Section 9.3
The Date of this Agreement...................................... Section 9.3
Third Party..................................................... Article 8
Y-2000 Compliant................................................ Section 3.28
ARTICLE 1.
The Merger
1.1. Effective Time of The Merger. Subject to the provisions of this
Agreement, an abbreviated version of this Agreement meeting the requirements
of Section 1101 of the California General Corporation Law ("CGCL"), certified
by the president or any vice president and the secretary or assistant
secretary of each of Sub and LECG in accordance with Section 1103 of the CGCL,
and a certificate of merger prepared in accordance with Section 252 of the
Delaware General Corporation Law ("DGCL") (collectively, the "CERTIFICATES OF
MERGER") shall be duly prepared, executed and acknowledged by the Surviving
Corporation, (as defined in Section 1.3), Sub and such other parties as may be
appropriate, and thereafter the applicable Certificate of Merger shall be
delivered to the Secretary of State of the State of California (the
"CALIFORNIA DEPARTMENT"), as provided in Section 1103 of the CGCL, and the
Secretary of State of the State of Delaware ("DELAWARE DEPARTMENT"), in each
case for filing as soon as practicable on or after the date on which the
Closing (as defined in Section 1.2) occurs. The Merger shall become effective
on the date and at the time of the acceptance of the respective Certificates
of Merger by the California Department and the Delaware Department or at such
time thereafter as is provided in the Certificate of Merger (the "EFFECTIVE
TIME").
1.2. Closing. The closing of the Merger (the "CLOSING") will take place at
10:00 a.m., Central Time, on a date to be specified by ▇▇▇▇▇▇▇ and LECG, which
shall be no later than August 31, 1998 (the "CLOSING DATE"), at the offices of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, unless another date or place is agreed to in writing by ▇▇▇▇▇▇▇ and
LECG.
1.3. Effects of the Merger.
(a) At the Effective Time, (i) the separate existence of Sub shall cease
and Sub shall be merged with and into LECG (Sub and LECG are sometimes
referred to herein as the "CONSTITUENT CORPORATIONS" and LECG is sometimes
referred to herein as the "SURVIVING CORPORATION"), (ii) the Articles of
Incorporation of LECG as in effect immediately prior to the Effective Time
shall remain the Articles of Incorporation of the Surviving Corporation,
and (iii) the Bylaws of LECG as in effect immediately prior to the
Effective Time shall remain the Bylaws of the Surviving Corporation.
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(b) At and after the Effective Time, the effects of the Merger shall be
as provided in the applicable provisions of the CGCL and the DGCL. Without
limiting the generality of the foregoing, and subject thereto, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises of a public as well as of a private nature, and be subject to
all the restrictions, disabilities and duties of each of the Constituent
Corporations; and all and singular rights, privileges, powers and
franchises of each of the Constituent Corporations, and all property, real,
personal and mixed, and all debts due to either of the Constituent
Corporations on whatever account, as well as for stock subscriptions and
all other things in action or belonging to each of the Constituent
Corporations, shall be vested in the Surviving Corporation, and all
property, rights, privileges, powers and franchises, and all and every
other interest shall be thereafter as effectually the property of the
Surviving Corporation as they were of the Constituent Corporations, and the
title to any real estate vested by deed or otherwise, in either of the
Constituent Corporations, shall not revert or be in any way impaired; but
all rights of creditors and all liens upon any property of either of the
Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Constituent Corporations shall thereafter
attach to the Surviving Corporation, and may be enforced against it to the
same extent as if such debts and liabilities had been incurred by it.
1.4. Directors and Officers. The directors of Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Articles of Incorporation and
Bylaws of the Surviving Corporation, and the officers of the Surviving
Corporation shall initially be the persons set forth on Schedule 1.4 hereto,
and all other officers of the Surviving Corporation as of the Effective Time,
in each case until their respective successors are duly elected or appointed.
ARTICLE 2.
Conversion of Securities
2.1. Conversion of Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of LECG
Common Stock (as defined in Section 3.2) or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, $.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and ▇▇▇▇▇▇▇-Owned Stock. Any shares of
LECG Common Stock that are owned by ▇▇▇▇▇▇▇, Sub or any other wholly-owned
Subsidiary of ▇▇▇▇▇▇▇ shall be canceled and retired and shall cease to
exist and no stock of ▇▇▇▇▇▇▇ or other consideration shall be delivered in
exchange therefor.
(c) Conversion of LECG Common Stock. Subject to Section 2.3, each issued
and outstanding share of LECG Common Stock (other than shares to be
canceled in accordance with Section 2.1(b)) shall be converted into the
right to receive 0.6 fully paid and nonassessable shares of ▇▇▇▇▇▇▇ Common
Stock (as defined in Section 4.2) (adjusted for any stock split or stock
dividend effected between the date of this Agreement and the Effective
Time). All shares of LECG Common Stock, when converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to
receive the shares of ▇▇▇▇▇▇▇ Common Stock and any cash in lieu of
fractional shares of ▇▇▇▇▇▇▇ Common Stock to be issued or paid in
consideration therefor upon the surrender of such certificate in accordance
with Section 2.2, without interest.
(d) LECG Stock Plans and Options. At the Effective Time, ▇▇▇▇▇▇▇ shall
assume LECG's rights and obligations under each of the outstanding options
previously granted under the stock option plan of LECG, as amended and
dated as of October, 1997 (the "LECG STOCK OPTION PLAN") (each such option
existing immediately prior to the Effective Time being called an "EXISTING
OPTION," and each such option so
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assumed by ▇▇▇▇▇▇▇ being called an "ASSUMED OPTION"), by which assumption
the optionee shall have the right to purchase that number of shares of
▇▇▇▇▇▇▇ Common Stock (with any fractional share to be rounded down to the
nearest whole share) into which the number of shares of LECG Stock subject
to purchase under the Existing Option would be converted pursuant to the
terms of the Merger as described in Section 2.1(c) hereof. Each Assumed
Option shall constitute a continuation of the Existing Option, substituting
▇▇▇▇▇▇▇ for LECG as issuer. The aggregate exercise price for the total
number of shares of ▇▇▇▇▇▇▇ Common Stock subject to the Assumed Option
shall be the aggregate exercise price at which the Existing Option was
exercisable for the total number of shares of LECG Common Stock, and the
purchase price per share of ▇▇▇▇▇▇▇ Common Stock thereunder shall be such
aggregate exercise price divided by the total number of whole shares of
▇▇▇▇▇▇▇ Common Stock covered thereby (with any fraction of a cent to be
rounded up to the nearest whole cent); provided, however, that in the case
of any Existing Option to which Section 422 of the Code applies, the option
price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in
order to comply with Section 424(a) of the Code. The assumption of the
Assumed Options by ▇▇▇▇▇▇▇ as provided in this Section 2.1(d) shall not,
except as provided herein, provide the holders thereof additional benefits
which they did not have immediately prior to the Effective Time or relieve
the holders thereof of any obligations or restrictions applicable to the
Assumed Options or the shares of ▇▇▇▇▇▇▇ Common Stock obtainable upon
exercise of the Assumed Options. ▇▇▇▇▇▇▇ shall take all corporate action
necessary to reserve and make available for issuance a sufficient number of
shares of ▇▇▇▇▇▇▇ Common Stock for delivery under the Assumed Options.
LECG shall take such action as is necessary to cause the ending date of the
then current offering period under the LECG Stock Purchase Plan (the "LECG
STOCK PURCHASE PLAN") to be the last trading day on which the LECG Common
Stock is traded on The New York Stock Exchange immediately prior to the
Effective Time (the "FINAL LECG PURCHASE DATE"); provided, that, such change
in the offering period shall be conditioned upon the consummation of the
Merger. On the Final LECG Purchase Date, LECG shall apply the funds credited
as of such date under the LECG Stock Purchase Plan within each participant's
payroll withholding account to the purchase of whole shares of LECG Common
Stock in accordance with the terms of the LECG Stock Purchase Plan.
Employees of LECG as of the Effective Time shall be permitted to participate
in the ▇▇▇▇▇▇▇ Stock Purchase Plan commencing on the first enrollment date of
such plan following the Effective Time, subject to the eligibility provisions
of such plan (with employees receiving credit, for purposes of such
eligibility provisions, for service with LECG or Sub).
2.2. Exchange of Certificates. The procedures for exchanging outstanding
shares of LECG Common Stock for ▇▇▇▇▇▇▇ Common Stock pursuant to the Merger
shall be as follows:
(a) Exchange Agent. As of the Effective Time, ▇▇▇▇▇▇▇ shall deposit with
American Stock Transfer and Trust Company (the "EXCHANGE AGENT"), for the
benefit of the holders of shares of LECG Common Stock, certificates
representing the shares of ▇▇▇▇▇▇▇ Common Stock issuable pursuant to
Section 2.1 in exchange for outstanding shares of LECG Common Stock (such
shares of ▇▇▇▇▇▇▇ Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"EXCHANGE FUND").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of LECG Common Stock (each a "CERTIFICATE"
and, collectively, the "CERTIFICATES") and which shares were converted
pursuant to Section 2.1 into the right to receive shares of ▇▇▇▇▇▇▇ Common
Stock (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as ▇▇▇▇▇▇▇ and LECG may
reasonably specify), (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of
▇▇▇▇▇▇▇ Common Stock and (iii) the notice of approval of the Merger and
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accompanying statutory materials, information and instruction as required
by Section 1301(a) of the CGCL). Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by ▇▇▇▇▇▇▇, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
▇▇▇▇▇▇▇ Common Stock which such holder has the right to receive pursuant to
the provisions of this Section 2.2(b), and the Certificate so surrendered
shall immediately be canceled. In the event of a transfer of ownership of
LECG Common Stock which is not registered in the transfer records of LECG,
a certificate representing the proper number of shares of ▇▇▇▇▇▇▇ Common
Stock may be issued to a transferee if the Certificate representing such
LECG Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes have been paid. Until surrendered
as contemplated by this Section 2.2, each Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive
upon such surrender the certificate representing shares of ▇▇▇▇▇▇▇ Common
Stock and cash in lieu of any fractional shares of ▇▇▇▇▇▇▇ Common Stock as
contemplated by this Section 2.2. The instructions for effecting the
surrender of the Certificates shall set forth procedures that must be taken
by the holder of any Certificate that has been lost, destroyed or stolen.
It shall be a condition to the right of such holder to receive a
certificate representing shares of ▇▇▇▇▇▇▇ Common Stock that the Exchange
Agent shall have received, along with the letter of transmittal, a duly
executed lost certificate affidavit, including an agreement to indemnify
▇▇▇▇▇▇▇, signed exactly as the name or names of the registered holder or
holders appeared on the books of LECG immediately prior to the Effective
Time, together with a customary bond and such other documents as ▇▇▇▇▇▇▇ or
the Exchange Agent may reasonably require in connection therewith.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect
to ▇▇▇▇▇▇▇ Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of ▇▇▇▇▇▇▇ Common Stock represented thereby and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to
subsection (e) below until the holder of such Certificate shall surrender
such Certificate. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
certificates representing whole shares of ▇▇▇▇▇▇▇ Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of ▇▇▇▇▇▇▇ Common
Stock to which such holder is entitled pursuant to subsection (e) below and
the amount of dividends or other distributions with a record date after the
Effective Time previously paid with respect to such whole shares of ▇▇▇▇▇▇▇
Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of ▇▇▇▇▇▇▇ Common Stock.
(d) No Further Ownership Rights in LECG Common Stock. All shares of
▇▇▇▇▇▇▇ Common Stock issued upon the surrender for exchange of shares of
LECG Common Stock in accordance with the terms hereof (including any cash
paid pursuant to subsection (c) or (e) of this Section 2.2) shall be deemed
to have been issued in full satisfaction of all rights pertaining to such
shares of LECG Common Stock, subject, however to the Surviving
Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by LECG on such shares of LECG Common Stock in
accordance with the terms of this Agreement on or prior to the date hereof
and which remain unpaid at the Effective Time and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of LECG Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this Section 2.2.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of ▇▇▇▇▇▇▇ Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to exercise any rights of a
stockholder of ▇▇▇▇▇▇▇. Notwithstanding any other provision of this
Agreement, each holder of shares of LECG Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of
a share
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of ▇▇▇▇▇▇▇ Common Stock (after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of ▇▇▇▇▇▇▇
Common Stock multiplied by the last reported sale price of ▇▇▇▇▇▇▇ Common
Stock, as reported on the Nasdaq National Market, on the trading day
immediately preceding the date of the Effective Time.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the shareholders of LECG for one year after the
Effective Time shall be delivered to ▇▇▇▇▇▇▇, and any shareholders of LECG
who have not previously complied with this Section 2.2 shall thereafter
look only to ▇▇▇▇▇▇▇ for payment of their claim for ▇▇▇▇▇▇▇ Common Stock,
any cash in lieu of fractional shares of ▇▇▇▇▇▇▇ Common Stock, and any
dividends or distributions with respect to LECG Common Stock or ▇▇▇▇▇▇▇
Common Stock.
(g) No Liability. Neither ▇▇▇▇▇▇▇ nor LECG shall be liable to any holder
of shares of LECG Common Stock or ▇▇▇▇▇▇▇ Common Stock, as the case may be,
for such shares (or dividends or distributions with respect thereto)
delivered to a public official as required by any applicable abandoned
property, escheat or similar law.
2.3. Dissenters' Rights. The shares of LECG Common Stock ("DISSENTERS'
SHARES") held by any shareholder of LECG who has exercised dissenters' rights
pursuant to the CGCL (a "DISSENTING SHAREHOLDER") shall not be converted
pursuant to the Merger unless and until the holder thereof shall have failed
to perfect or shall have effectively withdrawn or lost such holder's rights to
dissent from the Merger under the CGCL, and shall be entitled to receive only
the payment provided for by the CGCL. If any such holder shall fail to perfect
or shall have effectively withdrawn or lost the right to dissent, the
Dissenters' Shares held by such Dissenting Shareholder shall thereupon be
treated as though such shares had been converted into shares of ▇▇▇▇▇▇▇ Common
Stock pursuant to the terms hereof.
ARTICLE 3.
Representations and Warranties of LECG
LECG represents and warrants to ▇▇▇▇▇▇▇ and Sub that the statements
contained in this Article 3 are true and correct, except as set forth in the
disclosure schedule delivered by LECG to ▇▇▇▇▇▇▇ (the "LECG DISCLOSURE
SCHEDULE"). The LECG Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this
Article 3, and the disclosure in any paragraph shall qualify only the
corresponding paragraph in this Article 3.
3.1. Organization. Each of LECG and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
respective jurisdiction of its incorporation, has all requisite corporate
power to own, lease and operate its property and to carry on its business as
now being conducted and as proposed to be conducted, and is duly qualified
and/or licensed to do business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have a LECG Material Adverse Effect. Except as set forth on the LECG
Disclosure Schedule, neither LECG nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity, excluding securities in any
publicly traded company held for investment by LECG and comprising less than
one percent (1%) of the outstanding stock of such company.
3.2. LECG Capital Structure.
(a) The authorized capital stock of LECG consists of 40,000,000 shares of
common stock, par value $0.001 per share ("LECG COMMON STOCK"), and
5,000,000 shares of Preferred Stock, par value $0.001 per share ("LECG
PREFERRED STOCK"). As of June 30, 1998, (i) 13,027,867 shares of LECG
Common Stock were issued and outstanding, all of which are duly authorized,
validly issued, fully paid and nonassessable, (ii) there were options
outstanding under the LECG Stock Option Plans, entitling the
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optionees thereunder upon valid exercise to acquire in the aggregate
608,300 shares of LECG Common Stock at a weighted average exercise price of
$9.00 per share and (iii) no shares of LECG Common Stock were held by any
Subsidiary of LECG. No change in such capitalization has occurred since
such date other than the exercise and termination of stock options
outstanding. No shares of LECG Preferred Stock were issued and outstanding.
All shares of LECG Common Stock subject to issuance as specified above,
upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, shall be duly authorized, validly
issued, fully paid and nonassessable. There are no obligations, contingent
or otherwise, of LECG or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of LECG Common Stock or the capital stock of
any LECG Subsidiary or make any investment (in the form of a loan, capital
contribution or otherwise) in any such Subsidiary or any other entity. All
of the outstanding shares of capital stock of each of LECG's Subsidiaries
are duly authorized, validly issued, fully paid and nonassessable and all
such shares are owned by LECG free and clear of all Security Interests,
agreements, preemptive rights, and/or limitations in LECG's voting rights,
charges or other restrictions of any nature.
(b) Except as set forth in this Section 3.2 or as reserved for future
grants of options under the LECG Stock Option Plan or reserved for issuance
pursuant to LECG's Stock Purchase Plan, there are no equity securities of
any class of LECG or any of its Subsidiaries, or any security exchangeable
into or exercisable for such equity securities, issued, reserved for
issuance or outstanding. Except as set forth in this Section 3.2, there are
no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which LECG or any of its Subsidiaries is a
party or by which any of them are bound obligating LECG or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of LECG or any of its Subsidiaries
or obligating LECG or any of its Subsidiaries to grant, extend, accelerate
the vesting of or enter into any such option, warrant, equity security,
call, right, commitment or agreement. None of the Existing Options that are
not currently exercisable shall become exercisable as a result of the
consummation of the Merger. To the knowledge of LECG, there are no voting
trusts, proxies or other agreements or understandings with respect to the
shares of capital stock of LECG. All of the outstanding LECG Common Stock,
options or warrants were either registered under the Securities Act of
1933, as amended (the "SECURITIES ACT") or were issued pursuant to valid
exemptions from registration. LECG has taken all actions necessary such
that after the Effective Time there will not exist any rights of any nature
granting any Person a right to acquire the securities of LECG and/or its
Subsidiaries.
3.3. Authority and Status.
(a) The execution, delivery and performance by LECG of this Agreement and
each and every other agreement, document and instrument provided for herein
have been duly authorized and approved by the Board of Directors of LECG
subject only to the approval of the Merger by LECG's shareholders under
applicable provisions of LECG's Articles of Incorporation and the CGCL. The
Board of Directors of LECG has (i) determined that the Merger is fair to
and in the best interests of the shareholders of LECG and (ii) resolved to
submit the Merger to and recommend approval of the Merger by the
shareholders of LECG.
(b) LECG has the corporate power and authority to execute and deliver
this Agreement, to perform hereunder and, upon approval of the transactions
provided for herein by the shareholders of LECG, to consummate the
transactions contemplated hereby without any other corporate or shareholder
approval. Assuming this Agreement and each and every agreement, document or
instrument to be executed, delivered and performed by LECG in connection
herewith are valid and legally binding obligations of ▇▇▇▇▇▇▇ and Sub, this
Agreement and each and every agreement, document and instrument to be
executed, delivered and performed by LECG in connection herewith constitute
or will, when executed and delivered, constitute the valid and legally
binding obligation of LECG enforceable against it in accordance with their
respective terms, except as enforceability may be limited by applicable
equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally. Attached hereto on the LECG
Disclosure Schedule are true, correct and complete copies of the current
Articles of Incorporation and Bylaws of LECG and each of its Subsidiaries.
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3.4. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by LECG does not, and
the consummation of the transactions contemplated by this Agreement will
not, (i) conflict with, or result in any violation or breach of, any
provision of the Articles of Incorporation or Bylaws of LECG; (ii) result
in any violation or breach of, require any consent or approval under, or
constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under any of the terms,
conditions or provisions of any material note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which LECG
or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound; or (iii) subject to the consents,
approvals, orders, authorizations, filings and registrations specified in
Section 3.4(b), conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to LECG or any of its Subsidiaries or any of their
properties or assets.
(b) Based on the representation of ▇▇▇▇▇▇▇ that neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby would require ▇▇▇▇▇▇▇ to file a pre-merger notification
report under the ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality ("GOVERNMENTAL ENTITY")
is required by or with respect to LECG or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) the
filing and declaration of effectiveness of the Registration Statement (as
defined in Section 3.23) with the Securities and Exchange Commission (the
"SEC") in accordance with the Securities Act; (ii) the filing of the
applicable Certificates of Merger with the California Department and the
Delaware Department; (iii) the filing of the Proxy Statement (as defined in
Section 3.23) with the SEC in accordance with the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"); and (iv) such consents,
approvals, orders, authorizations, registrations, declarations and filings
as may be required under applicable federal and state securities laws.
3.5. SEC Filings; Financial Statements.
(a) LECG has filed and made available to ▇▇▇▇▇▇▇ all forms, each
registration statement, schedule, report, proxy statement and document
required to be filed by LECG with the SEC since October 16, 1997
(collectively, the "LECG SEC REPORTS"). The LECG SEC Reports (i) at the
time filed, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may
be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in the LECG SEC Reports
or necessary in order to make the statements in the LECG SEC Reports, in
the light of the circumstances under which they were made, not misleading.
None of LECG's Subsidiaries is required to file any forms, reports or other
documents with the SEC. Since October 16, 1997, LECG has made all filings
with the SEC in a timely manner as required by law and no event has
occurred that requires an additional filing or any amendment to a prior
filing.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the LECG SEC Reports, including any
LECG SEC Reports filed after the date of this Agreement until the Closing,
complied or will comply as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto,
was or will be prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes to such financial statements or,
in the case of unaudited statements, as permitted for presentation in
Quarterly Reports on Form 10-Q), and fairly presented or will fairly
present the consolidated financial position of LECG and its Subsidiaries as
at the respective dates and the consolidated results of their operations
and cash flows for the periods indicated, except that the unaudited interim
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financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not material in amount. The audited
balance sheet of LECG as of December 31, 1997 is referred to herein as the
"LECG BALANCE SHEET."
(c) LECG has provided ▇▇▇▇▇▇▇ with a consolidated balance sheet and
related statements of income, changes in shareholder's equity and cash
flows for LECG and each of its Subsidiaries as of and for the three month
period ended March 31, 1998 ("LATEST BALANCE SHEET"). The Latest Balance
Sheet and the related statement of income and cash flows are consistent
with the accounting policies used in preparing the consolidated financial
statements attached to the LECG SEC Reports and fairly present the results
for the interim period presented thereby, except that such financial
statements are subject to normal and recurring year-end adjustments which
are not material in amount.
3.6. Intentionally Omitted.
3.7. Absence of Certain Changes or Events. Since the date of the LECG
Balance Sheet, LECG and its Subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (i) any material damage, destruction or
loss (whether or not covered by insurance) with respect to LECG or any of its
Subsidiaries; (ii) any change by LECG in its accounting methods, principles or
practices; (iii) any increase in dividends or employee compensation or
benefits payable by LECG, except for normal increases in compensation
consistent, in amounts and timing, with historical practices; (iv) any
revaluation by LECG of any of its assets, including, without limitation,
writing down the value of capitalized software or inventory or writing off
notes or accounts receivable other than in the Ordinary Course of Business;
(v) any change in any material respect in which the business of LECG and its
Subsidiaries has been conducted, including, without limitation, billing of
clients or collection of accounts receivable, purchases of goods and services
or payment of accounts payable; (vi) any agreement and/or understanding
entered into which alters or amends any licensing or contractual arrangements
with respect to any LECG Intellectual Property Rights, other than in the
Ordinary Course of Business; (vii) any loss or change in the relationships
with any client, contractor or supplier that would constitute a LECG Material
Adverse Effect; or (viii) any other transaction, commitment, dispute, or any
other action or event or condition that would be reasonably likely to have a
LECG Material Adverse Effect.
3.8. Restrictions on Business Activities. There is no agreement, judgment,
injunction, order or decree binding upon LECG or any of its Subsidiaries which
has the effect of prohibiting or materially impairing any current or future
business practice of LECG or any of its Subsidiaries, any acquisition of
property by LECG or any of its Subsidiaries or the conduct of business by LECG
or any of its Subsidiaries as currently conducted or as proposed to be
conducted by LECG or any of its Subsidiaries.
3.9. Taxes.
(a) LECG and its Subsidiaries have, as of the date hereof, and will prior
to the Effective Time have, timely and accurately filed all federal, state,
foreign and local income, franchise, sales, real and personal property and
other tax returns and reports required to be filed by them prior to such
dates and have timely paid, or will prior to the Effective Time timely pay,
all taxes shown on such returns as owed for the periods of such returns,
including all withholding or other payroll related taxes shown on such
returns. The tax basis of all assets of LECG and the Subsidiaries as
reflected on their books and records is correct and accurate in all
material aspects. Except as described on the LECG Disclosure Schedule,
neither LECG nor any Subsidiary is, nor will any of them become, subject to
any additional taxes, interest, penalties or other similar charges with
respect to the tax returns and reports referred to in the first sentence of
this Section 3.9(a) that would individually or in the aggregate have a LECG
Material Adverse Effect. No assessments or notices of deficiency or other
communications have been received by LECG, nor have any been threatened,
with respect to any such tax return that has not been paid, discharged or
fully reserved on the LECG Balance Sheet, and no amendments or applications
for refund have been filed or are planned with respect to any such return.
LECG does not have any material liabilities for Taxes that have not been
accrued for or reserved on the LECG Balance Sheet, whether asserted or
unasserted, contingent or otherwise. Except as
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set forth on the LECG Disclosure Schedule, there are no agreements between
LECG or any Subsidiary and any taxing authority, including, without
limitation, the IRS, waiving or extending any statute of limitations with
respect to any tax return, and neither LECG nor any of its Subsidiaries has
filed any consent or election under the Code, including, without
limitation, any election under Section 341(f) of the Code.
(b) Neither LECG nor any of its Subsidiaries has made any payments and
none of them is obligated to make any payments, and none of them is a party
to any agreement that under certain circumstances could obligate it, or any
successor in interest, to make any parachute payments that will not be
deductible under Section 280G of the Code.
(c) LECG and its Subsidiaries (i) have withheld proper and accurate
amounts in compliance with the tax withholding provisions of all applicable
laws for all compensation paid to the officers and employees of LECG and
its Subsidiaries, (ii) have correctly and properly prepared and duly and
timely filed all returns and reports relating to those amounts withheld
from their officers and employees and to their employer liability for
employment taxes under the Tax Code and applicable state and local laws and
(iii) have duly and timely paid and remitted to the appropriate taxing
authorities the amounts withheld from their officers and employees and any
additional amounts that represent their employer liability under applicable
law for employment taxes.
(d) To the knowledge of LECG, no issue has been raised by the IRS, any
state or local taxing authority, or any other investigation or audit, that
will have, or can be expected to have, a LECG Material Adverse Effect.
(e) Neither LECG nor any of its Subsidiaries is a "United States real
property holding corporation" as defined in Section 897(c)(2) of the Code.
3.10. Intellectual Property.
(a) LECG and its Subsidiaries own or use under valid fully paid licenses
all patents, trademarks, trade names, service marks, copyrights and mask
works, all applications for and registrations of such patents, trademarks,
trade names, service marks, copyrights and mask works, and all processes,
formulae, methods, schematics, technology, know-how, computer software
programs or applications, algorithms, routines, and source code, and
tangible or intangible proprietary information or material that are
necessary to conduct the business of LECG and its Subsidiaries as currently
conducted or planned to be conducted, excluding commercially available
"shrink-wrap" and office automation software (the "LECG INTELLECTUAL
PROPERTY RIGHTS").
(b) There are no claims or demands, and to the knowledge of LECG no
reasonable basis for any such claim or demand, of any Person that any of
the LECG Intellectual Property Rights, or any processes or equipment used
by LECG, any of the services of LECG or its Subsidiaries or any of the
software or other proprietary rights or intellectual property developed by
LECG or its Subsidiaries, infringes or conflicts in any way with any
copyright, patent, trademark, service ▇▇▇▇, trade name, trade secret,
license, application or other proprietary right or intellectual property of
any other Person, or makes unauthorized use of any secret process, formula,
method, information, know-how or any other proprietary confidential
information, including, without limitation, any software or software
documentation, of any other Person. LECG or its Subsidiaries own all right,
title and interest in and to the LECG Intellectual Property Rights, other
than the items expressly identified as such on the LECG Disclosure
Schedule, as to which LECG or its Subsidiaries has a valid, assignable
license. Each of LECG's and its Subsidiaries' rights in and to such LECG
Intellectual Property Rights are freely assignable in their respective own
names, as applicable, including the right to create derivatives, and
neither LECG nor any of its Subsidiaries is under any obligation to pay any
royalty or other compensation to any third party or to obtain any approval
or consent for use of licensing of any of the LECG Intellectual Property
Rights. All of the interests of LECG and its Subsidiaries in the LECG
Intellectual Property Rights are free and clear of all Security Interests,
and are not currently being challenged or, to the knowledge of LECG
infringed in any way or involved in any pending legal or
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administrative proceedings before any court or governmental agency. Except
for licenses to clients in the Ordinary Course of Business, no current
licenses for the use of any such rights have been granted by LECG or its
Subsidiaries to any third parties, and to the knowledge of LECG none of the
LECG Intellectual Property Rights is being used by any other Person.
(c) It is the policy of LECG and its Subsidiaries to have each of their
employees sign an employee nondisclosure and work-for-hire agreements
substantially in the form attached to the LECG Disclosure Schedule. No
employees or independent contractors of either LECG or any of its
Subsidiaries have any valid claims or rights to any of the LECG
Intellectual Property Rights. To the knowledge of LECG and its
Subsidiaries, no employee of either LECG or any of its Subsidiaries is a
party to or otherwise bound by any agreement with or obligated to any other
Person (including, any former employer) which in any respect conflicts with
any obligation, commitment or job responsibility of such employee to LECG
or its Subsidiaries under any agreement to which currently he or she is a
party or otherwise.
(d) Neither LECG nor any of its Subsidiaries is or will be, as a result
of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or
other agreement relating to the LECG Intellectual Property Rights or any
license, sublicense or other agreement pursuant to which LECG or any of its
Subsidiaries is authorized to use any third party patents, trademarks or
copyrights, including software, which are used in the manufacture of,
incorporated in, or form a part of any product of LECG or any of its
Subsidiaries.
(e) All patents, trademarks, service marks, copyrights, trade secrets and
other proprietary rights held by LECG or any of its Subsidiaries which LECG
considers to be material to its business are valid and enforceable. Neither
LECG nor any of its Subsidiaries (i) is a party to any suit, action or
proceeding which involves a claim of infringement of any patent, trademark,
service ▇▇▇▇ or copyright or the violation of any trade secret or other
proprietary right of any third party; or (ii) has any knowledge that the
marketing, licensing, sale, offer for sale, or use of any of its services
or products infringes any patent, trademark, service ▇▇▇▇, copyright, trade
secret or other proprietary right of any third party.
3.11. Agreements, Contracts and Commitments. The LECG Disclosure Schedule
contains a true and complete list of all contracts, agreements, commitments
and other instruments (identified by title, date and parties) (whether oral or
written), excluding customer engagement contracts that are terminable by
either party upon reasonable notice, to which LECG or its Subsidiaries is a
party that involve a receipt or an expenditure by LECG or its Subsidiaries or
require the performance of services or delivery of goods to, by, through, on
behalf of or for the benefit of LECG or its Subsidiaries, which in each case
relates to a contract, agreement, commitment or instrument that requires
payments in excess of $100,000 per year or provides for receipts in excess of
$100,000 per year. The LECG Disclosure Schedule also identifies (identified by
title, date and parties) (whether oral or written) all:
(a) leases, rental agreements or other contracts or commitments affecting
the ownership or leasing of, title to or use of any interest in real or
personal property with payments equal to or greater than $8,000 per month
and all maintenance or service agreements relating to any real or personal
property with payments equal to or greater than $8,000 per month;
(b) contracts or commitments providing for payments by LECG or its
Subsidiaries based in any manner upon the sales, purchases, receipts,
income or profits of LECG or its Subsidiaries other than those entered into
in the Ordinary Course of Business between LECG and the principals and
experts servicing LECG clients;
(c) franchise agreements, marketing agreements or royalty agreements;
(d) employment contracts or commitments regarding employees or
independent contractors (except to the extent listed pursuant to Section
3.15) (including without limitation any standard form contracts such as
employee nondisclosure agreements, provided that to the extent
substantially all employees have executed any such standard form, a copy of
such form is attached in lieu of each individual contract and LECG
represents and warrants that substantially all employees have executed such
form), and any other contracts,
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plans or commitments providing for any continuing payment of any type or
nature, including, without limitation, any severance, termination,
parachute, or other payments (whether due to a change in control,
termination or otherwise) and bonuses and vested commissions.
(e) instruments or arrangements evidencing or related to Indebtedness for
money borrowed or to be borrowed, whether directly or indirectly, by way of
purchase-money obligation, guaranty, subordination, conditional sale,
lease-purchase or otherwise;
(f) joint product development agreements with any party other than
▇▇▇▇▇▇▇;
(g) any written arrangement concerning non-competition;
(h) written arrangements not disclosed on the LECG Disclosure Schedule
pursuant to any other provision in this Section 3.11 under which the
consequences of a default or termination could have a LECG Material Adverse
Effect;
(i) agreements with any employee, the benefits of which are contingent
on, or the terms of which are materially altered upon, the occurrence of a
transaction of the nature contemplated by this Agreement involving LECG or
its Subsidiaries; and
(j) agreements or Plans the benefits of which will be increased or
accelerated by the occurrence of the transactions contemplated by this
Agreement.
The contracts, agreements, commitments and other instruments listed or
required to be listed on the LECG Disclosure Schedule are herein referred to
as the "MATERIAL CONTRACTS."
All the Material Contracts are valid and binding upon LECG or the applicable
Subsidiary and upon the other parties thereto and are in full force and effect
and enforceable in accordance with their terms, except as enforceability may
be affected by bankruptcy, insolvency, moratorium or similar laws affecting
creditors rights generally and general principles of equity relating to the
availability of equitable remedies. Except as set forth on the LECG Disclosure
Schedule, none of LECG, the applicable Subsidiary and any other party to any
such contract, commitment or arrangement has breached any provision of, or is
in default under, the terms thereof; and except as set forth on the LECG
Disclosure Schedule, there are no existing facts or circumstances that would
prevent the work in process of LECG or its Subsidiaries or their contracts and
agreements from maturing upon performance by LECG or its Subsidiaries into
accounts receivable collectible in the aggregate in amounts consistent in all
material respects with historical experience. Except as set forth on the LECG
Disclosure Schedule, there are no material contracts or commitments that
require the performance of services or provision of products by LECG at a
direct cost for each such contract or commitment reasonably expected to be in
excess of the revenue to be derived pursuant to the terms of such contract or
commitment. Except for terms specifically described on the LECG Disclosure
Schedule, neither LECG nor any Subsidiary has received any payment from any
contracting party in connection with or as an inducement for entering into any
contract, agreement, policy or instrument except for payment for actual
services rendered or to be rendered by LECG or its Subsidiaries consistent
with amounts historically charged for such services. Except for those Material
Contracts set forth on the LECG Disclosure Schedule and identified as "Fixed-
Rate Engagements" (the "MATERIAL FIXED-RATE ENGAGEMENTS"), neither LECG nor
its Subsidiaries is a party to any fixed fee or capped price contracts or
engagement arrangements involving work which if billed at LECG's normal hourly
rates would exceed $250,000 in annual revenues, nor does LECG or its
Subsidiaries have any outstanding offers, bids or proposals to perform any
services on a fixed fee or capped basis exceeding such amount. The LECG
Disclosure Schedule identifies each Material Fixed-Rate Engagement and sets
forth the number of hours remaining to complete the work required thereunder
and the amount of fees uncollected with respect thereto. The LECG Disclosure
Schedule also sets forth the amount of client payments to LECG or its
Subsidiaries through the date hereof with respect to services not yet
performed by LECG or its Subsidiaries, which payments individually or in the
aggregate exceed $100,000.
3.12. Ownership of Assets. LECG and its Subsidiaries have title to all of
their respective properties and assets used or useful in their respective
businesses, other than leased property, licensed property and immaterial items
of personal property, in each case free and clear of any liens or Security
Interests, except as disclosed or
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reserved against in the Latest Balance Sheet and except for liens arising from
current taxes not yet due and payable and other immaterial liens. Except as
disclosed on the LECG Disclosure Schedule, all material assets owned or leased
by LECG or any Subsidiary are in good operating condition and reasonable state
of repair, subject only to ordinary wear and tear. Neither LECG nor any
Subsidiary has received any notice of violation of any applicable zoning
regulation, ordinance or other law, regulation or requirement relating to
their operations and properties, whether owned or leased. All of the accounts
receivable of LECG and its Subsidiaries as of the Effective Time will reflect
actual transactions and will have arisen in the Ordinary Course of Business.
3.13. Litigation. The LECG Disclosure Schedule sets forth each instance in
which LECG or any of its Subsidiaries (i) is subject to any unsatisfied
judgment, order, decree, stipulation, injunction or charge or (ii) is a party
to or, is threatened to be made a party to, any charge, complaint, action,
suit, proceeding, hearing, or investigation of or in any court or quasi-
judicial or administrative agency of any Federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the charges, complaints,
actions, suits, proceedings, hearings, and investigations set forth on the
LECG Disclosure Schedule could reasonably be expected to result in any LECG
Material Adverse Effect. LECG has no knowledge of any basis on which such
charge, complaint, action, suit, proceeding, hearing, or investigation may be
brought or threatened against LECG or its Subsidiaries.
3.14. Intentionally Omitted.
3.15. Employees; Employment Matters.
(a) Except as disclosed on the LECG Disclosure Schedule, neither LECG nor
its Subsidiaries have any unsatisfied Liability to any previously
terminated employee or independent contractor. LECG and its Subsidiaries
have disclosed all written employee handbooks, policies, programs and
arrangements to ▇▇▇▇▇▇▇.
(b) No key employee or group of employees has informed LECG and its
Subsidiaries of any plans to terminate their employment with LECG or its
Subsidiaries as a result of the transactions contemplated hereby or
otherwise. Neither LECG nor its Subsidiaries are a party to or bound by any
collective bargaining agreement and neither LECG nor its Subsidiaries have
experienced any strikes, grievances, other collective bargaining disputes
or claims of unfair labor practices. Neither LECG nor its Subsidiaries have
any knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of
LECG and its Subsidiaries.
(c) All persons employed by LECG and its Subsidiaries are employees at
will or otherwise employed such that LECG and its Subsidiaries may
terminate their employment at any time, with or without cause, without
creating any material cause of action against LECG and its Subsidiaries or
otherwise giving rise to any material liability of LECG and its
Subsidiaries for wrongful discharge, breach of contract or tort.
(d) Except as disclosed on the LECG Disclosure Schedule, LECG and its
Subsidiaries have complied in all material respects with all applicable
laws relating to labor, including, without limitation, any requirements of
the Immigration and Nationalization Act of 1952, as amended by the
Immigration Reform and Control Act of 1986 and the regulations promulgated
thereunder, any provisions thereof relating to wages, termination pay,
vacation pay, fringe benefits, collective bargaining and the payment and/or
accrual of the same and all insurance and all other costs and expenses
applicable thereto, and neither LECG nor its Subsidiaries are liable for
any arrearage, or any costs or penalties for failure to comply with any of
the foregoing. Without limiting the generality of the foregoing, neither
LECG nor its Subsidiaries have incurred a violation of Part 6 of Subtitle B
of Title I of ERISA ("COBRA") or other applicable state insurance
continuation law. No COBRA or other state insurance continuation law
violation exists or will exist with respect to any employees of either LECG
and its Subsidiaries prior to and including the Effective Time, nor will
any such violation occur as a result of the transactions contemplated
hereby.
(e) Each Person whom LECG or its Subsidiaries has retained as an
independent contractor during the past three years qualifies as an
independent contractor and not as an employee of LECG or its Subsidiaries
under the Code and all applicable state laws. Neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby
shall cause LECG or its Subsidiaries to be in breach of any
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agreement with any employment, contractor or consultant or cause LECG or
its Subsidiaries to be liable to pay any severance or other amount to any
employee, contractor or consultant of LECG or its Subsidiaries.
3.16. Employee Benefit Plans. LECG and each of its Plans have at all times
complied in all material respects with all applicable laws relating to labor
and employee benefits, including without limitation, all applicable provisions
of ERISA and the Code, any laws relating to wages, termination pay, vacation
pay, fringe benefits, collective bargaining and the payment and/or accrual of
the same and all taxes, insurance and all other costs and expenses applicable
thereto.
3.17. Licenses and Permits; Compliance with Law. LECG and its Subsidiaries
hold all licenses, certificates, permits, franchises and rights from all
appropriate federal, state or other public authorities necessary for the
conduct of their respective businesses and the use of their respective assets,
except for such licenses, certificates, permits, franchises and rights the
absence of which would not individually or in the aggregate have a LECG
Material Adverse Effect. Except for any matters which will not have a LECG
Material Adverse Effect, LECG and its Subsidiaries presently are conducting
their respective businesses so as to comply with all applicable statutes,
ordinances, rules, regulations and orders of any governmental authority.
Further, LECG and its Subsidiaries are not presently charged with, or under
governmental investigation with respect to, any actual or alleged violation of
any statute, ordinance, rule or regulation, or presently the subject of any
pending or, to the knowledge of LECG, threatened adverse proceeding by any
regulatory authority having jurisdiction over their respective businesses,
properties or operations. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will result in
the termination of any license, certificate, permit, franchise or right held
by LECG or any of its Subsidiaries, and all such licenses, certificates,
permits, franchises and rights will inure to the benefit of the Surviving
Corporation after the consummation of the transactions contemplated by this
Agreement.
3.18. Intentionally Omitted.
3.19. Related Parties.
(a) Except as set forth on the LECG Disclosure Schedule or in the LECG
SEC Reports, to the knowledge of LECG, no shareholder owning greater than a
five-percent (5%) interest in LECG, no Affiliate or member of the immediate
family of any such shareholder, and no officer or director or member of the
immediate family of such officer or director of LECG or any Subsidiary
possesses, directly or indirectly, any beneficial interest in, or is a
director, officer or employee of, or member of the immediate family of a
director, officer or employee of, any corporation, partnership, firm,
association or business organization that is a client, supplier, customer,
lessor, lessee, lender, creditor, borrower, debtor or contracting party
with or of LECG or any Subsidiary (except as a shareholder holding less
than a one-percent (1%) interest in a corporation whose shares are traded
on a national or regional securities exchange or in the over-the-counter
market), other than arrangements with LECG principals and experts in the
Ordinary Course of Business.
(b) LECG has provided to each of its "Affiliates" as identified in
Section 6.12 a copy of the Affiliates Letter and has obtained their
agreement to execute and provide the Affiliates Letter to ▇▇▇▇▇▇▇ 31 days
prior to the date of the LECG Shareholder Meeting.
3.20. Pooling of Interests. LECG is not aware of any facts or circumstances
in respect of it or its accounting procedures, or transactions in its capital
stock, which would have the effect of precluding accounting for the
transactions contemplated hereby as a "pooling of interests."
3.21. Complete Disclosure. No statement contained herein or in any
certificate, schedule, list, exhibit or other instrument furnished or required
to be furnished to ▇▇▇▇▇▇▇ pursuant to the provisions hereof contains, or will
at the time it is furnished contain, any untrue statement of any material fact
or omits or will omit to state any fact necessary to make the statements
herein or therein not false or misleading. As used in this Section, "material"
means material to the financial condition, business, properties, rights or
operations of LECG and its Subsidiaries, taken as a whole.
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3.22. No Special Shareholder Rights. Except as disclosed on the LECG
Disclosure Schedule, LECG has no agreement with any individual or entity that
grants such person any rights as a shareholder of LECG Common Stock that are
in addition to such holder's rights under LECG's Articles of Incorporation or
Bylaws (including, without limitation, registration rights, preemptive rights,
put rights, rights of co-sale or rights to Board representation).
3.23. Registration Statement; Proxy Statement/Prospectus. The information
supplied by LECG for inclusion in the registration statement on Form S-4
pursuant to which shares of ▇▇▇▇▇▇▇ Common Stock issuable in the Merger will
be registered with the SEC (the "REGISTRATION STATEMENT") shall not at the
time the Registration Statement is declared effective by the SEC contain any
untrue statement of a material fact or omit to state any material fact
required to be stated in the Registration Statement or necessary in order to
make the statements in the Registration Statement, not misleading. The
information supplied by LECG for inclusion in the joint proxy
statement/prospectus (the "PROXY STATEMENT") to be sent to the shareholders of
LECG and the stockholders of ▇▇▇▇▇▇▇ in connection with the meetings of their
shareholders and stockholders, respectively, to consider this Agreement and
the Merger (the "LECG SHAREHOLDERS MEETING" and the "▇▇▇▇▇▇▇ STOCKHOLDERS
MEETING," respectively, and, collectively, the "STOCKHOLDERS MEETINGS") shall
not, on the date the Proxy Statement is first mailed to shareholders of LECG
and the stockholders of ▇▇▇▇▇▇▇, at the time of the Stockholders Meetings and
at the Effective Time, contain any statement which, at such time and in light
of the circumstances under which it was made, is false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements made in the Proxy Statement not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meetings which has become false or misleading. If
at any time prior to the Effective Time any event relating to LECG or any of
its Affiliates, officers or directors should be discovered by LECG which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, LECG shall promptly inform ▇▇▇▇▇▇▇.
3.24. Intentionally Omitted.
3.25. Intentionally Omitted.
3.26. Suppliers and Clients. LECG shall provide ▇▇▇▇▇▇▇ with a true and
accurate list of (i) all of the clients that generated at least $250,000 in
revenues to LECG in any of the last three calendar years with whom LECG and
its Subsidiaries have had engagements since December 31, 1995 and (ii) a list
of all LECG clients with ▇▇▇▇▇▇▇▇ in 1998 in excess of $100,000. Since the
date of the LECG Latest Balance Sheet, no client of LECG and its Subsidiaries
accounting for more than 5% of LECG's revenues in fiscal 1997, has canceled,
materially reduced the scope of, or otherwise adversely modified its
relationship with LECG or its Subsidiaries and, no such Person has any
intention to do so, and there are no disputes or problems or notices of
dissatisfaction with or from any such client of LECG or its Subsidiaries and
the consummation of the transactions contemplated hereby will not, to the
knowledge of LECG, adversely affect any relationships with such clients.
3.27. Warranty; Unbillable Work. All services rendered by LECG and its
Subsidiaries have been in material conformity with all applicable contractual
commitments and all warranties, and LECG and its Subsidiaries have no
Liability for damages in connection therewith, subject to the reserve for
client claims set forth on the face of the LECG Balance Sheet. LECG and its
Subsidiaries are not obligated to perform nonbillable client service work
(under the terms of the client agreement or necessary in order to maintain the
client relationship), in order to correct work previously performed that was
incorrect or deficient, to complete work in excess of the fixed rate limit
with respect to a particular project or otherwise, other than reasonable and
customary efforts to maintain client satisfaction consistent with the size and
scope of a particular project and consistent with maintaining the reasonable
profitability of such project.
3.28. Year 2000 Compliance. LECG and its Subsidiaries have conducted a
reasonable review of all operating codes, programs, utilities and other
software as well as all hardware and systems utilized by LECG and its
Subsidiaries (collectively, "SYSTEMS") to determine whether such Systems are
designed to record, store,
A-17
process, and present calendar dates falling on or after January 1, 2000 in the
same manner, and with the same functionality, as provided on or before
December 31, 1999, and are designed to not lose functionality or degrade in
performance as a consequence of such software operating at a date later than
December 31, 1999 (such design and performance being referred to as "Y-2000
COMPLIANT"). To the extent such review identified Systems that are not Y-2000
Compliant, LECG and its Subsidiaries have taken, or are planning to take,
appropriate corrective action with respect to such Systems, and the costs of
such corrective action will not exceed, in the aggregate, $250,000.
ARTICLE 4.
Representations and Warranties of ▇▇▇▇▇▇▇ and Sub
▇▇▇▇▇▇▇ and Sub represent and warrant to LECG that the statements contained
in this Article 4 are true and correct, except as set forth in the disclosure
schedule delivered by ▇▇▇▇▇▇▇ to LECG (the "▇▇▇▇▇▇▇ DISCLOSURE SCHEDULE"). The
▇▇▇▇▇▇▇ Disclosure Schedule shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article 4, and the
disclosure in any paragraph shall qualify only the corresponding paragraph in
this Article 4.
4.1. Organization. Each of ▇▇▇▇▇▇▇, Sub and ▇▇▇▇▇▇▇'▇ other Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite corporate
power to own, lease and operate its property and to carry on its business as
now being conducted and as proposed to be conducted, and is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a ▇▇▇▇▇▇▇
Material Adverse Effect. Except as set forth in the ▇▇▇▇▇▇▇ SEC Reports (as
defined in Section 4.4) or the ▇▇▇▇▇▇▇ Disclosure Schedule, neither ▇▇▇▇▇▇▇
nor any of its Subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture or other business association
or entity, excluding securities in any publicly traded company held for
investment by ▇▇▇▇▇▇▇ or any of its Subsidiaries and comprising less than one
percent (1%) of the outstanding stock of such company.
4.2. ▇▇▇▇▇▇▇ Capital Structure.
(a) The authorized capital stock of ▇▇▇▇▇▇▇ consists of 75,000,000 shares of
▇▇▇▇▇▇▇ Common Stock $0.001 par value ("▇▇▇▇▇▇▇ COMMON STOCK") and 3,000,000
shares of Preferred Stock, $0.001 par value ("▇▇▇▇▇▇▇ PREFERRED STOCK"). As of
June 30, 1998, (i) approximately 22,450,000 shares of ▇▇▇▇▇▇▇ Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no shares of ▇▇▇▇▇▇▇ Common Stock were held in the
treasury of ▇▇▇▇▇▇▇ or by Subsidiaries of ▇▇▇▇▇▇▇ and (iii) an amount equal to
25% of the outstanding shares of ▇▇▇▇▇▇▇ Common Stock were reserved for future
issuance pursuant to stock options granted and outstanding under ▇▇▇▇▇▇▇'▇
stock option plans (the "▇▇▇▇▇▇▇ OPTION PLANS"). As of the date of this
Agreement, no shares of ▇▇▇▇▇▇▇ Preferred Stock are issued and outstanding.
All shares of ▇▇▇▇▇▇▇ Common Stock subject to issuance as specified above,
upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, shall be duly authorized, validly issued,
fully paid and nonassessable. There are no obligations, contingent or
otherwise, of ▇▇▇▇▇▇▇ or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of ▇▇▇▇▇▇▇ Common Stock or the capital stock of
any ▇▇▇▇▇▇▇ Subsidiary. All of the outstanding shares of capital stock of each
of ▇▇▇▇▇▇▇'▇ Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and all such shares are owned by ▇▇▇▇▇▇▇ or a Subsidiary of
▇▇▇▇▇▇▇ free and clear of all Security Interests, agreements, limitations in
▇▇▇▇▇▇▇'▇ voting rights, charges or other restrictions of any nature.
(b) Except as set forth in this Section 4.2 or as reserved for future grants
of options under the ▇▇▇▇▇▇▇ Option Plans or future sales under the ▇▇▇▇▇▇▇
Purchase Plan, there are no equity securities of any class of ▇▇▇▇▇▇▇ or any
of its respective Subsidiaries, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in this Section 4.2 or in the ▇▇▇▇▇▇▇
Disclosure
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Schedule, there are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which ▇▇▇▇▇▇▇ or any of its
respective Subsidiaries is a party or by which any of them are bound
obligating ▇▇▇▇▇▇▇ or any of its respective Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of ▇▇▇▇▇▇▇ or any of its respective Subsidiaries or obligating ▇▇▇▇▇▇▇
or any of its respective Subsidiaries to grant, extend, accelerate the vesting
of or enter into any such option, warrant, equity security, call, right,
commitment or agreement. To the knowledge of ▇▇▇▇▇▇▇, there are no voting
trusts, proxies or other agreements or understandings with respect to the
shares of capital stock of ▇▇▇▇▇▇▇.
4.3. Authority; No Conflict; Required Filings and Consents.
(a) ▇▇▇▇▇▇▇ and Sub have all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of ▇▇▇▇▇▇▇ and Sub,
subject only to the approval of the shares to be issued in the Merger by
▇▇▇▇▇▇▇'▇ shareholders under applicable provisions of the By-Laws of the
National Association of Securities Dealers, as amended. This Agreement has
been duly executed and delivered by ▇▇▇▇▇▇▇ and Sub and constitutes the valid
and binding obligation of ▇▇▇▇▇▇▇ and Sub, enforceable in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy laws and
other similar laws affecting creditors' rights generally and (ii) general
principles of equity, regardless of whether asserted in a proceeding in equity
or at law.
(b) The execution and delivery of this Agreement by ▇▇▇▇▇▇▇ and Sub does
not, and the consummation of the transactions contemplated by this Agreement
will not, (i) conflict with, or result in any violation or breach of any
provision of the Certificate of Incorporation or Bylaws of ▇▇▇▇▇▇▇ or
certificate or Bylaws of Sub, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which ▇▇▇▇▇▇▇ or any of its respective
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, or (iii) subject to the consents, approvals, orders,
authorizations, filings and registrations specified in Section 4.3.(c),
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
▇▇▇▇▇▇▇ or any of its respective Subsidiaries or any of their properties or
assets, except in the case of clause (ii) for any such violations, breaches,
defaults, terminations, cancellations or accelerations which in the aggregate
would not be reasonably likely to have a ▇▇▇▇▇▇▇ Material Adverse Effect, or a
material adverse effect on the ability of ▇▇▇▇▇▇▇ or Sub to consummate the
transactions contemplated by this Agreement.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to ▇▇▇▇▇▇▇ or any of its Subsidiaries in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Registration Statement
with the SEC in accordance with the Securities Act, (ii) the filing of the
Certificates of Merger with the California Department and the Delaware
Department, (iii) the filing of the Proxy Statement with the SEC in accordance
with the Exchange Act, (iv) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country, (v)
applicable Blue Sky laws and (vi) such other consents, authorizations,
filings, approvals and registrations which in the aggregate, if not obtained
or made, would not be reasonably likely to have a ▇▇▇▇▇▇▇ Material Adverse
Effect or a material adverse effect on the parties' ability to consummate the
transactions contemplated by this Agreement.
4.4. Sec Filings; Financial Statements.
(a) ▇▇▇▇▇▇▇ has filed and made available to LECG all forms, reports and
documents required to be filed by ▇▇▇▇▇▇▇ with the SEC since July 26, 1996,
(collectively, the "▇▇▇▇▇▇▇ SEC REPORTS"). The ▇▇▇▇▇▇▇ SEC Reports (i) at the
time filed, complied in all material respects with the applicable requirements
of the Securities
A-19
Act and the Exchange Act, as the case may be, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
the ▇▇▇▇▇▇▇ SEC Reports or necessary in order to make the statements in the
▇▇▇▇▇▇▇ SEC Reports, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the ▇▇▇▇▇▇▇ SEC Reports, including any ▇▇▇▇▇▇▇
SEC Reports filed after the date of this Agreement until the Closing, complied
or will comply as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will
be prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as may
be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted for presentation in Quarterly Reports on
Form 10-Q), and fairly presented or will fairly present the consolidated
financial position of ▇▇▇▇▇▇▇ and its Subsidiaries as at the respective dates
and the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount. The audited balance sheet of ▇▇▇▇▇▇▇ as of
December 31, 1997 is referred to herein as the "▇▇▇▇▇▇▇ BALANCE SHEET."
4.5. Absence of Certain Changes or Events. Since the date of the ▇▇▇▇▇▇▇ SEC
Reports there has not been any transaction, commitment, dispute or any other
event or condition that individually or in the aggregate constitutes a ▇▇▇▇▇▇▇
Material Adverse Effect.
4.6. Litigation. Except as described in the ▇▇▇▇▇▇▇ Disclosure Schedule,
there is no action, suit or proceeding, claim, arbitration or, to the
knowledge of ▇▇▇▇▇▇▇, investigation against ▇▇▇▇▇▇▇ or any of its Subsidiaries
pending or as to which ▇▇▇▇▇▇▇ or any Subsidiary has received any written
notice of assertion. Except as disclosed in the ▇▇▇▇▇▇▇ Disclosure Schedule,
neither ▇▇▇▇▇▇▇ nor any of its Subsidiaries is subject to any outstanding
order, writ, injunction or decree which, insofar as can be reasonably
foreseen, individually or in the aggregate, would have a ▇▇▇▇▇▇▇ Material
Adverse Effect.
4.7. Licenses and Permits; Compliance with Law. ▇▇▇▇▇▇▇ and its Subsidiaries
hold all licenses, certificates, permits, franchises and rights from all
appropriate federal, state or other public authorities necessary for the
conduct of their respective businesses and the use of their respective assets,
except for such licenses, certificates, permits, franchises and rights the
absence of which would not individually or in the aggregate have a ▇▇▇▇▇▇▇
Material Adverse Effect. Except for any matters which will not have a ▇▇▇▇▇▇▇
Material Adverse Effect, ▇▇▇▇▇▇▇ and its Subsidiaries presently are conducting
their respective businesses so as to comply with all applicable statutes,
ordinances, rules, regulations and orders of any governmental authority.
Further, ▇▇▇▇▇▇▇ and its Subsidiaries are not presently charged with, or under
governmental investigation with respect to, any actual or alleged violation of
any statute, ordinance, rule or regulation, or presently the subject of any
pending or, to the knowledge of ▇▇▇▇▇▇▇, threatened adverse proceeding by any
regulatory authority having jurisdiction over their respective businesses,
properties or operations. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will result in
the termination of any license, certificate, permit, franchise or right held
by ▇▇▇▇▇▇▇ or any of its Subsidiaries, and all such licenses, certificates,
permits, franchises and rights will inure to the benefit of the Surviving
Corporation after the consummation of the transactions contemplated by this
Agreement.
4.8. Pooling of Interests. ▇▇▇▇▇▇▇ is not aware of any facts or
circumstances in respect of it or its accounting procedures which would have
the effect of precluding accounting for the transactions contemplated hereby
as a "pooling of interests."
4.9. Registration Statement; Proxy Statement/Prospectus. The information
supplied by ▇▇▇▇▇▇▇ (including information concerning Sub) for inclusion in
the Registration Statement shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact
or omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in
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the Registration Statement, not misleading. The information supplied by
▇▇▇▇▇▇▇ (including information concerning Sub) for inclusion in the Proxy
Statement shall not, on the date the Proxy Statement is first mailed to the
shareholders of LECG and the stockholders of ▇▇▇▇▇▇▇, at the time of the
Stockholders' Meetings and at the Effective Time, contain any statement which,
at such time and in light of the circumstances under which it was made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Proxy
Statement not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Stockholders' Meetings which has become
false or misleading. If at any time prior to the Effective Time any event
relating to ▇▇▇▇▇▇▇ or any of its Affiliates, officers or directors should be
discovered by ▇▇▇▇▇▇▇ which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, ▇▇▇▇▇▇▇ shall
promptly inform LECG.
4.10. Complete Disclosure. No statement contained herein or in any
certificate, schedule, list, exhibit or other instrument furnished or required
to be furnished to LECG pursuant to the provisions hereof contains, or will at
the time it is furnished contain, any untrue statement of any material fact or
omits or omit to state any fact necessary to make the statements herein or
there not false or misleading. As used in this Section, "material" means
material to the financial condition, business, properties, rights or
operations of ▇▇▇▇▇▇▇ and its Subsidiaries, taken as a whole.
ARTICLE 5.
Conduct of Business
5.1. Covenants of LECG. During the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, LECG agrees as to itself and its Subsidiaries (except to the
extent that ▇▇▇▇▇▇▇ shall otherwise consent in writing), to carry on its
business in the usual, regular and ordinary course in substantially the same
manner as previously conducted, to pay its debts and taxes when due, subject
to good faith disputes over such debts or taxes, to pay or perform its other
obligations when due, and, to the extent consistent with such business, to use
all reasonable efforts consistent with past practices and policies to (i)
preserve intact its present business organization, (ii) keep available the
services of its present officers and key employees, (iii) maintain its
properties, (iv) keep its insurance in force, and (v) preserve its
relationships with clients, suppliers, distributors, licensors, licensees, and
others having business dealings with it. LECG shall promptly notify ▇▇▇▇▇▇▇ of
any event or occurrence not in the Ordinary Course of Business of LECG or its
Subsidiaries, where such event or occurrence would result in a breach of any
covenant of LECG or its Subsidiaries, set forth in this Agreement or cause any
representation or warranty of LECG, set forth in this Agreement to be untrue
as of the date of, or giving effect to, such event or occurrence. Except as
expressly contemplated by this Agreement, LECG shall not, without the prior
written consent of ▇▇▇▇▇▇▇ which shall not be unreasonably withheld:
(a) Accelerate, amend or change the period of exercisability of options
or restricted stock granted under any employee stock plan of such party or
authorize cash payments in exchange for any options granted under any of
such plans except as required by the terms of such plans or any related
agreements in effect as of the date of this Agreement;
(b) Transfer or license to any Person or otherwise extend, amend or
modify any material rights to the LECG Intellectual Property Rights, other
than the grant of non-exclusive licenses in the Ordinary Course of Business
substantially consistent with past practices; issue any shares of LECG
capital stock or capital stock of any Subsidiary, or any securities which
may be exchanged or exercised for or converted into LECG capital stock or
the capital stock of any Subsidiary (including, without limitation, any
options or warrants) other than shares of LECG Common Stock issuable upon
exercise of Existing Options;
(c) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of
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its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock, provided however that LECG may
grant options under the terms of its existing plans to newly hired or newly
promoted employees in the Ordinary Course of Business;
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or assets of, or by any other manner, any
business or any corporation, partnership or other business organization or
division, or otherwise acquire or agree to acquire any assets;
(e) Sell, lease, license or otherwise dispose of any of its properties or
assets which are material, individually or in the aggregate, to its
business and that of its Subsidiaries, taken as a whole, except for
transactions entered into in the Ordinary Course of Business;
(f) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary
or wages of employees in the ordinary course in accordance with past
practices, (ii) grant any additional severance or termination pay to, or
enter into any employment or severance agreements with, officers, (iii)
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any employee, except in settlement of dispute
with terminated employees, (iv) enter into any collective bargaining
agreement, or (v) establish, adopt, enter into or amend in any material
respect any bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, trust, fund, policy or arrangement
for the benefit of any directors, officers or employees;
(g) Revalue any material amount of its assets, including writing down the
value of inventory or writing off notes or accounts receivable other than
in the Ordinary Course of Business;
(h) Incur any Indebtedness for borrowed money or guarantee any such
Indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities or guarantee any debt securities of others,
other than Indebtedness incurred under outstanding lines of credit in the
Ordinary Course of Business;
(i) Incur or commit to incur aggregate capital expenditures in an amount
in excess of $1,000,000;
(j) Change or take any action with respect to accounting policies or
procedures, other than actions in the Ordinary Course of Business and
consistent with past practice;
(k) Waive, release, assign, settle or compromise any material claims or
litigation;
(l) Change the amortization or capitalization policies or otherwise make
any changes in the accounting policies of LECG and its Subsidiaries;
(m) Except as described on the LECG Disclosure Schedule, make any tax
election or settle or compromise any material federal, state, local or
foreign tax liability; or
(n) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (m) above, or any action which is
reasonably likely to make any of such party's representations or warranties
contained in this Agreement untrue or incorrect in any material respect on
the date made (to the extent so limited) or as of the Effective Time.
5.2. Cooperation. Subject to compliance with applicable law, from the date
hereof until the Effective Time, each of ▇▇▇▇▇▇▇ and LECG shall confer on a
regular and frequent basis with one or more representatives of the other party
to report operational matters of materiality and the general status of ongoing
operations and shall promptly provide the other party or its counsel with
copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated
hereby.
5.3. Pooling Treatment. Neither ▇▇▇▇▇▇▇ nor LECG, nor any of their
respective Subsidiaries, shall take any action that would adversely affect the
ability of the parties hereto to account for the business combination to be
effected by the Merger as a pooling of interests.
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ARTICLE 6.
Additional Agreements
6.1. No Solicitation.
(a) LECG shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, through any officer, director, employee,
representative, agent or affiliate, (i) solicit, initiate, or encourage
(including by way of furnishing information) any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a proposal or offer
for a merger, consolidation, business combination, sale of substantial assets,
sale of shares of capital stock (including without limitation by way of a
tender offer) or similar transactions involving LECG, other than the
transactions contemplated or permitted by this Agreement (any of the foregoing
inquiries or proposals being referred to in this Agreement as a "COMPETING
OFFER"), (ii) engage in negotiations or discussions concerning, or provide any
non-public information to any Person relating to, any Competing Offer, or
(iii) agree to, approve or recommend any Competing Offer. Neither the Board of
Directors of LECG, nor any committee thereof, shall (a) withdraw or modify, or
propose to withdraw or modify, in any manner adverse to ▇▇▇▇▇▇▇, the approval
or recommendation of the Board of Directors of LECG of the Merger or this
Agreement, or (b) approve or recommend, or propose to approve or recommend,
any Competing Offer or any other acquisition of outstanding shares of LECG,
other than pursuant to the Merger or this Agreement. Notwithstanding the
foregoing, nothing contained in this Agreement shall prevent LECG or its Board
of Directors from (A) furnishing non-public information to, or entering into
discussions or negotiations with, any Person in connection with an unsolicited
bona fide written Competing Offer by such Person (including a new and
unsolicited Competing Offer received by LECG after the execution of this
Agreement from a Person whose initial contact with LECG may have been
solicited by such party prior to the execution of this Agreement) or
recommending such an unsolicited bona fide written Competing Offer to its
shareholders, if and only to the extent that (1) (x) the LECG Board of
Directors determines in good faith (after consultation with and based upon the
written advice of its financial advisor, if any) that such Competing Offer
would, if consummated, result in a transaction more favorable to LECG's
shareholders than the transaction contemplated by this Agreement and that the
Person making such Preferred Proposal has the financial means, or the ability
to obtain the necessary financing, to conclude such transaction, and (y) the
Board of Directors of LECG determines in good faith (after consultation with
and based upon the written advice of its outside legal counsel) that the
failure to take such action would be inconsistent with the fiduciary duties of
the Board of Directors to its shareholders under applicable law (any such more
favorable Competing Offer being referred to in this Agreement as a "PREFERRED
PROPOSAL"); and (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such Person, the Board of
Directors receives from such Person an executed confidentiality agreement with
confidentiality provisions not materially less favorable to such Person than
those contained in the Confidentiality Agreement dated as of May 15, 1998
between ▇▇▇▇▇▇▇ and LECG (the "CONFIDENTIALITY AGREEMENT") or (B) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to a Competing
Offer. LECG shall take no action with respect to the Competing Offer until 48
hours after notice is received by ▇▇▇▇▇▇▇ as required under Section 6.1(b)
below.
(b) LECG shall notify ▇▇▇▇▇▇▇ orally and in writing no later than 24 hours
after receipt by LECG (or its advisors) of any Competing Offer or any request
for nonpublic information in connection with a Competing Offer or for access
to the properties, books or records of such party by any Person that informs
such party that it is considering making, or has made, a Competing Offer. Such
notice to ▇▇▇▇▇▇▇ shall be made orally and in writing and shall indicate in
reasonable detail the identity of the offeror and the terms and conditions of
such proposal, inquiry or contact.
6.2. Proxy Statement/Prospectus; Registration Statement
(a) As promptly as practicable after the execution of this Agreement,
▇▇▇▇▇▇▇ and LECG shall prepare and file with the SEC the Proxy Statement, and
▇▇▇▇▇▇▇ shall prepare and file with the SEC the Registration Statement in
which the Proxy Statement will be included. ▇▇▇▇▇▇▇ and LECG shall use their
best efforts to cause the Registration Statement to become effective as soon
after such filing as practicable, and the parties shall promptly
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furnish a copy of the Proxy Statement/prospectus included in the Registration
Statement to each of its shareholders or stockholders, as applicable, after
the Registration Statement has become effective.
(b) ▇▇▇▇▇▇▇ and LECG shall make all necessary filings with respect to the
Merger under the Securities Act and the Exchange Act and applicable state blue
sky laws and the rules and regulations thereunder.
6.3. Consents. Each of ▇▇▇▇▇▇▇ and LECG shall use all reasonable efforts to
obtain all necessary consents, waivers and approvals under their respective
material agreements, contracts, licenses or leases as may be necessary or
advisable to consummate the Merger and the other transactions contemplated by
this Agreement.
6.4. Access to Information. Upon reasonable notice and subject to applicable
law and other legal obligations, LECG shall afford to the officers, employees,
accountants, counsel and other representatives of ▇▇▇▇▇▇▇, access, during
normal business hours during the period prior to the Effective Time, to all
its properties, books, contracts, commitments, personnel and records and,
during such period, LECG shall furnish promptly to ▇▇▇▇▇▇▇ (a) a copy of each
report, schedule, registration statement and other document filed or received
by it during such period pursuant to the requirements of federal securities
laws and (b) all other information concerning its business, properties and
personnel as ▇▇▇▇▇▇▇ may reasonably request. Unless otherwise required by law,
the parties will hold any such information which is nonpublic in confidence in
accordance with the Confidentiality Agreement. No information or knowledge
obtained in any investigation pursuant to this Section 6.4 shall affect or be
deemed to modify any representation or warranty contained in this Agreement or
the conditions to the obligations of the parties to consummate the Merger.
6.5. Stockholders Meetings. LECG and ▇▇▇▇▇▇▇ shall each call a meeting of
their respective shareholders and stockholders, as applicable, to be held as
promptly as practicable for the purpose of voting upon this Agreement and the
Merger, with respect to LECG, and the issuance of the shares of ▇▇▇▇▇▇▇ Common
Stock contemplated hereunder, with respect to ▇▇▇▇▇▇▇. Subject to Sections 6.1
and 6.2, LECG and ▇▇▇▇▇▇▇ will, through their respective Boards of Directors,
recommend to their respective shareholders and stockholders, as applicable,
approval of such matters and will coordinate and cooperate with respect to the
timing of such meetings and shall use their best efforts to hold such meetings
on the same day and as soon as practicable after the date hereof.
6.6. Legal Conditions to Merger. Each of ▇▇▇▇▇▇▇ and LECG will take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on itself with respect to the Merger (which actions shall
include, without limitation, furnishing all information required in connection
with approvals of or filings with any Governmental Entity) and will promptly
cooperate with and will use their best efforts to furnish information to each
other in connection with any such requirements imposed upon any of them in
connection with the Merger. Each of ▇▇▇▇▇▇▇ and LECG will: (i) take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other third party, required to be obtained or
made by LECG or ▇▇▇▇▇▇▇ in connection with the Merger (any of the foregoing an
"APPROVAL") or the taking of any action contemplated thereby or by this
Agreement; (ii) diligently oppose or pursue any rehearing, appeal or other
challenge which may be available to it of any refusal to issue any Approval or
of any order or ruling of any Governmental Entity which may adversely affect
the ability of the parties hereto to consummate the Merger or to take any
action contemplated by any Approval or by this Agreement until such time as
such refusal to issue any Approval or any order or ruling has become final and
non-appealable; and (iii) diligently oppose any objections to, appeals from or
petitions to reconsider or reopen any Approval or the taking of any action
contemplated thereby or by this Agreement.
6.7. Public Disclosure. In the event that either party proposes to issue,
make or distribute any press release, public announcement or other written
publicity or disclosure prior to the Closing Date that refers to the
transactions contemplated herein, the party proposing to make such disclosure
shall provide a copy of such disclosure to the other parties and shall afford
the other parties reasonable opportunity (subject to any legal obligation of
prompt disclosure) to comment on such disclosure or the portion thereof which
refers to the transactions contemplated herein prior to making such
disclosure.
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6.8. Tax-Free Reorganization. ▇▇▇▇▇▇▇ and LECG shall each use its best
efforts to cause the Merger to be treated as a reorganization within the
meaning of Section 368(a) of the Code and in connection therewith shall
deliver at the Closing the Tax Representation Letters (as defined in Section
7.3(d), required for the opinion of counsel contemplated by Sections 7.2(d)
and 7.3(d), respectively. For federal and state tax purposes, ▇▇▇▇▇▇▇ and LECG
shall report the transactions contemplated by this Agreement as a
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Tax Code and similar state laws.
6.9. Pooling Accounting. ▇▇▇▇▇▇▇ and LECG shall each use its best efforts to
cause the business combination to be effected by the Merger to be accounted
for as a pooling of interests. Each of ▇▇▇▇▇▇▇ and LECG shall use its best
efforts to cause its respective Affiliates (as defined in Section 6.12) to
avoid any action that would adversely affect the ability of ▇▇▇▇▇▇▇ to account
for the business combination to be effected by the Merger as a pooling of
interests.
6.10. Letters from Accountants.
(a) LECG shall use its best efforts to cause to be delivered to ▇▇▇▇▇▇▇
"cold comfort" letters of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, its independent public
accountants, dated the date on which the Registration Statement shall become
effective and as of the Effective Time, respectively, and addressed to
▇▇▇▇▇▇▇, in form and substance reasonably satisfactory to ▇▇▇▇▇▇▇, and
comparable in scope and substance to letters customarily delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement and transactions such as those
contemplated by this Agreement.
(b) ▇▇▇▇▇▇▇ shall use its best efforts to cause to be delivered to LECG
"cold comfort" letters of KPMG Peat Marwick LLP, its independent public
accountants, dated the date on which the Registration Statement shall become
effective and as of the Effective Time, respectively, and addressed to LECG in
form and substance reasonably satisfactory to LECG and comparable in scope and
substance to letters customarily delivered by independent public accountants
in connection with registration statements similar to the Registration
Statement and transactions such as those contemplated by this Agreement.
6.11. Update Disclosure; Breaches. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
party, by written update to its Disclosure Schedule, of (i) the occurrence or
non-occurrence of any event which would be likely to cause any condition to
the obligations of any party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied, or (ii) the failure of
▇▇▇▇▇▇▇ or LECG to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it pursuant to this Agreement which would
be likely to result in any condition to the obligations of any party to effect
the Merger and the other transactions contemplated by this Agreement not to be
satisfied. The delivery of any notice pursuant to this Section 6.11 shall not
cure any breach of any representation or warranty requiring disclosure of such
matter prior to the date of this Agreement or otherwise limit or affect the
remedies available hereunder to the party receiving such notice, provided that
such party, within ten (10) Business Days after receipt of such notice,
advises the other party of its objection to the matter disclosed in such
notice and the nature of such objection.
6.12. Affiliate Letter. Upon the execution of this agreement, ▇▇▇▇▇▇▇ and
LECG will provide each other with a list of those persons who are, in
▇▇▇▇▇▇▇'▇ or LECG's respective reasonable judgment, "affiliates" of ▇▇▇▇▇▇▇ or
LECG, respectively, within the meaning of Rule 145 under the Securities Act
("RULE 145"). Each such person who is an "affiliate" of ▇▇▇▇▇▇▇ or LECG within
the meaning of Rule 145 is referred to herein as an "AFFILIATE." ▇▇▇▇▇▇▇ and
LECG shall provide each other such information and documents as LECG or
▇▇▇▇▇▇▇ shall reasonably request for purposes of reviewing such list and shall
notify the other party in writing regarding any change in the identity of its
Affiliates prior to the Closing Date. LECG shall use its best efforts to
deliver or cause to be delivered to ▇▇▇▇▇▇▇ by July 30, 1998 from each of the
Affiliates of LECG, an executed agreement, in the form attached hereto as
Exhibit A ("AFFILIATE LETTER"). ▇▇▇▇▇▇▇ shall be entitled to place appropriate
legends on the certificates evidencing any ▇▇▇▇▇▇▇ Common Stock to be received
by Affiliates of LECG pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the ▇▇▇▇▇▇▇
Common Stock, consistent with the terms of the Affiliate Letter.
A-25
6.13. NASDAQ Quotation. ▇▇▇▇▇▇▇ shall use its best efforts to cause the
shares of ▇▇▇▇▇▇▇ Common Stock to be issued in the Merger to be listed or
approved for listing on The Nasdaq National Market, subject to official notice
of issuance, prior to the Closing Date.
6.14. Employees. Upon the request of ▇▇▇▇▇▇▇, LECG shall provide ▇▇▇▇▇▇▇,
within three (3) business days of such request, a true, correct and complete
list setting forth the names and current salaries or rates of compensation and
current bonus plans and bonus compensation structure of all current employees
of LECG and its Subsidiaries and current independent contractors who render
services to LECG and its Subsidiaries on more than a single occasion.
6.15. Brokers or Finders. Each of ▇▇▇▇▇▇▇ and LECG represents, as to itself,
its Subsidiaries and its Affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement except ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, whose fees and expenses (not to exceed $255,000) will be paid by
LECG in accordance with LECG's agreement with such firm (a copy of which has
been delivered by LECG to ▇▇▇▇▇▇▇ prior to the date of this Agreement), and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, whose fees and expenses
will be paid by ▇▇▇▇▇▇▇ in accordance with ▇▇▇▇▇▇▇'▇ agreement with such firm
(a copy of which has been delivered by ▇▇▇▇▇▇▇ prior to the date of this
Agreement), and each of ▇▇▇▇▇▇▇ and LECG agrees to indemnify and hold the
other harmless from and against any and all claims, liabilities or obligations
with respect to any other fees, commissions or expenses asserted by any person
on the basis of any act or statement alleged to have been made by such party
or its Affiliate.
6.16. Indemnification of Directors and Officers.
(a) After the Effective Time, the Surviving Corporation shall, to the
fullest extent permitted under applicable law, indemnify and hold harmless,
each present and former director or officer of LECG and each Subsidiary of
LECG (collectively, the "INDEMNIFIED PARTIES") against all costs and expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, administrative or investigative, arising out
of or pertaining to any action or omission in their capacity as an officer or
director to whom this Section 6.16 applies, in each case occurring before the
Effective Time (including the transactions contemplated by this Agreement).
(b) In the event the Surviving Corporation or its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger
or (ii) transfers all or substantially all its properties and assets to any
Person, then, and in each case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation, as the case may be, honor
the indemnification obligations set forth in this Section 6.16.
(c) The Surviving Corporation shall, for a period of at least three (3)
years from the Effective Time, retain LECG's existing Director and Officer
insurance or obtain "claims made" tail coverage with respect to LECG's
existing Director and Officer insurance.
(d) The provisions contained in this Section 6.16 shall not limit any of the
rights that an Indemnified Party may have under any current indemnification
agreement between the Indemnified Party and LECG. The Indemnified Parties
shall be considered to be third party beneficiaries with respect to this
Section 6.16.
6.17. Additional Agreements; Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, subject to the appropriate vote of the
shareholders of LECG and the stockholders of ▇▇▇▇▇▇▇ described in Section 6.5,
including cooperating fully with the other party. In case at any time after
the Effective Time any further action is necessary or desirable to carry
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out the purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of either of the Constituent Corporations, the proper officers and
directors of each party to this Agreement shall take all such necessary
action.
6.18. Stock Option Agreements. LECG and ▇▇▇▇▇▇▇ agree to fully perform their
respective obligations under the Stock Option Agreements.
6.19. Trading Prohibitions. Each of ▇▇▇▇▇▇▇, Sub and LECG hereby
acknowledges that as a result of disclosures by ▇▇▇▇▇▇▇, Sub and LECG
contemplated under this Agreement, ▇▇▇▇▇▇▇, Sub, LECG and its Subsidiaries and
their respective Affiliates may, from time to time, have material, non-public
information concerning each other. Each of ▇▇▇▇▇▇▇, Sub and LECG confirms that
it and its respective Affiliates are aware, and that it has advised such
persons that, (i) the United States securities laws may prohibit a Person who
has material, non-public information from purchasing or selling securities of
any company to which such information relates, and (ii) material non-public
information shall not be communicated to any other Person except as permitted
herein.
6.20. Voting Agreement and Registration Rights Agreement. Contemporaneously
with the execution of this Agreement ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ have executed, and LECG will use its best
efforts to cause ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (collectively "LECG INSIDERS") to execute a
voting agreement whereby each party to such agreement has agreed to vote in
favor of the Merger. In addition, ▇▇▇▇▇▇▇ has entered into a Registration
Rights Agreement with the LECG Insiders, contemporaneously with this
Agreement.
6.21. Reserving of ▇▇▇▇▇▇▇ Common Stock. ▇▇▇▇▇▇▇ agrees to reserve, in the
aggregate, 1,200,000 shares of ▇▇▇▇▇▇▇ Common Stock for issuance (i) pursuant
to the Assumed Options under Section 2.1(d) of this Agreement and (ii)
pursuant to options granted under The ▇▇▇▇▇▇▇ Group, Inc. Long-Term Incentive
Plan, as amended, specifically for current and future employees of LECG.
6.22. Delivery of LECG Disclosure Schedule. LECG shall deliver the LECG
Disclosure Schedule to ▇▇▇▇▇▇▇ by no later than the 5:00 p.m., Central
Daylight Time, on July 2, 1998 or such later date agreed to by the parties. If
either (i) LECG fails to deliver the LECG Disclosure Schedule to ▇▇▇▇▇▇▇ by
such time, or (ii) ▇▇▇▇▇▇▇ objects in writing to the matters disclosed on the
LECG Disclosure Schedule within three (3) business days of its receipt of the
LECG Disclosure Schedule and the Parties do not reach a mutually acceptable
resolution with respect to such objections within three (3) business days
thereafter, then, notwithstanding any other provision of this Agreement to the
contrary, either Party may terminate this Agreement by written notice without
further obligation.
ARTICLE 7.
Conditions to Merger
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved by the affirmative vote of the holders of a majority of the
outstanding shares of LECG Common Stock entitled to vote thereon and the
issuance of the shares of ▇▇▇▇▇▇▇ Common Stock pursuant to this Agreement
shall have been approved by the affirmative vote of the holders of a
majority of the outstanding shares of ▇▇▇▇▇▇▇ Common Stock, entitled to
vote thereon, present at a meeting at which a quorum is present in person
or by proxy.
(b) Intentionally Omitted.
(c) Approvals. Other than the filing provided for by Section 1.1, all
authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any
Governmental Entity the absence or nonoccurrence of which would be
reasonably likely to have a LECG
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Material Adverse Effect or a ▇▇▇▇▇▇▇ Material Adverse Effect shall have
been filed, occurred or been obtained.
(d) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
(e) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger or limiting or
restricting the conduct or operation by ▇▇▇▇▇▇▇ of the business of ▇▇▇▇▇▇▇
or the Surviving Corporation after the Merger shall have been issued,
except for any such order, injunction restraint or prohibition which would
not be reasonably likely to have a material adverse effect on ▇▇▇▇▇▇▇; nor
shall there be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger by any
Governmental Entity which makes the consummation of the Merger illegal.
(f) Pooling Letters. ▇▇▇▇▇▇▇ and LECG shall have received letters from
KPMG Peat Marwick LLP and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, respectively, each dated the
date of the Proxy Statement and confirmed in writing as of the Closing Date
and addressed to ▇▇▇▇▇▇▇ and LECG, respectively, stating that the Merger
may be accounted for as a pooling of interests transaction.
(g) NASDAQ Approval. The shares of ▇▇▇▇▇▇▇ Common Stock to be issued in
the Merger shall have been listed or approved for listing on The Nasdaq
National Market.
(h) Appraisal Rights. The holders of the issued and outstanding shares of
LECG Common Stock shall not have effectively exercised dissenters' rights
pursuant to the CGCL in an amount that would cause the Merger, after taking
into consideration all other elements of consideration which may be deemed
payable, to not be eligible for accounting as a pooling-of-interest
transaction.
7.2. Additional Conditions to Obligations of ▇▇▇▇▇▇▇. The obligations of
▇▇▇▇▇▇▇ to effect the Merger are subject to the satisfaction of each of the
following conditions, any of which may be waived in writing exclusively by
▇▇▇▇▇▇▇:
(a) Representations and Warranties. The representations and warranties of
LECG set forth in this Agreement shall be (i) true and correct as of the
date of this Agreement; and (ii) true and correct as of the Closing Date as
though made on and as of the Closing Date, except in the case of this
clause (ii) to the extent such representations and warranties speak as of
an earlier date, and except (with respect to all representations and
warranties other than those in Section 3.23) for such inaccuracies which
would not reasonably be expected to result in a LECG Material Adverse
Effect (reading all such representations and warranties without giving
effect to qualifications based on materiality therein); and ▇▇▇▇▇▇▇ shall
have received a certificate signed on behalf of LECG by the chief executive
officer and the chief financial officer of LECG to such effect.
(b) Performance of Obligations of LECG. LECG shall have performed in all
material respects all material obligations required to be performed by it
under this Agreement at or prior to the Closing Date; and ▇▇▇▇▇▇▇ shall
have received a certificate signed on behalf of LECG by the chief executive
officer and the chief financial officer of LECG to such effect.
(c) Opinion of LECG's Counsel. ▇▇▇▇▇▇▇ and Sub shall have received an
opinion of counsel for LECG covering such matters as is customary in a
transaction of this type and in form and substance reasonably satisfactory
to ▇▇▇▇▇▇▇ and Sub.
7.3. Additional Conditions to Obligations of LECG. The obligation of LECG to
effect the Merger is subject to the satisfaction of each of the following
conditions, any of which may be waived, in writing, exclusively by LECG:
(a) Representations and Warranties. The representations and warranties of
▇▇▇▇▇▇▇ set forth in this Agreement shall be (i) true and correct in all
material respects as of the date of this Agreement; and (ii) true and
correct as of the Closing Date as though made on and as of the Closing
Date, except in the clause of
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this clause (ii) to the extent such representations and warranties speak as
of an earlier date, and except (with respect to all representations and
warranties other than those in Section 4.9) for such inaccuracies which
would not reasonably be expected to result in a ▇▇▇▇▇▇▇ Material Adverse
Effect (reading all such representations and warranties without giving
effect to qualifications based on materiality therein); and LECG shall have
received a certificate signed on behalf of ▇▇▇▇▇▇▇ by the chief executive
officer and the chief financial officer of ▇▇▇▇▇▇▇ to such effect
(b) Performance of Obligations of ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ shall have performed
in all material respects all material obligations required to be performed
by them under this Agreement at or prior to the Closing Date; and LECG
shall have received a certificate signed on behalf of ▇▇▇▇▇▇▇ by the chief
executive officer and the chief financial officer of ▇▇▇▇▇▇▇ to such
effect.
(c) Opinion of ▇▇▇▇▇▇▇'▇ Counsel. LECG shall have received an opinion of
counsel for ▇▇▇▇▇▇▇ and Sub covering such matters as is customary in a
transaction of this type and in form and substance reasonably satisfactory
to LECG.
(d) Tax Opinion. LECG shall have received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to LECG, to the effect that the Merger
will be treated for federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code. In rendering such opinions, such
counsel may rely upon the representations contained in the certificates of
▇▇▇▇▇▇▇ and LECG in substantially the form attached hereto as Exhibits B
and C, respectively (the "Tax Representation Letters") and ▇▇▇▇▇▇▇; and
LECG and ▇▇▇▇▇▇▇ will make, and each of them agrees to use reasonable
efforts to cause such of its respective shareholders and stockholders, as
applicable, to make, such representations and deliver such certificates.
7.4. Closing.
(a) Transactions at Closing. At the Closing, each of the following
transactions shall occur:
(b) LECG's Performance. At the Closing, LECG shall deliver to ▇▇▇▇▇▇▇ the
following:
(i) copies of the consents described in Section 3.4(b);
(ii) satisfactory evidences of the approvals described in Section 7.1(a);
(iii) the certificate described in Section 7.2(a) and (b);
(iv) certificates of compliance or certificates of good standing of LECG
and its Subsidiaries, as of the most recent practicable date, from the
appropriate governmental authority of the jurisdiction of their respective
incorporation and any other jurisdiction that is set forth on the LECG
Disclosure Schedule;
(v) certified copies of resolutions of the Board of Directors and
shareholders of LECG approving the transactions set forth in this
Agreement;
(vi) certificates of incumbency for the officers of LECG;
(vii) Certificates of Merger, each in form and content that complies with
the CGCL and the DGCL, executed by LECG;
(viii) the opinion of counsel for LECG, referenced in Section 7.2(c);
(ix) the Affiliate Letter and Voting and Registration Rights Agreements
described in Sections 6.12 and 6.20, respectively;
(x) the letters described in Section 6.8;
(xi) such other evidence of the performance of all covenants and
satisfaction of all conditions required of LECG by this Agreement, at or
prior to the Closing, as ▇▇▇▇▇▇▇ or its counsel may reasonably require.
(c) Performance by ▇▇▇▇▇▇▇. At the Closing, ▇▇▇▇▇▇▇ shall deliver to LECG
the following:
(i) the certificate described in Section 7.3 (a) and (b);
(ii) certificates of incumbency of the officers of ▇▇▇▇▇▇▇ who are
executing this Agreement and the other documents contemplated hereunder;
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(iii) certified copies of resolutions of the Boards of Directors of
▇▇▇▇▇▇▇ approving the transactions set forth in this Agreement;
(iv) Certificates of Merger, each in form and content that complies with
the CGCL and the DGCL, executed by ▇▇▇▇▇▇▇;
(v) the opinion of counsel for ▇▇▇▇▇▇▇ referenced in Section 7.3(c); and
(vi) such other evidence of the performance of all the covenants and
satisfaction of all of the conditions required of ▇▇▇▇▇▇▇ by this Agreement
at or before the Closing as LECG or its counsel may reasonably require.
ARTICLE 8.
Termination and Amendment
8.1. Termination. This Agreement may be terminated at any time prior to the
Effective Time (with respect to Sections 8.1(b) through 8.1(h), by written
notice by the terminating party to the other party), whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of ▇▇▇▇▇▇▇ or the shareholders of LECG, as follows:
(a) by mutual written consent of ▇▇▇▇▇▇▇ and LECG; or
(b) by either ▇▇▇▇▇▇▇ or LECG if the Merger shall not have been
consummated by October 31, 1998 (provided, however, that the right to
terminate this Agreement under this Section 8.1(b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause of or resulted in the failure of the Merger to occur on
or before such date; or
(c) by either ▇▇▇▇▇▇▇ or LECG if a court of competent jurisdiction or
other Governmental Entity shall have issued a final order, decree or
ruling, or taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, and all appeals
with respect to such order or action have been exhausted or the time for
appeal of such order, decree, ruling or action shall have expired; or
(d) by either ▇▇▇▇▇▇▇ or LECG if, at the LECG Shareholders' Meeting or
the ▇▇▇▇▇▇▇ Stockholders Meeting to be held in due course (including any
adjournment or postponement thereof), the requisite vote of shareholders of
LECG or stockholders of ▇▇▇▇▇▇▇ in favor of this Agreement and the Merger
shall not have been obtained (provided, that the right to terminate this
Agreement under this Section 8.1(d) shall not be available to any party
which has not complied with its obligations hereunder in all material
respects; or
(e) by ▇▇▇▇▇▇▇ if (i) the Board of Directors of LECG shall have withdrawn
or modified its recommendation of this Agreement or the Merger in a manner
adverse to ▇▇▇▇▇▇▇ or shall have resolved or publicly announced or
disclosed to any third party its intention to do so; (ii) an Alternative
Transaction (as defined below) involving LECG shall have taken place or the
Board of Directors of LECG shall have recommended such an Alternative
Transaction to the shareholders of LECG or shall have resolved or publicly
announced its intention to recommend or engage in such an Alternative
Transaction; or (iii) a tender offer or exchange offer for forty percent
(40%) or more of the outstanding shares of LECG Common Stock shall have
been commenced or a registration statement with respect thereto shall have
been filed (other than by ▇▇▇▇▇▇▇ or an affiliate thereof), and the Board
of Directors of LECG shall have (A) recommended (or shall have resolved or
publicly announced its intention to recommend) that the shareholders of
LECG tender their shares in such tender or exchange offer or (B) resolved
or publicly announced its intention to take no position with respect to
such tender or exchange offer; or
(f) by ▇▇▇▇▇▇▇ if a breach of any representation, warranty, covenant or
agreement on the part of LECG set forth in this Agreement shall have
occurred which would cause the conditions set forth in Sections 7.2(a) or
7.2(b) not to be satisfied, and, that with respect to any breach of a
covenant or agreement hereunder, such covenant or agreement is incapable of
being cured or, if capable of being cured, shall not have been cured within
twenty (20) Business Days following receipt by LECG of written notice of
such breach from ▇▇▇▇▇▇▇; or
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(g) by LECG, (i) the Board of Directors of ▇▇▇▇▇▇▇ shall have withdrawn
or modified its recommendation of this Agreement or the Merger in a manner
adverse to LECG or shall have resolved or publicly announced or disclosed
to any third party its intention to do so, or (ii) if the Board of
Directors of LECG shall have determined to recommend a Competing Offer to
its shareholders after determining, pursuant to Section 6.1, that such
Competing Offer constitutes a Preferred Proposal, provided, however, that
the Board of Directors of LECG shall provide ▇▇▇▇▇▇▇ with 48 hours prior
written notice before recommending such Competing Offers to its
shareholders; or
(h) by LECG, if a breach of any representation, warranty, covenant or
agreement on the part of ▇▇▇▇▇▇▇ set forth in this Agreement shall have
occurred which would cause the conditions set forth Sections 7.3(a) or
7.3(b) not to be satisfied, and, with respect to any breach of a covenant
or agreement hereunder, such covenant or agreement is incapable of being
cured or, if capable of being cured, shall not have been cured within
twenty (20) Business Days following receipt by LECG of written notice of
such breach from ▇▇▇▇▇▇▇; or
(i) by ▇▇▇▇▇▇▇ if LECG's revenues, margins and earnings per share, as
reported for the three months ended June 30, 1998, shall be less than the
estimates for such period previously provided to ▇▇▇▇▇▇▇ by LECG, or by
LECG if ▇▇▇▇▇▇▇'▇ revenues, margins and earnings per share, as reported for
the three months ended June 30, 1998, shall be less than the estimates for
such period previously provided to LECG by ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ or LECG must
exercise their respective right to terminate this Agreement pursuant to
this Section 8.1(i), if at all, within the ten (10) business days following
the public disclosure of other party's second quarter financial results.
For purposes of this Section 8.1, an "ALTERNATIVE TRANSACTION" involving a
specified party to this Agreement means: (i) a transaction or series of
transactions pursuant to which any person or group (as such term is defined
under the Exchange Act) other than ▇▇▇▇▇▇▇, LECG or Sub, or any affiliate
thereof, (a "THIRD PARTY") acquires or would acquire (upon completion of such
transaction or series of transactions) shares (or securities exercisable for
or convertible into shares) representing more than forty percent (40%) of the
outstanding shares of LECG's common stock, pursuant to a tender offer or
exchange offer or otherwise; (ii) a merger, consolidation, share exchange or
other business combination involving LECG or any of its material Subsidiaries
if, upon consummation of such merger, consolidation, share exchange or other
business combination such Third Party owns or would own more than forty
percent (40%) of the outstanding equity securities of LECG or any of its
material Subsidiaries or the entity surviving such merger or business
combination or resulting from such consolidation; (iii) any other transaction
or series of transactions pursuant to which any Third Party acquires or would
acquire (upon completion of such transaction or series of transactions)
control of assets of LECG or any of its material Subsidiaries (including, for
this purpose, outstanding equity securities of Subsidiaries of such party)
having a fair market value equal to more than forty percent (40%) of the fair
market value of all the consolidated assets of such party immediately prior to
such transaction or series of transactions; or (iv) any transaction or series
of transactions pursuant to which any Third Party acquires or would acquire
(upon completion of such transaction or series of transactions) control of the
Board of Directors of LECG or by which nominees of any Third Party are (or
would be) elected or appointed to a majority of the seats on the Board of
Directors of LECG.
8.2. Effect of Termination. In the event of termination of this Agreement
pursuant to Section 8.1, there shall be no Liability or obligation on the part
of ▇▇▇▇▇▇▇, LECG, or their respective officers, directors, stockholders or
Affiliates, except as set forth in Section 8.3 and further except to the
extent that such termination results from the willful breach by a party of any
of its representations, warranties, covenants or agreements in this Agreement;
and provided, that the provisions of Section 8.3 of this Agreement and the
Confidentiality Agreement shall remain in full force and effect and survive
any termination of this Agreement.
8.3. Fees and Expenses.
(a) Except as set forth in this Section 8.3, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expenses, whether or not the Merger
is consummated; provided, however, that ▇▇▇▇▇▇▇ and LECG shall share equally
all fees and expenses,
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other than attorneys', financial advisors and accounting fees and expenses,
incurred in relation to the printing and filing of the Proxy Statement
(including any related preliminary materials) and the Registration Statement
(including financial statements and exhibits) and any amendments or
supplements thereto in connection with the transactions contemplated by this
Agreement.
(b) Intentionally Omitted.
(c) If this Agreement is terminated (i) by ▇▇▇▇▇▇▇ pursuant to Section
8.1(e), (ii) by LECG pursuant to Section 8.1(d) as a result of the failure to
receive the requisite vote for approval of this Agreement and the Merger by
the shareholders of LECG at the LECG Shareholders' Meeting, (iii) by LECG
pursuant to Section 8.1(g), (iv) by ▇▇▇▇▇▇▇ pursuant to Section 8.1(f) as a
result of a breach by LECG of any of its representations, warranties or
covenants, or (v) by ▇▇▇▇▇▇▇ pursuant to Section (8.1(i), LECG shall pay to
▇▇▇▇▇▇▇ all fees and expenses incurred by ▇▇▇▇▇▇▇ relating to this Agreement
and the transactions contemplated hereby ("▇▇▇▇▇▇▇ EXPENSES") within five
business days after receipt of such request.
(d) If this Agreement is terminated (i) by LECG if the Board of Directors of
▇▇▇▇▇▇▇ shall have withdrawn or modified its recommendation of this Agreement
or the Merger in a manner adverse to ▇▇▇▇▇▇▇ or shall have resolved or
publicly announced or disclosed to any third party its intention to do so,
(ii) by ▇▇▇▇▇▇▇ pursuant to Section 8.1(d) as a result of the failure to
receive the requisite vote for approval of this Agreement and the Merger by
the stockholders of ▇▇▇▇▇▇▇ at the ▇▇▇▇▇▇▇ Stockholders' Meeting, (iii) by
LECG pursuant to Section 8.1(h), or (iv) by LECG pursuant to Section 8.1(i),
▇▇▇▇▇▇▇ shall pay to LECG all fees and expenses incurred by LECG relating to
this Agreement and the transactions contemplated hereby ("LECG EXPENSES")
within five business days after receipt of such request.
(e) Intentionally Omitted.
(f) If LECG fails to promptly pay to ▇▇▇▇▇▇▇ any fee or expense due
hereunder, LECG shall pay the costs and expenses (including reasonable legal
fees and expenses) in connection with any action, including the filing of any
lawsuit or other legal action, taken to collect payment, together with
interest on the amount of any unpaid fee at the publicly announced prime rate
as reported in the Wall Street Journal from the date such fee was required to
be paid.
8.4. Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the shareholders of LECG or the stockholders of ▇▇▇▇▇▇▇, but, after
any such approval, no amendment shall be made which by law requires further
approval by such shareholders or stockholders, as applicable, without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.5. Extension; Waiver. At any time prior to the Effective Time, the parties
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.
ARTICLE 9.
Miscellaneous
9.1. Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Closing and
the Effective Time, except for covenants and agreements which, by their terms,
are to be performed after the Effective Time and the agreements of the
Affiliates of LECG delivered pursuant hereto. The Confidentiality Agreement
shall survive the execution and delivery of this Agreement.
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9.2. Notices. All notices, requests and demands, and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or mailed by registered or
certified mail (return receipt requested), or sent by Federal Express or
similar overnight delivery service, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to ▇▇▇▇▇▇▇ or Sub, to: The ▇▇▇▇▇▇▇ Group, Inc. ▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Facsimile No.: (312)
573-5676, with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇; and
(b) if to LECG, Inc. to: LECG ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Facsimile No.: (▇▇▇)▇▇▇-▇▇▇▇, with a
copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇.
If delivered personally, the date on which a notice, request, instruction or
document is delivered shall be the date on which such delivery is made and, if
delivered by mail or by overnight delivery service, the date on which such
notice, request, instruction or document is received shall be the date of
delivery. In the event any such notice, request, instruction or document is
mailed or shipped by overnight delivery service to a party in accordance with
this Section 9.2 and is returned to the sender as nondeliverable, then such
notice, request, instruction or document shall be deemed to have been
delivered or received on the fifth day following the deposit of such notice,
request, instruction or document in the United States mails or the delivery to
the overnight delivery service.
Any party hereto may change its address specified for notices herein by
designating a new address by notice in accordance with this Section 9.2.
9.3. Interpretation. The parties have jointly participated in the
negotiation and drafting of this Agreement. In the event of an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumptions or burdens of proof
shall arise favoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any Federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
parties intend that each representation, warranty and covenant contained
herein shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which
the party has not breached shall not detract from or mitigate the fact that
the party is in breach of the first representation, warranty, or covenant.
Each defined term used in this Agreement has a comparable meaning when used in
its plural or singular form. Each gender-specific term used herein has a
comparable meaning whether used in a masculine, feminine or gender-neutral
form. The term "INCLUDE" and its derivatives shall have the same construction
as the phrase "INCLUDE, WITHOUT LIMITATION," and its derivatives. The section
headings contained in this Agreement are inserted for convenience or reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. When a reference is made in this Agreement to a section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The phrase "MADE AVAILABLE" in this
Agreement shall mean that the information referred to has been made available
if requested by the party to whom such information is to be made available.
The phrases "THE DATE OF THIS AGREEMENT", "THE DATE HEREOF," and terms of
similar import, unless otherwise specified, shall be deemed to refer to July
1, 1998, and all representations made herein, unless otherwise specified.
9.4. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
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9.5. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules. If any provision of this Agreement is held
to be unenforceable for any reason, it shall be modified rather than voided,
if possible, in order to achieve the intent of the parties to the extent
possible. In any event, all other provisions of this Agreement shall be deemed
valid and enforceable to the extent possible.
9.6. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other parties, and any attempted assignment thereof without such consent shall
be null and void. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
9.7. Entire Agreement; No Third Party Beneficiaries. This Agreement and all
agreements referenced specifically in this Agreement and executed as required
by this Agreement constitute the entire agreement among the parties hereto and
supersede and cancel any prior agreements, representations, warranties, or
communications, whether oral or written, among the parties hereto relating to
the transactions contemplated hereby or the subject matter herein. Neither
this Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only by an agreement in writing signed by the party
against whom or which the enforcement of such change, waiver, discharge or
termination is sought. This Agreement is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
9.8. No Agreement Until Executed. This Agreement shall not constitute or be
deemed to evidence a contract or agreement among the parties hereto unless and
until executed by all parties hereto, irrespective, of negotiations among the
parties or the exchanging of drafts of this Agreement.
9.9. Severability. In the event that any court or any governmental authority
or agency declares all or any part of any Section of this Agreement to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
9.10. Exhibits and Schedules Incorporated. All Exhibits and Schedules
attached hereto are an integral part of this Agreement.
9.11. Time of Essence. Time is of the essence in this Agreement.
In Witness Whereof, ▇▇▇▇▇▇▇, Sub and LECG have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
The ▇▇▇▇▇▇▇ Group, Inc.
LECG, Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: _________________________________
By: _________________________________ Chief Executive Officer and
President President
Title: ______________________________ Title: ______________________________
MGI Acquisition Corp.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: _________________________________
Chief Executive Officer and
President
Title: ______________________________
[Signature page to the Agreement and plan of Merger by and among ▇▇▇▇▇▇▇, Sub
and LECG]
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