Exhibit 10.24

 

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September 10, 2003

 

Michael J. Puntoriero

1128 West Oceanfront

Newport Beach, CA  92611

 

Dear Mike,

 

This letter sets forth the substance of the agreement (the “Agreement”) between
you and First Consulting Group, Inc. (“FCG”) regarding your separation of
employment.

 

1. Separation.  You will cease to be an officer, director or employee of FCG or
any of its subsidiaries or affiliates (individually, an “FCG Company” or
collectively, the “FCG Companies”) effective September 26, 2003 (the “Separation
Date”).   To the extent you are a director serving on the board of any FCG
Company, this Agreement shall serve as your resignation from such directorships.

 

2. Accrued Salary and Paid Time Off.  On or after the Separation Date, in
conformance with applicable state laws, FCG will pay you all accrued and unpaid
salary, and all accrued and unused paid time off earned through the Separation
Date, subject to standard payroll deductions and withholdings.  You are entitled
to these payments regardless of whether or not you sign this Agreement.  Unused
personal choice holidays are not paid out.

 

3. Severance Payments.  FCG will pay to you the following amounts as full
consideration for your obligations and covenants under this Agreement and in
full satisfaction of any amount that may be owed to you upon your separation
from FCG under any agreement or arrangement between you and FCG or any other FCG
Company: (a) six months of base salary, or approximately $200,000; and (b) any
bonus earned by you under the FCG bonus plan for third quarter of 2003.  Payment
of the amount in clause (a) above will be paid as a lump sum distribution within
ten (10) days after the later of: (i) the date this signed agreement is received
by FCG; (ii) your Separation Date; or (iii) the date you have returned to FCG
all of the FCG property and equipment in your possession in accordance with
Section 13 below.  Payment of the amount in clause (b) above will be made at the
time FCG pays third quarter bonuses to active employees, which is expected to
occur in the first payroll run of November 2003.  All amounts paid under this
paragraph will be less federal, state and other applicable taxes and other
authorized withholdings.

 

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In addition, in the event that (i) you have not secured full time employment
with an organization other than FCG; and (ii) you are not in violation of any of
the terms of this Agreement, you will be eligible to receive additional
severance as follows:

 

•                  If you are not employed prior to March 31, 2004, you will
receive three additional months of base salary, or approximately $100,000, less
federal, state and other applicable taxes and authorized withholdings.

 

•                  If you are not employed prior June 30, 2004, you will be
provided three additional months of base salary, or approximately $100,000, less
federal, state and other applicable taxes and authorized withholdings.

 

The additional severance benefits set forth in the preceding paragraph and
bullets shall no longer be available once you are employed full time with an
organization other than FCG, even if you secure employment and then are
subsequently not employed by such non-FCG organization on the dates above.  For
example, if you secure employment in January 2004 and then are not employed as
of March 31, 2004, you will not be eligible to receive any additional severance
under this Agreement.

 

For purposes of this Agreement, “employed” or “employment” shall mean full time
employment as an employee, consultant or independent contractor.  For purposes
of clarification, “full time” shall not include temporary or interim positions
where you may be engaged full time in terms of working hours, but not in terms
of expected length of service (i.e., a one month consulting engagement that is
20 hours or more per week but is not a full time position as an employee or an
extended period of full time service as a consultant or contractor for you with
that non-FCG organization).

 

You must return this signed Agreement within three (3) weeks of the Separation
Date in order to be eligible to receive the severance benefits outlined above.
All severance payments under this Agreement will be by manual checks.

 

You will also receive an Executive Outplacement Package of four (4) months of
assistance with Right Management Consultants.  Information in regard to this
assistance will be sent to your home and a representative from Right Management
Consultants will be contacting you shortly.  It is your option to begin the four
months now or wait until up to 90 days after your Separation Date.

 

4. Health Insurance.  According to company policy, your FCG group health
insurance benefits will be cancelled effective with the Separation Date. After
the Separation Date, you will be eligible to continue your group health
insurance benefits at your sole cost and expense (except as noted below) to the
extent provided by federal COBRA law, state insurance laws and by FCG’s current
group health insurance policies. You may do this by making the COBRA election
and submitting your premiums directly to our COBRA administrator in the Long
Beach office.  A package of information will be sent to you via mail within 21
days of the Separation Date detailing the process

 

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and premium amounts for COBRA coverage, including the deadline by which you must
elect COBRA coverage. Should you elect COBRA within the time requirements,
coverage will be effective retroactive to the Separation Date.

 

Should you elect to continue your group health insurance benefits through COBRA,
and subject to your execution of this Agreement, FCG will pay your COBRA
premiums until the earlier of (1) March 31, 2004; or (2) the date you become
eligible for group health insurance benefits through a new employer.  You agree
to notify FCG promptly upon obtaining new employment.  Although FCG will pay the
cost of your COBRA until the date specified above, your coverage will not be
reinstated until you have received, signed and returned the COBRA election
form.  At that time, the carriers will be notified of your election and your
coverage will be reinstated.  In the meantime, if you should require any
medical/dental services, you will need to pay for those services and submit your
receipts, with a claim form, to the insurance company for reimbursement after
you have signed and returned your COBRA election form.

 

In addition, if you have not secured any employment (as defined in Section 3
above) with an organization other than FCG and you are not in violation of any
of the terms of this Agreement, you will be provided additional COBRA premium
support based on the following schedule:

 

•                  If you are not employed prior to March 31, 2004, you will be
provided an additional three months of company paid COBRA coverage premiums.

 

•                  If you are not employed prior to June 30, 2004, you will be
provided an additional three months of company paid COBRA coverage premiums.

 

Your eligibility to receive this additional three or six months of COBRA
coverage is the same as your eligibility to receive additional severance as set
forth in Section 3 above.

 

5. Flexible Spending Accounts. Coverage under Flexible Spending Accounts ceases
on the Separation Date, subject to your ability to continue your Health Care
Flexible Spending Account through the balance of the year on an after-tax basis.
Additional details are provided in the COBRA notification.

 

6. Life Insurance. Your FCG group life insurance coverage will end effective on
the Separation Date.  If you would like to convert your coverage, please contact
the Benefits Service Center within 30 days of the Separation Date at
800-471-8853, ext. 2363.

 

7. Disability/Long Term Care Coverage. Coverage under the disability and Long
Term Care programs will terminate effective on the Separation Date.  If you
would like to convert your coverage(s), please contact the Benefits Service
Center within 30 days of the Separation Date at the number above.

 

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8. Associate Stock Purchase Plan (ASPP).   Participation in the ASPP will
terminate effective with the Separation Date.  Year-to-date deductions that have
not already been used to purchase stock will be refunded within two pay periods
after the Separation Date.  Stock already purchased will remain in your personal
E*TRADE account. You should contact E*TRADE directly with any questions
regarding your account.

 

9. Stock Options.  Any options to purchase FCG stock that you hold will cease to
vest on the Separation Date and all of your unvested stock options will be
cancelled.  You will have 90 days following the Separation Date to exercise any
vested options you received under FCG’s option plans. A closing statement
containing information on your vested options will be mailed to your home from
the FCG Corporate Affairs department.  Also, status of your stock options is
available online through E*TRADE at www.optionslink.com.

 

10. Other Benefits.  You and FCG hereby agree and acknowledge the following:

 

(a) SERP and 401(k).  As of the Separation Date, you no longer may contribute
funds to FCG’s 401(k) plan or the Supplemental Executive Retirement Plan
(“SERP”), nor will FCG contribute any matching or other funds to such plans on
your behalf.   No payroll deductions for pre-tax contributions will be taken
from your severance pay.    Nothing in this Agreement terminates or otherwise
affects any right or interest you may have in vested funds and assets under
FCG’s 401(k), ASOP and SERP plans.

 

You will receive detailed information from New York Life regarding the
distribution of your contributions and any vested funds from the 401(k) and ASOP
account.  As you will read in that material, you should wait until the middle of
the month after the month in which your last 401(k) deduction is made before
applying for a distribution.  Contact New York Life directly at (800) 294-3575
regarding any questions, including account rollover transactions.  You may also
visit their website at www.bcomplete.com.  If you currently have an outstanding
loan, you may maximize the tax deferral of this benefit by electing to repay the
loan prior to taking a distribution from the Plan.  If you choose not to, the
outstanding loan balance will be defaulted and treated as a taxable distribution
to you.  You may coordinate the prepayment of the outstanding loan balance with
New York Life.

 

You will receive detailed information from Human Resources regarding the
distribution of your contributions and any vested funds from the SERP.  You may
contact Human Resources if you have any questions.

 

(b) Other Amounts.  You acknowledge that, except as expressly provided in this
Agreement, you will not receive any additional compensation, bonus, severance or
benefits after the Separation Date.

 

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11. Unemployment Benefits. Because of the nature of your separation with FCG,
you may be eligible for unemployment insurance benefits.  Contact your local
employment commission office for information regarding unemployment
compensation.

 

12. Expense Reimbursement. Any outstanding unreimbursed expenses will be paid
based on the submission of your final Time and Expense Report and the
appropriate documentation. It is acknowledged that you may receive cellular
phone, long distance and other business related charges after the Separation
Date; please submit those expenses for reimbursement as they occur to FCG c/o
Jan Blue in the Long Beach, California office.

 

13. Return of FCG Property.  Except as noted below, on or before the Separation
Date, you agree to return to FCG all FCG Company documents (and all copies
thereof) and other FCG Company property that you have had in your possession at
any time, including (i) any materials of any kind that contain or embody any
proprietary or confidential information of an FCG Company (and all reproductions
thereof), and (ii) computers and other electronic devices, cellular phones,
credit cards, phone cards, entry cards, identification badges and keys. If you
have a cell phone and have had it for at least 3 months, it is yours to keep. 
Any firm-provided service will be cancelled and you will need to establish your
own service.  You will receive a Federal Express pack, with a pre-paid shipping
label, to ship your equipment back to Long Beach. Please return items to the FCG
Help Desk in Long Beach as soon as practicable, at least within 7 days.

 

You will be permitted to keep your laptop computer at no cost to you, except
that the value of the computer will be added to your taxable wages and
appropriate state and federal taxes will be deducted.  The applications software
on your laptop is licensed for FCG use only and it is your responsibility to
delete any applications software from the computer with the exception of the
operating system.

 

14. Vice President Agreement; Indemnity Agreement. You hereby acknowledge and
agree to your continuing obligations, both during and after your employment with
FCG, to abide by the terms of that certain Vice President Agreement between you
and FCG dated January 1, 2003.  The terms of that certain Indemnity Agreement
between you and FCG dated January 13, 2003 shall remain in full force and effect
and you are entitled to indemnification by FCG in accordance with and subject to
the terms of FCG’s charter documents and the Indemnity Agreement.

 

15. Confidentiality.  The provisions of this Agreement will be held in strictest
confidence by you and FCG and will not be publicized or disclosed in any manner
whatsoever; provided, however, that:  (a) you may disclose this Agreement to
your immediate family; (b) the parties may disclose this Agreement in confidence
to their respective attorneys, accountants, auditors, tax preparers, and
financial advisors; (c) FCG may disclose this Agreement as necessary to fulfill
standard or legally required corporate reporting or disclosure requirements; and
(d) the parties may disclose this

 

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Agreement insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law.  In particular, and without limitation, you agree not
to disclose the terms of this Agreement to any current or former FCG employee.

 

16. Nondisparagement.  Both you and FCG agree not to disparage the other party,
and the other party’s officers, directors, employees, shareholders and agents,
in any manner likely to be harmful to them or their business, business
reputation or personal reputation; provided that both you and FCG will respond
accurately and fully to any question, inquiry or request for information when
required by legal process.

 

17. Release of the FCG Companies.  You hereby release, acquit and forever
discharge each of the FCG Companies and their respective parents and
subsidiaries, and each of their respective officers, directors, agents,
servants, employees, attorneys, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys’ fees, damages, indemnities and obligations
of every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed, arising out of or in any
way related to agreements, events, acts or conduct at any time prior to and
including the Effective Date of this Agreement, including but not limited to:
all such claims and demands directly or indirectly arising out of or in any way
connected with your employment with any FCG Company or the termination of that
employment; claims or demands related to salary, bonuses, commissions, stock,
stock options or any other ownership interests in any FCG Company, vacation pay,
fringe benefits, expense reimbursements, severance pay or any other form of
compensation; claims arising from any employment agreement or arrangement
between you and any FCG Company; claims pursuant to any federal, state or local
law, statute or cause of action including, but not limited to, the federal Civil
Rights Act of 1964, as amended; the federal Americans with Disabilities Act of
1990; the federal Age Discrimination in Employment Act of 1967, as amended
(“ADEA”); the California Fair Employment and Housing Act, as amended; tort law;
contract law; wrongful discharge; discrimination; harassment; fraud; defamation;
emotional distress; and breach of the implied covenant of good faith and fair
dealing.  You further agree not to initiate or continue any proceeding based
upon the claims released herein.  Notwithstanding the foregoing, your release of
the FCG Companies in accordance with this Section shall not be deemed to release
(i) any of the FCG Companies’ duties or obligations under this Agreement,
including, but not limited to, FCG’s indemnification obligations to you
described in Section 14 of this Agreement; or (ii) any of your rights as a
stockholder of FCG.

 

18. ADEA Waiver.  You acknowledge that you are knowingly and voluntarily waiving
and releasing any rights you may have under the ADEA, as amended.  You also
acknowledge that the consideration given for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which you were
already entitled.  You further acknowledge that you have been advised by this
writing, as required by the ADEA, that:  (a) your waiver and release do not
apply to any rights or

 

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claims that may arise after the execution date of this Agreement; (b) you have
been advised hereby that you have the right to consult with an attorney prior to
executing this Agreement; (c) you have twenty-one (21) days to consider this
Agreement (although you may choose to voluntarily execute this Agreement
earlier); (d) you have seven (7) days following the execution of this Agreement
by the parties to revoke the Agreement; and (e) this Agreement will not be
effective until the date upon which the revocation period has expired, which
will be the eighth day after this Agreement is executed by you, provided that
FCG has also executed this Agreement by that date (“Effective Date”).

 

19. Section 1542 Waiver.  In giving the above release, which includes claims
which may be unknown to you at present, you acknowledge that you have read and
understand Section 1542 of the California Civil Code which reads as follows:  “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”  You
hereby expressly waive and relinquish all rights and benefits under that section
and any law of any jurisdiction of similar effect with respect to your release
of any unknown or unsuspected claims you may have against an FCG Company.

 

20. Indemnification and Attorneys’ Fees.  You understand and agree that if you
hereafter commence, join in, or in any manner seek relief through any lawsuit,
charge or complaint with any court, administrative agency, governmental
authority or otherwise in any matter arising out of, based upon, or relating to
the claims released in this Agreement, then you will pay FCG in addition to any
other expenses, costs or damages caused to FCG thereby, all FCG’s attorneys’
fees incurred in defending or otherwise responding to such lawsuit, charge, or
complaint.  This section will not apply to any claim brought by you under the
ADEA or to challenge the validity of the waiver in this Agreement of any such
claim or any claim to enforce FCG’s obligations hereunder or any rights you may
have as an FCG stockholder.

 

21. Miscellaneous.  This Agreement constitutes the entire agreement between you
and FCG with regard to this subject matter.  It is entered into without reliance
on any promise or representation, written or oral, other than those expressly
contained herein, and it supersedes any other such promises, warranties or
representations.  This Agreement may not be modified or amended except in a
writing signed by both you and FCG.  This Agreement will bind and inure to the
benefit of the heirs, personal representatives, successors and assigns of both
you and FCG.  If any provision of this Agreement is determined to be invalid or
unenforceable, in whole or in part, this determination will not affect any other
provision of this Agreement and the provision in question will be modified by
the court so as to be rendered enforceable.  This Agreement will be deemed to
have been entered into and will be construed and enforced in accordance with the
laws of the State of California as applied to contracts made and to be performed
entirely within California.

 

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We appreciate your service to FCG and we wish you all the best in wherever your
future endeavors may take you.

 

If this Agreement is acceptable to you, please sign below and return the
original to Jan Blue at First Consulting Group, Inc., 111 West Ocean Boulevard,
10th Floor, Long Beach, California 90802.

 

Sincerely,

 

First Consulting Group, Inc.

 

 

By:

 

 

 

Luther Nussbaum

Date

 

Chairman/CEO

 

 

 

Agreed:

 

 

 

 

 

 

Michael J. Puntoriero

Date

 

cc:

Jan Blue, Vice President

 

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