Exhibit 10.8

 

CREDIT AGREEMENT

 

THIS AGREEMENT is entered into as of May 1, 2003, by and between FIRST
CONSULTING GROUP, INC., a Delaware corporation (“Borrower”), and WELLS FARGO
BANK, NATIONAL ASSOCIATION (“Bank”).

 

RECITALS

 

Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree as follows:

 

ARTICLE I

CREDIT TERMS

 

SECTION 1.1.                       LINE OF CREDIT.

 

(a)                                  Line of Credit.  Subject to the terms and
conditions of this Agreement, Bank hereby agrees to make advances to Borrower
from time to time up to and including May 3, 2004, not to exceed at any time the
aggregate principal amount of Seven Million Dollars ($7,000,000.00) (“Line of
Credit”), the proceeds of which shall be used for working capital requirements. 
Borrower’s obligation to repay advances under the Line of Credit shall be
evidenced by a promissory note substantially in the form of Exhibit A attached
hereto (“Line of Credit Note”), all terms of which are incorporated herein by
this reference.

 

(b)                                 Letter of Credit Subfeature.  As a
subfeature under the Line of Credit, Bank agrees from time to time during the
term thereof to issue or cause an affiliate to issue standby letters of credit
for the account of Borrower to back performance instruments (each, a “Letter of
Credit” and collectively, “Letters of Credit”); provided however, that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at any
time exceed One Million Dollars ($1,000,000.00).  The form and substance of each
Letter of Credit shall be subject to approval by Bank, in its sole discretion. 
No Letter of Credit shall have an expiration date subsequent to the maturity
date of the Line of Credit.  The undrawn amount of all Letters of Credit shall
be reserved under the Line of Credit and shall not be available for borrowings
thereunder.  Each Letter of Credit shall be subject to the additional terms and
conditions of the Letter of Credit agreements, applications and any related
documents required by Bank in connection with the issuance thereof.  Each
drawing paid under a Letter of Credit shall be deemed an advance under the Line
of Credit and shall be repaid by Borrower in accordance with the terms and
conditions of this Agreement applicable to such advances; provided however, that
if advances under the Line of Credit are not available, for any reason, at the
time any drawing is paid, then Borrower shall immediately pay to Bank the full
amount drawn, together with interest thereon from the date such drawing is paid
to the date such amount is fully repaid by Borrower, at the rate of interest
applicable to advances under the Line of Credit.  In such event Borrower agrees
that Bank, in its sole discretion, may debit any account maintained by Borrower
with Bank for the amount of any such drawing.

 

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(c)                                  Borrowing and Repayment.  Borrower may from
time to time during the term of the Line of Credit borrow, partially or wholly
repay its outstanding borrowings, and reborrow, subject to all of the
limitations, terms and conditions contained herein or in the Line of Credit
Note; provided however, that the total outstanding borrowings under the Line of
Credit shall not at any time exceed the maximum principal amount available
thereunder, as set forth above. Notwithstanding the foregoing, Borrower shall
maintain a zero balance on advances under the Line of Credit for a period of at
least thirty (30) consecutive days during the term of the Line of Credit.

 

SECTION 1.2.                       INTEREST/FEES.

 

(a)                                  Interest.  The outstanding principal
balance of the Line of Credit shall bear interest at the rate of interest set
forth in the Line of Credit Note.

 

(b)                                 Computation and Payment.  Interest shall be
computed on the basis of a 360-day year, actual days elapsed.  Interest shall be
payable at the times and place set forth in each promissory note or other
instrument or document required hereby.

 

(c)                                  Unused Commitment Fee.  Borrower shall pay
to Bank a fee equal to two-tenths percent (.20%) per annum (computed on the
basis of a 360-day year, actual days elapsed) on the average daily unused amount
of the Line of Credit, which fee shall be calculated on a calendar quarter basis
by Bank and shall be due and payable by Borrower in arrears on the last day of
each calendar quarter.

 

(d)                                 Letter of Credit Fees.  Borrower shall pay
to Bank (i) fees upon the issuance of each Letter of Credit equal to two percent
(2.00%) per annum (computed on the basis of a 360-day year, actual days elapsed)
of the face amount thereof, and (ii) fees upon the payment or negotiation of
each drawing under any Letter of Credit and fees upon the occurrence of any
other activity with respect to any Letter of Credit (including without
limitation, the transfer, amendment or cancellation of any Letter of Credit)
determined in accordance with Bank’s standard fees and charges then in effect
for such activity.

 

SECTION 1.3.                       COLLECTION OF PAYMENTS.  Borrower authorizes
Bank to collect all interest and fees due under the Line of Credit by charging
Borrower’s deposit account number 4624028767 with Bank, or any other deposit
account maintained by Borrower with Bank, for the full amount thereof.  Should
there be insufficient funds in any such deposit account to pay all such sums
when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.

 

SECTION 1.4.                       COLLATERAL.

 

As security for all indebtedness of Borrower to Bank under the Line of Credit,
Borrower hereby grants to Bank security interests of first priority in all
Borrower’s accounts receivable and other rights to payment, general intangibles
and equipment.

 

All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds of trust and other documents as
Bank shall reasonably require, all in form and substance satisfactory to Bank. 
Borrower shall reimburse Bank within five (5) days of Bank’s demand, therefor,
for all reasonable costs and expenses incurred by Bank in connection with any of
the foregoing security, including without limitation, filing and recording fees
and costs of appraisals, audits and title insurance.

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

 

SECTION 2.1.                       LEGAL STATUS.  Borrower is a corporation,
duly organized and existing and in good standing under the laws of the State of
Delaware, and is qualified or licensed to do business (and is in good standing
as a foreign corporation, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on Borrower.

 

SECTION 2.2.                       AUTHORIZATION AND VALIDITY.  This Agreement
and each promissory note, contract, instrument and other document required
hereby or at any time hereafter delivered to Bank in connection herewith
(collectively, the “Loan Documents”) have been duly authorized, and upon their
execution and delivery in accordance with the provisions hereof will constitute
legal, valid and binding agreements and obligations of Borrower or the party
which executes the same, enforceable in accordance with their respective terms.

 

SECTION 2.3.                       NO VIOLATION.  The execution, delivery and
performance by Borrower of each of the Loan Documents do not violate any
provision of any law or regulation, or contravene any provision of the Articles
of Incorporation or By-Laws of Borrower, or result in any breach of or default
under any contract, obligation, indenture or other instrument to which Borrower
is a party or by which Borrower may be bound.

 

SECTION 2.4.                       LITIGATION.  There are no pending, or to the
best of Borrower’s knowledge threatened, actions, claims, investigations, suits
or proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those disclosed by
Borrower to Bank in writing prior to the date hereof.

 

SECTION 2.5.                       CORRECTNESS OF FINANCIAL STATEMENT.  The
financial statement of Borrower dated December 28, 2002, a true copy of which
has been delivered by Borrower to Bank prior to the date hereof, (a) is complete
and correct and presents fairly the financial condition of Borrower, (b)
discloses all liabilities of Borrower that are required to be reflected or
reserved against under generally accepted accounting principles, whether
liquidated or unliquidated, fixed or contingent, and (c) has been prepared in
accordance with generally accepted accounting principles consistently applied. 
Since the date of such financial statement there has been no material adverse
change in the financial condition of Borrower, nor has Borrower mortgaged,
pledged, granted a security interest in or otherwise encumbered any of its
assets or properties except in favor of Bank or as otherwise permitted by Bank
in writing.

 

SECTION 2.6.                       INCOME TAX RETURNS.  Borrower has no
knowledge of any pending assessments or adjustments of its income tax payable
with respect to any year.

 

SECTION 2.7.                       NO SUBORDINATION.  There is no agreement,
indenture, contract or instrument to which Borrower is a party or by which
Borrower may be bound that requires the

 

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subordination in right of payment of any of Borrower’s obligations subject to
this Agreement to any other obligation of Borrower.

 

SECTION 2.8.                       PERMITS, FRANCHISES.  Borrower possesses, and
will hereafter possess, all permits, consents, approvals, franchises and
licenses required and rights to all trademarks, trade names, patents, and
fictitious names, if any, necessary to enable it to conduct the business in
which it is now engaged in compliance with applicable law.

 

SECTION 2.9.                       ERISA.  Borrower is in compliance in all
material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended or recodified from time to time
(“ERISA”); Borrower has not violated any provision of any defined employee
pension benefit plan (as defined in ERISA) maintained or contributed to by
Borrower (each, a “Plan”); no Reportable Event as defined in ERISA has occurred
and Is continuing with respect to any Plan initiated by Borrower; Borrower has
met its minimum funding requirements under ERISA with respect to each Plan; and
each Plan will be able to fulfill its benefit obligations as they come due in
accordance with the Plan documents and under generally accepted accounting
principles.

 

SECTION 2.10.                 OTHER OBLIGATIONS.  Borrower is not in default on
any obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.

 

SECTION 2.11.                 ENVIRONMENTAL MATTERS.  Except as disclosed by
Borrower to Bank in writing prior to the date hereof, Borrower is in compliance
in all material respects with all applicable federal or state environmental,
hazardous waste, health and safety statutes, and any rules or regulations
adopted pursuant thereto, which govern or affect any of Borrower’s operations
and/or properties, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time.  None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment. 
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

 

ARTICLE III

CONDITIONS

 

SECTION 3.1.                       CONDITIONS OF INITIAL EXTENSION OF CREDIT. 
The obligation of Bank to extend any credit contemplated by this Agreement is
subject to the fulfillment to Bank’s satisfaction of all of the following
conditions:

 

(a)                                  Approval of Bank Counsel.  All legal
matters incidental to the extension of credit by Bank shall be satisfactory to
Bank’s counsel.

 

(b)                                 Documentation.  Bank shall have received, in
form and substance satisfactory to Bank, each of the following, duly executed:

 

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(i)

 

This Agreement and each promissory note or other instrument or document required
hereby.

(ii)

 

Corporate Resolution Borrowing.

(iii)

 

Certificate of Incumbency.

(iv)

 

Continuing Security Agreement Rights to Payment.

(v)

 

Security Agreement Equipment.

(vi)

 

UCC-1 Financing Statement.

(vii)

 

Such other documents as Bank may require under any other Section of this
Agreement.

 

(c)                                  Financial Condition.  There shall have been
no material adverse change, as determined by Bank, in the financial condition or
business of Borrower, nor any material decline, as determined by Bank, in the
market value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower.

 

(d)                                 Insurance.  Borrower shall have delivered to
Bank evidence of insurance coverage on all Borrower’s property, in form,
substance, amounts, covering risks and issued by companies satisfactory to Bank,
and where required by Bank, with loss payable endorsements in favor of Bank.

 

SECTION 3.2.                       CONDITIONS OF EACH EXTENSION OF CREDIT.  The
obligation of Bank to make each extension of credit requested by Borrower
hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of
the following conditions:

 

(a)                                  Compliance.  The representations and
warranties contained herein and in each of the other Loan Documents shall be
true on and as of the date of the signing of this Agreement and on the date of
each extension of credit by Bank pursuant hereto, with the same effect as though
such representations and warranties had been made on and as of each such date,
and on each such date, no Event of Default as defined herein, and no condition,
event or act which with the giving of notice or the passage of time or both
would constitute such an Event of Default, shall have occurred and be continuing
or shall exist.

 

(b)                                 Documentation.  Bank shall have received all
additional documents which may be required in connection with such extension of
credit.

 

ARTICLE IV

AFFIRMATIVE COVENANTS

 

Borrower covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

 

SECTION 4.1.                       PUNCTUAL PAYMENTS.  Punctually pay all
principal, interest, fees or other liabilities due under any of the Loan
Documents at the times and place and in the manner specified therein.

 

SECTION 4.2.                       ACCOUNTING RECORDS.  Maintain adequate books
and records in accordance with generally accepted accounting principles
consistently applied and permit any

 

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representative of Bank, at any reasonable time, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the
properties of Borrower.

 

SECTION 4.3.                       FINANCIAL STATEMENTS.  Provide to Bank all of
the following, in form and detail satisfactory to Bank:

 

(a)                                  not later than 90 days after and as of the
end of each fiscal year, an audited financial statement of Borrower, prepared by
an independent certified public accountant acceptable to Bank, to include
balance sheet, income statement, statement of cash flow and source and
application of funds statement;

 

(b)                                 not later than 45 days after and as of the
end of each fiscal quarter, a financial statement of Borrower, prepared by
Borrower, to include balance sheet and income statement;

 

(c)                                  if Borrower is a public company, not later
than 5 days within filing, copies of all reports on Form 10-K, 10-Q and 8K filed
with Securities and Exchange Commission;

 

(d)                                 from time to time such other information as
Bank may reasonably request.

 

SECTION 4.4.                       COMPLIANCE.  Preserve and maintain all
licenses, permits, governmental approvals, rights, privileges and franchises
necessary for the conduct of its business; and comply with the provisions of all
documents pursuant to which Borrower is organized and/or which govern Borrower’s
continued existence and with the requirements of all laws, rules, regulations
and orders of any governmental authority applicable to Borrower and/or its
business.

 

SECTION 4.5.                       INSURANCE.  Maintain and keep in force
insurance of the types and in amounts customarily carried in lines of business
similar to that of Borrower, including but not limited to fire, extended
coverage, public liability flood, property damage and workers’ compensation,
with all such insurance carried with companies and in amounts satisfactory to
Bank, and deliver to Bank from time to time at Bank’s request schedules setting
forth all insurance then in effect.

 

SECTION 4.6.                       FACILITIES.  Keep all properties useful or
necessary to Borrower’s business in good repair and condition, and from time to
time make necessary repairs, renewals and replacements thereto so that such
properties shall be fully and efficiently preserved and maintained.

 

SECTION 4.7.                       TAXES AND OTHER LIABILITIES.  Pay and
discharge when due any and all indebtedness, obligations, assessments and taxes,
both real or personal, including without limitation federal and state income
taxes and state and local property taxes and assessments, except such (a) as
Borrower may in good faith contest or as to which a bona fide dispute may arise
and (b) for which Borrower has made provision, to Bank’s satisfaction, for
eventual payment thereof in the event Borrower is obligated to make such
payment.

 

SECTION 4.8.                       LITIGATION.  Promptly give notice in writing
to Bank of any litigation pending or threatened against Borrower with a claim in
excess of $150,000,00.

 

SECTION 4.9.                       FINANCIAL CONDITION.  Maintain Borrower’s
financial condition as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the
extent modified by the definitions herein);

 

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(a)                                  Tangible Net Worth not at any time less
than $90,000,000.00, with “Tangible Net Worth” defined as the aggregate of total
stockholders’ equity plus subordinated debt less any intangible assets.

 

(b)                                 Total Liabilities divided by Tangible Net
Worth not at any time greater than 0.75 to 1.0 with “Total Liabilities” defined
as the aggregate of current liabilities and non-current liabilities less
subordinated debt, and with “Tangible Net Worth” as defined above.

 

(c)                                  Quick Ratio not at any time less than 2.0
to 1.0 with “Quick Ratio” defined as the aggregate of: unrestricted cash,
unrestricted marketable securities, accounts receivables and non-billed accounts
receivables (recorded in financial statements) convertible into cash divided by
total current liabilities.

 

(d)                                 Net income after taxes not less than $1.00
on an annual basis, determined as of each fiscal year end, and pre-tax profit
not less than $1.00 on a quarterly basis, determined as of each fiscal quarter
end.

 

SECTION 4.10.                 NOTICE TO BANK.  Promptly (but in no event more
than five (5) business days after the occurrence of each such event or matter)
give written notice to Bank in reasonable detail of: (a) the occurrence of any
Event of Default or any condition event or act which with the giving of notice
or the passage of time or both would constitute an Event of Default; (b) any
change in the name or the organizational structure of Borrower; (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each as
defined in ERISA, or any funding deficiency with respect to any Plan, or any
investigation or audit of the ESOP by the Department of Labor or the Internal
Revenue Service; or (d) any termination or cancellation of any insurance policy
which Borrower is required to maintain, or any uninsured or partially uninsured
loss exceeding $50,000.00 through liability or property damage, or through fire,
theft or any other cause affecting Borrower’s property.  For purposes of this
Agreement, “Business Day” means any day except a Saturday, Sunday or any other
day designated as a holiday under Federal or California statute or regulation.

 

ARTICLE V

NEGATIVE COVENANTS

 

Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank’s prior written
consent:

 

SECTION 5.1.                       USE OF FUNDS.  Use any of the proceeds of any
credit extended hereunder except for the purposes stated in Article I hereof.

 

SECTION 5.2.                       OTHER INDEBTEDNESS.  Create, incur, assume or
permit to exist any indebtedness or liabilities resulting from borrowings, loans
or advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
and (b) any other liabilities of Borrower existing as of, and disclosed to Bank
prior to, the date hereof, (c) trade payables incurred in the ordinary course of

 

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business, and (d) other indebtedness or liabilities not to exceed $100,000.00 in
the aggregate outstanding at any time.

 

SECTION 5.3.                       MERGER, CONSOLIDATION, TRANSFER OF ASSETS.
Merge into or consolidate with any other entity where the  Borrower is not the
surviving entity, or unless such other surviving entity (a) is reasonably
acceptable to Bank, (b) assumes all of Borrower’s liabilities in connection
herewith, and executes any documents, and (c) takes all further actions
reasonably required by Bank to effect such assumption; make any substantial
change in the nature of Borrower’s business as conducted as of the date hereof;
acquire all or substantially all of the assets of any other entity; nor sell,
lease, transfer or otherwise dispose of all or a substantial or material portion
of Borrower’s assets except in the ordinary course of its business.

 

SECTION 5.4.                       GUARANTIES. Guarantee or become liable in any
way as surety, endorser (other than as endorser of negotiable instruments for
deposit or collection in the ordinary course of business), accommodation
endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as
security for, any liabilities or obligations of any other person or entity,
except any of the foregoing in favor of Bank.

 

SECTION 5.5.                       DIVIDENDS, DISTRIBUTIONS. Declare or pay any
dividend or distribution either in cash, stock or any other property on
Borrower’s stock now or hereafter outstanding, nor redeem, retire, repurchase or
otherwise acquire any shares of any class of Borrower’s stock now or hereafter
outstanding except in connection with Borrower’s 1994 Restricted Stock Bonus
Plan and Agreement.

 

SECTION 5.6.                       PLEDGE OF ASSETS. Mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or any portion of
Borrower’s assets pledged to Bank under this Agreement, except any of the
foregoing in favor of Bank or which is existing as of, and disclosed to Bank in
writing prior to, the date hereof.

 

ARTICLE VI

EVENTS OF DEFAULT

 

SECTION 6.1.                       The occurrence of any of the following shall
constitute an “Event of Default” under this Agreement:

 

(a)                                  Borrower shall fail to pay when due any
principal, interest, fees or other amounts payable under any of the Loan
Documents.

 

(b)                                 Any financial statement or certificate
furnished to Bank in connection with, or any representation or warranty made by
Borrower or any other party under this Agreement or any other Loan Document
shall prove to be incorrect, false or misleading in any material respect when
furnished or made.

 

(c)                                  Any default in the performance of or
compliance with any obligation, agreement or other provision contained herein or
in any other Loan Document (other than those referred to in subsections (a) and
(b) above), and with respect to any such default which by its nature can be
cured, such default shall continue for a period of thirty (30) days from its
occurrence.

 

(d)                                 Any default in the payment or performance of
any obligation, or any defined event of default, under the terms of any contract
or instrument (other than any of the Loan Documents)

 

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pursuant to which Borrower has incurred any debt or other liability to any
person or entity, where the total of such obligations and/or face amount of such
contracts or instruments exceeds an aggregated of $1,000,000.00.

 

(e)                                  Any default in the payment or performance
of any obligation, or any defined event of default, under the terms of any
contract or instrument (other than any of the Loan Documents) pursuant to which
Borrower has incurred any debt or other liability to Bank, except where a
bonafide dispute exists.

 

(f)                                    The filing of a notice of judgment lien
against Borrower; or the recording of any abstract of judgment against Borrower
in any county in which Borrower has an interest in real property; or the service
of a notice of levy and/or of a writ of attachment or execution, or other like
process, against the assets of Borrower; or the entry of a judgment against
Borrower; in each case when the total amount involved in any of the foregoing
exceeds an aggregate of $500,000.00.

 

(g)                                 Borrower shall become insolvent, or shall
suffer or consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property, or shall generally
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower shall file a voluntary petition in
bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform Act,
Title 11 of the United States Code, as amended or recodified from time to time
(“Bankruptcy Code”), or under any state or Federal law granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
Federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower and is not dismissed within 60 days
following date of filing thereof, or Borrower shall file an answer admitting the
jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower shall be adjudicated a bankrupt, or an order for relief
shall be entered against Borrower by any court of competent jurisdiction under
the Bankruptcy Code or any other applicable state or Federal law relating to
bankruptcy, reorganization or other relief for debtors which such adjudication
or order for relief is not reversed, vacated or dismissed within 60 days
following the date of filing thereof.

 

(h)                                 There shall exist or occur any event or
condition which Bank in good faith believes impairs, or is substantially likely
to impair, the prospect of payment or performance by Borrower of its obligations
under any of the Loan Documents.

 

(i)                                     The dissolution or liquidation of
Borrower; or Borrower, or any of its directors, stockholders or members, shall
take action seeking to effect the dissolution or liquidation of Borrower.

 

(j)                                     Any change in ownership during the term
of this Agreement of an aggregated of twenty-five percent (25%) or more of the
common stock of Borrower other than in connection with an initial public
offering of Borrower’s stock.

 

(k)                                  Any violation of the Code, ERISA, any
regulations thereunder or any laws or regulations applicable to the ESOP which
is deemed by Bank, in the good faith exercise of its discretion, to have a
material adverse effect upon Borrower or ESOP, including , but not limited to,
the occurrence of a prohibited transaction within the meaning of  Section 4975
(c) of the Code or Sections 406 or 407 of ERISA.

 

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(I)                                    The determination by any court or
governmental agency or authority that ESOP is not a qualified plan under
Sections 401(a) or (k) of the Code or an ESOP under Section 4975(e)(7) of the
Code or that the Term Loan or any of the related transactions violate the Code,
ERISA or any regulation thereunder, or constitute a prohibited transaction
within the meaning of Section 4975(c) of the Code or Section 406 or 407 of
ERISA.

 

SECTION 6.2.                       REMEDIES.  Upon the occurrence of any Event
of Default: (a) all indebtedness of Borrower under each of the Loan Documents,
any term thereof to the contrary notwithstanding, shall at Bank’s option and
without notice become immediately due and payable without presentment, demand,
protest or notice of dishonor, all of which are hereby expressly waived by each
Borrower; (b) the obligation, if any, of Bank to extend any further credit under
any of the Loan Documents shall immediately cease and terminate; and (c) Bank
shall have all rights, powers and remedies available under each of the Loan
Documents, or accorded by law, including without limitation the right to resort
to any or all security for any credit subject hereto and to exercise any or all
of the rights of a beneficiary or secured party pursuant to applicable law. All
rights, powers and remedies of Bank may be exercised at any time by Bank and
from time to time after the occurrence of an Event of Default, are cumulative
and not exclusive, and shall be in addition to any other rights, powers or
remedies provided by law or equity.

 

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1.                       NO WAIVER. No delay, failure or
discontinuance of Bank in exercising any right, power or remedy  under any of
the Loan Documents shall affect or operate as a waiver of such right, power or
remedy; nor shall any single or partial exercise of any such right, power or
remedy preclude, waive or otherwise affect any other or further exercise thereof
or the exercise of any other right, power or remedy. Any waiver, permit, consent
or approval of any kind by Bank of any breach of or default under any of the
Loan Documents must be in writing and shall be effective only to the extent set
forth in such writing.

 

SECTION 7.2.                       NOTICES. All notices, requests and demands
which any party is required or may desire to give to any other party under any
provision of this Agreement must be in writing delivered to each party at the
following address:

 

BORROWER:

 

FIRST CONSULTING GROUP, INC.

 

 

111 W. Ocean Blvd., Suite 400

 

 

Long Beach, CA 90802

 

 

 

BANK:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

111 W. Ocean Blvd., Suite 300

 

 

Long Beach. CA 90802

 

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

 

SECTION 7.3.                       COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower
shall pay to Bank immediately upon demand the full amount of all payments,
advances, charges, costs and

 

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expenses, including reasonable attorneys’ fees (to include outside counsel fees
and all allocated costs of Bank’s in-house counsel), expended or incurred by
Bank in connection with (a) the negotiation and preparation of this Agreement
and the other Loan Documents, Bank’s continued administration hereof and
thereof, and the preparation of any amendments and waivers hereto and thereto,
(b) the enforcement of Bank’s rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Bank or any other person) relating to any Borrower
or any other person or entity.

 

SECTION 7.4.                       SUCCESSORS, ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of the parties;
provided however, that Borrower may not assign or transfer its interest
hereunder without Bank’s prior written consent. Bank reserves the right to sell,
assign, transfer, negotiate or grant participations in all or any part of, or
any interest in, Bank’s rights and benefits under each of the Loan Documents. In
connection therewith, Bank may disclose all documents and information which Bank
now has or may hereafter acquire relating to any credit subject hereto, Borrower
or its business, or any collateral required hereunder.

 

SECTION 7.5.                       ENTIRE AGREEMENT; AMENDMENT. This Agreement
and the other Loan Documents constitute the entire agreement between Borrower
and Bank with respect to each credit subject hereto and supersede all prior
negotiations, communications, discussions and correspondence concerning the
subject matter hereof. This Agreement may be amended or modified only in writing
signed by each party hereto.

 

SECTION 7.6.                       NO THIRD PARTY BENEFICIARIES. This Agreement
is made and entered into for the sole protection and benefit of the parties
hereto and their respective permitted successors and assigns, and no other
person or entity shall be a third party beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any
other of the Loan Documents to which it is not a party.

 

SECTION 7.7.                       TIME.  Time is of the essence of each and
every provision of this Agreement and each other of the Loan Documents.

 

SECTION 7.8.                       SEVERABILITY OF PROVISIONS.  If any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any remaining
provisions of this Agreement.

 

SECTION 7.9.                       COUNTERPARTS.  This Agreement may be executed
in any number of counterparts, each of which when executed and delivered shall
be deemed to be an original, and all of which when taken together shall
constitute one and the same Agreement.

 

SECTION 7.10.                 GOVERNING LAW.  This Agreement shall be governed
by and construed in accordance with the laws of the State of California.

 

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SECTION 7.11.                 ARBITRATION.

 

(a)                                  Arbitration. The parties hereto agree, upon
demand by any party, to submit to binding arbitration all claims, disputes and
controversies between or among them (and their respective employees, officers,
directors, attorneys, and other agents), whether in tort, contract or otherwise
arising out of or relating to in any way (i) the loan and related Loan Documents
which are the subject of this Agreement and its negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination; or
(ii) requests for additional credit.

 

(b)                                 Governing Rules. Any arbitration proceeding
will (i) proceed in a location in California selected by the American
Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act
(Title 9 of the United States Code), notwithstanding any conflicting choice of
law provision in any of the documents between the parties; and (iii) be
conducted by the AAA, or such other administrator as the parties shall mutually
agree upon, in accordance with the AAA’s  commercial dispute resolution
procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive
of claimed interest, arbitration fees and costs in which case the arbitration
shall be conducted in accordance with the AAA’s optional procedures for large,
complex commercial disputes (the commercial dispute resolution procedures or the
optional procedures for large, complex commercial disputes to be referred to, as
applicable, as the “Rules”). If there is any inconsistency between the terms
hereof and the Rules, the terms and procedures set forth herein shall control.
Any party who fails or refuses to submit to arbitration following a demand by
any other party shall bear all costs and expenses incurred by such other party
in compelling arbitration of any dispute. Nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded to
it under 12 U.S.C. §91 or any similar applicable state law.

 

(c)                                  No Waiver of Provisional Remedies,
Self-Help and Foreclosure. The arbitration requirement does not limit the right
of any party to (i) foreclose against real or personal property collateral; (ii)
exercise self-help remedies relating to collateral or proceeds of collateral
such as setoff or repossession; or (iii) obtain provisional or ancillary
remedies such as replevin, injunctive relief, attachment or the appointment of a
receiver, before during or after the pendency of any arbitration proceeding.
This exclusion does not constitute a waiver of the right or obligation of any
party to submit any dispute to arbitration or reference hereunder, including
those arising from the exercise of the actions detailed in sections (i), (ii)
and (iii) of this paragraph.

 

(d)                                 Arbitrator Qualifications and Powers. Any
arbitration proceeding in which the amount in controversy is $5,000,000.00 or
less will be decided by a single arbitrator selected according to the Rules, and
who shall not render an award of greater than $5,000,000.00.  Any dispute in
which the amount in controversy exceeds $5,000,000.00 shall be decided by
majority vote of a panel of three arbitrators; provided however, that all three
arbitrators must actively participate in all hearings and deliberations.  The
arbitrator will be a neutral attorney licensed in the State of California or a
neutral retired judge of the state or federal judiciary of California, in either
case with a minimum of ten years experience in the substantive law applicable to
the subject matter of the dispute to be arbitrated.  The arbitrator will
determine whether or not an issue is arbitratable and will give effect to the
statutes of limitation in determining any claim.  In any arbitration proceeding
the arbitrator will decide (by documents only or with a hearing at the
arbitrator’s discretion) any pre-hearing motions which are similar to motions to
dismiss for failure to state a claim or motions for summary adjudication.  The
arbitrator shall resolve all disputes in accordance with the substantive law of
California and may grant any remedy or relief that a

 

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court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award.  The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction.  The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.

 

(e)                                  Discovery.  In any arbitration proceeding
discovery will be permitted in accordance with the Rules. All discovery shall be
expressly limited to matters directly relevant to the dispute being arbitrated
and must be completed no later than 20 days before the hearing date and within
180 days of the filing of the dispute with the AAA.  Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon a showing that the request for
discovery is essential for the party’s presentation and that no alternative
means for obtaining information is available.

 

(f)                                    Class Proceedings and Consolidations. 
The resolution of any dispute arising pursuant to the terms of this Agreement
shall be determined by a separate arbitration proceeding and such dispute shall
not be consolidated with other disputes or included in any class proceeding.

 

(g)                                 Payment Of Arbitration Costs And Fees.  The
arbitrator shall award all costs and expenses of the arbitration proceeding.

 

(h)                                 Real Property Collateral; Judicial
Reference.  Notwithstanding anything herein to the contrary, no dispute shall be
submitted to arbitration if the dispute concerns indebtedness secured directly
or indirectly, in whole or in part, by any real property unless (i) the holder
of the mortgage, lien or security interest specifically elects in writing to
proceed with the arbitration, or (ii) all parties to the arbitration waive any
rights or benefits that might accrue to them by virtue of the single action rule
statute of California, thereby agreeing that all indebtedness and obligations of
the parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable.  If any
such dispute is not submitted to arbitration, the dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638.  A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA’s selection procedures.  Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.

 

(i)                                     Miscellaneous.  To the maximum extent
practicable, the AAA, the arbitrators and the parties shall take all action
required to conclude any arbitration proceeding within 180 days of the filing of
the dispute with the AAA.  No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for
disclosures of Information by a party required in the ordinary course of its
business or by applicable law or regulation.  If more than one agreement for
arbitration by or between the parties potentially applies to a dispute, the
arbitration provision most directly related to the Loan Documents or the subject
matter of the dispute shall control.  This arbitration provision shall survive
termination, amendment or expiration of any of the Loan Documents or any
relationship between the parties.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.

 

 

 

WELLS FARGO BANK,

FIRST CONSULTING GROUP, INC.

 NATIONAL ASSOCIATION

 

 

By:

/s/ Luther J. Nussbaum

 

By:

/s/ Elizabeth Renteria

 

 

Luther J. Nussbaum

 

Elizabeth Renteria

 

Chief Executive Officer/Chairman

 

Vice President

 

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WELLS FARGO

REVOLVING LINE OF CREDIT NOTE

 

 

$7,000,000.00

INITIAL

Long Beach, California

 

May 1, 2003

 

FOR VALUE RECEIVED, the undersigned First Consulting Group, Inc. (“Borrower”)
promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”)
at its office at South Bay RCBO, 111 West Ocean Blvd., Suite #300, Long Beach,
CA 90802, or at such other place as the holder hereof may designate, in lawful
money of the United States of America and in immediately available funds, the
principal sum of $7,000,000.00, or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.

 

1.                                       INTEREST:

 

1.1                                 Interest.  The outstanding principal balance
of this Note shall bear interest (computed on the basis of a 360-day year,
actual days elapsed) at a rate per annum equal to the Prime Rate in effect from
time to time.  The “Prime Rate” is a base rate that Bank from time to time
establishes and which serves as the basis upon which effective rates of interest
are calculated for those loans making reference thereto.  Each change in the
rate of interest hereunder shall become effective on the date each Prime Rate
change is announced within Bank.

 

1.2                               Payment of Interest.  Interest accrued on this
Note shall be payable on the 1st day of each month, commencing June 1, 2003.

 

1.3                                 Default Interest.  From and after the
maturity date of this Note, or such earlier date as all principal owing
hereunder becomes due and payable by acceleration or otherwise, the outstanding
principal balance of this Note shall bear interest until paid in full at an
increased rate per annum (computed on the basis of a 360-day year, actual days
elapsed) equal to 4% above the rate of interest from time to time applicable to
this Note.

 

2.                                       BORROWING AND REPAYMENT:

 

2.1                                 Borrowing and Repayment.  Borrower may from
time to time during the term of this Note borrow, partially or wholly repay its
outstanding borrowings, and reborrow, subject to all of the limitations, terms
and conditions of this Note and of the Credit Agreement between Borrower and
Bank defined below; provided however, that the total outstanding borrowings
under this Note shall not at any time exceed the principal amount stated above. 
The unpaid principal balance of this obligation at any time shall be the total
amounts advanced hereunder by the holder hereof less the amount of principal
payments made hereon by or for any Borrower, which balance may be endorsed
hereon from time to time by the holder.  The outstanding principal balance of
this Note shall be due and payable in full on May 3, 2004.

 

2.2                                 Advances.  Advances hereunder, to the total
amount of the principal sum available hereunder, may be made by the holder at
the oral or written request of (a) Luther J. Nussbaum, Michael J. Puntoriero or
Philip H. Ockelmann, any one acting alone, who are authorized to request
advances and direct the disposition of any advances until written notice of the
revocation of such authority is received by the holder at the office designated
above, or (b) any person, with respect to advances deposited to the credit of
any deposit account of any Borrower, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of each Borrower
regardless of the fact that persons other than those authorized to request
advances may have authority to draw against such account.  The holder shall have
no obligation to determine whether any person requesting an advance is or has
been authorized by any Borrower.

 

2.3                                 Application of Payments.  Each payment made
on this Note shall be credited first, to any interest then due and second, to
the outstanding principal balance hereof.

 

PROMNOTE.CA (01/03)

Revolving Line of Credit Note

02699, #2475800509

 

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3.                                       EVENTS OF DEFAULT:

 

This Note is made pursuant to and is subject to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of May 1, 2003, as
amended from time to time (the “Credit Agreement”).  Any default in the payment
or performance of any obligation under this Note, or any defined event of
default under the Credit Agreement, shall constitute an “Event of Default” under
this Note.

 

4.                                       MISCELLANEOUS:

 

4.1                                
Remedies.                                          Upon the occurrence of any
Event of Default, the holder of this Note, at the holder’s option, may declare
all sums of principal and interest outstanding hereunder to be immediately due
and payable without presentment, demand, notice of nonperformance, notice of
protest, protest or notice of dishonor, all of which are expressly waived by
each Borrower, and the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate.  Each Borrower shall pay
to the holder immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys’ fees (to include
outside counsel fees and all allocated costs of the holder’s in-house counsel),
expended or incurred by the holder in connection with the enforcement of the
holder’s rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity.

 

4.2                                 Obligations Joint and
Several.                                 Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.

 

4.3                                 Governing Law.            This Note shall be
governed by and construed in accordance with the laws of the State of
California.

 

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

 

First Consulting Group, Inc.

 

By:

  /s/ Luther J. Nussbaum

 

 

 

Luther J. Nussbaum, Chief Executive

 

 

 

Officer/Chairman

 

 

 

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WELLS FARGO

CERTIFICATE OF INCUMBENCY

 

TO:  WELLS FARGO BANK, NATIONAL ASSOCIATION

 

The undersigned, Michael A. Zuercher, Secretary of First Consulting Group, Inc.,
a corporation created and existing under the laws of the state of California,
hereby certifies to Wells Fargo Bank, National Association (“Bank”) that (a) the
following named persons are duly elected officers of this corporation and
presently hold the titles specified below, (b) said officers are authorized to
act on behalf of this Corporation in transactions with Bank, and (c) the
signature opposite each officer’s name is his or her true signature:

 

TITLE

 

NAME

 

SIGNATURE

 

 

 

 

 

Chief Executive Officer/Chairman

 

Luther J. Nussbaum

 

/s/ Luther J. Nussbaum

 

 

 

 

 

Executive Vice President/CFO

 

Michael J. Puntoriero

 

/s/ Michael J. Puntoriero

 

The undersigned further certifies that if any of the above-named officers
change, or if, at any time, any of said officers are no longer authorized to act
on behalf of this corporation in transactions with Bank, this corporation shall
immediately provide to Bank a new Certificate of Incumbency.  Bank is hereby
authorized to rely on this Certificate of Incumbency until a new Certificate of
Incumbency certified by the Secretary of this corporation is received by Bank.

 

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed the corporate seal
of said corporation as of May 1, 2003.

 

 

/s/ Michael A. Zuercher

 

 

Secretary

(SEAL)

 

 

 

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