EXHIBIT 10.1

 

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November 21, 2005

 

Luther J. Nussbaum

5818 Bay Shore Walk

Long Beach, CA  90803

 

Dear Lu,

 

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.  Your separation as an employee of FCG and all of its
subsidiaries or affiliates (individually, an “FCG Company” or collectively, the
“FCG Companies”) shall be effective November 21, 2005 (the “Separation Date”). 
The foregoing shall not be deemed to modify the date of your previous
resignation on November 3, 2005 as FCG’s Chairman and Chief Executive Officer,
and as an officer and/or director of any FCG Company.

 

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 paid out.

 

3.  Severance Payments.  FCG will pay to you a lump sum amount of $820,250 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.   The foregoing lump sum severance amount represents: (a) eighteen (18)
months base salary; (b) eighteen (18) months of target DSO bonus at a 10% bonus
rate; (c) lump sum amount equivalent to purchase of retiree benefits; and
(d) membership dues for the Center Club and WPO for the 2006 calendar year.
Payment of the lump sum severance described above will be made within ten
(10) days after the date this signed agreement is received by FCG.  All amounts
paid under this paragraph will be less federal, state and other applicable taxes
and other authorized withholdings, and shall be made by manual check.

 

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 to the extent provided by
federal law, state insurance laws and by FCG’s current group health insurance
policies (including retiree medical benefits). You may do this by making the
retiree medical election and submitting your premiums directly to our benefits
administrator in the Long Beach office.

 

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A package of information will be sent to you via mail within 21 days of the
Separation Date detailing the process and premium amounts for your retiree
medical benefits coverage, including the deadline by which you must elect
coverage. Coverage will be effective retroactive to the Separation Date.

 

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 standard 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.

 

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.  The expiration date on your vested options will be modified so that
you will have until December 31, 2006 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

 

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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 Carol Cogan 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.

 

(c) Acknowledgment.  You acknowledge that the consideration provided in this
Agreement is good and valuable consideration in exchange for this Agreement, and
includes payments and benefits to which you are not otherwise entitled.

 

11. Unemployment Benefits. Because of the nature of your separation with FCG,
you are not eligible for unemployment insurance benefits.

 

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, credit cards, phone
cards, entry cards, identification badges and keys. Please return items to Jan
Blue 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 fair market 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.

 

In addition, FCG will make reasonable efforts to provide to you any personal
emails sent to your former FCG email address for a period of sixty (60) days
from the Separation Date.  Additionally, during that period of time, FCG will
place an auto reply message on your former FCG email indicating your new email
address for any personal messages. Meanwhile, any pertinent FCG communications,
other than inquiries described in Section 17 below, shall be forwarded to Steve
Heck or a successor CEO.

 

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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 December 15, 2000; provided, however, that you agree that Sections
7(a) and (b) of your Vice President Agreement shall be superseded and replaced
in their entirety by the terms set forth in Section 15 of this Agreement.  The
terms of that certain Indemnity Agreement between you and FCG dated February 9,
1998 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. Non-Solicitation.  You hereby agree to the following restrictions for a
period of eighteen (18) months from the Separation Date:

 

(a)         No Solicitation of Known FCG Company Clients.  You hereby agree
that, without the prior written consent of FCG, you (i) shall not provide any
services, directly or indirectly, and whether as an employee, consultant,
independent contractor or otherwise, to or on behalf of any Known FCG Client,
and (ii) shall not, directly or indirectly, solicit, divert or take away any
Known FCG Client.  For purposes of these restrictions, a “Known FCG Client”
shall be any past, present or prospective client of any FCG Company that you
provided services for, participated in preparation or delivery of any oral or
written proposal for, or otherwise had contact with during the last 18 months
while at FCG.

 

(b)         No Solicitation of Employees.  You agree to not, directly or
indirectly, solicit, divert, take away, hire or engage, on behalf of yourself or
any other person or entity any employee of any FCG Company.

 

16. 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
members of your immediate family upon their agreement to maintain this Agreement
in strict confidence as set forth in this section; (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
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.

 

17. Nondisparagement; Inquiries.  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.  You agree that you shall refer any inquiries
from the media, financial analysts or the stockholder community concerning the
reasons for your departure from FCG to Tom Reep and shall not provide any such
persons with any information concerning the reasons for your departure beyond
that described in FCG’s public announcement of your departure.

 

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18. Release of Claims.  In consideration for FCG entering into this Agreement
and for other good and valuable consideration, 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 or undisclosed, fixed or contingent,
liquidated or unliquidated, 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 and/or option holder
of FCG.

 

19. 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 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”).

 

20. Section 1542 Waiver.  In giving the above releases, which include 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 that you may have against the FCG
Companies.

 

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21. 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 and/or option holder.

 

22. Consultation.  You agree to make yourself reasonably available to FCG to
respond to reasonable requests by FCG for information concerning litigation,
regulatory inquiry or investigation, involving facts or events relating to FCG
that may be within your knowledge.  You will provide a reasonable degree of
cooperation with FCG in connection with any or all future litigation or
regulatory proceedings brought by or against FCG to the extent FCG reasonably
deems your cooperation necessary.

 

23. 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, except and only to the extent expressly provided in Section 14
hereof.  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.

 

Lu, we deeply appreciate your many years of service to FCG, including as CEO and
Chairman. We wish you all the best in wherever your future endeavors may take
you.

 

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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,
4th Floor, Long Beach, California 90802.

 

Sincerely,

 

FIRST CONSULTING GROUP, INC.

 

 

By:

   /s/ Douglas G. Bergeron

 

 

  Douglas G. Bergeron

 

  Chairman

 

 

AGREED:

 

 

   /s/ Luther J. Nussbaum

 

 

  Luther J. Nussbaum

 

cc:        Jan Blue, Vice President

 

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