FIRST AMENDMENT TO SENIOR MANAGEMENT AGREEMENT
EXHIBIT
10.38
FIRST
AMENDMENT
TO
WHEREAS,
Huron Consulting Group LLC, a Delaware limited liability company (the
“Company”),
has
entered into a Senior Management Agreement, effective as of May 15, 2002
(the
“Agreement”)
with
Xxxxx Xxxxxxxxx (the
“Executive”);
WHEREAS,
the Company is wholly owned by Huron Consulting Group, Inc., a Delaware
corporation (the “Parent”);
WHEREAS,
the Parent contemplates the consummation of an initial public offering of
its
common stock (the “IPO”);
and
WHEREAS,
the Executive and the Company desire to amend the Agreement, subject to and
effective simultaneous with the Closing of the IPO.
NOW,
THEREFORE, the Agreement is hereby amended, effective as set forth in Paragraph
4 below, as follows:
1. The
Agreement is hereby amended by restating in its entirety Section 6.4, as
follows:
6.4 Change
of Control.
(a) The
provisions of Section 6.1 and 6.2 hereof to the contrary notwithstanding,
if
(i) Executive is terminated by the Company without Cause or Executive
resigns for CoC Good Reason (defined below) in either case during the period
commencing on a Change of Control (defined below) and ending on the second
anniversary of the Change of Control (such two-year period being the
“Protection
Period”
hereunder), or (ii) Executive reasonably demonstrates that the Company's
termination of Executive's employment (or event which, had it occurred following
a Change of Control, would have constituted CoC Good Reason) prior to a Change
of Control was at the request of a third party who was taking steps reasonably
calculated to effect a Change of Control (or otherwise in contemplation of
a
Change of Control) and a Change of Control actually occurs, (each a
“Qualifying
Termination”),
then
Executive shall be entitled to receive: (A) an amount in cash equal to the
then-prevailing target amount of Executive’s Annual Bonus (“Target
Bonus”)
during
the year of termination multiplied by a fraction, the numerator of which
is the
number of completed days (including the date of termination) during the year
of
termination and the denominator of which is 365, (B) an amount in cash equal
to
the sum of Executive’s annual Base Salary and annual Target Bonus, and (C)
continuation of medical benefits until the first anniversary of the date
of such
termination upon the same terms as exist for Executive immediately prior
to the
termination date. Following any termination described in this Section 6.4,
the
Company shall continue to have all other rights available hereunder (including,
without limitation, all rights under the Restrictive Covenants and any
restrictive covenants set forth in any plan, award and agreement applicable
to
Executive, at law or in equity). Subject to the Executive's execution of
the
Release described in Section 10.1, the amounts described in (A) and (B) shall
be
paid in a lump sum within ten (10) days after the date of termination. Such
amounts or benefits shall not be subject to mitigation or offset, except
that
medical
benefits may be offset by comparable benefits
obtained by Executive in connection with subsequent employment.
(b) Anything
set forth in any equity plan, equity award or any other provision of this
Agreement between the Company and Executive to the contrary notwithstanding,
all
of Executive’s outstanding equity grants that were awarded at or prior to the
time of the Change of Control shall fully vest upon the occurrence of a
Qualifying Termination.
(c)
The
compensation and benefits described in Section 6.4(a) and 6.4(b) shall be
in
lieu of compensation and benefits provided otherwise for a termination under
Section 6.2 of this Agreement and any other plan or agreement of the Company,
whether adopted before or after the date hereof, which provides severance
payments or benefits.
(d) If
it is
determined that any amount, right or benefit paid or payable (or otherwise
provided or to be provided) to Executive by the Company or any of its affiliates
under this Agreement or any other plan, program or arrangement under which
Executive participates or is a party (collectively, the “Payments”),
would
constitute an “excess parachute payment” within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended from time to time (the
“Code”),
subject to the excise tax imposed by Section 4999 of the Code, as amended
from
time to time (the “Excise
Tax”),
then
the amount of the Payments payable to the Executive under this Agreement
shall
be reduced (a “Reduction”)
to the
extent necessary so that no portion of such Payments payable to the Executive
is
subject to the Excise Tax.
All
determinations required to be made under this Section 6.4(d) and the assumptions
to be utilized in arriving at such determination, shall be made by an
independent, nationally recognized accounting firm mutually acceptable to
the
Company and the Executive (the “Auditor”);
provided that in the event a Reduction is required, the Executive may determine
which Payments shall be reduced in order to comply with the provisions of
Section 6.4(d). The Auditor shall promptly provide detailed supporting
calculations to both the Company and Executive following any determination
that
a Reduction is necessary. All fees and expenses of the Auditor shall be paid
by
the Company. All determinations made by the Auditor shall be binding upon
the
Company and the Executive.
(e) For
purposes of this Section 6.4 (and distinguished from a “Qualified Change of
Control” provided under certain other circumstances under the Agreement), the
term “Change
of Control”
shall
be deemed to have occurred upon the first to occur of any event set forth
in any
one of the following paragraphs of this Section 6.4(e):
(i)
any
Person becomes the Beneficial Owner, directly or indirectly, of securities
of
the Parent (not including in the securities beneficially owned by such Person
any securities acquired directly from the Parent or its Affiliates) representing
40% or more of the combined voting power of the Parent’s then outstanding
securities; or
(ii)
there
is
consummated a merger or consolidation of the Parent or any direct or indirect
subsidiary of the Parent with any Person, other than (a) a merger or
consolidation which would result in the voting securities of the Parent or
such
subsidiary (as the case may be) outstanding immediately prior to such merger
or
consolidation continuing to represent (either by remaining outstanding or
by
being converted into voting securities of the surviving entity or
any
2
parent
thereof) at least 60% of the combined voting
power of the securities of the Parent, or by the Parent (directly or indirectly)
in such subsidiary, or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, (b) a merger or consolidation
effected to implement a recapitalization of the Parent (or similar transaction)
in which no Person other than existing security holders is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Parent (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from the Parent or its Affiliates) representing 40% or
more of
the combined voting power of the Parent’s then outstanding securities, or (c) a
merger or consolidation of a subsidiary of the Parent that does not represent
a
sale of all or substantially all of the assets of the Parent; or
(iii)
the
shareholders of the Parent approve a plan of complete liquidation or dissolution
of the Parent (except for a plan of liquidation or dissolution effected to
implement a recapitalization of the Parent (or similar transaction) in which
no
Person other than existing holders of voting securities is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Parent (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from the Parent or its Affiliates) representing 40% or
more of
the combined voting power of the Parent’s then outstanding securities); or
(iv) there
is
consummated an agreement for the sale or disposition of all or substantially
all
of the assets of the Parent or of the Company to a Person, other than a sale
or
disposition by the Parent of all or substantially all of the assets of the
Parent or a sale or disposition by the Company of all or substantially all
of
the assets of the Company (as the case may be) to an entity, at least 60%
of the
combined voting power of the voting securities of which are owned by
shareholders of the Parent (or by the Parent, in the case of a sale by the
Company) in substantially the same proportions as their ownership of the
Parent
(or the Company) immediately prior to such sale.
Notwithstanding
the foregoing, a “Change of Control” shall not be deemed to have occurred (1) by
virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the common
stock
of the Parent immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Parent immediately
following such transaction or series of transactions, or (2) as a result
of a
distribution by HCG Holdings, LLC of its common stock or other securities
of the
Parent to its members (other than in connection with a transaction if clauses
(i) or (ii) of the definition of “Change of Control” above applied by
substituting “HCG Holdings, LLC” in each place with the “Parent” appears but
without taking into account any references to subsidiaries contained in clause
(ii)).
For
purposes of this Change of Control definition, (A) “Beneficial
Owner”
shall
have the meaning set forth in Rule 13d-3 under the Exchange Act, (B)
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended from time to time, (C)
“Person”
shall
have the meaning given in Section 3(a)(9) of the Exchange Act, as modified
and
used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (1) HCG Holdings, LLC, any Related Party, the Parent, the Company
or any
of the Parent’s direct or indirect subsidiaries, (2) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or
the Parent or any of their Affiliates, (3) an underwriter temporarily holding
securities pursuant to an
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offering
of such securities, or (4) a corporation
owned, directly or indirectly, by the stockholders of the Parent in
substantially the same proportions as their ownership of stock of the Parent,
(D) "Affiliate"
shall
have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the
Exchange Act and (E) “Related
Party”
shall
mean (i) any member of HCG Holdings existing on the date hereof or any Affiliate
of such members or (ii) any trust, corporation, partnership or other entity,
whose beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of such entity consists of any
of
the parties listed in clause (i) of this definition.
(f) For
purposes of this Section 6.4 (and distinguished from “Good Reason” provided
under certain other circumstances under the Agreement), the term “CoC
Good Reason”
means
the occurrence of any of the following within the twenty-four (24) month
period
following a Change of Control without the express written consent of Executive:
(i)
any
material breach of the Company of the Agreement which has not been cured
within
twenty (20) days after notice of such non-compliance has been given by Executive
to the Company;
(ii)
a
material diminution of duties of Executive;
(iii)
any
reduction in Base Salary, other than in connection with an across-the-board
reduction in Base Salaries applicable in like proportions to all similarly
situated executives of the Company and any direct or indirect parent of the
Company;
(iv)
assignment of duties to Executive that are materially inconsistent with
Executive's position and responsibilities described in this Agreement;
(v)
the
failure of the Company to assign this Agreement to a successor to the Company
or
the Parent or failure of a successor to the Company or the Parent, as the
case
may be, to explicitly assume and agree to be bound by this Agreement; or
(vi)
requiring Executive to be principally based at any office or location more
than
fifty (50) miles from the current offices of the Company in Chicago, Illinois.
The
foregoing to the contrary notwithstanding, if the Company or the Parent is
acquired as a subsidiary or division of another company, in the absence of
other
grounds, the Executive shall not have incurred “CoC Good Reason” under
subparagraph (iv) on the ground that the Parent has ceased to be a reporting
company pursuant to Section 13 and Section 15(d) of the Securities Exchange
Act
of 1934 as a result of the Change of Control.
2. Section
10.1 of the Agreement is hereby amended by adding the words “and Section 6.4”
immediately following the words “Section 6.1 and Section 6.2” and adding the
words “or Section 6.4” immediately following the words “Section 6.1 or Section
6.2” thereof.
3. This
First Amendment and the Agreement shall be construed and enforced in accordance
with, and all questions concerning the construction, validity, interpretation
and performance of this First Amendment and the Agreement shall be governed
by,
the laws of the State of Illinois without giving effect to provisions thereof
regarding conflict of laws.
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4. This
First Amendment shall be effective simultaneous with the closing of the IPO.
In
the event that the IPO is not consummated prior to May 31, 2005, this First
Amendment will become null and void and of no force or effect (including
in the
event of the consummation of an IPO subsequent to such date). Following the
effectiveness of this First Amendment and except as specifically set forth
in
this First Amendment, the Agreement shall remain in full force and effect
and,
as amended by this First Amendment, is hereby ratified and confirmed by the
Company and the Executive.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this First Amendment as of
the
dates written below.
THE
COMPANY:
HURON
CONSULTING GROUP LLC
By:_/s/
Xxxxxx Massaro_______________
Its:_COO___________________________
Date:
September
,
2004
THE
PARENT
HURON
CONSULTING GROUP, INC.
By:_/s/
Xxxxxx Xxxxxxx ________________
Its:__COO___________________________
Date:
September
,
2004
EXECUTIVE:
_/s/
Xxxxx Gallagher____________________
Xxxxx
Xxxxxxxxx
Date:
September 24,
2004
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