Ex 10.20
XXXXXX X. XXXX
WAIVER AND RELEASE OF CLAIMS
This WAIVER and RELEASE OF CLAIMS (this "Release") is made and entered
into by and between Foundation Health Systems, Inc. and its affiliates and
subsidiaries (hereinafter referred to as the "Company") and Xxxxxx X. Xxxx
(hereinafter referred to as the "Employee").
WHEREAS, the Company and Employee are parties to an Employment
Agreement dated December 31, 1997 (the "Employment Agreement") and desire to
terminate the Employment Agreement as of the Termination Date.
WHEREAS, the Company and Employee are entering into this Release as a
condition to Employee's receipt of severance pay and certain other payments
and benefits described below upon his or her termination of employment with
the Company.
NOW, THEREFORE, the Company and Employees agree as follows:
1. Employee's employment with the Company shall terminate on December 31,
1998 (the "Termination Date"). Upon execution of this Agreement, Employee
shall not represent to anyone that he is an employee of the Company and
shall not say or do anything purporting to bind the Company.
2. The Company shall provide Employee with the following payments and
benefits:
A. Following the Termination Date upon Employee's acceptance of the
terms set forth herein as evidenced by Employee's signature set forth
below and the expiration of the seven (7) day revocation period set
forth below, Employee shall be entitled to:
(i) a lump sum payment equal to $956,800 less applicable
deductions and withholdings, representing 2.99 times Employee's
base salary of $320,000 per year (the "Base Salary");
(ii) a lump sum payment equal to $250,000 less applicable
deductions and withholdings representing Employee's retention bonus;
(iii) medical, health, disability, life and accident insurance
coverage for Employee and his dependents (i.e. his wife, unmarried
dependent children ages 19-24 who are dependent on Employee for at
least 50% of their financial support or are full-time students),
at the levels and in the amounts existing at the Termination Date
("the Benefits"), through the FHS choices plan or another plan or
plans of the Company's choosing, until the first to occur of the
following: (a) Employee reaches age 65, or (b) Employee secures
similar coverage through another employer.
(iv) use of the automobile leased by the Company for Employee
through September 14, 2001, the end of the lease term. The Company
will continue to pay maintenance, repair insurance and other costs
for the leased automobile associated with the lease through the end
of the lease term provided Employee submits to the Company receipts
for such repairs and maintenance. Employee shall have the option to
purchase said automobile at the end of the lease term in accordance
with the terms of said lease, provided Employee pays any applicable
sales tax, transfer fees or other fees associated with said option
to purchase;
(v) payment of an amount not to exceed $12,000 to defray
Employee's legal and financial planning expenses which amount shall
be paid by Company directly to Employee's attorneys, Xxxxxxxx &
Xxxxxxxx, upon presentation of documentation by Xxxxxxxx & Xxxxxxxx
evidencing that such expenses have been incurred by Employee;
(vi) outplacement services commensurate with that provided to
other employees of the Company at Employee's level of
responsibility;
(vii) Employee's office chair and computer.
(viii) reimbursement of Employee's University Club initiation fee
and 1998 dues upon receipt of documentation showing that Employee
has paid these fees and dues.
B. Employee acknowledges and agrees that he has received all
compensation and all earned and unused vacation/paid-time-off owing
to Employee as of the Termination Date.
C. The Company agrees that any stock options that were granted to
Employee during his employment, will be fully vested as of the
Termination Date and shall be exercisable through December 31,
2000, notwithstanding anything to the contrary contained in the
applicable stock option plan of the Company. Employee further
acknowledges and agrees that he is not entitled to receive or be
granted and will not receive or be granted any additional stock,
units, options or shares.
3. In consideration of the Company providing Employee those payments and
benefits set forth in Section 2A above, and as a condition to receiving
such payments and benefits, Employee freely and voluntarily enters into
this Release and by signing this Release Employee, on his own behalf and
on behalf of his heirs, beneficiaries, successors, representatives,
trustees, administrators and assigns, hereby waives and releases the
Company, and each of its past, present and future officers, directors,
shareholders, employees, consultants, accountants, attorneys, agents,
managers, insurers, sureties, parent and sister corporations, divisions,
subsidiary corporations and entities, partners, joint venturers,
affiliates, beneficiaries, successors, representatives and assigns, from
any and all claims, demands, damages, debts, liabilities, controversies,
obligations, actions or causes of action of any nature whatsoever,
whether based on tort, statute, contract, indemnity, rescission or any
other theory or recovery, including by not limited to claims arising
under federal, state or local laws prohibiting discrimination in
employment, including the Fair Employment and Housing Act, Title VII of
the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1870,
as amended, claims of disability discrimination under the Americans with
Disabilities Act, claims under the Age Discrimination in Employment Act,
as amended ("ADEA"), the Worker Adjustment and Retraining Notification
Act ("WARN") or claims for wrongful termination, breach of contract, breach
of public policy, termination in violation of public policy, physical
or mental harm or distress or claims arising out of the Company's right
to terminate its employees, whether for compensatory, punitive,
equitable or other relief, whether known, unknown, suspected or
unsuspected, including without limitation claims which may have arisen
or may in the future arise in connection with any event which occurred on
or before the date of Employee's execution of this Release. The
provisions in this paragraph are not intended to prohibit Employee from
filing a claim for unemployment insurance or worker's compensation
insurance.
4. Employee shall not initiate or cause to be initiated against the Company
any compliance review, suit, action, investigation or proceeding of any
kind, or voluntarily participate in same, individually or as a
representative, witness or member of a class, under contract, law or
regulation, federal, state or local, pertaining to any matter related to
his employment with the Company.
5. Except as otherwise provided herein, Employee agrees he shall return to
the Company immediately on execution of this Agreement any building
key(s), security pass or other access or identification cards and any
Company property in his possession, including but not limited to any
documents, credit cards, computer equipment, mobile phones or data
files. Employee agrees to submit all expense accounts and to pay
promptly the outstanding balance on each corporate credit card that the
Company previously issued to Employee.
6. Employee shall not, without the Company's written consent by an
authorized representative, at any time prior or subsequent to the
execution of this Release, disclose, use, remove or copy any confidential
information, trade secret or proprietary information or customer lists
of the Company, including without limitation, any technical, actuarial,
economic, financial, procurement, provider, customer, underwriting,
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contractual, managerial, marketing or other information of any type that
has economic value in the business in which the Company is engaged,
provided however, that confidential information, trade secret or
proprietary information and customer lists shall not include any
previously published information, information generally in the public
domain or information required to be disclosed by applicable law or
legal process.
7. A. For purposes of the Agreement, "Competition" by the Employees shall
mean the Employee's engaging in, or otherwise directly or indirectly
being employed by or acting as a consultant or lender to, or being a
director, officer, employee, principal, agent, stockholder, member,
owner or partner of, or permitting his name to be used in connection
with the activities of any other business or organization anywhere
in the United States which competes, directly or indirectly, with
the business of the Company as the same shall be constituted at any
time following the Termination Date.
B. For the twelve (12) month period following the Termination Date, the
Employee shall not engage in Competition (as defined above and
modified herein for purposes of this subsection 7B only), with the
Company in (a) any locality or region of the United States, and (b)
any substantive area, for which the Employee had responsibility
while employed by the Company; PROVIDED, that it shall not be a
violation of this sub-paragraph for the Employee to become the
registered or beneficial owner of up to two percent (2%) of any
class of the capital stock of a competing corporation registered
under the Securities Exchange Act of 1934, as amended, provided that
the Employee does not actively participate in the business of such
corporation until such time as this covenant expires.
C. For the twelve (12) month period following the Termination Date,
Employee agrees that he will not, directly or indirectly, for his
benefit or for the benefit of any other person, firm or entity, do any
of the following:
(i) solicit from any customer doing business with the Company as of
the Termination Date, business of the same or of a similar nature to
the business of the Company with such customer;
(ii) solicit from any known potential customer of the Company
business of the same or of a similar nature to that which has been
the subject of a known written or oral bid, offer or proposal by the
Company, or of substantial preparation with a view to making such a
bid, proposal or offer, within six (6) months prior to the
Termination Date;
(iii) solicit the employment or services of, or hire, any person who
was known to be employed by or was a known consultant to the Company as
of the Termination Date, or within six (6) months prior thereto; or
(iv) otherwise knowingly interfere with the business or accounts of
the Company.
8. Any developments or discoveries by Employee during the course of his
employment with the Company through the Termination Date resulting in
patents, lists of customers, trade secrets, specialized know-how or other
intellectual property useful in the then current business of the Company
shall be for the sole benefit of the Company.
9. Employee agrees to cooperate with the Company in defending or
investigating any claim against the Company arising in whole or in part out
of the Company's business during Employee's employment with the Company for
which the Company requests Employee's assistance. The Company will use its
reasonable best efforts to assure that any request for such cooperation
will not unduly interfere with Employee's other material business and
personal obligations and commitments.
10. Nothing contained herein shall be construed as an admission of any
wrongful act, including but not limited to violation of any contract,
express or implied, or any federal, state or local employment laws or
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regulations, and nothing contained herein shall be used for any purpose
except in proceedings related to the enforcement of this Release.
11. If any part or term of this Release is held invalid or unenforceable,
such invalidity or unenforceability shall not affect in any way the
validity or enforceability of any other part or term of this Release.
This Release supersedes all other understandings and agreements of the
parties, whether written or oral, including but not limited to the
Employment Agreement.
12. Employee acknowledges that he has had an opportunity to consult and be
represented by counsel of Employee's choosing in the review of this
Release, and that he has been advised by the Company to do so, that the
Employee is fully aware of the contents of the Release and of its legal
effect, that the preceding paragraphs recite the sole consideration for
this Release, and that Employee enters into this Release freely, without
coercion, and based on the Employee's own judgment and not in reliance
upon any representation or promise made by the other party, other than
those contained herein. There may be no modification of the terms of
this Release except in writing signed by the parties hereto.
13. Employee agrees and acknowledges that this Release recites all payments
and benefits Employee is entitled to receive and that no other payments or
benefits will be asserted or requested by Employee.
14. The Release shall be construed and governed by the laws of the State of
California. Employee expressly waives the provisions of California Civil
Code Section 1542 (or any applicable provision under any applicable state
law) regarding the waiver of unknown claims. California Civil Code Section
1542 provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR EXPECT 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."
15. Solely for the purposes of the computation of payments to be made
pursuant to this Agreement and notwithstanding any other provisions
hereof, payments to the Employee under this Release (other than the
payments required to be made pursuant to Section 2B hereof) shall be
reduced (but not below zero) so that the present value, as determined in
accordance with Section 280G(d)(4) of the Internal Revenue Code of 1986,
as amended (the "Code"), of such payments plus any other payments that
must be taken into account for purposes of any computation relating to
the Employee under Section 280G(b)(2)(a)(ii) of the Code, shall not, in
the aggregate, exceed 2.99 times the Employee's "base amount" as such
term is defined in Section 280G(b)(3) of the Code. Notwithstanding any
other provision hereof, no reduction in payments under the limitation
contained in the immediately preceding sentence shall be applied to
payments hereunder which do not constitute "excess parachute payments"
within the meaning of the Code. Any payments in excess of the
limitation of this Section 14 or otherwise determined to be "excess
parachute payments" made to the Employee hereunder shall be deemed to be
overpayments which shall constitute an amount owing from the Employee to
the Company with interest from the date of receipt by the Employee to
the date of repayment (or offset) at the applicable federal rate under
Section 1274(d) of the Code, compounded semi-annually, which shall be
payable to the Company upon demand; PROVIDED, HOWEVER, that no repayment
shall be required under this sentence if in the written opinion of tax
counsel satisfactory to the Employee and delivered to the Employee and the
Company such repayment does not allow such overpayment to be excluded
for federal income and excise tax purposes from the Employee's income
for the year of receipt or afford the Employee a compensating federal
income tax deduction for the year of repayment.
EMPLOYEE ACKNOWLEDGES BY SIGNING BELOW that (i) Employee has not relied
upon any representations, written or oral, not set forth in this Release;
(ii) at the time Employee was given this Release Employee was informed in
writing by the Company that (a) Employee had at least 21 days in which to
consider whether Employee would sign the Release and (b) Employee should
consult with an attorney before signing the Release; and (iii) Employee
had an opportunity to consult with an attorney and either had such
consultations or has freely decided to sign this Release without consulting
an attorney.
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Employee further acknowledges that he may revoke acceptance of this
Release by delivering a letter of revocation within seven (7) days after the
date set forth below addressed to: FHS Corporate Legal Department, 00000
Xxxxxx Xxxxxx, Xxxxxxxx Xxxxx, XX 00000.
Finally, Employee acknowledges that he understands that this Release
shall not become effective until the eighth (8th) day following his signing
this Release and that if Employee does not revoke his acceptance of the terms
of this Release within the seven (7) day period following the date on which
Employee signs this Release, then this Release shall be binding and
enforceable.
IN WITNESS WHEREOF, the parties hereto have executed this Release as
of the dates set forth below.
Employee Foundation Health Systems, Inc.
By: /s/ Xxxxxx X. Xxxx By: /s/ B. Xxxxxx Xxxxxx
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Name: Xxxxxx X. Xxxx Name:
Title:
Dated: 2/4/99 Dated: 2/4/99
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