EXHIBIT 10.22
XXXX X. XXXXXXXXXX, M.D.
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 it affiliates and
subsidiaries (hereinafter referred to as the "Company") and Xxxx X.
Xxxxxxxxxx, M.D. (hereinafter referred to as the "Employee").
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 termination of employment
with the Company.
NOW, THEREFORE, the Company and Employee agree as follows:
1. Employee's employment with the Company shall terminate as of the close of
business on June 30, 1999 (the "Termination Date"). Upon termination of
employment, 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 (or, if applicable, his beneficiaries
or estate) the following payments and benefits:
a. Upon Employee's acceptance of the terms set forth herein as
evidenced by Employee's signature set forth below and upon the
expiration of any revocation period, Employee will receive $1,438,900
as a one-time lump sum payment (which represents the present value of
payments of base salary at the rate in effect immediately prior to the
Termination Date for a period of thirty-six (36) months after the
Termination Date (the "Severance Period"), as adjusted prior to the
Termination Date to include the 7% increase waived by Employee in 1997
and as adjusted during the Severance Period to include the 7% annual
increases provided for in Employee's Employment Agreement dated August
28, 1993, as amended on April 27, 1994 (the "Employment Agreement"),
and assuming a discount rate equal to 120% of the March 1999 short
term Applicable Federal Rate of 5.62%) and continuation of all
medical, health, disability, life and accident insurance maintained
for Employee's benefit immediately prior to the date of Employee's
termination (such insurance collectively, "Benefits") for a period of
three (3) years from the Termination Date, subject to all applicable
tax withholdings.
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b. Upon Employee's acceptance of the terms set forth herein as
evidenced by Employee's signature set forth below and upon the
expiration of any revocation period, Employee will also receive
Supplemental Benefit payments under the Company's Supplemental
Executive Retirement Plan ("SERP") based upon the form of Supplemental
Benefit selected by Employee under the SERP. The parties hereby agree
that the calculation of Employee's Supplemental Benefit payments under
the SERP shall be based upon a termination date of March 31, 1999 and
the Company agrees to credit Employee with additional service (solely
for purposes of the SERP) in order to provide Employee with fifteen
(15) years of service for purposes of such SERP. The parties hereby
further agree to and approve of the calculation of Employee's
Supplemental Benefit payments under the SERP, and the methodology used
to make such calculations, as set forth in the attached
correspondence, assuming a single life annuity as the form of
Supplemental Benefit under the SERP, in which event Employee would
receive $93,508 per year if Employee elects to receive such
Supplemental Benefit payments beginning at age 62 or $54,235 per year
if Employee elects to receive such Supplemental Benefit payments
beginning at age 55. In the event Employee selects a form of
Supplemental Benefit other than a single life annuity contemplated by
the attached calculations, such calculations shall be adjusted as
appropriate using the same methodology utilized in calculating the
Supplemental Benefit payments in the attached correspondence.
c. Employee agrees that $99,404.26 less required payroll taxes and
other applicable deductions is the total amount of earned and unused
vacation/paid-time-off ("PTO") owing to Employee as of the Termination
Date, and Employee acknowledges that upon receipt of such amount no
further PTO benefits will accrue after such date provided that in the
event any PTO has been used by Employee after January 31, 1999, then
such amount shall be appropriately adjusted downward. In addition, the
Company shall promptly reimburse Employee for all outstanding business
expenses appropriately incurred by Employee up to and including the
Termination Date in accordance with Company policy and Employee shall
be entitled to all of his 401(k) Plan account balance and all of his
account balance under the Company's prior Supplemental Executive
Retirement Plan pursuant to the applicable plan documents.
d. Employee's participation in all Company employee benefit plans as
an active employee shall cease on the Termination Date, and Employee
shall not be eligible to make contributions to or to receive
allocations under the Foundation Health Systems, Inc. 401(k) Associate
Savings Plan, to purchase shares of Company stock under the Foundation
Health Systems, Inc. Employee Stock Purchase Plan or to make any
deferrals pursuant to any deferred compensation plan of the Company
after the Termination Date.
e. All stock options held by Employee as of the Termination Date that
are
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Waiver and Release of Claims
currently exercisable (i.e., options to purchase 58,333 shares at
$32.50 per share, 92,000 shares at $35.25 per share and 25,000 shares
at $27.875 per share) shall remain exercisable by Employee (or in the
event of his death, his beneficiary) until May 31, 2001. All stock
options that are not yet exercisable as of the Termination Date shall
lapse and be canceled automatically without any further action as of
the Termination Date. It is agreed and acknowledged that the stock
option granted to the Employee by the Company on December 4, 1998
covering 200,000 shares of Class A Common Stock of the Company has
been canceled for failure of certain conditions subsequent to occur
and is therefore null and void.
f. Employee shall be entitled to purchase the laptop computer used by
Employee in the course of his employment at a purchase price equal to
the depreciated book value (as reflected on the Company's books and
records) of such computer.
4. In partial consideration of the Company providing Employee those payments
and benefits set forth in Section 3 above, and as a condition to receive
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 but not limited to claims arising under
federal, state or local laws prohibiting discrimination in employment,
including 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, the Age Discrimination in Employment
Act, as amended ("ADEA"), the Worker Adjustment and Retraining
Notification Act ("WARN"), the California Fair Employment and Housing Act,
the California Labor Code and the California Constitution (all as amended)
or claims growing out of any legal restrictions on the Company's right to
terminate its employees and whether for compensatory, punitive, equitable
or other relief, whether known, unknown, suspected or unsuspected, against
the Company, 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. Furthermore, it is expressly agreed
that such payments shall fully and finally release the Company from all
obligations it may have under the Employment Agreement. It is also
expressly agreed that the obligations of the Company to Employee under the
Indemnification Agreement dated August 10, 1996 for acts or omissions of
Employee as a director, officer or employee of the Company or its
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Waiver and Release of Claims
affiliates prior to the Termination Date shall be unaffected by this
Release or the payments hereunder and shall continue in full force and
effect in accordance with the terms thereof.
5. Except for the rights and obligations of the parties set forth herein, the
Company, on its own behalf and on behalf of its affiliates, and its and
their officers and directors, agents, employees, successors and assigns,
hereby waives and releases Employee and each of his attorneys, agents,
employees, successors, heirs, beneficiaries 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, and whether for compensatory, punitive, equitable or other
relief, whether known, unknown, suspected or unsuspected, against
Employee, 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 the Company's execution of this Release.
Notwithstanding the generality of the foregoing, nothing contained herein
shall release Employee from any claim relating to the breach by Employee
of any confidentiality agreements with the Company or any affiliate of the
Company, or the obligations set forth herein.
6. Employee expressly waives any right or claim of right to assert hereafter
that any claim, demand, obligation and/or cause of action has, through
ignorance, oversight or error, been omitted from the terms of this
Release. Employee makes this waiver with full knowledge of his rights and
with specific intent to release both his known and unknown claims, and
therefore specifically waives the provisions of Section 1542 of the Civil
Code of California or other similar provisions of any other applicable
law, 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."
Employee understands and acknowledges the significance and consequence of
this Release and of such specific waiver of Section 1542, and expressly
agrees that this Agreement shall be given full force and effect according
to each and all of its express terms and provisions, including those
relating to unknown and unsuspected claims, demands, obligations and
causes of action herein above specified.
7. 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, unless Employee first cooperates in
making his allegations known to the Company for the Company to take
corrective action at a time and place designated by the Company. Employee
represents that he has not, to date,
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Waiver and Release of Claims
initiated (or caused to be initiated) any such review, suit, action,
investigation or proceeding. In addition, Employee shall, without further
compensation, cooperate with the Company in defending or investigating
any claim in respect of which Employee is entitled to indemnification by
the Company or any other claim against the Company arising in whole or in
part during Employee's employment with the Company and its predecessors
or affiliates for which the Company requests Employee's assistance, which
cooperation shall include, but not be limited to, providing testimony and
assisting in information and document gathering efforts. In this
connection, it is agreed that 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, personal obligations
or commitments and the Company will pay all reasonable expenses incurred
by Employee in providing such cooperation.
8. Employee agrees he shall return to the Company immediately upon
termination of employment any building key(s), security passes 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 unless otherwise
expressly set forth in this Release. 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.
9. Except with respect to consulting services that may be provided to the
Company at the Company's request (in accordance with the procedure set
forth below), 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, trade secret or proprietary information he acquired during
the course of his employment by the Company, including without
limitation, any technical, actuarial, economic, financial, procurement,
provider, customer, underwriting, contractual, managerial, marketing or
other information of any type that has economic value in the business in
which the Company is engaged, but not including any previously published
information or other information generally in the public domain. It is
agreed that any and all consulting services provided by Employee to the
Company or any of its Subsidiaries or affiliates and all terms and
conditions thereof (including but not limited to all payment and scope of
work provisions) will be subject to the prior written approval of the
Senior Vice President, General Counsel and Secretary of the Company or
his designee. It is expressly agreed that the effectiveness of any
existing, proposed future or contemplated consulting arrangement or
agreement will be expressly subject to the foregoing prior approval
procedure.
10. In addition to any other part or term of this Release, Employee agrees
that he shall not, for a period of one (1) year from the date of this
Agreement, regardless of the reason for Employee's termination of
employment, on his own behalf or on behalf of any other person, either
directly or indirectly: 1) make known to any person, firm, corporation or
other entity of any type, the names and addresses of any of the Company's
customers,
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Waiver and Release of Claims
enrollees or providers or any other information pertaining to any of them
which is not available in previously published information or other
information generally in the public domain; or 2) disrupt, solicit or
influence or attempt to solicit, disrupt or influence any of the
Company's customers, employees, providers, vendors, agents or independent
contractors with whom Employee became acquainted during the course of
employment or service with the Company for the purpose of terminating
such a person's or entity's relationship with the Company.
Notwithstanding anything herein to the contrary, Employee may give oral
and written recommendations of former employees of the Company in
connection with such employees' employment efforts and such action will
not be deemed a breach of this Section 10.
11. Any developments or discoveries by Employee during the course of his
employment with the Company through the date of execution of this Release
or at any time while serving the Company under a consulting agreement,
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.
12. 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
regulations, and nothing contained herein shall be used for any purpose
except in proceedings related to the enforcement of this Release.
13. 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. It
is hereby further agreed that if any court of competent jurisdiction
shall determine that the restrictions imposed in this Release are
unreasonable (including, but not limited to, the definition of
Competitive Activity or the time period during which a provision of this
Release is applicable), the parties hereto hereby agree to any
restrictions that such court would find to be reasonable under the
circumstances.
14. 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 this 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.
15. Employee agrees and acknowledges that this Release recites all payments
and benefits Employee is entitled to receive hereunder and under the
Employment Agreement, and that no other payments or benefits will be
asserted or requested by Employee.
16. This Release shall be construed and governed by the laws of the State of
California.
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Waiver and Release of Claims
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.
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/ Xxxx X. Xxxxxxxxxx By: /s/ B. Xxxxxx Xxxxxx
-------------------------------- -------------------------------
Name: Xxxx X. Xxxxxxxxxx, M.D. Name: B. Xxxxxx Xxxxxx, Esq.
Title: Senior Vice President,
General Counsel and
Secretary
Dated: 6/30/99 Dated: 6/30/99
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