EXHIBIT 10.3
February 9, 1998
Xx. Xxxx X. Xxxxx
00 Xxxxxxx Xxx Xxxxx
Xxx Xxxxxx, XX 00000
LETTER OF AGREEMENT
Dear Marc:
I am very pleased that the discussions we had a few weeks ago resulted in our
jointly agreeing that you would continue to be employed as an associate of
Foundation Health Systems ("FHS"), Northeast Region. You will be based in New
Jersey and remain in your current position as Chief Financial Officer of First
Option Health Plan of New Jersey, Inc. ("First Option") until at least March 31,
1999. The potential of a longer term role for you in the FHS Northeast Region
will depend upon the development of the regional management structure over the
coming months.
I have outlined the components of our agreement for your review.
1. You will continue in your current position as Chief Financial
Officer, First Option, until at least March 31, 1999. You will continue to be
paid your current biweekly rate of $6,730.76, less all deductions required by
law until that date. You will report to the FHS Northeast Regional Chief
Financial Officer with a dotted line to the FHS New Jersey President.
2. During your period of employment, the following compensation and
benefits will be in effect:
A. Your base salary will be $175,000 annually.
B. You will be eligible to participate in the 1998 FHS
Management Bonus Plan in accordance with your position with
the Company. You will also be eligible to participate in the
1999 FHS Management Bonus Plan on a prorated basis.
C. You will receive a monthly automobile allowance in the
amount of $500.00 which will be paid to you through the last
month that you receive severance.
D. Associate 401K Savings Plan.
E. Associate Stock Purchase Plan.
F. You will be eligible to continue to participate and vest in
the FHS Management Stock Option Plan in accordance with your
position with the Company.
G. Group medical, vision, dental and pharmacy coverage for you
and your eligible dependents at current monthly rates
applicable to First Option associates.
H. Short-term and long-term disability benefits.
I. Group Life Insurance in the amount of $200,000.
3. If you remain employed by FHS until March 31, 1999 or if your
employment is terminated for any reason other than "just cause" prior to March
31, 1999, you will receive an additional retention bonus equivalent to three
months of salary which will be paid on March 31, 1999. "Just cause" includes,
acts of dishonesty, moral turpitude, conviction or arraignment of a felony,
habitual drunkenness, or narcotic drug addiction.
4. The following salary continuation and severance provisions will be
provided for you:
A. If FHS terminates your employment for any reason other than
"just cause" prior to March 31, 1999, FHS will continue to
pay you at your current biweekly rate of $6,730.76, less all
deductions required by law through September 30, 1999. Your
additional retention bonus will also be paid to you on the
date of termination.
B. On January 31, 1999, FHS will inform you of the status of a
potential future role in the Company. If an offer is made to
you to continue employment with FHS, you will have the right
to either accept or reject the offer. If you do not accept,
you will be entitled to six (6) months severance starting
April 1, 1999 and your additional retention bonus as
described in this agreement. If you accept, you will still
be entitled to six (6) months severance if you are
terminated in the future for any reason other than "just
cause".
C. FHS will pay any unused vacation pay, less all deductions
required by law.
D. You will continue to vest in the 401K Plan until the end of
the month that your severance payments end, but will not be
eligible to make contributions to the Plan from your
severance pay.
E. FHS further agrees to provide you with health benefits until
the end of the month that your severance payments end.
Thereafter, you will be eligible for COBRA benefits.
Information regarding the election of COBRA coverage will be
forthcoming.
F. FHS will provide outplacement service to you in accordance
with your position in the Company.
Marc, I look forward to our continued business relationship, and acknowledge the
challenges you faced this past year in reorganizing the finance department at
First Option. Both Xxxxx Xxxxx and I appreciate what you have accomplished, and
thank you for agreeing to remain in your current position, You are an integral
part of the process of putting the FHS Northeast Region together, and it is
critical that we continue to have your commitment and support.
Please indicate your acceptance of this agreement by signing below.
Sincerely,
/s/ Xxxxxx Xxxx /s/ Xxxx X. Xxxxx
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Xxxxxx Xxxx Xxxx X. Xxxxx
President & CEO
Foundation Health Systems
Northeast Region
