Exhibit 10.71
[LETTERHEAD]
December 31, 1997
Mr. Dale Terrell
10580 Durham Place
Powell, Ohio 43065
Dear Mr. Terrell:
I would like to confirm the offer made to you for the Exempt position of Senior
Vice President and Chief Information Officer for Foundation Health Systems, Inc.
("FHS"). This offer is subject to the approval of the Compensation and Stock
Option Committee of the FHS Board of Directors.
You will be reporting directly to the President and Chief Operating officer for
Foundation Health Systems, Inc. (FHS). Your monthly base salary in this
position will be $22,917. Associates are paid on a bi-weekly basis with 26 pay
periods per year.
The Company will provide to you a one-time engagement bonus of $25,000 payable
within thirty days of your date of employment. The engagement bonus payment is
subject to normal payroll deductions.
You will also be eligible to participate, beginning in the 1998 calendar year,
in the FHS Executive Incentive Plan ("Plan") with a target opportunity of 50
percent of your base annualized salary, prorated from your date of hire. Any
Plan bonus payments are governed by the provisions of the Plan and are dependent
upon attainment of corporate, business entity and your individual goals.
As part of your long-term incentive program, you will be eligible to participate
in the Company's stock option program. The Company's management will recommend
to the Compensation and Stock Option Committee (hereafter "Committee") that you
receive 25,000 shares as part of your offer of employment. It will be within
the sole discretion of the Committee to determine whether the recommendation to
grant you a specific number of shares will be approved. At all times, all stock
option grants remain within the sole discretion of the Committee.
PAGE TWO
You will participate in this FHS Choices benefit program. This cafeteria
style plan includes medical, vision, dental, life insurance, long-term and
short-term disability protection, an employee assistance program,
participation in our 401(k) Plan, and participation in our deferred
compensation plan. In our 401(k) Plan, consistent with IRS regulations, the
Company will match your contribution at $.50 for every dollar contributed up
to six percent (6%) of your compensation. You will also be eligible for an
automobile allowance consistent with policy and commensurate with that
received by Associates with similar levels of responsibility. The current
automobile allowance for your level of responsibility is $1,000 per month.
Although our current qualified and non-qualified retirement plans are
specific in regard to their consistency of application, we will explore
possible flexibility within the plans that might address the issues raised in
our conversation. Obviously, no action can be taken that threatens the
integrity of any plan.
The Company will provide relocation reimbursement according to Company policy
on IRS approvable expenses associated with your move. We have agreed to
reimburse to you reasonable temporary living expenses for up to six months if
necessary. The Human Resource department will coordinate arrangements for the
physical move of your household goods. Additionally, we will pay you
one-half month's salary to cover the cost of miscellaneous moving expenses
not specifically identified in our offer to you. This miscellaneous moving
expense payment will be made following your relocation.
As we discussed, if following six months of active marketing of your current
residence, you have not been successful in selling the property, FHS will
provide to you a "bridge loan" up to the verifiable equity that you have in
the property. At that time, a promissory note will be prepared for your
signature containing terms and conditions of the loan.
To assist you in the sale of your current home, and in the purchase of a home
in your new location, the Company will provide the following assistance:
SALE OF FORMER RESIDENCE
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- - Real estate transfer taxes.
- - Transfer stamp fees.
- - Abstract costs.
- - Legal fees.
- - Notary fees.
- - Escrow fees.
- - Lender or mortgage company service charges.
- - Loan prepayment penalties paid by the seller.
- - In the event that title insurance must be provided to the buyer as accepted
proof of the seller's good title, you will be reimbursed for the actual cost
of insurance.
PAGE THREE
- - If your house is sold through a recognized real estate agency, reimbursement
will be made for the realtors' sales commission fee at the rate prevailing
at that location, not to exceed 7.0 percent. No reimbursement will be made
for commissions or expenses not actually incurred.
No reimbursement will be made for capital improvements or repairs considered
necessary to make the prior residence ready for sale.
PURCHASE OF NEW RESIDENCE
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- - Legal fees related to title opinions and recording fees.
- - Credit verification.
- - Loan application or origination fees that are customary in the destination
location (not to exceed one percent of loan amount).
- - Inspections required to obtain loan.
- - Abstracting fees if title insurance is not required.
- - Title insurance, if required by the lending institution and/or title service
company, paid in lieu of abstracting fees.
- - Loan discount charges (not to exceed 2 percent of loan amount).
- - One appraisal fee on the home conducted by a recognized appraisal agency.
At the end of the calendar year in which relocation expenses are incurred,
your income will be "grossed-up" to recognize the tax impact resulting from
eligible relocation expenses. However, the miscellaneous moving expense
payment is not subject to gross-up.
Should you voluntarily leave the Company within one year from your date of
hire for any reason you will be responsible for reimbursing the Company
within five business days of the date of your termination of employment, 50%
of the total relocation expenses paid on your behalf.
We have recently presented a severance program proposal to our Compensation
and Stock Option Committee of the Board of Directors. With the Committee's
approval, we will implement the program for selected senior management staff
members. If approved, you will participate in that program at a level
commensurate with peers holding levels of responsibility similar to that
required in the CIO position. We will communicate details of that plan when
available.
The employment relationship with the Company is at the mutual consent of each
employee and the Company. Nothing in this offer letter is intended to
guarantee your continued employment with the Company or employment for any
specific length of time. While the Company hopes that employment
relationships will be mutually beneficial and rewarding, both you and the
Company maintain the right to terminate the relationship at-will, at any
time, with or without cause. The at-will nature of your employment with the
Company cannot be modified or superseded except by a written agreement signed
by you and the President and Chief Operating Officer of FHS, that clearly and
expressly specifies the intent to modify the at-will relationship.
PAGE FOUR
In accepting employment with the Company, you acknowledge that no Company
representative has made an oral or written promise or representation contrary
to this paragraph. Furthermore, you acknowledge that this paragraph presents
the only agreement between you and the Company concerning the duration of
your employment and the at-will nature of the employment relationship.
During your employment with the Company, you will have access to and become
acquainted with certain proprietary and confidential information and
practices ("Confidential Information"). Confidential Information includes
all information that is not generally known to the Company's competitors and
the public, and that has or could have commercial value to the Company's
business. It includes, but is not limited to, customer information, customer
lists, and pricing methodology.
In accepting employment with the Company, you acknowledge and agree that all
documents, memoranda, reports, files, correspondence, lists and other
written, electronic and graphic records affecting or relating to the
Company's business that you may prepare, use, observe, possess or control
(including, but not limited to, any materials containing Confidential
Information) shall be and remain the Company's sole property, and you agree
not to make use of or disclose to any third party any such material,
Confidential or otherwise, except for the benefit of the Company and in the
course of your employment with the Company. If your employment with the
Company is terminated (voluntarily or otherwise), you agree to deliver to the
Company within five business days of termination all written and/or graphic
records affecting or relating to the Company's business, including but not
limited to material containing Confidential Information.
You have agreed to certify that you have no other agreement, relationship, or
commitment to any other person or entity that conflicts with your obligations
to the Company under this offer letter. If you are unable to so certify, all
such agreement(s) must be identified here:
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You also agree not to use or disclose any Confidential Information or trade
secrets of others, including all prior employers, in your work at the
Company. Should a situation arise in which you believe that your job duties
may lead to the use or disclosure of confidential information or trade
secrets of another, you agree to notify Dan Smithson in the Human Resources
Department or Curt Westen in the Corporate Legal Department of the situation
immediately. You represent and warrant that you returned all property and
confidential information belonging to all prior employers.
PAGE FIVE
Finally, this letter sets forth all the terms of this offer of employment.
Together it supersedes any previous and contemporaneous oral and written
communications and representations. To confirm your acceptance of these
terms please sign, date and return a copy of this letter in the enclosed
self-addressed envelope. An additional copy of the offer letter is enclosed
for your file.
Dale, we are excited about the prospect of you joining our management team,
and are confident that it will offer the professional challenge and career
opportunity you are seeking. If you have any questions regarding the above
information or if I can assist you in any way, please call me at (916)
631-5061.
Sincerely,
/s/ Dan Smithson
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Dan Smithson
Senior Vice President
Corporate Human Resources
I hereby accept and agree to the terms of this offer of employment as outlined
above.
/s/ Dale P. Terrell January 5, 1998
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Signature Date