Exhibit 10.5
SECOND AMENDMENT TO EMPLOYMENT
AGREEMENT
This document is to amend the
Employment Agreement (the “Agreement”) entered into as
of August 16, 2004, by and between DaVita Inc.
(“Employer”) and Thomas Usilton
(“Employee”), as well as the first amendment to the
Employment Agreement, dated December 15, 2006. Specifically,
effective December 12, 2008, the parties agree to amend the
Agreement as follows:
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1.
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Section 2.8 is hereby deleted in its
entirety and replaced with the following:
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“ Employer Plane .
Employee shall have the right to use the Employer’s airplane,
for business purposes, up to 30 hours per year. If Employee is
using an airplane other than Encore, then the Chief Executive
Officer must approve the use of the plane by Employee in advance.
Employee must keep track of all hours and report it annually and
may not exceed the allotted hours in any given year. If Employee
does not use all of the allotted hours in any given calendar year,
Employer will pay Employee a bonus calculated as follows: Employee
shall receive one half of the hourly or the variable costs that
would have been incurred by Employer had he used an Encore airplane
for the allotted hours not used. This payment shall be paid in the
following calendar year.”
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2.
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Section 3.3 is hereby deleted in its
entirety and replaced with the following:
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“ Other Involuntary
Termination . Employer may terminate the employment of Employee
for any reason or for no reason at any time upon at least
thirty (30) days’ advance written notice. Except
following a Change of Control, as set forth below, or a termination
following a Change in Management, as set forth below, if Employer
terminates the employment of Employee for reasons other than for
death, Material Cause, or Disability, Employee shall (i) be
entitled to receive the Base Salary and benefits as set forth in
Section 2.1 and Section 2.2 , respectively,
through the effective date of such termination, (ii) be
entitled to receive a lump-sum payment equal to the Base Salary in
effect as of the date of the termination payable within 90 days
after the effective date of Employee’s termination of
employment; (iii) be entitled to continue to receive during
the one-year period following the effective date of such
termination (the “Severance Period”) the employee
health insurance benefits set forth in Section 2.2 (to
the extent Employee can continue to receive such benefits under
Employer’s health insurance policies and programs in effect
at the effective time of such termination through the exercise of
his rights under COBRA, Employee shall elect to receive COBRA
benefits, and Employer shall pay Employee’s insurance
premiums for COBRA coverage during the Severance Period;
provided , however , to the extent such benefits
cannot be provided under such policies and programs, Employer shall
purchase for Employee reasonably equivalent health insurance
benefits during the Severance Period; Employer’s obligation
to provide this benefit is subject to the limitation set forth
below and subject to the limitation set forth in
Section 2.13 ; and (iv) not be entitled to receive
any other compensation, benefits, or payments of any kind, except
as otherwise required by law or by the terms of any benefit or
retirement plan or other arrangement that would, by its terms,
apply. The foregoing notwithstanding, in the event Employee accepts
employment (as an employee
or as an independent contractor) with another
employer during the Severance Period, (x) Employee shall
immediately notify Employer of such employment and
(y) Employer’s obligation to continue to provide certain
health insurance benefits pursuant to clause (iv) of the
immediately preceding sentence shall terminate at such time as
Employee is insured with reasonably equivalent health benefits
under such successor employer’s health benefit plan, so long
as Employee uses his best effort to obtain such
insurance.
“During the Severance Period,
Employee agrees to make himself available to answer questions and
to cooperate in the transition of his duties. In addition, Employee
agrees to cooperate with Employer in the prosecution and/or defense
of any claim, including making himself available for any
interviews, appearing at depositions, and producing requested
documents. Employer shall reimburse Employee for any out-of-pocket
expenses he may incur, including travel costs. To the extent that
Employee is required to travel, he is required to work with
Employer’s travel department to arrange his travel
plans.
“For purposes of this
provision, an Employee’s employment has been terminated when
Employee is no longer providing services for Employer after a
specific date or the level of bona fide services that Employee
would perform (as an employee or independent contractor) after a
specific date would permanently decrease to no more than 20% of the
average level of bona fide services performed over the immediately
preceding thirty-six month period (or the full period of service if
Employee was employed for less than thirty-six
months).”
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3.
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Sections 3.8 is
hereby deleted in its entirety and replaced with the
following:
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“ Disability . Upon
thirty (30) days’ advance notice (which notice may be
given before the completion of the periods described herein),
Employer may terminate Employee’s employment for Disability
(as defined below).”
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4.
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Section 3.9(b) is hereby deleted in its
entirety and replaced with the following:
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“Constructive Discharge”
shall mean the occurrence of any of the following events after the
date of a Change of Control without Employee’s express
written consent: (i) the scope of Employee’s authority,
duties and responsibilities are materially diminished or are not
(A) in the same general level of seniority, or (C) of the
same general nature as Employee’s authority, duties, and
responsibilities with Employer immediately before such Change of
Control; (ii) a material change in the geographic location at
which the Employee must perform his or her services; or
(iii) a material reduction in Employee’s base
compensation as in effect on the date of such Change of Control.
Notwithstanding the above, the occurrence of any such condition
shall not constitute Constructive Discharge unless the Employee
provides notice to Employer of the existence of such condition not
later than 90 days after the initial existence of such condition,
and Employer shall have failed to remedy such condition within 30
days after receipt of such notice.”
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5.
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Section 3.12 is hereby added, which
provides the following:
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“ Key Employee .
Notwithstanding any provision herein to the contrary, in the event
that any payment to be made to Employee hereunder (whether pursuant
to this Section 3 or any other Section) as a result of
Employee’s termination of employment is determined to
constitute “deferred compensation” subject to
Section 409A of the Internal Revenue Code, and Employee is a
“Key Employee” under the DaVita Inc. Key Employee
Policy for 409A Arrangements at the time of Employee’s
termination of employment, all such deferred compensation payments
payable during the first six (6) months following
Employee’s termination of employment shall be delayed and
paid in a lump sum during the seventh calendar month following the
calendar month during which Employee’s termination of
employment occurs.”
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6.
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Section 5
is hereby deleted in its entirety and replaced with the
following:
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“ Excess Parachute
Payment . In the event that any payment or benefit received or
to be received by Employee in connection with a Change of Control,
whether payable pursuant to the terms of this Agreement or any
other plan, arrangement or agreement by Employer, any predecessor
or successor to Employer or any corporation affiliated (within the
meaning of Section 1504 of the Internal Revenue Code of 1986,
as amended (the “Code”)) with Employer or which becomes
so affiliated pursuant to the transactions resulting in a Change of
Control (collectively all such payments are hereinafter referred to
as the “Total Payments”), is deemed to be an
“Excess Parachute Payment” (in whole or in part) to
Employee w