Exhibit 10.7
AMENDMENT TO EMPLOYMENT
AGREEMENT
This document is to amend the
Employment Agreement (the “Agreement”), entered into as
of November 18, 2004, by and between DaVita Inc.
(“Employer”) and Joseph Schohl
(“Employee”). Specifically, effective December 30,
2008, the parties agree to amend the Agreement as
follows:
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1.
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Section 3.3 is hereby deleted in its
entirety and replaced with the following:
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“ Other 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. If Employer
terminates the employment of Employee for reasons other than for
Material Cause or Disability, or if Employee resigns within sixty
(60) days following Constructive Discharge or a Good Cause
Event (as those terms are defined below), 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 or
resignation, (ii) be entitled to receive his salary for the
two-year period following the termination of his employment (the
“Severance Period”), paid in accordance with
Employer’s usual payroll practices, (iii) be entitled to
continue to receive during the one-year period following the
effective date of such termination (the “COBRA Period”)
the employee health insurance benefits set forth in
Section 2.2 at the same cost to him as he paid prior to
his termination; 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 COBRA 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 (iii) of the
immediately preceding sentence shall terminate once Employee
becomes eligible to participate in his new employer’s health
benefit plan. In addition, once Employee accepts employment (as an
employee or as an independent contractor), Employer may reduce its
obligation under clause (ii) herein dollar-for-dollar for
every dollar Employee earns in base salary or other compensation
during the Severance Period from his new employer. Employee agrees
to use reasonable efforts to find employment after the first year
of the Severance Period and that if he fails to use reasonable
efforts, the Company’s obligations under clause
(ii) herein may be terminated by Employer in its sole
discretion.
“With respect to
Employee’s right to continue receiving health insurance, 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 this one-year 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 one-year period subject to the limitation set
forth below and subject to the limitation set forth in
Section 2.11 .
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.
“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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2.
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Section 3.9 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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3.
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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 within the meaning of Section 280G of the Code, as in
effect at such time, no change shall be made to the Total Payments
to be made in connection with the Change of Control, except that,
in addition to all other amounts to be paid to Employee by
Employer, Employer shall, within thirty (30) days of the date
on which any Excess Parachute Payment is made, pay to Employee, in
addition to any other payment, coverage or benefit due and owing,
an amount determined by (i) multiplying the rate of excise tax
then imposed by Code Section 4999 by the amount of the
“Excess Parachute Payment” received by Employee
(determined without regard to any payments made to Employee
pursuant to this Section 5 ) and (ii) dividing the
product so obtained by the amount
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obtained by subtracting (A) the aggregate
local, state and Federal income and employment tax rates (including
the value of the loss of itemized deductions under Section 68
of the Internal Revenue Code and the phase-out of the personal
exemption) applicable to the receipt by Employee of the
“Excess Parachute Payment” (taking into account the
deductibility for Federal income tax purposes of the payment of
state and local income taxes thereon) from (B) the amount
obtained by subtracting from 1.00 the rate of
