FIRST AMENDMENT TO EXECUTIVE SEVERANCE AGREEMENT
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This First Amendment to Executive Severance Agreement ("Amendment") is made
as of the 2nd day of May, 1996 between Renal Treatment Centers, Inc. (the
"Company"), a Delaware corporation and John A. Chambers (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive are parties to a certain Executive
Severance Agreement dated May 1, 1995 (the "Agreement"); and
WHEREAS, the parties wish to make certain changes to the Agreement, all as more
fully set forth herein.
NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Amendments.
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a. Section 1(b) is hereby amended to read in full as follows:
"(b) If the Executive is employed by the Company on the date on which a
Change of Control of the Company occurs, then, except as otherwise provided in
Sections 4 and 5(a), the Company agrees to employ the Executive, and the
Executive agrees to serve the Company, in a management capacity for a period of
twelve (12) months, commencing on the date on which the Change of Control
occurs."
b. Section 3(c) is hereby amended to read in full as follows:
"(c) In addition to all other compensation to be paid to the Executive by
the Company hereunder upon the occurrence of a Change of Control, the Company
shall cause all options ("Options") granted to the Executive under the Company's
stock option plans to become fully vested and exercisable immediately upon the
Change of Control. In addition, the Executive shall have the right exercisable
by written notice to the Company upon the occurrence of a Change of Control to
elect to receive, in lieu of shares of common stock of the Company (the "Company
Shares") issuable upon the exercise of Options (which Options shall be canceled
upon the making of the payment referred to below), an amount in cash equal to
the aggregate spread between the exercise prices of the Options held by the
Executive, whether or not then fully vested or exercisable, and the higher of
(a) the closing price per Company Share as reported on the New York Stock
Exchange on the date of the Change of Control (or the last trading date prior
thereto); or (b) the highest price per Company Share actually paid in
connection with the Change of Control of the Company (the higher price being
referred to as the "Termination Price"), but excluding from such calculation all
Options the exercise price of which is in excess of the Termination Price."
c. Subsections (a), (b), (c) and (d) of Section 5 are hereby amended to
read in full as follows:
"(a) If, during the Post Change of Control Employment Period, the
Executive shall terminate his employment other than for Good Reason (as defined
in Section 7 of this Agreement) or Constructive Discharge (as defined in the
Employment Agreement), or shall violate the provisions of Section 2(c) hereof,
the Company's remaining obligations under this Agreement shall terminate.
(b) The Company shall have the right to terminate the Post Change of
Control Employment Period of the Executive under this Agreement for Material
Cause (as defined below), and for no other reason. Upon such termination, the
Company's remaining obligations under this Agreement shall terminate. Moreover,
any conduct of the Executive in connection with a Change of Control (including
his opposition to or support of a Change of Control) shall not under any
circumstances be deemed to constitute Material Cause for purposes of this
Agreement.
(c) If the Executive shall terminate his employment for Good Reason or by
reason of Constructive Discharge prior to the end of the Post Change of Control
Employment Period, the Executive shall receive the same payments that would have
been provided to the Executive under Sections 5(e) and 5(f) hereof.
(d) If the Company shall terminate the employment of the Executive prior
to the end of the Post Change of Control Employment Period for any reason other
than Material Cause as provided in Section 5(b) of this Agreement or total
disability or incapacity for a period of at least six consecutive months as
provided in Section 4(b) of this Agreement, or if the Executive shall terminate
his employment for Good Reason or by reason of Constructive Discharge prior to
the end of the Post Change of Control Employment Period, the Executive shall be
entitled to receive such payments and benefits as are specifically provided by
this Agreement for a period equal to the balance of the Post Change of Control
Employment Period as if such termination had not occurred."
d. A new Section 7(d) is added to the Agreement to read in full as
follows:
"(d) For purposes of this Agreement, the term "Material Cause" shall mean
any of the following:
(i) conviction of a felony involving moral turpitude relating to the
business of the Company and which does, in fact, adversely and directly affect
the business of the Company;
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(ii) the adjudication by a court of competent jurisdiction that the
Executive has committed any act of fraud or dishonesty resulting or intended to
result directly or indirectly in personal enrichment at the expense of the
Company;
(iii) repeated failure or refusal by the Executive to follow policies or
directives reasonably established by the Company that goes uncorrected for a
period of thirty (30) consecutive days after written notice has been provided to
the Executive; and
(iv) persistent willful failure by the Executive to fulfill his duties
that goes uncorrected for a period of thirty (30) consecutive days after written
notice has been provided to the Executive."
e. The first paragraph of Section 8 is amended to read as follows:
"In the event that any payment or benefit received or to be received by the
Executive in connection with a Change of Control (whether payable pursuant to
the terms of this Agreement or any other plan, arrangement or agreement by the
Company, any successor to the Company or any corporation ("Affiliate")
affiliated with the Company or which becomes so affiliated pursuant to the
transactions resulting in a Change of Control, both within the meaning of
Section 1504 of the Internal Revenue Code of 1986, as amended (the "Code"),
(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 the Executive as a result of Section 280G and/or 4999 of the Code, 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 the
Executive by the Company hereunder, the Company, within thirty (30) days of the
date on which the Change of Control occurs, shall pay to the Executive, in
addition to any other payment, coverage or benefit due and owing hereunder, an
amount determined by multiplying the rate of excise tax then imposed by Code
Section 4999 by the amount of the "Excess Parachute Payment" received by the
Executive (determined without regard to any payments made to the Executive
pursuant to this Section) and dividing the product so obtained by the amount
obtained by subtracting the aggregate, local, state and Federal income tax rates
applicable to the receipt by the Executive 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 the amount obtained by
subtracting from 1.00 the rate of excise tax then imposed by Section 4999 of the
Code. It is the Company's intention that the Executive's net after-tax position
be identical to that which would have obtained had Sections 280G and 4999 not
been part of the Code."
2. Ratification and Confirmation. The other terms and conditions of the
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Agreement, as amended by this Amendment, are hereby ratified and confirmed and
shall continue in full force and effect.
3. Miscellaneous. This Amendment shall be effective as of May 2, 1996. This
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Amendment may be executed in two or more counterparts, and by different parties
on
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different counterparts, each of which shall be deemed an original and in making
proof of this Amendment it shall be necessary only to produce sufficient
counterparts. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and shall be governed by the
laws of the Commonwealth of Pennsylvania, conflict of laws provisions
notwithstanding.
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed,
this Amendment as of the day and year first above written.
RENAL TREATMENT CENTERS, INC.
By:/s/ Robert L. Mayer, Jr.
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Robert L. Mayer, Jr.,
President and Chief Executive Officer
Witness:
/s/ Frederick C. Jansen /s/ John A. Chambers
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John A. Chambers
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