EXHIBIT 10.16

 

First Amended and Restated

Total Renal Care Holdings, Inc.

1999 Non-Executive Officer and Non-Director

Equity Compensation Plan

 

1.    Purpose.    The purpose of the Total Renal Care Holdings, Inc. 1999
Non-Executive Officer and Non-Director Equity Compensation Plan (this “Plan”) is
to promote the interests of Total Renal Care Holdings, Inc. (the “Company”) and
its stockholders by enabling the Company to offer Participants an opportunity to
acquire an equity interest in the Company so as to better attract, retain, and
reward employees and other persons providing services to the Company and,
accordingly, to strengthen the mutuality of interests between Participants and
the Company’s stockholders by providing Participants with a proprietary interest
in pursuing the Company’s long-term growth and financial success.

 

2.    Definitions.    For purposes of this Plan, the following terms shall have
the meanings set forth below.

 

(a)  “Award” means an Option granted under this Plan.

 

(b)  “Board” means the Board of Directors of the Company.

 

(c)  “Code” means the Internal Revenue Code of 1986, as amended, and the
applicable regulations thereunder. Reference to any specific section of the Code
shall be deemed to be a reference to any successor provision.

 

(d)  “Committee” means the committee appointed by the Board, if any, to
administer this Plan as permitted by Section 4 below or, if no such committee is
appointed, the Board.

 

(e)  “Common Stock” means the common stock of Total Renal Care Holdings, Inc. or
any security issued in substitution, exchange, or in lieu thereof.

 

(f)  “Company” means Total Renal Care Holdings, Inc., a Delaware corporation, or
any successor corporation.

 

(g)  “Option” means an option to purchase Common Stock.

 

(h)  “Participant” means a person who has been granted an Option.

 

(i)  “Plan” means this 1999 Non-Executive Officer and Non-Director Equity
Compensation Plan of the Company, as it may be amended from time to time.

 

(j)  “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations
(other than the last corporation in the unbroken chain) owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, as determined in accordance
with the rules of Section 424(f) of the Code.

 

3.    Eligibility.    All employees and other persons providing bona fide
services (other than persons only providing services in connection with the
offering or sale of securities in a capital raising transaction) to the Company
or any Subsidiary are eligible to receive Awards under this Plan. However,
neither executive officers nor directors of the Company are eligible to receive
Awards under this Plan. In the event that the Company acquires another entity,
the Committee may authorize the issuance of Awards (“Substitute Awards”) to
employees and other persons in substitution of stock options or restricted stock
grants previously granted to such employees and other persons in connection with
their performance of services for the acquired entity upon such terms and
conditions as the Committee shall determine.

 

4.    Administration.    This Plan shall be administered by the Board or by a
committee consisting of two or more members of the Board appointed by the Board
to administer this Plan. The Committee is authorized to interpret this Plan and
to adopt rules and procedures relating to the administration of this Plan. All
actions of the

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Committee in connection with the interpretation and administration of this Plan
shall be binding upon all parties. Subject to the limitations set forth below,
the Committee is expressly authorized to make such modifications to this Plan
and the Awards granted hereunder as are necessary to effectuate the intent of
this Plan as a result of any changes in the tax, accounting, or securities laws
treatment of Participants and the Plan. The Committee may delegate its
responsibilities to others under such conditions and limitations as it may
prescribe.

 

5.    Effective Date of this Plan.    This Plan shall be effective on March 11,
1999. No Awards may be granted under this Plan prior to its effective date. This
Plan may be terminated by the Board at any time. Unless earlier terminated by
the Board, this Plan shall terminate as of the close of business on the day
prior to the tenth (10th) anniversary of the effective date of this Plan. The
foregoing notwithstanding, the termination of this Plan shall not adversely
affect the rights of any Participant with respect to any Award outstanding as of
the time of such termination.

 

6.    Shares Subject to this Plan.    The aggregate number of shares of Common
Stock which may be issued pursuant to this Plan shall be one million two hundred
sixty-seven thousand five hundred (1,267,500). This number may be adjusted from
time to time as set forth in Section 12 below. Upon the expiration or
termination of any Option granted under this Plan which shall not have been
exercised in full, the shares of Common Stock remaining unissued under such
Option shall again become available for granting under the Plan.

 

7.    Form of Options.    Options shall be granted under this Plan on such terms
and in such form as the Committee may approve, which shall not be inconsistent
with the provisions of this Plan, and which need not be the same for each such
grant. The terms and conditions of each Option shall include, in addition to
such other terms and conditions as may be established by the Committee, (a) the
per share exercise price of such Option, (b) the termination date of such
Option, and (c) the effect on such Option of the termination of the
Participant’s employment. The Options granted under this Plan will not qualify
as “incentive stock options” under Code Section 422.

 

8.    Exercise of Options.    Options are exercised by payment of the full
amount of the purchase price to the Company as follows:

 

(a)  The payment shall be in the form of cash or such other forms of
consideration as the Committee shall deem acceptable, such as the surrender of
outstanding shares of Common Stock owned by the Participant for the minimum
period of time necessary to avoid adverse accounting treatment (if applicable).

 

(b)  The Committee may authorize the exercise of Options by the delivery to the
Company or its designated agent of an irrevocable written notice of exercise
form together with irrevocable instructions to a broker-dealer to sell or margin
a sufficient portion of the shares of Common Stock and to deliver the sale or
margin loan proceeds directly to the Company to pay all or a portion of the
exercise price of the Options.

 

(c)  Options shall only be exercised for whole numbers of shares.

 

9.    Modification of Awards.    The Committee may modify any outstanding Award
as it deems appropriate. Such authority shall include, without limitation, the
right to decrease the exercise price of any Option and to accelerate the right
to exercise any Option. However, no modification may be made to any Award that
would adversely affect the rights of the Participant with respect to any
outstanding Award without such Participant’s consent.

 

10.    Transfer Restrictions.    Options granted to such Participant under this
Plan are exercisable only by the Participant and are not assignable or
transferable, except by will or the laws of descent and distribution.

 

11.    Adjustments.     In the event of any stock split, reverse stock split,
stock dividend, recapitalization, combination, reclassification, reorganization,
merger, combination, consolidation, exchange of Common Stock, spinoff or other
distribution of Company assets to stockholders (other than normal cash
dividends), the Committee may, in such manner and to such extent, if any, as it
deems appropriate and equitable, authorize such adjustments with respect to: (a)
the number and kind of shares for which Awards may be granted under this Plan,

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(b) the number and kind of shares covered by outstanding Awards, and (c) the per
share exercise price of outstanding Options. In connection with any merger or
consolidation of the Company with or into another entity in which the Company is
not the surviving corporation or as a result of which the Common Stock ceases or
will cease to be publicly traded, the Committee may, but shall not be required
to, by resolution terminate all outstanding Options effective upon the
consummation of such merger or consolidation, provided that, as a condition to
such termination, all restrictions on the exercisability of such Options (i.e.,
vesting provisions) shall be eliminated and the holders thereof shall be given
at least twenty (20) days prior to such termination to exercise such Options
without regard to any restrictions.

 

12.    Amendment of this Plan.    The Board may amend this Plan at any time.
However, no such amendment may adversely affect the rights of any Participant
with respect to any outstanding Award without the Participant’s consent.

 

13.    Tax Withholding.    The Company shall have the right to take such actions
as may be necessary to satisfy its tax withholding obligations arising because
of the operation of this Plan. To the extent authorized by the Committee,
Participants may surrender previously acquired shares of Common Stock or have
shares withheld upon the exercise of an Option in satisfaction of the tax
withholding obligations. However, the maximum number of shares that may be
withheld for this purpose is the minimum number needed to satisfy the applicable
income tax withholding rules.

 

14.    No Additional Rights.    Neither the adoption of this Plan nor the
granting of any Option shall (a) affect or restrict in any way the power of the
Company to undertake any corporate action otherwise permitted under applicable
law, (b) confer upon any Participant the right to continue performing services
for the Company, or (c) interfere in any way with the right of the Company to
terminate the services of any Participant at any time, with or without cause,
subject to such other contractual obligations which may exist. No Participant
shall have any rights as a stockholder with respect to any shares covered by an
Option granted to the Participant until the date a certificate for such shares
has been issued to the Participant following the exercise of the Option.

 

15.     Securities Law Restrictions.

 

(a)  No shares of Common Stock shall be issued under this Plan unless the
Committee shall be satisfied that the issuance will be in compliance with
applicable federal and state securities laws, as well as the requirements of any
stock exchange or quotation system on which the Common Stock is traded. The
Committee may require certain investment or other representations and
undertakings by the person exercising an Option in order to comply with
applicable law. Certificates for shares of Common Stock delivered under this
Plan may be subject to such restrictions as the Committee may deem advisable.
The Committee may cause a legend to be placed on the certificates to refer to
these restrictions.

 

(b)  The inability of the Company to obtain registration, qualification or other
necessary authorization, or the unavailability of an exemption from registration
or qualification obligation deemed by the Company’s counsel to be necessary for
the lawful issuance and sale of any shares of its Common Stock under this Plan,
shall suspend the Company’s obligation to permit the exercise of any Option or
to issue any shares under the Plan and shall relieve the Company of any
liability in respect of the nonissuance or sale of the shares as to which the
requisite authority or exemption shall not have been obtained.

 

16.    Indemnification.    To the maximum extent permitted by law, the Company
shall indemnify each member of the Committee and each other member of the Board,
as well as any other employee of the Company with duties under this Plan,
against expenses (including any amount paid in settlement, provided such
settlement is approved in writing by the Company) reasonably incurred by the
individual in connection with any claim against the individual by reason of the
performance of the individual’s duties as a member of the Committee, unless the
losses are due to the individual’s gross negligence or lack of good faith.
However, the Company shall be entitled to control the defense of any such claim
and shall be entitled to engage counsel for such defense. In addition, if more
than one member of the Committee or such other employee is subject to such
claim, or if the Company or other parties entitled to indemnification by the
Company are also subject to such claim, the

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Company, if applicable, and all such parties shall be represented by a single
counsel selected by the Company and no member or other party shall be entitled
to be represented by separate counsel at the Company’s expense unless counsel
selected by the Company advises the Company in writing that such counsel cannot
represent such member or other party under applicable rules of professional
responsibility.

 

17.    Governing Law.    This Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.