First Amended and Restated Total Renal Care Holdings, Inc. 1999 Non-Executive Officer andNon-Director Equity Compensation Plan
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
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,
(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
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.
