Exhibit 10.5
PERFORMANCE BASED RESTRICTED STOCK AWARD AGREEMENT
(Most Highly Compensated Executive Officers)
(Grant Date 7/25/07 – Part B)
Community Health Systems, Inc.
THIS AGREEMENT, between you and
Community Health Systems, Inc., a Delaware corporation (the
“Company”) governs an award of restricted stock in the
amount and on the date specified in your award notification (the
“Grant Date”).
WHEREAS, the Company has adopted the
Community Health Systems, Inc. Amended and Restated 2000 Stock
Option and Award Plan (the “ Plan ”) in order to
provide additional incentive to certain employees and directors of
the Company and its Subsidiaries;
WHEREAS, the Compensation Committee
(the “Committee”) of the Board of Directors (as
described in Section 3.1 of the Plan) has determined to grant
to you an Award of Restricted Stock as provided herein to encourage
your efforts toward the continuing success of the Company;
WHEREAS, the Committee has determined
to place a performance-based restriction on the Award of Restricted
Stock to better align your economic interests with those of the
other stockholders of the Company and to ensure that the
compensation attributable to the Award of Restricted Stock
constitutes “qualified performance-based compensation”
pursuant to IRC §162(m) and the regulations promulgated
thereunder; and
WHEREAS, the Committee has
established the Performance Objective (as defined in
Section 3.1 below) (a) utilizing objectively determinable
criteria, (b) on a date which is prior to the ninetieth (90
th )
day of the Performance Objective’s twelve-month measurement
period, and (c) at a time when the attainment of the
Performance Objective is substantially uncertain.
NOW, THEREFORE, the parties hereto
agree as follows:
1.
Grant of Restricted Stock.
1.1 The Company hereby grants to you
an award of Shares of Performance Based Restricted Stock (the
“ Award ”) in the number set out in an
electronic notification by the Company’s stock option plan
administrator, as may be appointed from time to time (the
“Plan Administrator”). The Shares of Performance Based
Restricted Stock granted pursuant to the Award shall be issued in
the form of book entry Shares in your name as soon as reasonably
practicable after the Date of Grant and shall be subject to your
acknowledgement of the terms of this Agreement (or your estate, if
applicable) to the Company as provided in Section 9
hereof.
1.2 This Agreement shall be construed
in accordance and consistent with, and subject to, the provisions
of the Plan (the provisions of which are hereby incorporated by
reference) and, except as otherwise expressly set forth herein, the
capitalized terms used in this Agreement shall have the same
definitions as set forth in the Plan.
2.
Restrictions on Transfer.
The Shares of Performance Based
Restricted Stock issued under this Agreement may not be sold,
transferred or otherwise disposed of and may not be pledged or
otherwise hypothecated until all
1
restrictions on such Performance Based Restricted Stock shall have
lapsed in the manner provided in Section 3, 4 or 5
hereof.
3.
Performance Objective; Lapse of Restrictions.
3.1 The
Award is subject to the Company attaining the following
“Performance Objective” (herein so called):
either (a) the Company’s “Earnings per
Share” for the twelve months ended June 30, 2009 (the
“Performance Objective’s measurement period”), as
reported by the Company to and approved by the Audit and Compliance
Committee in connection with the preparation of the earnings
release for the second fiscal quarter of 2009, shall be not less
than the amount which is seventy-five percent (75%) of the
projected “Earnings per Share” for the Performance
Objective’s measurement period, as identified in an
attachment to the minutes of the Committee’s meeting to be
held not later than September 26, 2008; or (b) the
Company’s “Net Revenues” for the Performance
Objective’s measurement period, as reported by the Company to
and approved by the Audit and Compliance Committee in connection
with the preparation of the earnings release for the second fiscal
quarter of 2009, shall be not less than the amount which is ninety
percent (90%) of the projected “Net Revenues”, as
identified in an attachment to the minutes of the Committee’s
meeting to be held not later than September 26, 2008. The
Performance Objective shall be adjusted upward or downward in
accordance with GAAP to reflect the impact of any material
acquisition or divestiture transaction and shall also be adjusted
for actual events as may be identified in the minutes of the
Committee’s meeting to be held not later than
September 26, 2008. For purposes of this Agreement,
“material acquisition” or “material
divestiture” transaction shall mean any single transaction or
series of related transactions in which the consideration exceeds
fifteen percent (15%) of the Company’s assets on a
consolidated basis. The computation of “Earnings per
Share” shall be adjusted for Changes in Capitalization (as
defined in the Plan).
3.2
Except as provided in Sections 4, 5 and 6 hereof, if the
Performance Objective is not attained, the Award shall be forfeited
in its entirety.
3.3
Except as provided in Sections 4, 5 and 6 hereof, if the
Performance Objective is attained, the determination of which shall
be certified by the Committee in writing, all of the Shares of
Performance Based Restricted Stock issued hereunder shall vest, and
the restrictions with respect to such Performance Based Restricted
Stock shall lapse.
4.
Effect of Certain Terminations of Employment.
