Community
Health Systems, Inc.
2009 STOCK OPTION AND AWARD PLAN
(As Adopted March 24, 2009)
The
purpose of this Plan is to strengthen Community Health Systems,
Inc., a Delaware corporation (the “Company”), and its
Subsidiaries by providing an incentive to its and their employees,
officers, consultants and directors and thereby encouraging them to
devote their abilities and industry to the success of the
Company’s and its Subsidiaries’ business enterprises.
It is intended that this purpose be achieved by extending to
employees (including future employees who have received a formal
written offer of employment), officers, consultants and directors
of the Company and its Subsidiaries an added long-term incentive
for high levels of performance and unusual efforts through the
grant of Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Performance Units, Performance Shares, Share
Awards, Restricted Stock and Restricted Stock Units (as each term
is herein defined).
For
purposes of the Plan:
2.1
“2000 Stock Option and Award Plan” means the Community
Health Systems, Inc. 2000 Stock Option and Award Plan, as amended
and restated March 24, 2009.
2.2
“Affiliate” means any entity, directly or indirectly,
controlled by, controlling or under common control with the Company
or any corporation or other entity acquiring, directly or
indirectly, all or substantially all the assets and business of the
Company, whether by operation of law or otherwise.
2.3
“Agreement” means the written agreement between the
Company and an Optionee or Grantee evidencing the grant of an
Option or Award and setting forth the terms and conditions
thereof.
2.4
“Award” means a grant of Restricted Stock, Restricted
Stock Units, a Stock Appreciation Right, a Performance Award, a
Share Award or any or all of them.
2.5
“Board” means the Board of Directors of the
Company.
2.6
“Cause” means, except as otherwise set forth
herein,
(a) in
the case of an Optionee or Grantee whose employment with the
Company or a Subsidiary is subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or
Subsidiary, which employment agreement includes a definition of
“Cause”, the term “Cause” as used in this
Plan or any Agreement shall have the meaning set forth in such
employment agreement during the period that such employment
agreement remains in effect; and
(b) in
all other cases, (i) intentional failure to perform reasonably
assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) involvement in a transaction in
connection with the performance of duties to the Company or any of
its Subsidiaries which transaction is adverse to the interests of
the Company or any of its Subsidiaries and which is engaged in for
personal profit or (iv) willful violation of any law, rule
or
regulation
in connection with the performance of duties (other than traffic
violations or similar offenses); provided, however , that
following a Change in Control clause (i) of this Section
2.6(b) shall not constitute “Cause.”
2.7
“Change in Capitalization” means any increase or
reduction in the number of Shares, or any change (including, but
not limited to, in the case of a spin-off, dividend or other
distribution in respect of Shares, a change in value) in the Shares
or exchange of Shares for a different number or kind of shares or
other securities of the Company or another corporation, by reason
of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights
or debentures, stock dividend, stock split or reverse stock split,
cash dividend, property dividend, combination or exchange of
shares, repurchase of shares, change in corporate structure or
otherwise.
2.8
A “Change in Control” shall mean the occurrence of any
of the following:
(a) An
acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by
any “Person” (as the term person is used for purposes
of Section 13(d) or 14(d) of the Exchange Act), immediately after
which such Person has “Beneficial Ownership” (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than fifty percent (50%) of the then outstanding Shares or
the combined voting power of the Company’s then outstanding
Voting Securities; provided, however, that in determining
whether a Change in Control has occurred pursuant to this
Section 2.7(a), Shares or Voting Securities which are acquired
in a “Non-Control Acquisition” (as hereinafter defined)
shall not constitute an acquisition which would cause a Change in
Control. A “Non-Control Acquisition” shall mean an
acquisition by (i) an employee benefit plan (or a trust
forming a part thereof) maintained by (A) the Company or
(B) any corporation or other Person the majority of the voting
power, voting equity securities or equity interest of which is
owned, directly or indirectly, by the Company (for purposes of this
definition, a “Related Entity”), (ii) the Company
or any Related Entity, or (iii) any Person in connection with
a “Non-Control Transaction” (as hereinafter
defined);
(b) The
individuals who, as of March 24, 2009, are members of the
Board (the “Incumbent Board”), cease for any reason to
constitute at least a majority of the members of the Board or,
following a Merger (as hereinafter defined) which results in a
Parent Corporation (as hereinafter defined), the board of directors
of the ultimate Parent Corporation; provided, however , that
if the election, or nomination for election by the Company’s
common stockholders, of any new director was approved by a vote of
at least two-thirds of the Incumbent Board, such new director
shall, for purposes of this Plan, be considered a member of the
Incumbent Board; provided further, however , that no
individual shall be considered a member of the Incumbent Board if
such individual initially assumed office as a result of the actual
or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board (a “Proxy Contest”)
including by reason of any agreement intended to avoid or settle
any Proxy Contest; or
(i) A
merger, consolidation or reorganization with or into the Company or
in which securities of the Company are issued (a
“Merger”), unless such Merger is a “Non-Control
Transaction.” A “Non-Control Transaction” shall
mean a Merger where:
2
(A) the
stockholders of the Company immediately before such Merger own
directly or indirectly immediately following such Merger at least
fifty percent (50%) of the combined voting power of the outstanding
voting securities of (x) the corporation resulting from such
Merger (the “Surviving Corporation”), if fifty percent
(50%) or more of the combined voting power of the then outstanding
voting securities of the Surviving Corporation is not Beneficially
Owned, directly or indirectly, by another Person (a “Parent
Corporation”), or (y) if there is one or more than one
Parent Corporation, the ultimate Parent Corporation; and
(B) the
individuals who were members of the Incumbent Board immediately
prior to the execution of the agreement providing for such Merger
constitute at least a majority of the members of the board of
directors of (x) the Surviving Corporation, if there is no
Parent Corporation, or (y) if there is one or more than one
Parent Corporation, the ultimate Parent Corporation;
(ii) A
complete liquidation or dissolution of the Company; or
(iii) The
sale or other disposition of all or substantially all of the assets
of the Company to any Person (other than a transfer to a Related
Entity or under conditions that would constitute a Non-Control
Transaction with the disposition of assets being regarded as a
Merger for this purpose or the distribution to the Company’s
stockholders of the stock of a Related Entity or any other
assets).
Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”)
acquired Beneficial Ownership of more than the permitted amount of
the then outstanding Shares or Voting Securities as a result of the
acquisition of Shares or Voting Securities by the Company which, by
reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a
Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Shares or Voting
Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any
additional Shares or Voting Securities which increases the
percentage of the then outstanding Shares or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control
shall occur.
If
an Eligible Individual’s employment is terminated by the
Company without Cause prior to the date of a Change in Control but
the Eligible Individual reasonably demonstrates that the
termination (A) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to
effect a change in control or (B) otherwise arose in
connection with, or in anticipation of, a Change in Control which
has been threatened or proposed, such termination shall be deemed
to have occurred after a Change in Control for purposes of this
Plan provided a Change in Control shall actually have
occurred.
2.9
“Code” means the Internal Revenue Code of 1986, as
amended.
2.10
“Committee” means a committee, as described in
Section 3.1, appointed by the Board from time to time to
administer the Plan and to perform the functions set forth
herein.
2.11
“Company” means Community Health Systems,
Inc.
3
2.12
“Director” means a director of the Company.
(a) in
the case of an Optionee or Grantee whose employment with the
Company or a Subsidiary is subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or
Subsidiary, which employment agreement includes a definition of
“Disability”, the term “Disability” as used
in this Plan or any Agreement shall have the meaning set forth in
such employment agreement during the period that such employment
agreement remains in effect;
(b) in
the case of an Optionee or Grantee to whom Section 2.12(a)
does not apply and who participates in the Company’s
long-term disability plan, if any, the term
“Disability” as used in such plan; or
(c) in
all other cases, a physical or mental infirmity which impairs the
Optionee’s or Grantee’s ability to perform
substantially all his or her duties for a period of ninety-one (91)
consecutive days.
2.14
“Division” means any of the operating units or
divisions of the Company designated as a Division by the
Committee.
2.15
“Dividend Equivalent Right” means a right to receive
all or some portion of the cash dividends that are or would be
payable with respect to Shares.
2.16
“Eligible Individual” means any of the following
individuals who is designated by the Committee as eligible to
receive Options or Awards subject to the conditions set forth
herein: (a) any director, officer or employee of the Company or a
Subsidiary, (b) any individual to whom the Company or a
Subsidiary has extended a formal, written offer of employment, or
(c) any consultant or advisor of the Company or a
Subsidiary.
2.17
“Exchange Act” means the Securities Exchange Act of
1934, as amended.
2.18
“Fair Market Value” on any date means the closing sales
prices of the Shares on such date on the principal national
securities exchange on which such Shares are listed or admitted to
trading, or, if such Shares are not so listed or admitted to
trading, the closing sales prices of the Shares as reported by The
Nasdaq Stock Market at the close of the primary trading session on
such dates and, in either case, if the Shares were not traded on
such date, on the next preceding day on which the Shares were
traded. In the event that Fair Market Value cannot be determined in
a manner described above, the Fair Market Value shall be the value
established by the Board in good faith and, in the case of an
Incentive Stock Option, in accordance with Section 422 of the
Code.
2.19
“Grantee” means a person to whom an Award has been
granted under the Plan.
2.20
“Incentive Stock Option” means an Option satisfying the
requirements of Section 422 of the Code and designated by the
Committee as an Incentive Stock Option.
4
2.21
“Non-employee Director” means a director of the Company
who is a “non-employee director” within the meaning of
Rule 16b-3 promulgated under the Exchange Act.
2.22
“Nonqualified Stock Option” means an Option which is
not an Incentive Stock Option.
2.23
“Option” means a Nonqualified Stock Option, an
Incentive Stock Option or either or both of them.
2.24
“Optionee” means a person to whom an Option has been
granted under the Plan.
2.25
“Outside Director” means a director of the Company who
is an “outside director” within the meaning of Section
162(m) of the Code and the regulations promulgated
thereunder.
2.26
“Parent” means any corporation which is a parent
corporation within the meaning of Section 424(e) of the Code with
respect to the Company.
2.27
“Performance Awards” means Performance Units,
Performance Shares or either or both of them.
2.28
“Performance-Based Compensation” means any Option or
Award that is intended to constitute “performance based
compensation” within the meaning of Section 162(m)(4)(C)
of the Code and the regulations promulgated thereunder.
2.29
“Performance Cycle” means the time period specified by
the Committee at the time Performance Awards are granted during
which the performance of the Company, a Subsidiary or a Division
will be measured.
2.30
“Performance Objectives” has the meaning set forth in
Section 9.
2.31
“Performance Shares” means Shares issued or transferred
to an Eligible Individual under Section 9.
2.32
“Performance Units” means performance units granted to
an Eligible Individual under Section 9.
2.33
“Plan” means Community Health Systems, Inc. 2009 Stock
Option and Award Plan, as amended and restated from time to
time.
2.34
“Restricted Stock” means Shares issued or transferred
to an Eligible Individual pursuant to Section 8.1.
2.35
“Restricted Stock Unit” means rights granted to an
Eligible Individual under Section 8.2 representing a number of
hypothetical Shares.
2.36
“Share Award” means an Award of Shares granted pursuant
to Section 10.
5
2.37
“Shares” means shares of the Common Stock of the
Company, par value $.01 per share, and any other securities into
which such shares are changed or for which such shares are
exchanged.
2.38
“Stock Appreciation Right” means a right to receive all
or some portion of the increase in the value of the Shares as
provided in Section 7 hereof.
2.39
“Subsidiary” means (i) except as provided in
subsection (ii) below, any corporation which is a subsidiary
corporation within the meaning of Section 424(f) of the Code with
respect to the Company, and (ii) in relation to the
eligibility to receive Options or Awards other than Incentive Stock
Options and continued employment for purposes of Options and Awards
(unless the Committee determines otherwise), any entity, whether or
not incorporated, in which the Company directly or indirectly owns
50% or more of the outstanding equity or other ownership
interests.
2.40
“Successor Corporation” means a corporation, or a
Parent or Subsidiary thereof within the meaning of Section 424(a)
of the Code, which issues or assumes a stock option in a
transaction to which Section 424(a) of the Code applies.
2.41
“Ten-Percent Stockholder” means an Eligible Individual,
who, at the time an Incentive Stock Option is to be granted to him
or her, owns (within the meaning of Section 422(b)(6) of the
Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, a
Parent or a Subsidiary.
3.1
The Plan shall be administered by the Committee, which shall hold
meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its
meetings. If the Committee consists of more than one
(1) member, a quorum shall consist of not fewer than two
(2) members of the Committee and a majority of a quorum may
authorize any action. Any decision or determination reduced to
writing and signed by a majority of all of the members of the
Committee shall be as fully effective as if made by a majority vote
at a meeting duly called and held. The Committee shall consist of
at least one (1) Director and may consist of the entire Board;
provided, however, that (A) with respect to any Option
or Award granted to an Eligible Individual who is subject to
Section 16 of the Exchange Act, the Committee shall consist of
at least two (2) Directors each of whom shall be a
Non-employee Director and (B) to the extent necessary for any
Option or Award intended to qualify as Performance-Based
Compensation to so qualify, the Committee shall consist of at least
two (2) Directors, each of whom shall be an Outside Director.
For purposes of the preceding sentence, if any member of the
Committee is neither a Non-employee Director nor an Outside
Director but recuses himself or herself or abstains from voting
with respect to a particular action taken by the Committee, then
the Committee, with respect to that action, shall be deemed to
consist only of the members of the Committee who have not recused
themselves or abstained from voting. Subject to applicable law, the
Committee may delegate its authority under the Plan to any other
person or persons.
3.2
No member of the Committee shall be liable for any action, failure
to act, determination or interpretation made in good faith with
respect to this Plan or any transaction hereunder. The Company
hereby agrees to indemnify each member of the Committee for all
costs and expenses and, to the extent permitted by applicable law,
any liability incurred in connection with defending against,
responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind
arising in connection with any
6
actions in
administering this Plan or in authorizing or denying authorization
to any transaction hereunder.
3.3
Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine
those Eligible Individuals to whom Options shall be granted under
the Plan and the number of such Options to be granted, prescribe
the terms and conditions (which need not be identical) of each such
Option, including the exercise price per Share, the vesting
schedule and the duration of each Option, and make any amendment or
modification to any Option Agreement consistent with the terms of
the Plan;
(b) select
those Eligible Individuals to whom Awards shall be granted under
the Plan, determine the number of Shares in respect of which each
Award is granted, the terms and conditions (which need not be
identical) of each such Award, and make any amendment or
modification to any Award Agreement consistent with the terms of
the Plan;
(c) construe
and interpret the Plan and the Options and Awards granted
hereunder, establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to
the extent it shall deem necessary or advisable, including so that
the Plan and the operation of the Plan comply with Rule 16b-3
under the Exchange Act, the Code to the extent applicable and other
applicable law, and otherwise make the Plan fully effective. All
decisions and determinations by the Committee in the exercise of
this power shall be final, binding and conclusive upon the Company,
its Subsidiaries, the Optionees and Grantees, and all other persons
having any interest therein;
(d) determine
the duration and purposes for leaves of absence which may be
granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of
the Plan;
(e) exercise
its discretion with respect to the powers and rights granted to it
as set forth in the Plan; and
(f) generally,
exercise such powers and perform such acts as are deemed necessary
or advisable to promote the best interests of the Company with
respect to the Plan.
7
3.4
The Committee may delegate to one or more officers of the Company
the authority to grant Options or Awards to Eligible Individuals
(other than to himself or herself) and/or determine the number of
Shares subject to each Option or Award (by resolution that
specifies the total number of Shares subject to the Options or
Awards that may be awarded by the officer and the terms of any such
Options or Awards, including the exercise price), provided that
such delegation is made in accordance with the Delaware General
Corporation Law and with respect to Options and Awards that are not
intended to qualify as Performance-Based Compensation.
4.
Stock Subject to the Plan; Grant Limitations .
4.1
The maximum number of Shares that may be made the subject of
Options and Awards granted under the Plan is 3,500,000;
provided, however, that, (i) when aggregated with
Options and Awards granted under the 2000 Stock Option and Award
Plan in any calendar year, no Eligible Individual may be granted
Options or Awards in the aggregate in respect of more than
1,000,000 Shares, and (ii) in no event shall more than an
aggregate of 30,000 Shares be issued upon the exercise of Incentive
Stock Options granted under the Plan. The Company shall reserve for
the purposes of the Plan, out of its authorized but unissued Shares
or out of Shares held in the Company’s treasury, or partly
out of each, such number of Shares as shall be determined by the
Board.
4.2
Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and
Awards shall be reduced as follows:
(a) In
connection with the granting of an Option or an Award, the number
of Shares shall be reduced by the number of Shares in respect of
which the Option or Award is granted or denominated.
(b) Stock
Appreciation Rights to be settled in shares of Common Stock shall
be counted in full against the number of shares available for award
under the Plan, regardless of the number of Exercise Gain Shares
issued upon settlement of the Stock Appreciation Right.
(c) Notwithstanding
the foregoing, Awards granted in the form of Restricted Stock
(including Restricted Stock Units), Performance Awards (including
Shares issued in respect to Performance Awards), and other Awards
that are granted as “full value awards” shall reduce
the number of shares that may be the subject to Options and Awards
under the Plan by 1.52 Shares for each Share subject to such an
Award.
4.3
Whenever any outstanding Option or Award or portion thereof
expires, is canceled, is forfeited, is settled in cash or is
otherwise terminated for any reason without having been exercised
or payment having been made in respect of the entire Option or
Award, the Shares allocable to the expired, canceled, forfeited,
settled or otherwise terminated portion of the Option or Award may
again be the subject of Options or Awards granted hereunder. With
regard to Awards referred to in Section 4.2(c), for each Share
subject to an Award that is cancelled, forfeited, settled in cash
or other otherwise terminated as provided in the foregoing
sentence, 1.52 Shares may again be the subject of Options or Awards
under the Plan.
8
5.
Option Grants for Eligible Individuals .
5.1
Authority of Committee . Subject to the provisions of the
Plan, the Committee shall have full and final authority to select
those Eligible Individuals who will receive Options, and the terms
and conditions of the grant to such Eligible Individuals shall be
set forth in an Agreement. Incentive Stock Options may be granted
only to Eligible Individuals who are employees of the Company or
any Subsidiary.
5.2
Exercise Price . The purchase price or the manner in which
the exercise price is to be determined for Shares under each Option
shall be determined by the Committee and set forth in the
Agreement; provided, however , that the exercise price per
Share under each Nonqualified Stock Option and each Incentive Stock
Option shall not be less than 100% of the Fair Market Value of a
Share on the date the Option is granted (110% in the case of an
Incentive Stock Option granted to a Ten-Percent
Stockholder).
5.3
Maximum Duration . Options granted hereunder shall be for
such term as the Committee shall determine, provided that an
Incentive Stock Option shall not be exercisable after the
expiration of ten (10) years from the date it is granted (five
(5) years in the case of an Incentive Stock Option granted to
a Ten-Percent Stockholder) and a Nonqualified Stock Option shall
not be exercisable after the expiration of ten (10) years from
the date it is granted; provided, however , that unless the
Committee provides otherwise, an Option (other than an Incentive
Stock Option) may, upon the death of the Optionee prior to the
expiration of the Option, be exercised for up to one (1) year
following the date of the Optionee’s death even if such
period extends beyond ten (10) years from the date the Option
is granted. The Committee may, subsequent to the granting of any
Option, extend the term thereof, but in no event shall the term as
so extended exceed the maximum term provided for in the preceding
sentence.
5.4
Vesting . Subject to Section 5.10, each Option shall
become exercisable in such installments (which need not be equal)
and at such times as may be designated by the Committee and set
forth in the Agreement. To the extent not exercised, installments
shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the
Option expires. The Committee may accelerate the exercisability of
any Option or portion thereof at any time.
5.5
Deferred Delivery of Option Shares . The Committee may, in
its discretion, permit Optionees to elect to defer the issuance of
Shares upon the exercise of one or more Nonqualified Stock Options
granted pursuant to the Plan. The terms and conditions of such
deferral shall be determined at the time of the grant of the Option
or thereafter and shall be set forth in the Agreement evidencing
the Option.
5.6
Limitations on Incentive Stock Options. To the extent that
the aggregate Fair Market Value (determined as of the date of the
grant) of Shares with respect to which Incentive Stock Options
granted under the Plan and “incentive stock options”
(within the meaning of Section 422 of the Code) granted under all
other plans of the Company or its Subsidiaries (in either case
determined without regard to this Section 5.6) are exercisable
by an Optionee for the first time during any calendar year exceeds
$100,000, such Incentive Stock Options shall be treated as
Nonqualified Stock Options. In applying the limitation in the
preceding sentence in the case of multiple Option grants, Options
which were intended to be Incentive Stock Options shall be treated
as Nonqualified Stock Options according to the order in which they
were granted such that the most recently granted Options are first
treated as Nonqualified Stock Options.
9
|
