FORM OF
STOCK OPTION AGREEMENT
THIS
AGREEMENT, dated as of
, 2009 (the “ Grant Date ”) is made by and
between HCA Inc., a Delaware corporation (hereinafter referred to
as the “ Company ”), and the individual whose
name is set forth on the signature page hereof, who is an employee
of the Company or a Subsidiary or Affiliate of the Company,
hereinafter referred to as the “ Optionee ”. Any
capitalized terms herein not otherwise defined in Article I
shall have the meaning set forth in the 2006 Stock Incentive Plan
for Key Employees of HCA Inc. and its Affiliates (the “
Plan ”).
WHEREAS,
the Company wishes to carry out the Plan, the terms of which are
hereby incorporated by reference and made a part of this Agreement;
and
WHEREAS,
the Compensation Committee of the Board of Directors of the Company
(or, if no such committee is appointed, the Board of Directors of
the Company) (the “ Committee ”) has determined
that it would be to the advantage and best interest of the Company
and its shareholders to grant the Option provided for herein to the
Optionee as an incentive for increased efforts during his term of
office with the Company or its Subsidiaries or Affiliates, and has
advised the Company thereof and instructed the undersigned officers
to issue said Option;
NOW,
THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto do hereby agree as
follows:
Whenever
the following terms are used in this Agreement, they shall have the
meaning specified below unless the context clearly indicates to the
contrary.
“Base
Price” shall mean $51.00.
“Cause”
shall mean “Cause” as such term may be defined in any
employment agreement or change-in-control agreement in effect at
the time of termination of employment between the Optionee and the
Company or any of its Subsidiaries or Affiliates, or, if there is
no such employment or change-in-control agreement,
“Cause” shall mean (i) willful and continued
failure by Optionee (other than by reason of a Permanent
Disability) to perform his or her material duties with respect to
the Company or it Subsidiaries which continues beyond ten
(10) business days after a written demand for substantial
performance is delivered to Optionee by the Company (the
“ Cure
Period ”); (ii) willful or intentional engaging by
Optionee in material misconduct that causes material and
demonstrable injury, monetarily or otherwise, to the Company, the
Investors or their respective Affiliates; (iii) conviction of,
or a plea of nolo contendere to, a crime constituting (x) a
felony under the laws of the United States or any state thereof or
(y) a misdemeanor for which a sentence of more than six
months’ imprisonment is imposed; or (iv) willful and
material breach of the Management Stockholder’s Agreement or
related agreements, or Optionee’s engaging in any action in
breach of restrictive covenants made by Optionee under the
Management Stockholder’s Agreement or any employment or
change-in-control agreement between the Optionee and the Company or
any of its Subsidiaries, which continues beyond the Cure Period (to
the extent that, in the Board’s reasonable judgment, such
breach can be cured).
Section 1.3. Closing Date
“Closing
Date” shall have the same meaning as that term is defined in
the Merger Agreement.
Section 1.4. EBITDA Performance
Option
“EBITDA
Performance Option” shall mean the right and option to
purchase, on the terms and conditions set forth herein, all or any
part of an aggregate of the number of shares of Common Stock set
forth on the signature page hereof opposite the term EBITDA
Performance Option.
“Fiscal
Year” shall mean each of the 2009, 2010, and 2011 fiscal
years of the Company (which, for the avoidance of doubt, ends on
December 31 of any given calendar year).
“Good
Reason” shall mean “Good Reason” as such term may
be defined in any employment agreement or change-in-control
agreement in effect at the time of termination of employment
between the Optionee and the Company or any of its Subsidiaries or
Affiliates, or, if there is no such employment or change-in-control
agreement, “Good Reason” shall mean (i) (A) a
reduction in Optionee’s base salary (other than a general
reduction in base salary that affects all similarly situated
employees (defined as all employees within the same Company pay
grade as that of Optionee) in substantially the same proportions
that the Board implements in good faith after consultation with the
Chief Executive Officer (“CEO”) and Chief Operating
Officer of the Company); (B) a reduction in Optionee’s
annual incentive compensation opportunity; or (C) the
reduction of benefits payable to Optionee under the Company’s
Supplemental Executive Retirement Plan (if Optionee is a
participant in such plan), in each case other than any isolated,
insubstantial and inadvertent failure by the Company that is not in
bad faith and is cured within ten (10) business days after
Optionee gives the Company written notice of such event;
provided that the events described in (i)(A) or (i)(B) above
will not
be deemed to
give rise to Good Reason if employment is terminated, but Optionee
declines an offer of employment involving a loss of compensation of
less than 15% from a purchaser, transferee, outsourced vendor, new
operating entity or affiliated employer; (ii) a substantial
diminution in Optionee’s title, duties and responsibilities,
other than any isolated, insubstantial and inadvertent failure by
the Company that is not in bad faith and is cured within ten
(10) business days after Optionee gives the Company written
notice of such event; or (iii) a transfer of Optionee’s
primary workplace to a location that is more than twenty
(20) miles from his or her workplace as of the date of this
Agreement; provided that Good Reason shall not be deemed to
occur merely because Optionee’s willful decision to change
position or status within the Company or any of its Subsidiaries
causes one or more of the occurrences described in (i), (ii), or
(iii) to come about.
Section 1.7. Investor
Return
“Investor
Return” shall mean, on any date, as determined on a fully
diluted, per Share basis, all cash proceeds actually received by
the Investors after the Closing Date in respect of their shares of
Common Stock, including the receipt of any cash dividends or other
cash distributions thereon. The Fair Market Value of any shares of
Common Stock distributed by the Investors to their limited partners
shall be deemed to be “cash proceeds” for purposes of
this definition.
Section 1.8. Management
Stockholder’s Agreement
“Management
Stockholder’s Agreement” shall mean that certain
Management Stockholder’s Agreement between the Optionee and
the Company.
“Option”
shall mean the aggregate of the Time Option, the EBITDA Performance
Option, and the Return Performance Option granted under
Section 2.1 of this Agreement.
Section 1.10. Merger
Agreement
“Merger
Agreement” shall mean the Agreement and Plan of Merger by and
Among HCA Inc., Hercules Holdings II, LLC, and Hercules Acquisition
Corporation, dated July 24, 2006.
Section 1.11 Permanent
Disability
“Permanent
Disability” shall mean “Disability” as such term
is defined in any employment agreement between Optionee and the
Company or any of its Subsidiaries, or, if there is no such
employment agreement, “Disability” as defined in the
long-term disability plan of the Company.
“Retirement”
shall mean Optionee’s resignation (other than for Good
Reason) from service with the Company and its Service Recipients
(i) after attaining 65 years of age or (ii) after
attaining 60 years of age and completing thirty-six
(36) months of service with the Company or any Service
Recipients following the Closing Date.
Section 1.13 Return Performance
Option
“Return
Performance Option” shall mean the option to purchase, on the
terms and conditions set forth herein, all or any part of an
aggregate of the number of shares of Common Stock set forth on the
signature page hereof opposite the term Return Performance
Option.
“Secretary”
shall mean the Secretary of the Company.
“Time
Option” shall mean the right and option to purchase, on the
terms and conditions set forth herein, all or any part of an
aggregate of the number of shares of Common Stock set forth on the
signature page hereof opposite the term Time Option.
ARTICLE II
GRANT OF OPTIONS
Section 2.1. Grant of
Options
For
good and valuable consideration, on and as of the date hereof the
Company irrevocably grants to the Optionee the following Stock
Options: (a) the Time Option, (b) the EBITDA Performance
Option, and (c) the Return Performance Option, in each case on
the terms and conditions set forth in this Agreement.
Section 2.2. Exercise
Price
Subject
to Section 2.4, the exercise price of the shares of Common
Stock covered by the Option (the “Exercise Price”)
shall be as set forth on the signature page hereof.
Section 2.3. No Guarantee of
Employment
Nothing
in this Agreement or in the Plan shall confer upon the Optionee any
right to continue in the employ of the Company or any Subsidiary or
Affiliate or shall interfere with or restrict in any way the rights
of the Company and its Subsidiaries or Affiliates, which are hereby
expressly reserved, to terminate the employment of the Optionee at
any time for any reason whatsoever, with or without cause, subject
to the
applicable
provisions of, if any, the Optionee’s employment agreement
with the Company or offer letter provided by the Company to the
Optionee.
Section 2.4. Adjustments to
Option
The
Option shall be subject to the adjustment provisions of
Sections 8 and 9 of the Plan, provided , however
, that in the event of the payment of an extraordinary dividend by
the Company to its stockholders, then; first , the Exercise
Prices of the Option shall be reduced by the amount of the dividend
paid, but only to the extent the Committee determines it to be
permitted under applicable tax laws and it will not have adverse
tax consequences to the Optionee; and, if such reduction cannot be
fully effected due to such tax laws, second , the Company
shall pay to the Optionee a cash payment, on a per Share basis,
equal to the balance of the amount of the dividend not permitted to
be applied to reduce the Exercise Price of the applicable Option as
follows: (a) for each Share subject to a vested Option,
immediately upon the date of such dividend payment; and (b), for
each Share subject to an unvested Option, on the date on which such
Option becomes vested and exercisable with respect to such
Share.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1. Commencement of
Exercisability
(a) So
long as the Optionee continues to be employed by the Company or any
other Service Recipients, the Option shall become exercisable
pursuant to the following schedules:
(i)
Time Option . The Time Option shall become vested and
exercisable with respect to 1/3 of the Shares subject to such
Option on each of the first three anniversaries of the Grant
Date.
(ii)
EBITDA Performance Option . The EBITDA Performance Option
shall be eligible to become vested and exercisable as to 1/3 of the
Shares subject to such Option at the end of each of the three
Fiscal Years if the Company, on a consolidated basis, achieves its
annual EBITDA targets as set forth in Schedule A
attached hereto (each an “ EBITDA Target ”) for
the given Fiscal Year. Notwithstanding the foregoing, in
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