Amended and Restated Stock Option and Award Plan Nonqualified Stock Option Agreement (Director)

Exhibit 10.4

 

COMMUNITY HEALTH SYSTEMS, INC.

 

AMENDED AND RESTATED STOCK OPTIONAND AWARD PLAN
(DIRECTOR)

 

THIS AGREEMENT, made as of the       day of                             (the “Grant Date”), between Community Health Systems, Inc. (the “Corporation”),and                                     ,whose address is                                             (the “Optionee”).

 

WHEREAS, the Corporation has adopted the CommunityHealth Systems, Inc. Amended and Restated 2000 Stock Option and Award Plan (the“Plan”) in order to provide additional incentive to certain employees, officersand directors of the Corporation and its subsidiaries; and

 

WHEREAS, the Committee responsible foradministration of the Plan has determined to grant an option to the Optionee asprovided herein;

 

NOW THEREFORE, the parties hereto agree as follows:

 

1.             Grant of Option.

 

1.1           The Corporation hereby grants to the Optioneethe right and option (the “Option”) to purchase all or any part of an aggregateof                           (number spelled) whole Shares (such number being subject to adjustment asprovided in Section 10 hereof), on the terms and conditions set forth inthis Agreement and in the Plan, a copy of which has been provided to theOptionee.

 

1.2           This Option is not intended to qualify as anIncentive Stock Option within the meaning of Section 422 of the Code.

 

1.3.          Except as otherwise defined herein,capitalized terms used in this Agreement shall have the same definitions as setforth in the Plan.

 

2.             Purchase Price.

 

The price at which the Optionee shall be entitled topurchase Shares upon the exercise of this Option shall be $              per Share (such price being subject to adjustment as provided in Section 10hereof).

 

3.             Duration of Option.

 

The Option shall be exercisable to the extent and inthe manner provided herein for a period of 10 years from the date hereof (the “ExerciseTerm”); provided, however, that the Option may be earlier terminated asprovided in Section 6 or Section 8 hereof; provided, further, thatthe Option may, upon the death of the Optionee be later exercised for up to one(1) year following the date of the Optionee’s death if such death occurs priorto the tenth anniversary of the grant Date.

 



 

4.             Exercisability of Option.

 

Unless otherwise provided in this Agreement or thePlan, the Option shall entitle the Optionee to purchase, in whole at any timeor in part from time to time, fifty percent (50%) of the total number of Sharescovered by the Option after the expiration of one (1) year from the Grant Dateand the remaining fifty percent (50%) of the total number of Shares covered bythe Option after the expiration of the second anniversary of the Grant Date,and each such right of purchase shall be cumulative and shall continue, unlesssooner exercised or terminated as herein provided, during the remaining periodof the Exercise Term.  Any fractionalnumber of shares resulting from the application of the foregoing percentagesshall be rounded down to the next whole number of Shares.

 

5.             Manner of Exercise and Payment.

 

5.1           Notice of Exercise. Subject to the terms and conditions of this Agreement and the Plan, theOption may be exercised by delivery of written notice to the Company.  Such notice shall state that the Optionee iselecting to exercise the Option and the number of Shares in respect of whichthe Option is being exercised and shall be signed by the Optionee or by anyguardian, executor, administrator or other legal representative.  The notice shall be in the form of Exhibit Aattached to this Agreement, or such other form as may be prescribed by theCorporation from time to time.  TheCorporation may require proof satisfactory to it as to the right of such personto exercise the Option.  Not less thanone hundred (100) shares may be purchased at any one time upon any exercise ofthe Option, unless the number of Shares so purchased constitutes the totalnumber of Shares then purchasable under the Option.

 

5.2           Deliveries.  The notice of exercise describedin Section 5.1 hereof shall be accompanied by the full purchase price forthe Shares in respect of which the Option is being exercised, in cash or bycheck or, if indicated in the notice, such payment shall follow by check from aregistered broker acting as agent on behalf of the Optionee.  However, at the discretion of the Committee,the Optionee may pay the exercise price in part or in full by transferring tothe Corporation Shares owned by the Optionee for a period of six (6) months (orsuch lesser period as may be permitted by the Committee) prior to the exerciseof the Option.  Any Shares transferred tothe Corporation as payment of the exercise price under an Option shall bevalued at their Fair Market Value on the date of exercise of such Option.

 

5.3           Issuance of Shares.  Uponreceipt of notice of exercise, full payment for the Shares in respect of whichthe Option is being exercised, and subject to Section 10, the Corporationshall take such action as may be necessary under applicable law to affect theissuance to the Optionee of the number of Shares as to which such exercise wasaffected.

 

5.4           Stockholder Rights.  TheOptionee shall not be deemed to be the holder of, or to have any of the rightsof a holder with respect to any Shares subject to the Option until (a) theOption shall have been exercised in accordance with the terms of this Agreementand the Optionee shall have paid the full purchase price for the number ofShares in respect of which the Option was exercised and any withholding taxesdue in connection with such exercise, (b) the Corporation shall have issued theShares to the Optionee, and (c) the Optionee’s name shall have been entered asa shareholder of record on the books of the Corporation.  Upon the occurrence of all of the foregoing

 



 

events,the Optionee shall have full voting and other ownership rights with respect tosuch Shares.

 

6.             Termination of Option. Subject to Section 7 hereof, each Option shall terminate on thedate which is the tenth anniversary of the Grant Date (or if later, the firstanniversary of the date of the Optionee’s death if such death occurs prior tosuch tenth anniversary), unless terminated earlier as follows:

 

6.1           If the Optionee’s position as a director isterminated for any reason other than Disability, Death or for Cause, theOptionee may for a period of three (3) months after such termination exercisehis or her option to the extent, and only to the extent, that the Option orportion thereof was vested and exercisable as of the date of such termination,after which time the Option shall automatically terminate in full.

 

6.2           If the Optionee’s position as a director isterminated by reason of Disability, all of the Option shall immediately becomevested and exercisable and the Optionee may, for a period of twelve (12) monthsafter such termination, exercise his or her Option, after which time the Optionshall automatically terminate in full.

 

6.3           If the Optionee’s position as a director isterminated by reason of Death, or if the Optionee dies within three (3) monthsafter termination as described in Section 6.1 hereof the Option shallimmediately become vested and exercisable and the person or persons to whomsuch rights under the Option shall pass by will, or by the laws of descent ordistribution may, for a period of twelve (12) months following the Optionee’sdeath, exercise the Option, after which time the Option shall terminate infull.

 

6.4           If the Optionee’s position as a director isterminated for Cause, the Option granted to the Optionee hereunder shallimmediately terminate in full and no rights thereunder may be exercised.

 

6.5           Except as expressly provided herein to thecontrary, the Option, to the extent not yet vested and exercisable, shallterminate immediately upon the Optionee’s termination as a director of theCorporation for any reason.

 

7.             Effect of Change of Control.  Inthe event of a Change in Control, the Option shall become immediately and fullyvested and exercisable and shall, notwithstanding any shorter period set forthin this Agreement, remain exercisable for a period ending not before theearlier of (x) the six (6) month anniversary of the termination of the Optionee’sposition as a director or (y) the expiration of the Exercise Term.

 

8.             Non-Transferability.  TheOption shall not be transferable other than by will or by the laws of descentand distribution or pursuant to a domestic relations order; provided, however,that the Option may be transferred to members of the Optionee’s immediatefamily, to trusts solely for the benefit of such immediate family members andto partnerships in which such family members and/or trusts are the onlypartners.  For this purpose, immediatefamily means the Optionee’s spouse, parents, children, stepchildren andgrandchildren and the spouses of such persons, children, stepchildren andgrandchildren.

 



 

9.             Adjustments.  Inthe event of a Change in Capitalization, the Committee may make appropriateadjustments to the number and class of Shares or other stock or securitiessubject to this Option and the purchase price for such Shares or other stock orsecurities (an “Adjustment”).  In theevent of (i) the liquidation or dissolution of the Corporation or (ii) a mergeror consolidation of the Corporation (a “Transaction”), any such Adjustment maybe as provided for in the plan or agreement of liquidation, dissolution, mergeror consolidation.  If such plan oragreement does not expressly provide for the treatment of the Option inconnection with the Transaction, the Option shall continue in effect inaccordance with its terms and the Optionee shall be entitled to receive inrespect of all Shares subject to the Option, upon exercise of the Option, thesame number and kind of stock, securities, cash, property or otherconsideration that each holder of Shares was entitled to receive in theTransaction.  The Committee’s Adjustmentshall be final and binding for all purposes of the Plan and the Agreement.  No Adjustment provided for in this Section 9shall require the Corporation to issue a fractional share, and the totaladjustment with respect to this Agreement shall be limited accordingly.

 

10.           Withholding.  TheCorporation shall have the right to deduct form any amounts payable under thisAgreement an amount equal to the federal, state, and local income taxes andother amounts as may be required by applicable law and to be withheld (the “WithholdingTaxes”).  If the Optionee is entitled toreceive Shares upon exercise of the Option, the Optionee shall pay theWithholding Taxes to the Corporation in cash prior to the issuance of suchShares.  In satisfaction of theWithholding Taxes, the Optionee may, unless the Committee determines otherwise,elect to have withheld a portion of the Shares issuable to him or her uponexercise of the Option, having an aggregate Fair Market Value, equal to theWithholding Taxes.

 

11.           No Right to Continued Position.  ThisAgreement and the Option shall not confer upon the Optionee any right withrespect to continuance of a position on the Board of Directors of theCorporation, nor shall it interfere in any way with the right of theCorporation to terminate the Optionee’s board position as provided under theCorporation’s Bylaws, as amended from time to time.

 

12.           Entire Agreement.  ThisAgreement and the Plan constitute the entire agreement, and supersede all prioragreements and understandings, oral and written, between the parties heretowith respect to the subject matter hereof.

 

13.           Execution of Agreement; Modification ofAgreement.  This Agreement may be executed in any numberof counterparts, each of which shall be deemed to be an original and whichtogether shall constitute one and the same instrument.  This Agreement may be modified, amended,supplemented or terminated by written agreement of the parties hereto; provided,that the Corporation may modify, amend, supplement or terminate this Agreementin a writing signed by the Corporation without any further action by theOptionee if such modification, amendment, supplement or termination does notadversely affect the Optionee’s rights hereunder.

 

14.           Invalidity of Provisions.  Theinvalidity or unenforceability of any provision of this Agreement in anyjurisdiction shall not affect the validity or enforceability of the remainderof this Agreement in that jurisdiction or the validity or enforceability ofthis Agreement, including that provision, in any other jurisdiction.  If any provision of this Agreement is heldunlawful or unenforceable in any respect, such provision shall be

 



 

revisedor applied in a manner that renders it lawful and enforceable to the fullestextent possible.

 

15.           Acknowledgment.  TheOptionee hereby acknowledges receipt of a copy of the Plan and agrees to bebound by all the terms and provisions thereof as the same may be amended fromtime to time.  The Optionee herebyacknowledges that the Optionee has reviewed the Plan and this Agreement andunderstands his or her rights and obligations thereunder and hereunder.  The Optionee also acknowledges that theOptionee has been provided with such information concerning the Corporation,the Plan and this Agreement as the Optionee and his or her advisors haverequested.

 

16.           Binding Effect.  ThisAgreement shall inure to the benefit of and be binding upon the parties heretoand their respective heirs, legal representatives, successors and assigns.

 

17.           Headings.  The headings and captionscontained herein are for convenience only and shall not control or affect themeaning or construction of any provision hereof.

 

18.           Resolution of Disputes.  Anydispute or disagreement which may arise under, or as a result of, or in any wayrelate to, the interpretation, construction or application of this Agreementshall be determined by the Committee in good faith, whose determination shallbe final, binding and conclusive for all purposes.

 

19.           Governing Law.  ThisAgreement and the rights and obligations of the parties hereto shall begoverned by, and construed in accordance with, the laws of the State ofDelaware without giving effect to the principles of conflicts of laws thereof.

 

20.           Specific Performance.  Theparties hereto acknowledge that there will be no adequate remedy at law for aviolation of any of the provisions of this Agreement and that, in addition toany other remedies which may be available, all of the provisions of thisAgreement shall be specifically enforceable in accordance with their respectiveterms.

 

21.           Notice.  All notices and othercommunications hereunder shall be in writing and, unless otherwise providedherein, shall be deemed to have been given when received by the party to whomsuch notice is to be given at its address set forth below, or such otheraddress for the party as shall be specified by notice given pursuant hereto:

 

(a)           If to the Corporation, by regular mail, to:

Community Health Systems, Inc.

155 Franklin Road

Suite 400

Brentwood, TN 37027

Attention: General Counsel

 

(b)           If to the Optionee or his or her legalrepresentative, to such person at the address as reflected in the records ofthe Corporation.

 



 

22.           Consent to Jurisdiction.  Eachparty hereby irrevocably and unconditionally consents to submit to theexclusive jurisdiction of the courts of the State of Tennessee and of theUnited States of America, in each case located in the County of Williamson, forany actions, suits or proceedings arising out of or relating to this Agreement,the Option or the Plan and the transactions contemplated hereby and thereby (“Litigation”)(and agrees not to commence any Litigation except in any such court), andfurther agrees that service of process, summons, notice or document by U.S.registered mail to such party’s respective address set forth in Section 22hereof shall be effective service of process for any Litigation brought againstsuch party in any such court.  Each partyhereby irrevocably and unconditionally waives any objection to the laying ofvenue of any Litigation in the courts of the State of Tennessee or of theUnited States of America, in each case located in the County of Williamson, andhereby further irrevocable and unconditionally waives and agrees not to pleador claim in any such court that any Litigation brought in any such court hasbeen brought in an inconvenient forum.

 

IN WITNESS WHEREOF, the parties have executed thisAgreement as of the date first above written.

 

 

COMMUNITY HEALTH SYSTEMS, INC.

 

 

 

 

 

 

 

Wayne T. Smith, President and CEO

 

 

 

 

Attest:

 

 

 

 

 

 

 

 

Rachel A. Seifert, Senior Vice President,

 

Secretary and General Counsel