Community Health Systems, Inc. Amended and Restated 2000 Stock Option and Award Plan Nonqualified Stock Option Agreement (Employee)

Exhibit 10.3






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. 2000 Stock Option and Award Plan, as amended (the “Plan”)in order to provide additional incentive to certain employees, officers anddirectors 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 toone (1) year following the date of the Optionee’s death if such death occursprior to 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, thirty-three and one-third percent (33 1/3%) ofthe total number of Shares covered by the Option after the expiration of one(1) year from the Grant Date and an additional thirty-three and one-thirdpercent (33 1/3%) of the total number of Shares covered by the Option after theexpiration of each of the second and third anniversaries of the Grant Date, andeach 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 ExhibitA attached to this Agreement, or such other form as may be prescribed bythe Corporation, 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 exercisedescribed in Section 5.1 hereof shall be accompanied by the full purchaseprice for the Shares in respect of which the Option is being exercised, in cashor by check or, if indicated in the notice, such payment shall follow by checkfrom a registered 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.  In addition, an Optionmay be exercised through a registered broker-dealer pursuant to such cashlessexercise procedures which are, from time to time, deemed acceptable by theCommittee.  Any Shares transferred to theCorporation as payment of the exercise price under an Option shall be valued attheir 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 11, 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



connectionwith such exercise, (b) the Corporation shall have issued the Shares to theOptionee, and (c) the Optionee’s name shall have been entered as a shareholderof record on the books of the Corporation. Upon the occurrence of all of the foregoing events, the Optionee shallhave full voting and other ownership rights with respect to such Shares.


6.             Termination of Option. Subject to Sections 7 and 8 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 employment of the Optionee 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 employment of the Optionee 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           Ifthe employment of the Optionee is terminated by reason of death, or if theOptionee dies within three (3) months after termination as described in Section 6.1hereof the Option shall immediately become vested and exercisable and theperson or persons to whom such rights under the Option shall pass by will, orby the laws of descent or distribution may, for a period of twelve (12) monthsfollowing the Optionee’s death, exercise the Option, after which time theOption shall terminate in full.


6.4           Ifthe employment of the Optionee is terminated for Cause, the option granted tothe Optionee hereunder shall immediately terminate in full and no rightsthereunder may be exercised.


6.5           Exceptas expressly provided herein to the contrary, the Option, to the extent not yetvested and exercisable, shall terminate immediately upon the Employee’stermination of employment with the Corporation for any reason.


7.             Effect of Change of Control.


In the event of a Change in Control, the Optionshall become immediately and fully vested and exercisable and shall,notwithstanding any shorter period set forth in this Agreement, remainexercisable for a period ending not before the earlier of (x) the six (6) monthanniversary of the termination of the Optionee’s employment or (y) theexpiration of the Exercise Term.


8.             Prohibited Activities


8.1           Prohibition Against Certain Activities.  TheOptionee agrees that (a) the Optionee will not at any time during his or heremployment (other than in the course of his or her employment) with theCorporation or any Affiliate thereof, or after any termination of employment,directly or indirectly disclose or furnish to any other



personor use for the Optionee’s own or any other person’s account any confidential orproprietary knowledge or any other information which is not a matter of publicknowledge obtained during the course of his or her employment with, or otherperformance of services for (including service as a director of), theCorporation or any Affiliate thereof or any predecessor of any of theforegoing, no matter from where or in what manner the Optionee may haveacquired such knowledge or information, and the Optionee shall retain all suchknowledge and information in trust for the benefit of the Corporation, itsAffiliates and the successors and assigns of any of them, (b) the Optionee willnot at any time during his or her employment with the Corporation or anyAffiliate thereof, or for three (3) years following any termination ofemployment, directly or indirectly solicit for employment, including, withoutlimitation, recommending to any subsequent employer the solicitation foremployment of, any person who at the time of the solicitation is employed bythe Corporation or any Affiliate thereof, (c) the Optionee will not at any timeduring his or her employment with, or performance of services for (includingservice as a director of), the Corporation or any Affiliate thereof or afterany termination of employment, publish any statement or make any statement(under circumstances reasonably likely to become public or that he mightreasonably expect to become public) critical of the Corporation or anyAffiliate of the Corporation, or in any way adversely affecting or otherwisemaligning the business reputation of any of the foregoing entities, and (d) theOptionee will not breach the provisions of Section 9 hereof (any activitydescribed in clause (a), (b), (c) or (d) of this Section 8.1 being hereinreferred to as a “Prohibited Activity”).


8.2           Right to Terminate Option.  TheOptionee understands that the Corporation is granting to the Optionee an optionto purchase Shares hereunder to reward the Optionee for the Optionee’s futureefforts and loyalty to the Corporation and its Affiliates by giving theOptionee the opportunity to participate in the potential future appreciation ofthe Corporation.  Accordingly, if, at anytime during which any portion of the Option, including any exercisable portion,is outstanding (a) if the Optionee engages in any Prohibited Activity, or (b)the Optionee engages in any Competitive Activity (as hereinafter defined), or(c) the Optionee is convicted of a crime against the Corporation or any of itsAffiliates, then, in addition to any other rights and remedies available to theCorporation, the Corporation shall be entitled, at its option, to terminate theOption, including any exercisable portion thereof, which shall then be of nofurther force and effect.


The term “Competitor” shall mean any person thatcompetes either directly or indirectly through one or more Affiliates with anyof the businesses in which, at the time the Optionee’s employment isterminated, the Corporation or any of its subsidiaries is engaged.


The term “Competitive Activity” shall mean engagingin any of the following activities:  (i)serving as a director of any Competitor; (ii) directly or indirectly (x)controlling any Competitor or (y) owning any equity or debt interests in anyCompetitor (other than equity or debt interests which are publicly traded anddo not exceed 2% of the particular class of interests outstanding) (it beingunderstood that, if any such interests in any Competitor are owned by aninvestment vehicle or other entity in which the Optionee owns an equityinterest, a portion of the interests in such Competitor owned by such entityshall be attributed to the Optionee, such portion determined by applying thepercentage of the equity interest in such entity owned by the Optionee to theinterests in such Competitor owned by such entity); (iii) directly orindirectly soliciting,



diverting,taking away, appropriating or otherwise interfering with any of the customersor suppliers of the Corporation or any Affiliate of the Corporation; (iv)employment by (including serving as an officer or director of) or providingconsulting services to any Competitor; provided, however, that if theCompetitor has more than one discrete and readily distinguishable part of itsbusiness, employment by or providing consulting services to any Competitorshall be Competitive Activity only if (1) his or her employment duties are ator involving the part of the Competitor’s business that competes with any ofthe businesses conducted by the Company or any of its subsidiaries (the “CompetingOperations”), including serving in a capacity where any person at the CompetingOperations reports to the Optionee, or (2) the consulting services are providedto or involve the Competing Operations. For purposes of this definition, the term “control” means thepossession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of any Competitor, whether through theownership of equity or debt interests, by contract or otherwise.


9.             Non-Transferability.


The Option shall not be transferable other than bywill or by the laws of descent and distribution or pursuant to a domesticrelations order; provided, however, that the Option may be transferred tomembers of the Optionee’s immediate family, to trusts solely for the benefit ofsuch immediate family members and to partnerships in which such family membersand/or trusts are the only partners.  Forthis purpose, immediate family means the Optionee’s spouse, parents, children,stepchildren and grandchildren and the spouses of such parents, children,stepchildren and grandchildren.


10.           Adjustments.


In the event of a Change in Capitalization, theCommittee may make appropriate adjustments to the number and class of Shares orother stock or securities subject to this Option and the purchase price forsuch Shares or other stock or securities (an “Adjustment”).  In the event of (i) the liquidation ordissolution of the Corporation or (ii) a merger or consolidation of theCorporation (a “Transaction”), any such Adjustment may be as provided for inthe plan or agreement of liquidation, dissolution, merger orconsolidation.  If such plan or agreementdoes not expressly provide for the treatment of the Option in connection withthe Transaction, the Option shall continue in effect in accordance with itsterms and the Optionee shall be entitled to receive in respect of all Sharessubject to the Option, upon exercise of the Option, the same number and kind ofstock, securities, cash, property or other consideration that each holder ofShares was entitled to receive in the Transaction.  The Committee’s Adjustment shall be final andbinding for all purposes of the Plan and the Agreement.  No Adjustment provided for in this Section 10shall require the Corporation to issue a fractional share, and the totaladjustment with respect to this Agreement shall be limited accordingly.


11.           Withholding.


The Corporation shall have the right to deduct fromany amounts payable under this Agreement an amount equal to the federal, stateand local income taxes and other amounts as may be required by applicable lawto be withheld (the “Withholding Taxes”). If the Optionee is entitled to receive Shares upon exercise of theOption, the Optionee shall pay the Withholding Taxes to the Corporation in cashprior to the issuance of such Shares.  Insatisfaction of the Withholding Taxes, the Optionee may,



unlessthe Committee determines otherwise, elect to have withheld a portion of theShares issuable to him or her upon exercise of the Option, having an aggregateFair Market Value, equal to the Withholding Taxes.


12.           No Right to Continued Employment.


This Agreement and the Option shall not confer uponthe Optionee any right with respect to continuance of employment by theCorporation or any Affiliate thereof, nor shall it interfere in any way withthe right of the Corporation or any Affiliate thereof to terminate the Optionee’semployment at any time.


13.           Entire Agreement.


This Agreement and the Plan constitute the entireagreement, and supersede all prior agreements and understandings, oral andwritten, between the parties hereto with respect to the subject matter hereof.


14.           Execution of Agreement; Modification ofAgreement.


This Agreement may be executed in any number ofcounterparts, 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; providedthat 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.


15.           Invalidity of Provisions.


The invalidity or unenforceability of any provisionof this Agreement in any jurisdiction shall not affect the validity orenforceability of the remainder of this Agreement in that jurisdiction or thevalidity or enforceability of this Agreement, including that provision, in anyother jurisdiction.  If any provision ofthis Agreement is held unlawful or unenforceable in any respect, such provisionshall be revised or applied in a manner that renders it lawful and enforceableto the fullest extent possible.


16.           Acknowledgment.


The Optionee hereby acknowledges receipt of a copyof the Plan and agrees to be bound by all the terms and provisions thereof asthe same may be amended from time to time. The Optionee hereby acknowledges that the Optionee has reviewed the Planand this Agreement and understands his or her rights and obligations thereunderand hereunder.  The Optionee alsoacknowledges that the Optionee has been provided with such information concerningthe Corporation, the Plan and this Agreement as the Optionee and his or heradvisors have requested.


17.           Binding Effect.


This Agreement shall inure to the benefit of and bebinding upon the parties hereto and their respective heirs, legal representatives,successors and assigns.



18.           Headings.


The headings and captions contained herein are forconvenience only and shall not control or affect the meaning or construction ofany provision hereof.


19.           Resolution of Disputes.


Any dispute or disagreement which may arise under,or as a result of, or in any way relate to, the interpretation, construction orapplication of this Agreement shall be determined by the Committee in goodfaith, whose determination shall be final, binding and conclusive for allpurposes.


20.           Governing Law.


This Agreement and the rights and obligations of theparties hereto shall be governed by, and construed in accordance with, the lawsof the State of Delaware without giving effect to the principles of conflictsof laws thereof.


21.           Specific Performance.


The parties hereto acknowledge that there will be noadequate remedy at law for a violation of any of the provisions of thisAgreement and that, in addition to any other remedies which may be available;all of the provisions of this Agreement shall be specifically enforceable inaccordance with their respective terms.


22.           Notice.


All notices and other communications hereunder shallbe in writing and, unless otherwise provided herein, shall be deemed to havebeen given when received by the party to whom such notice is to be given at itsaddress set forth below, or such other address for the party as shall bespecified 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.


23.           Consent to Jurisdiction.


Each party hereby irrevocably and unconditionallyconsents to submit to the exclusive jurisdiction of the courts of the State ofTennessee and of the United States of America, in each case located in theCounty of Williamson, for any actions, suits or proceedings arising out of orrelating to this Agreement, the Option or the Plan and the transactionscontemplated hereby and thereby (“Litigation”) (and agrees not to commence anyLitigation except in any such court), and further agrees that service of process,summons, notice or document by U.S. registered mail to such party’s



respectiveaddress set forth in Section 22 hereof shall be effective service ofprocess for any Litigation brought against such party in any such court.  Each party hereby irrevocably andunconditionally waives any objection to the laying of venue of any litigationin the courts of the State of Tennessee or of the United States of America, ineach case located in the County of Williamson, and hereby further irrevocablyand unconditionally waives and agrees not to plead or claim in any such courtthat any Litigation brought in any such court has been brought in aninconvenient forum.


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











Wayne T. Smith, President and CEO












Rachel A. Seifert, Senior Vice President


Secretary and General Counsel