Exhibit 10.8
AMERICA
1998 LONG-TERM INCENTIVE PLAN
AMERICA
1998 LONG-TERM INCENTIVE PLAN
Table of Contents
1. Purpose of the Plan............................................... 1
2. Definitions....................................................... 1
(a) Award........................................................ 1
(b) Award Agreement.............................................. 1
(c) Board........................................................ 1
(d) Change in Control............................................ 1
(e) Code......................................................... 1
(f) Columbia/HCA................................................. 1
(g) Committee.................................................... 1
(h) Common Stock................................................. 2
(i) Corporation.................................................. 2
(j) Date of Grant................................................ 2
(k) Dividend Equivalent Award.................................... 2
(l) Effective Date............................................... 2
(m) Eligible Person.............................................. 2
(n) Employee..................................................... 2
(o) Fair Market Value............................................ 2
(p) Incentive Stock Option....................................... 2
(q) Non-qualified Stock Option................................... 2
(r) Option....................................................... 2
(s) Participant.................................................. 2
(t) Phantom Stock Award.......................................... 3
(u) Plan......................................................... 3
(v) Performance Award............................................ 3
(w) Restricted Stock Award....................................... 3
(x) Section 162(m)............................................... 3
(y) Section 162(m) Award......................................... 3
(z) Stock Appreciation Right..................................... 3
(aa) Subsidiary................................................... 3
3. Shares of Common Stock Subject to the Plan........................ 3
3.1. Number of Shares............................................. 3
3.2. Adjustments.................................................. 4
4. Administration of the Plan........................................ 4
4.1. Committee Members............................................ 4
4.2. Discretionary Authority...................................... 4
4.3. Changes to Awards............................................ 4
5. Eligibility and Awards............................................ 5
6. Stock Options..................................................... 5
6.1. Grant of Option.............................................. 5
i
6.2. Exercise Price............................................ 5
6.3. Vesting; Term of Option................................... 5
6.4. Option Exercise; Withholding.............................. 5
6.5. Limited Transferability of Non-qualified Options.......... 6
6.6. Additional Rules for Incentive Stock Options.............. 6
(a) Annual Limits........................................ 6
(b) Termination of Employment............................ 6
(c) Other Terms and Conditions; Nontransferability....... 6
(d) Disqualifying Dispositions........................... 7
6.7. Restrictions on Transfer of Stock......................... 7
7. Stock Appreciation Rights........................................ 7
7.1. Grant of SARs............................................. 7
7.2. Tandem SARs............................................... 7
7.3. Freestanding SARs......................................... 7
7.4. Payment of SARs........................................... 8
8. Restricted Stock Award........................................... 8
8.1. Grant of Restricted Stock Awards.......................... 8
8.2. Vesting Requirements...................................... 8
8.3. Restrictions.............................................. 8
8.4. Rights as Shareholder..................................... 8
8.5. Section 83(b) Election.................................... 9
9. Performance Awards............................................... 9
9.1. Grant of Performance Awards............................... 9
9.2. Payment of Performance Awards............................. 9
9.3. Performance Criteria...................................... 9
9.4. Section 162(m) Requirements............................... 10
10. Phantom Stock Award.............................................. 10
10.1. Grant of Phantom Stock Awards............................. 10
10.2. Payment of a Phantom Stock Awards......................... 10
11. Dividend Equivalent Award........................................ 10
11.1. Grant of a Dividend Equivalent Awards..................... 10
11.2. Payment of Dividend Equivalent Awards..................... 11
12. Change in Control................................................ 11
12.1. Effect of Change in Control............................... 11
12.2. Definition of Change in Control........................... 11
13. Award Agreements................................................. 13
13.1. Form of Agreement......................................... 13
13.2. Forfeiture Events......................................... 13
14. General Provisions............................................... 13
ii
14.1. No Assignment or Transfer; Beneficiaries................ 13
14.2. Deferrals of Payment..................................... 14
14.3. Rights as Shareholder.................................... 14
14.4. Employment or Service.................................... 14
14.5. Securities Laws.......................................... 14
14.6. Tax Withholding.......................................... 14
14.7. Unfunded Plan............................................ 14
14.8. Other Compensation and Benefit Plans..................... 15
14.9. Plan Binding on Transferees.............................. 15
14.10. Construction and Interpretation.......................... 15
14.11. Severability............................................. 15
14.12. Governing Law............................................ 15
15. Effective Date, Termination and Amendment........................ 15
15.1. Establishment of the Plan................................. 15
15.2. Effective Date; Shareholder Approval...................... 15
15.3. Termination............................................... 16
15.4. Amendment................................................. 16
iii
AMERICA
1998 LONG-TERM INCENTIVE PLAN
1. Purpose of the Plan
The purpose of the America 1998 Long-Term Incentive Plan is to promote the
interests of the Corporation and its shareholders by strengthening the
Corporation's ability to attract, motivate, and retain personnel upon whose
judgment, initiative, and efforts the financial success and growth of the
business of the Corporation largely depend, to offer such personnel additional
incentives to put forth maximum efforts for the success of the business, and to
afford them an opportunity to acquire a proprietary interest in the Corporation
through stock ownership and other rights.
2. Definitions
Wherever the following capitalized terms are used in this Plan, they shall
have the meanings specified below:
(a) "Award" means an award of an Option, Restricted Stock Award, Stock
Appreciation Right, Performance Award, Phantom Stock Award or Dividend
Equivalent Award granted under the Plan.
(b) "Award Agreement" means an agreement entered into between the
Corporation and a Participant setting forth the terms and conditions of an Award
granted to a Participant.
(c) "Board" means the Board of Directors of the Corporation; provided,
--------
however, that with regard to any action to be taken prior to the first
- -------
meeting of the Board of Directors of the Corporation, Board shall mean the
Board of Directors of Columbia/HCA.
(d) "Change in Control" shall have the meaning specified in Section 12
hereof.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Columbia/HCA" means the Columbia/HCA Healthcare Corporation, a
Delaware corporation.
(g) "Committee" means the committee appointed to administer the Plan and
shall consist of two or more directors of the Corporation (i) none of whom shall
be officers or employees of the Corporation, and (ii) all of whom, to the extent
deemed necessary or appropriate by the Board, shall satisfy the requirements for
an "outside director" under Section 162(m) and a "non-employee director" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934. If the Board
shall so direct, designated members of the Committee shall act as a separate
committee, which shall administer the Plan as to all Section 162(m) Awards. In
such event, all references herein to the Committee relating to Section 162(m)
Awards shall be considered to refer only to such separate committee. The members
of the Committee shall be appointed by and serve at the pleasure of the Board.
Notwithstanding the foregoing, prior to the first meeting of the Board of
Directors of the Corporation, Committee shall mean a committee of two or more
1
Directors of Columbia/HCA appointed to administer the plan (i) none of whom
shall be officers or employees of Columbia/HCA, and (ii) all of whom, to the
extent deemed necessary or appropriate by the Board of Columbia/HCA, shall
satisfy the requirements for an "outside director" under Section 162(m) and a
"non-employee director" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934.
(h) "Common Stock" means the common stock of the Corporation.
(i) "Corporation" means America, a Delaware corporation.
(j) "Date of Grant" means the date on which an Award under the Plan is made
by the Committee, or such later date as the Committee may specify to be the
effective date of the Award.
(k) "Dividend Equivalent Award" means an Award under Section 11 hereof
entitling the Participant to receive payments with respect to dividends declared
on the Common Stock.
(l) "Effective Date" means the Effective Date of this Plan, as defined in
Section 15.2 hereof.
(m) "Eligible Person" means any person who is an Employee of the
Corporation or any of its Subsidiaries and, in the case of Awards other than
Incentive Stock Options, any consultant or other independent contractor (not
including any non-employee outside director) providing services to the
Corporation or a Subsidiary.
(n) "Employee" means any person who is employed as a common-law employee.
(o) "Fair Market Value" of a share of Common Stock as of a given date means
the closing sales price of the Common Stock on the New York Stock Exchange as
reflected on the composite index on the trading day immediately preceding the
date as of which Fair Market Value is to be determined, or in the absence of any
reported sales of Common Stock on such date, on the first preceding date on
which any such sale shall have been reported. If the Common Stock is not listed
on the New York Stock Exchange on the date as of which Fair Market Value is to
be determined, the Committee shall determine in good faith the Fair Market Value
in whatever manner it considers appropriate.
(p) "Incentive Stock Option" means an option to purchase Common Stock that
is intended to qualify as an incentive stock option under section 422 of the
Code and the Treasury Regulations thereunder.
(q) "Non-qualified Stock Option" means an option to purchase Common Stock
that is not an Incentive Stock Option.
(r) "Option" means an Incentive Stock Option or a Non-qualified Stock
Option granted under Section 6 hereof.
(s) "Participant" means any Eligible Person who holds an outstanding Award
under the Plan.
2
(t) "Phantom Stock Award" means an Award under Section 10 hereof entitling
a Participant to a payment at the end of a vesting period of a unit value based
on the Fair Market Value of a share of Common Stock.
(u) "Plan" means the America 1998 Long-Term Incentive Plan as set forth
herein, as it may be amended from time to time.
(v) "Performance Award" means an Award under Section 9 hereof entitling a
Participant to a payment based on the Fair Market Value of a share of Common
Stock (a "Performance Share") or based on specified dollar units (a "Performance
Unit") at the end of a performance period, if certain conditions established by
the Committee are satisfied.
(w) "Restricted Stock Award" means an Award under Section 8 hereof
entitling a Participant to shares of Common Stock that are nontransferable and
subject to forfeiture until specific conditions established by the Committee are
satisfied.
(x) "Section 162(m)" means section 162(m) of the Code and the Treasury
Regulations thereunder.
(y) "Section 162(m) Award" means any Award that is intended to qualify for
the performance-based compensation exemption under Section 162(m).
(z) "Stock Appreciation Right" or "SAR" means an Award under Section 7
hereof entitling a Participant to receive an amount, representing the difference
between the base price per share of the right and the Fair Market Value of a
share of Common Stock on the date of exercise.
(aa) "Subsidiary" means an entity (whether or not a corporation) that is
wholly or majority owned or controlled, directly or indirectly, by the
Corporation, or any other affiliate of the Corporation that is so designated,
from time to time, by the Committee; provided, however, that with respect to
-------- -------
Incentive Stock Options, the term "Subsidiary" shall include only an entity that
qualifies under section 424(f) of the Code as a "subsidiary corporation" with
respect to the Corporation.
3. Shares of Common Stock Subject to the Plan
3.1. Number of Shares. Subject to the following provisions of this
----------------
Section 3, the aggregate number of shares of Common Stock that may be issued
pursuant to all Awards under the Plan is ___________ shares of Common Stock. The
shares of Common Stock to be delivered under the Plan will be made available
from authorized but unissued shares of Common Stock or issued shares that have
been reacquired by the Corporation. To the extent that any Award payable in
Common Stock is forfeited, cancelled, returned to the Corporation for failure to
satisfy vesting requirements or upon the occurrence of other forfeiture events,
or otherwise terminates without payment being made thereunder, shares of Common
Stock covered thereby will no longer be charged against the foregoing maximum
share limitations and may again be made subject to Awards under the Plan
pursuant to such limitations.
3
3.2. Adjustments. If there shall occur any recapitalization,
-----------
reclassification, stock dividend, stock split, reverse stock split, or other
distribution with respect to the shares of Common Stock, or other change in
corporate structure affecting the Common Stock, the Committee may, in the manner
and to the extent that it deems appropriate and equitable to the Participants
and consistent with the terms of this Plan, cause an adjustment to be made in
(i) the maximum number and kind of shares provided in Section 3.1 hereof, (ii)
the maximum number and kind of shares set forth in Sections 6.1, 7.1, 8.1 and
9.4 hereof, (iii) the number and kind of shares of Common Stock, share units, or
other rights subject to then outstanding Awards, (iv) the price for each share
or unit or other right subject to then outstanding Awards, (v) the performance
targets or goals applicable to any outstanding Performance Awards (subject to
such limitations as are considered appropriate for Section 162(m) Awards), or
(vi) any other terms of an Award that are affected by the event. Notwithstanding
the foregoing, in the case of Incentive Stock Options, any such adjustments
shall be made in a manner consistent with the requirements of section 424(a) of
the Code and, to the extent considered advisable by the Committee, in a manner
consistent with the requirements of Section 162(m).
4. Administration of the Plan
4.1. Committee Members. The Plan shall be administered by the Committee.
-----------------
The Committee shall have such powers and authority as may be necessary or
appropriate for the Committee to carry out its functions as described in the
Plan. No member of the Committee shall be liable for any action or determination
made in good faith by the Committee with respect to the Plan or any Award
thereunder.
4.2. Discretionary Authority. Subject to the express limitations of the
-----------------------
Plan, the Committee shall have authority in its discretion to determine the
Eligible Persons to whom, and the time or times at which, Awards may be granted,
the number of shares, units or other rights subject to each Award, the exercise,
base or purchase price of an Award (if any), the time or times at which an Award
will become vested, exercisable or payable, the performance criteria,
performance goals and other conditions of an Award, the duration of the Award,
and all other terms of the Award. The Committee shall also have discretionary
authority to interpret the Plan, to make all factual determinations under the
Plan, and to make all other determinations necessary or advisable for Plan
administration. The Committee may prescribe, amend, and rescind rules and
regulations relating to the Plan. All interpretations, determinations, and
actions by the Committee shall be final, conclusive, and binding upon all
parties.
4.3. Changes to Awards. The Committee shall have the authority to effect,
-----------------
at any time and from time to time, (i) the cancellation of any or all
outstanding Awards and the grant in substitution therefor of new Awards covering
the same or different numbers of shares of Common Stock and having an exercise
or base price which may be the same as or different than the exercise or base
price of the cancelled Awards, or (ii) the amendment of the terms of any and all
outstanding Awards; provided, however, that no such action by the Committee may
-------- -------
adversely impair the rights of a Participant (or any permitted transferee) under
any outstanding Award without the consent of the Participant (or transferee).
The Committee may in its discretion accelerate the vesting or exercisability of
an Award at any time or on the basis of any specified event.
4
5. Eligibility and Awards
All Eligible Persons are eligible to be designated by the Committee to
receive an Award under the Plan. The Committee has authority, in its sole
discretion, to determine and designate from time to time those Eligible Persons
who are to be granted Awards, the types of Awards to be granted and the number
of shares or units subject to the Awards that are granted under the Plan. Each
Award will be evidenced by an Award Agreement between the Corporation and the
Participant that shall include such terms and conditions (consistent with the
Plan) as the Committee may determine; provided, however, that failure to issue
-------- -------
an Award Agreement shall not invalidate an Award.
6. Stock Options
6.1. Grant of Option. An Option may be granted to any Eligible Person
---------------
selected by the Committee; provided, however, that only Employees of the
-------- -------
Corporation or a Subsidiary shall be eligible to receive Incentive Stock
Options. Subject to the applicable provisions of section 422 of the Code, each
Option shall be designated, in the discretion of the Committee, as an Incentive
Stock Option or a Non-qualified Stock Option. The maximum number of shares of
Common Stock that may be granted under Options to any Participant during any
calendar year shall be limited to _______ shares (subject to adjustment as
provided in Section 3.2 hereof).
6.2. Exercise Price. The exercise price under any Option shall be
--------------
determined by the Committee; provided, however, that the exercise price per
-------- -------
share under an Option shall not be less than 100 percent of the Fair Market
Value per share of the Common Stock on the Date of Grant.
6.3. Vesting; Term of Option. The Committee, in its sole discretion, shall
-----------------------
prescribe the time or times at which, or the conditions upon which, an Option or
portion thereof shall become vested and exercisable, and may accelerate the
exercisability of any Option at any time. The period during which a vested
Option may be exercised shall be ten years from the Date of Grant, unless a
shorter exercise period is specified by the Committee in an Award, subject to
such limitations as may apply under an Award relating to the termination of a
Participant's employment or other service with the Corporation or any
Subsidiary.
6.4. Option Exercise; Withholding. Subject to such terms and conditions as
----------------------------
shall be specified in an Award, an Option may be exercised in whole or in part
at any time during the term thereof by written notice to the Corporation,
together with payment of the aggregate exercise price therefor. Payment of the
exercise price shall be made (i) in cash or by cash equivalent, (ii) at the
discretion of the Committee, in shares of Common Stock acceptable to the
Committee, valued at the Fair Market Value of such shares on the date of
exercise, (iii) at the discretion of the Committee, by a delivery of a notice
that the Participant has placed a market sell order (or similar instruction)
with a broker with respect to shares of Common Stock then issuable upon exercise
of the Option, and that the broker has been directed to pay a sufficient portion
of the net proceeds of the sale to the Corporation in satisfaction of the Option
exercise price (conditioned upon the payment of such net proceeds), (iv) at the
discretion of the Committee, by a combination of the methods described above, or
(v) by such other method as may be approved by the Committee and set forth in
the Award. In addition to and at the time of payment of the exercise price, the
Participant shall pay to the Corporation the full amount of any and all
5
applicable income tax and employment tax amounts required to be withheld in
connection with such exercise, payable under such of the methods described above
for the payment of the exercise price of the Options as may be approved by the
Committee.
6.5. Limited Transferability of Non-qualified Options. Solely to the extent
------------------------------------------------
permitted by the Committee in an Award and subject to such terms and conditions
as the Committee shall specify (which may, in the Committee's discretion,
include a requirement that the Option be vested), a Non-qualified Stock Option
(but not an Incentive Stock Option) may be transferred to members of the
Participant's immediate family (as determined by the Committee) or to trusts,
partnerships, or corporations whose beneficiaries, members, or owners are
members of the Participant's immediate family, and/or to such other persons or
entities as may be approved by the Committee in advance and set forth in an
Award, in each case subject to the condition that the Committee be satisfied
that such transfer is being made for estate or tax planning purposes or for
gratuitous or donative purposes, without consideration (other than nominal
consideration) being received therefor. Except to the extent permitted by the
Committee in accordance with the foregoing, an Option shall be nontransferable
otherwise than by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of a Participant only by such Participant.
6.6. Additional Rules for Incentive Stock Options.
--------------------------------------------
(a) Annual Limits. No Incentive Stock Option shall be granted to a
-------------
Participant as a result of which the aggregate Fair Market Value (determined as
of the Date of Grant) of the stock with respect to which Incentive Stock Options
are exercisable for the first time in any calendar year under the Plan and any
other stock option plans of the Corporation, any Subsidiary, or any parent
corporation, would exceed the maximum amount permitted under section 422(d) of
the Code. This limitation shall be applied by taking Options into account in the
order in which granted.
(b) Termination of Employment. An Award of an Incentive Stock Option may
-------------------------
provide that such Option may be exercised not later than 3 months following
termination of employment of the Participant with the Corporation and all
Subsidiaries, subject to special rules relating to death and disability, as and
to the extent determined by the Committee to be appropriate with regard to the
requirements of section 422 of the Code and Treasury Regulations thereunder.
(c) Other Terms and Conditions; Nontransferability. Any Incentive Stock
----------------------------------------------
Option granted hereunder shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as are deemed necessary or desirable
by the Committee, which terms, together with the terms of this Plan, shall be
intended and interpreted to cause such Incentive Stock Option to qualify as an
"incentive stock option" under section 422 of the Code. Such terms shall
include, if applicable, limitations on Incentive Stock Options granted to ten-
percent owners of the Corporation. An Award Agreement for an Incentive Stock
Option may provide that such Option shall be treated as a Non-qualified Stock
Option to the extent that certain requirements applicable to "incentive stock
options" under the Code shall not be satisfied. An Incentive Stock Option shall
by its terms be nontransferable otherwise than by will or by the laws of descent
and distribution, and shall be exercisable during the lifetime of a Participant
only by such Participant.
6
(d) Disqualifying Dispositions. If shares of Common Stock acquired by
--------------------------
exercise of an Incentive Stock Option are disposed of within two years following
the Date of Grant or one year following the transfer of such shares to the
Participant upon exercise, the Participant shall, promptly following such
disposition, notify the Corporation in writing of the date and terms of such
disposition and provide such other information regarding the disposition as the
Committee may reasonably require.
6.7. Restrictions on Transfer of Stock. The Committee may, in its sole
---------------------------------
discretion, impose in any Award of an Option restrictions on the transferability
of the shares of Common Stock issued upon exercise of such Option. If any such
restrictions are imposed, the Committee may require the Participant to enter
into an escrow agreement providing that the certificates representing the shares
subject to such transfer restrictions will remain in the physical custody of an
escrow holder until such restrictions are removed or have expired. The
Committee may require that certificates representing the shares subject to such
restrictions bear a legend making appropriate reference to the restrictions
imposed. Subject to any restrictions imposed in accordance with this Section
6.7, the Participant will have all rights of a shareholder with respect to any
such shares acquired upon an Option exercise, including the right to vote the
shares and receive all dividends and other distributions paid or made with
respect thereto.
7. Stock Appreciation Rights
7.1. Grant of SARs. A Stock Appreciation Right granted to a Participant is
-------------
an Award in the form of a right to receive, upon surrender of the right but
without other payment, an amount based on appreciation in the Fair Market Value
of the Common Stock over a base price established for the Award, exercisable at
such time or times and upon conditions as may be approved by the Committee. The
maximum number of shares of Common Stock that may be subject to SARs granted to
any Participant during any calendar year shall be limited to ____________ shares
(subject to adjustment as provided in Section 3.2 hereof).
7.2. Tandem SARs. A Stock Appreciation Right may be granted in connection
-----------
with an Option, either at the time of grant or at any time thereafter during the
term of the Option. An SAR granted in connection with an Option will entitle the
holder, upon exercise, to surrender such Option or any portion thereof to the
extent unexercised, with respect to the number of shares as to which such SAR is
exercised, and to receive payment of an amount computed as described in Section
7.4 hereof. Such Option will, to the extent and when surrendered, cease to be
exercisable. An SAR granted in connection with an Option hereunder will have a
base price per share equal to the per share exercise price of the Option, will
be exercisable at such time or times, and only to the extent, that a related
Option is exercisable, and will expire no later than the related Option expires.
7.3. Freestanding SARs. A Stock Appreciation Right may be granted
-----------------
without any related Option, and in such case, will be exercisable as determined
by the Committee, but in no event after 10 years from the Date of Grant. The
base price of an SAR granted without any related Option shall be determined by
the Committee in its sole discretion; provided, however, that the base price per
-------- -------
share of any such freestanding SAR shall not be less than 100 percent of the
Fair Market Value of the Common Stock on the Date of Grant.
7
7.4. Payment of SARs. An SAR will entitle the holder, upon exercise of
---------------
the SAR, to receive payment of an amount determined by multiplying: (i) the
excess of the Fair Market Value of a share of Common Stock on the date of
exercise of the SAR over the base price of such SAR, by (ii) the number of
shares as to which such SAR is exercised. Payment of the amount determined under
the foregoing may be made, in the discretion of the Committee, in cash, in
shares of Common Stock valued at their Fair Market Value on the date of
exercise, or in a combination of cash and shares of Common Stock.
8. Restricted Stock Award
8.1. Grant of Restricted Stock Awards. An Award of Restricted Stock to a
--------------------------------
Participant represents shares of Common Stock that are issued subject to such
restrictions on transfer and other incidents of ownership and such forfeiture
conditions as the Committee may determine. The Committee may, in connection
with any Restricted Stock Award, require the payment of a specified purchase
price. The Committee may grant a Restricted Stock Award that is a Section
162(m) Award (as described in Section 8.2 below), as well as Restricted Stock
Awards that are not Section 162(m) Awards; provided, however, that the maximum
-------- -------
number of shares of Common Stock that may be subject to a Restricted Stock Award
granted to a Participant during any one calendar year shall be separately
limited to __________ shares (subject to adjustment as provided in Section 3.2
hereof).
8.2. Vesting Requirements. The restrictions imposed on shares granted
--------------------
under a Restricted Stock Award shall lapse in accordance with the vesting
requirements specified by the Committee in the Award Agreement. Such vesting
requirements may be based on the continued employment of the Participant with
the Corporation or its Subsidiaries for a specified time period or periods,
provided that any such restriction shall not be scheduled to lapse in its
entirety earlier than the first anniversary of the Date of Grant. Such vesting
requirements may also be based on the attainment of specified business goals or
measures established by the Committee in its sole discretion. In the case of any
Restricted Stock Award that is a Section 162(m) Award, any such performance-
based vesting requirements shall be based upon the performance criteria
identified in Section 9.3 below, and the terms of the Award shall otherwise
comply with the Section 162(m) requirements described in Section 9.4 hereof.
8.3. Restrictions. Shares granted under any Restricted Stock Award may
------------
not be transferred, assigned or subject to any encumbrance, pledge, or charge
until all applicable restrictions are removed or have expired, unless otherwise
allowed by the Committee. The Committee may require the Participant to enter
into an escrow agreement providing that the certificates representing the shares
granted or sold under a Restricted Stock Award will remain in the physical
custody of an escrow holder until all restrictions are removed or have expired.
Failure to satisfy any applicable restrictions shall result in the subject
shares of the Restricted Stock Award being forfeited and returned to the
Corporation, with any purchase price paid by the Participant to be refunded,
unless otherwise provided by the Committee. The Committee may require that
certificates representing the shares granted under a Restricted Stock Award bear
a legend making appropriate reference to the restrictions imposed.
8.4. Rights as Shareholder. Subject to the foregoing provisions of this
---------------------
Section 8 and the applicable Award Agreement, the Participant will have all
rights of a shareholder with
8
respect to the shares granted to him under a Restricted Stock Award, including
the right to vote the shares and receive all dividends and other distributions
paid or made with respect thereto, unless the Committee determines otherwise at
the time the Restricted Stock Award is granted.
8.5. Section 83(b) Election. The Committee may provide in an Award
----------------------
Agreement that the Restricted Stock Award is conditioned upon the Participant's
refraining from making an election with respect to the Award under section 83(b)
of the Code. Irrespective of whether an Award is so conditioned, if a
Participant makes an election pursuant to section 83(b) of the Code with respect
to a Restricted Stock Award, the Participant shall be required to promptly file
a copy of such election with the Corporation.
9. Performance Awards
9.1. Grant of Performance Awards. The Committee may grant Performance
---------------------------
Awards under the Plan, which shall be represented by units denominated on the
Date of Grant either in shares of Common Stock (Performance Shares) or in
dollars (Performance Units). The Committee may grant Performance Awards that are
Section 162(m) Awards, as well as Performance Awards that are not Section 162(m)
Awards. At the time a Performance Award is granted, the Committee shall
determine, in its sole discretion, one or more performance periods and
performance goals to be achieved during the applicable performance periods, as
well as such other restrictions and conditions as the Committee deems
appropriate. In the case of Performance Units, the Committee shall also
determine a target unit value or a range of unit values for each Award. No
performance period shall exceed ten years from the Date of Grant. The
performance goals applicable to a Performance Award grant may be subject to such
later revisions as the Committee shall deem appropriate to reflect significant
unforeseen events, such as changes in law, accounting practices or unusual or
nonrecurring items or occurrences. The Committee's authority to make such
adjustments shall be subject to such limitations as the Committee deems
appropriate in the case of a Performance Award that is a Section 162(m) Award.
9.2. Payment of Performance Awards. At the end of the performance
-----------------------------
period, the Committee shall determine the extent to which performance goals have
been attained, or a degree of achievement between minimum and maximum levels, in
order to establish the level of payment to be made, if any, and shall determine
if payment is to be made in the form of cash or shares of Common Stock (valued
at their Fair Market Value at the time of payment) or a combination of cash and
shares of Common Stock. Payments of Performance Awards shall generally be made
as soon as practicable following the end of the performance period.
9.3. Performance Criteria. The performance criteria upon which the
--------------------
payment or vesting of a Performance Award that is a Section 162(m) Award may be
based shall be limited to one or more of the following business measures, which
may be applied with respect to the Corporation, any Subsidiary or any business
unit, and which may be measured on an absolute or relative to peer-group basis:
(i) total shareholder return, (ii) stock price increase, (iii) return on equity,
(iv) return on capital, (v) earnings per share, (vi) EBIT (earnings before
interest and taxes), and (vii) cash flow (including operating cash flow, free
cash flow, discounted cash flow return on investment, and cash flow in excess of
costs of capital). In the case of Performance Awards that are not Section 162(m)
Awards, the Committee shall designate performance criteria
9
from among the foregoing or such other business criteria as it shall determine
in its sole discretion.
9.4. Section 162(m) Requirements. In the case of a Performance Award
---------------------------
that is a Section 162(m) Award, the Committee shall make all determinations
necessary to establish the terms of the Award within 90 days of the beginning of
the performance period (or such other time period as is required under Section
162(m)), including, without limitation, the designation of the Participant to
whom the Performance Award is to be made, the performance criteria or criterion
applicable to the Award and the performance goals that relate to such criteria,
and the dollar amounts or number of shares of Common Stock payable upon
achieving the applicable performance goals. As and to the extent required by
Section 162(m), the terms of a Performance Award that is a Section 162(m) Award
must state, in terms of an objective formula or standard, the method of
computing the amount of compensation payable under the Award, and must preclude
discretion to increase the amount of compensation payable under the terms of the
Award (but may give the Committee discretion to decrease the amount of
compensation payable). The maximum amount of compensation that may be payable to
a Participant during any one calendar year under a Performance Unit Award shall
be $___ million. The maximum number of Common Stock units that may be subject to
a Performance Share Award granted to a Participant during any one calendar year
shall be __________ share units (subject to adjustment as provided in Section
3.2 hereof).
10. Phantom Stock Award
10.1. Grant of Phantom Stock Awards. A Phantom Stock Award is an Award
-----------------------------
to a Participant of a number of hypothetical share units with respect to shares
of Common Stock, with an initial value based on the Fair Market Value of the
Common Stock on the Date of Grant. A Phantom Stock Award shall be subject to
such restrictions and conditions as the Committee shall determine. On the Date
of Grant, the Committee shall determine, in its sole discretion, the installment
or other vesting period of the Phantom Stock Award and the maximum value of the
Phantom Stock Award, if any. No vesting period shall exceed 10 years from the
Date of Grant. A Phantom Stock Award may be granted, at the discretion of the
Committee, together with a Dividend Equivalent Award covering the same number of
shares.
10.2. Payment of a Phantom Stock Awards. Upon the vesting date or dates
---------------------------------
applicable to the Phantom Stock Award granted to a Participant, an amount equal
to the Fair Market Value of one share of Common Stock upon such vesting dates
(subject to any applicable maximum value) shall be paid with respect to each
Phantom Stock Award unit granted to the Participant. Payment may be made, at
the discretion of the Committee, in cash or in shares of Common Stock valued at
their Fair Market Value on the applicable vesting dates, or in a combination
thereof.
11. Dividend Equivalent Award
11.1. Grant of a Dividend Equivalent Awards. A Dividend Equivalent Award
-------------------------------------
granted to a Participant is an Award in the form of a right to receive cash
payments determined by reference to dividends declared on the Common Stock from
time to time during the term of the Award, which shall not exceed 10 years from
the Date of Grant. Dividend Equivalent Awards may be granted on a stand-alone
basis or in tandem with other Awards. Dividend Equivalent
10
Awards granted on a tandem basis shall expire at the time the underlying Award
is exercised or otherwise becomes payable to the Participant, or expires.
11.2. Payment of Dividend Equivalent Awards. Dividend Equivalent Awards
-------------------------------------
shall be payable in cash or in shares of Common Stock, valued at their Fair
Market Value on either the date the related dividends are declared or the date
the Dividend Equivalent Awards are paid to a Participant, as determined by the
Committee. Dividend Equivalent Awards shall be payable to a Participant as soon
as practicable following the time dividends are declared and paid with respect
to the Common Stock, or at such later date as the Committee shall specify in the
Award Agreement. Dividend Equivalent Awards granted with respect to Options
intended to qualify as a Section 162(m) Award shall be payable regardless of
whether the Option is exercised.
12. Change in Control
12.1. Effect of Change in Control. The Committee may, in an Award
---------------------------
Agreement, provide for the effect of a Change in Control on an Award. Such
provisions may include any one or more of the following: (i) the acceleration or
extension of time periods for purposes of exercising, vesting in, or realizing
gain from any Award, (ii) the elimination or modification of performance or
other conditions related to the payment or other rights under an Award, (iii)
provision for the cash settlement of an Award for an equivalent cash value, as
determined by the Committee, or (iv) such other modification or adjustment to an
Award as the Committee deems appropriate to maintain and protect the rights and
interests of Participants upon or following a Change in Control.
12.2. Definition of Change in Control. For purposes hereof, a "Change in
-------------------------------
Control" shall be deemed to have occurred upon the occurrence of any of the
following after the date on which the Corporation becomes a publicly-held
Corporation:
(i) An acquisition (other than directly from the Corporation) of
any voting securities of the Corporation (the "Voting Securities") by any
"Person" (as the term Person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended (the "1934 Act"))
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty percent
(20%) or more of the combined voting power of the then outstanding Voting
Securities; provided, however, that in determining whether a Change in
-------- -------
Control has occurred, 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 Corporation or (B)
any corporation or other Person of which a majority of the voting power or
the equity securities or equity interests is owned directly or indirectly
by the Corporation (a "Control Subsidiary"), or (ii) the Corporation or any
Control Subsidiary.
(ii) The individuals who, as of the date hereof, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the Board; provided, however, that if the election or
-------- -------
nomination for election by the Corporation's stockholders of any new
director was approved by a vote of at least two-thirds of the
11
Incumbent Board, such new director shall, for purposes of this Agreement,
be considered as a member of the Incumbent Board; provided, further,
------- -------
however, that no individual shall be considered a member of the Incumbent
-------
Board if (1) such individual initially assumed office as a result of either
an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other 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 Election Contest or Proxy Contest or (2) such individual was
designated by a Person who has entered into an agreement with the
Corporation to effect a transaction described in clause (i) or (iii) of
this Section 2(c)(1); or
(iii) Consummation, after approval by stockholders of the
Corporation, of:
(1) A merger, consolidation or reorganization involving the
Corporation, unless,
(A) The stockholders of the Corporation, immediately
before such merger, consolidation or reorganization,
own, directly or indirectly immediately following such
merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power
of the outstanding Voting Securities of the corporation
resulting from such merger or consolidation or
reorganization or its parent corporation (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or
reorganization;
(B) The individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation; and
(C) No Person (other than the Corporation, any
Control Subsidiary, any employee benefit plan (or any
trust forming a part thereof) maintained by the
Corporation, the Surviving Corporation or any Control
Subsidiary, or any Person who, immediately prior to
such merger, consolidation or reorganization, had
Beneficial Ownership of twenty percent (20%) or more of
the then outstanding Voting Securities) has Beneficial
Ownership of twenty percent (20%) or more of the
combined voting power of the Surviving Corporation's
then outstanding Voting Securities.
(2) A complete liquidation or dissolution of the
Corporation; or
(3) The sale or other disposition of all or substantially
all of the assets of the Corporation to any Person
(other than a transfer to a Control
12
Subsidiary).
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 outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Corporation which, by
reducing the number of Voting Securities outstanding, increased the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Corporation, and after
such share acquisition by the Corporation, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
13. Award Agreements
13.1. Form of Agreement. Each Award under this Plan shall be evidenced by
-----------------
an Award Agreement in a form approved by the Committee setting forth the number
of shares of Common Stock, units or other rights (as applicable) subject to the
Award, the exercise, base, or purchase price (if any) of the Award, the time or
times at which an Award will become vested, exercisable or payable, the duration
of the Award, and in the case of Performance Awards, the applicable performance
criteria and goals. The Award Agreement shall also set forth other material
terms and conditions applicable to the Award as determined by the Committee
consistent with the limitations of this Plan. Award Agreements evidencing Awards
that are Section 162(m) Awards shall contain such terms and conditions as may be
necessary to meet the applicable requirements of Section 162(m). Award
Agreements evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions of section 422
of the Code.
13.2. Forfeiture Events. The Committee may specify in an Award that the
-----------------
Participant's rights, payments and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture or recoupment upon the occurrence
of certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events shall include, but shall not be
limited to, termination of employment for cause, violation of material
Corporation or Subsidiary policies, breach of noncompetition, confidentiality
or other restrictive covenants that may apply to the Participant, or other
conduct by the Participant that is detrimental to the business or reputation of
the Corporation or any Subsidiary.
14. General Provisions
14.1. No Assignment or Transfer; Beneficiaries. Except as provided in
-----------------------------------------
Section 6.5 hereof, Awards under the Plan shall not be assignable or
transferable, except by will or by the laws of descent and distribution, and
during the lifetime of a Participant, the Award shall be exercised only by such
Participant or by his guardian or legal representative. Notwithstanding the
foregoing, the Committee may provide in the terms of an Award Agreement that the
Participant shall have the right to designate a beneficiary or beneficiaries who
shall be entitled to any rights, payments or other specified under an Award
following the Participant's death.
13
14.2. Deferrals of Payment. Notwithstanding any other provisions of
--------------------
the Plan, the Committee may permit a Participant to defer the receipt of payment
of cash or delivery of shares of Common Stock that would otherwise be due to the
Participant by virtue of the exercise of a right or the satisfaction of vesting
or other conditions with respect to an Award. If any such deferral is to be
permitted by the Committee, the Committee shall establish the rules and
procedures relating to such deferral, including, without limitation, the period
of time in advance of payment when an election to defer may be made, the time
period of the deferral and the events that would result in payment of the
deferred amount, the interest or other earnings attributable to the deferral and
the method of funding, if any, attributable to the deferred amount.
14.3. Rights as Shareholder. A Participant shall have no rights as a
---------------------
holder of Common Stock with respect to any unissued securities covered by an
Award until the date the Participant becomes the holder of record of such
securities. Except as provided in Section 3.2 hereof, no adjustment or other
provision shall be made for dividends or other shareholder rights, except to the
extent that the Award Agreement is a Dividend Equivalent Award, or otherwise
provides for dividend payments or similar economic benefits.
14.4. Employment or Service. Nothing in the Plan, in the grant of any
---------------------
Award or in any Award Agreement shall confer upon any Eligible Person the right
to continue in the capacity in which he is employed by, or otherwise serves, the
Corporation or any Subsidiary.
14.5. Securities Laws. No shares of Common Stock will be issued or
---------------
transferred pursuant to an Award unless and until all then applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any stock
exchanges upon which the Common Stock may be listed, have been fully met. As a
condition precedent to the issuance of shares pursuant to the grant or exercise
of an Award, the Corporation may require the Participant to take any reasonable
action to meet such requirements. The Committee may impose such conditions on
any shares of Common Stock issuable under the Plan as it may deem advisable,
including, without limitation, restrictions under the Securities Act of 1933, as
amended, under the requirements of any stock exchange upon which such shares of
the same class are then listed, and under any blue sky or other securities laws
applicable to such shares.
14.6. Tax Withholding. The Participant shall be responsible for
---------------
payment of any taxes or similar charges required by law to be withheld from an
Award or an amount paid in satisfaction of an Award, which shall be paid by the
Participant on or prior to the payment or other event that results in taxable
income in respect of an Award. The Award Agreement shall specify the manner in
which the withholding obligation shall be satisfied with respect to the
particular type of Award.
14.7. Unfunded Plan. The adoption of this Plan and any setting aside of
-------------
cash amounts or shares of Common Stock by the Corporation with which to
discharge its obligations hereunder shall not be deemed to create a trust or
other funded arrangement. The benefits provided under this Plan shall be a
general, unsecured obligation of the Corporation payable solely from the general
assets of the Corporation, and neither a Participant nor the Participant's
permitted transferees or estate shall have any interest in any assets of the
Corporation by virtue of this Plan, except as a general unsecured creditor of
the Corporation. Notwithstanding the foregoing, the
14
Corporation shall have the right to implement or set aside funds in a grantor
trust, subject to the claims of the Corporation's creditors, to discharge its
obligations under the Plan.
14.8. Other Compensation and Benefit Plans. The adoption of the Plan
------------------------------------
shall not affect any other stock incentive or other compensation plans in effect
for the Corporation or any Subsidiary, nor shall the Plan preclude the
Corporation from establishing any other forms of stock incentive or other
compensation for employees of the Corporation or any Subsidiary. The amount of
any compensation deemed to be received by a Participant pursuant to an Award
shall not constitute compensation with respect to which any other employee
benefits of such Participant are determined, including, without limitation,
benefits under any bonus, pension, profit sharing, life insurance or salary
continuation plan, except as otherwise specifically provided by the terms of
such plan.
14.9. Plan Binding on Transferees. The Plan shall be binding upon the
---------------------------
Corporation, its transferees and assigns, and the Participant, his executor,
administrator and permitted transferees and beneficiaries.
14.10. Construction and Interpretation. Whenever used herein, nouns in
-------------------------------
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.
14.11. Severability. If any provision of the Plan or any Award
------------
Agreement shall be determined to be illegal or unenforceable by any court of law
in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
14.12. Governing Law. The validity and construction of this Plan and of
-------------
the Award Agreements shall be governed by the laws of the State of Delaware.
15. Effective Date, Termination and Amendment
15.1. Establishment of the Plan. This Plan is being adopted by the
-------------------------
Board in connection with the anticipated formation of the Corporation as a
Subsidiary of Columbia/HCA and the distribution shortly thereafter by
Columbia/HCA of all of its shares of the Corporation to the shareholders of
Columbia/HCA.
15.2. Effective Date; Shareholder Approval. The Effective Date of the
------------------------------------
Plan shall be November 5, 1998; provided, however, that no amounts may be paid
-------- -------
or shares issued under any Award granted on or after the first meeting of the
shareholders of the Corporation that shall occur more than twelve months after
the date on which the Corporation becomes a publicly held corporation, unless
the shareholders of the Corporation shall have approved the Plan. At the sole
discretion of the Board, in order to comply with the requirements of Section
162(m) for certain types of Awards under the Plan, the performance criteria set
forth in Section 9.3 shall be reapproved by the shareholders of the Corporation
no later than the first shareholder meeting that occurs in the fifth calendar
year following the calendar year of the initial shareholder approval of such
performance criteria.
15
15.3. Termination. The Plan shall terminate on the date immediately
-----------
preceding the tenth anniversary of the date the Plan is adopted by the Board.
The Board may, in its sole discretion and at any earlier date, terminate the
Plan. Notwithstanding the foregoing, no termination of the Plan shall adversely
affect any Award theretofore granted without the consent of the Participant or
the permitted transferee of the Award.
15.4. Amendment. The Board may at any time and from time to time and
---------
in any respect, amend or modify the Plan; provided, however, that no amendment
-------- -------
or modification of the Plan shall be effective without the consent of the
Corporation's shareholders that would (i) change the class of Eligible Persons
under the Plan, (ii) increase the number of shares of Common Stock reserved for
issuance under the Plan in accordance with Section 3.1 hereof, or (iii) allow
the grant of Options at an exercise price below Fair Market Value. In addition,
the Board may seek the approval of any amendment or modification by the
Corporation's shareholders to the extent it deems necessary or advisable in its
sole discretion for purposes of compliance with Section 162(m) or section 422 of
the Code, the listing requirements of the New York Stock Exchange or for any
other purpose. No amendment or modification of the Plan shall adversely affect
any Award theretofore granted without the consent of the Participant or the
permitted transferee of the Award.
___________________________________________________
16
INSTRUMENT OF AMENDMENT
-----------------------
Columbia/HCA Healthcare Corporation
-----------------------------------
LifePoint Hospitals, Inc. Long-Term Incentive Plan
--------------------------------------------------
WHEREAS, Columbia/HCA Healthcare Corporation ("Columbia/HCA") approved
and adopted the LifePoint Hospitals, Inc. Long-Term Incentive Plan (the "Plan");
and
WHEREAS, Section 15.4 of the Plan provides that Columbia/HCA may amend
the Plan at any time;
NOW, THEREFORE, the Plan is amended as follows:
(1) All references to "America" shall be replaced with "LifePoint
Hospitals, Inc."
(2) Paragraph 2(o) of the Plan is amended and restated in its entirety as
follows:
"Fair Market Value" of a share of Common Stock as of a given date
shall mean the closing sales price of the Common Stock on the Nasdaq
Stock Market on the trading day immediately preceding the date as of
which the Fair Market Value is to be determined, or, in the absence of
any reported sales of Shares on such date, on the first preceding date
on which any such sale shall have been reported (in either case, as
reported in the Two Star Edition of The Wall Street Journal). If the
Common Stock is not listed on the Nasdaq Stock Market on the date as
of which Fair Market Value is to be determined, the Committee shall in
good faith determine the Fair Market Value in whatever manner it
considers appropriate.
(3) Paragraph 2(g) of the Plan is amended and restated in its entirety as
follows:
"Committee" means the committee appointed to administer the Plan and
shall consist of two or more directors of the Corporation (i) none of
whom shall be officers or employees of the Corporation, and (ii) all
of whom, to the extent deemed necessary or appropriate by the Board,
shall satisfy the requirements for an "outside director" under Section
162(m) and a "non-employee director" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934. The
members of the Committee shall be appointed by and serve at the
pleasure of the Board. Notwithstanding the foregoing, prior to the
date Columbia/HCA distributes all of its shares of the Corporation to
the shareholders of Columbia/HCA, Committee shall mean a committee of
two or more Directors of Columbia/HCA appointed to administer the plan
(i) none of whom shall be officers or employees of Columbia/HCA, and
(ii) all of whom, to the extent deemed necessary or appropriate by the
Board of Columbia/HCA, shall satisfy the requirements for an "outside
director" under Section 162(m) and a "non-employee director" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934. If
the applicable Board shall so direct, designated members of the
applicable Committee shall act as a separate subcommittee, which shall
administer the Plan as to all Section 162(m) Awards. In such event,
all references herein to the applicable Committee relating to Section
162(m) Awards shall be considered to refer only to the applicable
separate subcommittee.
(4) Paragraph 12.2(ii) of the Plan is amended and restated in its
entirety as follows:
The individuals who, as of the date the Corporation issues any class
of equity securities required to be registered under Section 12 of the
1934 Act, are members of the Board (the "Incumbent Board"), cease for
any reason to constitute at least two-thirds of the Board; provided,
--------
however, that if the election or nomination for election by the
-------
Corporation's 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 Agreement, be considered as a member of
the Incumbent Board; provided, further, however, that no individual
-------- ------- -------
shall be considered a member of the Incumbent Board if (1) such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated
under the 1934 Act) or other 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 Election Contest or Proxy Contest or (2) such
individual was designated by a
2
Person who has entered into an agreement with the Corporation to
effect a transaction described in clause (i) or (iii) of this Section
12.2; or
(5) Paragraph 6.5 of the Plan is amended and restated in its entirety
as follows:
All Options shall be nontransferable except (i) upon the Participant's
death, by the Participant's will or the laws of descent and
distribution or (ii) in the case Non-qualified Stock Options only, on
a case-by-case basis as may be approved by the Committee in its
discretion, in accordance with the terms provided below. An Award
Agreement for a Non-qualified Stock Option may provide that the
Participant shall be permitted to, during his or her lifetime and
subject to the prior approval of the Committee at the time of proposed
transfer, transfer all or part of the Option to the Participant's
family member (as defined in the Award Agreement in a manner
consistent with the requirements for the Form S-8 registration
statement, if applicable). Any such transfer shall be subject to the
condition that it is made by the Participant for estate planning, tax
planning, donative purposes or pursuant to a domestic relations order,
and no consideration (other than nominal consideration) is received by
the Participant therefor. The transfer of a Non-qualified Stock
Option may be subject to such other terms and conditions as the
Committee may in its discretion impose from time to time, including a
condition that the portion of the Option to be transferred be vested
and exercisable by the Participant at the time of the transfer.
Subsequent transfers of an Option shall be prohibited other than by
will or the laws of descent and distribution upon the death of the
transferee.
(6) Paragraph 15.4 of the Plan is amended and restated in its entirety
as follows:
The Board may at any time and from time to time and in any respect,
amend or modify the Plan; provided, however, that no amendment or
-------- -------
modification of the Plan shall be effective without the consent of the
Corporation's shareholders that would (i) change the class of Eligible
Persons under the Plan, (ii) increase the number of shares of Common
Stock reserved for issuance under the Plan in accordance with Section
3.1 hereof, or (iii) allow the grant of Options at an
3
exercise price below Fair Market Value. In addition, the Board may
seek the approval of any amendment or modification by the
Corporation's shareholders to the extent it deems necessary or
advisable in its sole discretion for purposes of compliance with
Section 162(m) or section 422 of the Code, the listing requirements of
the Nasdaq Stock Market or for any other purpose. No amendment or
modification of the Plan shall adversely affect any Award theretofore
granted without the consent of the Participant or the permitted
transferee of the Award.
(7) An Appendix A is added to the Plan, which reads in its entirety as
follows:
"Appendix A
----------
Notwithstanding anything elsewhere in the Plan to the contrary, the
following rules shall apply in connection with the distribution of
Common Stock to Columbia/HCA stockholders (the "Spin-off").
(i) In the case of each Columbia/HCA Non-Qualified Option that is a
vested option and covers more than 1000 shares, the Committee
may grant an option which covers a number of shares of Common
Stock equal to the Original Number of Shares multiplied by the
LifePoint Share Multiple and which has a per share exercise
price equal to the per share exercise price of the original
Columbia/HCA Non-Qualified Option multiplied by the LifePoint
Ratio.
(ii) In the case of each Columbia/HCA ISO that is held by a
LifePoint Employee or LifePoint Terminee (or his estate), the
Committee may grant an option which covers a number of shares
of Common Stock equal to the Original Number of Shares divided
by the LifePoint Ratio and (2) has a per share exercise price
equal to the original per share exercise price multiplied by
the LifePoint Ratio.
(iii) In the case of any options granted by the Committee pursuant to
this Appendix, any resulting per share exercise price which is
not equal to a whole multiple of a cent shall be rounded up to
the next whole cent and any
4
resulting number of shares covered by an option which is not
equal to a whole multiple of a share shall be rounded down to
the next whole share.
(iv) The Committee may provide that the terms of any option granted
under this Appendix are to be substantially the same as those
of the related Columbia/HCA Option, subject to such exceptions
as the Committee may provide. Any such option may, in the
discretion of the Committee, also provide that (a) any period
of prior employment or service with Columbia/HCA or any related
entity is to be credited as covered employment or service for
purposes of determining the vesting and exercisability of such
option (to the same extent as such period was credited for such
purposes under the related original Columbia/HCA Option), and
(b) in the case of any Columbia/HCA Non-Qualified Option, the
optionee is to be considered to be employed by or providing
services to the Corporation so long as he is employed by or
providing services to Columbia/HCA or Triad Hospitals, Inc.
("Triad") (or any Subsidiary thereof), for purposes of
determining when the option will cease to be exercisable on
account of termination of employment or service, and at such
time as the optionee ceases to be employed by or provide
service to Columbia/HCA or Triad (or any Subsidiary thereof),
such cessation of employment or service shall be treated as
though it were a cessation of employment or service with the
Corporation under comparable circumstances.
(v) For purposes hereof, the following definitions shall apply:
(a) "Affiliate" shall mean any entity required to be aggregated
with Columbia/HCA, LifePoint or Triad as appropriate, pursuant
to Code sections 414(b), 414(c), 414(m) or 414(o).
(b) "Assets" shall mean all properties, rights, contracts, leases
and claims, of any kind and description, wherever located,
whether tangible or intangible or whether real, personal or
mixed.
5
(c) "Columbia/HCA ISO" shall mean any option outstanding under a
Columbia/HCA Option Plan on the date of the Spin-off that is
intended to qualify as an "Incentive Stock Option" under section
422 of the Code.
(d) "Columbia/HCA Non-Qualified Option" shall mean any stock option
outstanding under a Columbia/HCA Option Plan on the date of the
Spin-off that is not a Columbia/HCA ISO. Any such option shall
be considered a "vested option" to the extent that it is
exercisable on the date in question and shall be considered a
"non-vested option" to the extent that it is not yet exercisable
on such date.
(e) "Columbia/HCA Option" shall mean a Columbia/HCA ISO or
Columbia/HCA Non-Qualified Option, as the context shall
indicate.
(f) "Columbia/HCA Option Plan" shall mean any plan maintained by
Columbia/HCA under which there are stock options outstanding on
the date of the Spin-off.
(g) "Ex-Dividend Date" shall mean the first trading date on which
the Columbia/HCA stock shall trade on an ex-dividend basis with
respect to the distribution of the Corporation's Common Stock
and Triad's stock.
(h) "LifePoint Business" shall mean any business now or formerly
conducted by the Corporation, or its present or former
Subsidiaries, including any business now or formerly conducted
by Columbia/HCA and its Subsidiaries that is associated with the
Assets of the Corporation and its Subsidiaries.
(i) "LifePoint Employee" shall mean an employee of the Corporation,
or any direct or indirect Subsidiary of the Corporation that is
an Affiliate thereof, on the date of the Spin-off.
(j) "LifePoint Ratio" shall mean a fraction whose numerator is the
closing price of the Common Stock on the first day on which such
stock is traded
6
and whose denominator is the closing price of the Columbia/HCA
stock on the trading date immediately preceding the Ex-Dividend
Date.
(k) "LifePoint Share Multiple" shall mean the number of shares of
Common Stock to be distributed per share of Columbia/HCA stock
on the date of the Spin-off.
(l) "LifePoint Terminee" shall mean any individual who is no
longer employed by Columbia/HCA or any Affiliate thereof
immediately prior to the Spin-off but was employed by a
LifePoint Business immediately prior to his termination of
employment from Columbia/HCA and its Affiliates.
(m) "Original Number of Shares" shall mean, as to any Columbia/HCA
Option, the number of shares of Columbia/HCA stock covered by
such option immediately prior to the Spin-off.
Notwithstanding anything elsewhere in the Plan to the contrary, the
Committee may grant Non-qualified Stock Options, effective as of the
twenty-first trading date for the Common Stock, at an exercise price
equal to the Fair Market Value of the Common Stock on such date, in
accordance with the attached Schedule and in accordance with such
other terms as shall be established by the Committee."
7