Exhibit 10.1

Community Health Systems, Inc.

2009 STOCK OPTION AND AWARD PLAN

(As Adopted March 24, 2009 and Amended and Restated March 18, 2011, March 20,
2013,

March 19, 2014, March 16, 2016 and March 14, 2018)

 

1. Purpose.

The purpose of this Plan is to strengthen Community Health Systems, Inc., a
Delaware corporation (the “Company”), and its Subsidiaries by providing a
retention tool and an incentive to its and their employees, officers,
consultants and directors, and thereby encouraging them to devote their
abilities and industry to the success of the Company’s and its Subsidiaries’
business enterprises. It is intended that this purpose be achieved by extending
to employees (including future employees who have received a formal written
offer of employment), officers, consultants and directors of the Company and its
Subsidiaries an added long-term incentive for high levels of performance and
unusual efforts through the grant of Incentive Stock Options, Non-qualified
Stock Options, Stock Appreciation Rights, Performance Units, Performance Shares,
Share Awards, Restricted Stock and Restricted Stock Units (as each term is
herein defined).

 

2. Definitions.

For purposes of the Plan:

2.1    “2000 Stock Option and Award Plan” means the Community Health Systems,
Inc. 2000 Stock Option and Award Plan, as amended and restated March 20, 2013.

2.2    “Affiliate” means any entity, directly or indirectly, controlled by,
controlling or under common control with the Company or any corporation or other
entity acquiring, directly or indirectly, all or substantially all the assets
and business of the Company, whether by operation of law or otherwise.

2.3    “Agreement” means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting forth
the terms and conditions thereof.

2.4    “Award” means a grant of an Option, Restricted Stock, a Restricted Stock
Unit, a Stock Appreciation Right, a Performance Award, a Share Award or any or
all of them.

2.5    “Board” means the Board of Directors of the Company.

2.6    “Cause” means, except as otherwise set forth herein or in an applicable
Agreement,

(a)    in the case of an Optionee or Grantee whose employment with the Company
or a Subsidiary is subject to the terms of an employment agreement between such
Optionee or Grantee and the Company or Subsidiary, which employment agreement
includes a definition of “Cause”, the term “Cause” as used in this Plan or any
Agreement shall have the meaning set forth in such employment agreement during
the period that such employment agreement remains in effect; and

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(b)    in all other cases, (i) intentional failure to perform reasonably
assigned duties, (ii) dishonesty or willful misconduct in the performance of
duties, (iii) involvement in a transaction in connection with the performance of
duties to the Company or any of its Subsidiaries which transaction is adverse to
the interests of the Company or any of its Subsidiaries and which is engaged in
for personal profit or (iv) willful violation of any law, rule or regulation in
connection with the performance of duties (other than traffic violations or
similar offenses); provided, however, that following a Change in Control clause
(i) of this Section 2.6(b) shall not constitute “Cause.”

2.7    “Change in Capitalization” means any increase or reduction in the number
of Shares, or any change (including, but not limited to, in the case of a
spin-off, dividend or other distribution in respect of Shares, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company or another corporation, by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
spin-off, split-up, issuance of warrants or rights or debentures, stock
dividend, stock split or reverse stock split, cash dividend, property dividend,
extraordinary cash dividend, combination or exchange of shares, repurchase of
shares, change in corporate structure or otherwise.

2.8    A “Change in Control” shall mean the occurrence of any of the following:

(a)    An acquisition (other than directly from the Company) of any voting
securities of the Company (the “Voting Securities”) by any “Person” (as the term
person is used for purposes of Section 13(d) or 14(d) of the Exchange Act),
immediately after which such Person has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty
percent (50%) of the then outstanding Shares or the combined voting power of the
Company’s then outstanding Voting Securities; provided, however, that in
determining whether a Change in Control has occurred pursuant to this
Section 2.8(a), Shares or Voting Securities which are acquired in a “Non-Control
Acquisition” (as hereinafter defined) shall not constitute an acquisition which
would cause a Change in Control. A “Non-Control Acquisition” shall mean an
acquisition by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other Person the
majority of the voting power, voting equity securities or equity interest of
which is owned, directly or indirectly, by the Company (for purposes of this
definition, a “Related Entity”), (ii) the Company or any Related Entity, or
(iii) any Person in connection with a “Non-Control Transaction” (as hereinafter
defined);

(b)    The individuals who, as of the Restatement Effective Date, are members of
the Board (the “Incumbent Board”), cease for any reason to constitute at least a
majority of the members of the Board or, following a Merger (as hereinafter
defined) which results in a Parent Corporation (as hereinafter defined), the
board of directors of the ultimate Parent Corporation; provided, however, that
if the election, or nomination for election by the Company’s common
stockholders, of any new director was approved by a vote of at least two-thirds
of the Incumbent Board, such new director shall, for purposes of this Plan, be
considered a member of the Incumbent Board; provided further, however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of the actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board (a “Proxy Contest”) including by reason of any agreement intended to avoid
or settle any Proxy Contest; or

 

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(c)    The consummation of:

(i)    A merger, consolidation or reorganization with or into the Company or in
which securities of the Company are issued (a “Merger”), unless such Merger is a
“Non-Control Transaction.” A “Non-Control Transaction” shall mean a Merger
where:

(A)    the stockholders of the Company immediately before such Merger own
directly or indirectly immediately following such Merger at least fifty percent
(50%) of the combined voting power of the outstanding voting securities of
(x) the corporation resulting from such Merger (the “Surviving Corporation”), if
fifty percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Surviving Corporation is not Beneficially Owned,
directly or indirectly, by another Person (a “Parent Corporation”), or (y) if
there is one or more than one Parent Corporation, the ultimate Parent
Corporation; and

(B)    the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for such Merger constitute at least
a majority of the members of the board of directors of (x) the Surviving
Corporation, if there is no Parent Corporation, or (y) if there is one or more
than one Parent Corporation, the ultimate Parent Corporation;

(ii)    A complete liquidation or dissolution of the Company; or

(iii)    The sale or other disposition of all or substantially all of the assets
of the Company to any Person (other than a transfer to a Related Entity or under
conditions that would constitute a Non-Control Transaction with the disposition
of assets being regarded as a Merger for this purpose or the distribution to the
Company’s stockholders of the stock of a Related Entity or any other assets).

Notwithstanding the foregoing, (A) a Change in Control shall not be deemed to
occur solely because any Person (the “Subject Person”) acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Shares or
Voting Securities as a result of the acquisition of Shares or Voting Securities
by the Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur; and (B) unless otherwise provided
in the applicable Agreement, with respect to any Award constituting a “deferral
of compensation” subject to Section 409A of the Code, solely for purposes of
determining the timing of a payment pursuant to the Agreement, a Change in
Control shall mean a “change in the ownership” of the Company, a “change in the
effective control” of the Company, or a “change in the ownership of a
substantial portion of the assets” of the Company as such terms are defined in
Section 1.409A-3(i)(5) of the Treasury Regulations.

If an Optionee’s or Grantee’s employment is terminated by the Company without
Cause prior to the date of a Change in Control but the Optionee or Grantee
reasonably demonstrates that the termination (A) was at the request of a third
party who has indicated an intention or

 

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taken steps reasonably calculated to effect a Change in Control or (B) otherwise
arose in connection with, or in anticipation of, a Change in Control which has
been threatened or proposed, such termination shall be deemed to have occurred
after a Change in Control for purposes of this Plan provided a Change in Control
shall actually have occurred.

2.9    “Code” means the Internal Revenue Code of 1986, as amended.

2.10    “Committee” means a committee, as described in Section 3.1, appointed by
the Board from time to time to administer the Plan and to perform the functions
set forth herein.

2.11    “Company” means Community Health Systems, Inc.

2.12    “Director” means a director of the Company.

2.13    “Disability” means, unless otherwise defined in an Agreement:

(a)    in the case of an Optionee or Grantee whose employment with the Company
or a Subsidiary is subject to the terms of an employment agreement between such
Optionee or Grantee and the Company or Subsidiary, which employment agreement
includes a definition of “Disability”, the term “Disability” as used in this
Plan or any Agreement shall have the meaning set forth in such employment
agreement during the period that such employment agreement remains in effect;

(b)    in the case of an Optionee or Grantee to whom Section 2.13(a) does not
apply and who participates in the Company’s long-term disability plan, if any,
the term “Disability” as used in such plan; or

(c)    in all other cases, a physical or mental infirmity which impairs the
Optionee’s or Grantee’s ability to perform substantially all his or her duties
for a period of ninety-one (91) consecutive days.

2.14    “Division” means any of the operating units or divisions of the Company
designated as a Division by the Committee.

2.15    “Dividend Equivalent Right” means a right to receive all or some portion
of the cash dividends that are or would be payable with respect to Shares;
provided, that subject to Section 12, no Dividend Equivalent Rights shall be
granted with respect to unexercised Options or Stock Appreciation Rights.

2.16    “Eligible Individual” means any of the following individuals who is
designated by the Committee as eligible to receive Options or Awards subject to
the conditions set forth herein: (a) any Director or Employee, (b) any
individual to whom the Company or a Subsidiary has extended a formal, written
offer of employment, or (c) any consultant or advisor of the Company or a
Subsidiary.

2.17    “Employee” means any person, including an officer (whether or not also a
director) in the regular full-time employment of the Company or any of its
Subsidiaries, but excludes, in the case of an Incentive Stock Option, an
employee of any Subsidiary that is not a “subsidiary corporation” of the Company
as defined in Code Section 424(f).

2.18    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

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2.19    “Fair Market Value” on any date, unless otherwise determined by the
Committee, means the closing sales prices of the Shares on such date on the
principal national securities exchange on which such Shares are listed or
admitted to trading, or, if such Shares are not so listed or admitted to
trading, the closing sales prices of the Shares as reported by the Nasdaq Stock
Market at the close of the primary trading session on such dates and, in either
case, if the Shares were not traded on such date, on the next preceding day on
which the Shares were traded. In the event that Fair Market Value cannot be
determined in a manner described above, the Fair Market Value shall be the value
established by the Board in good faith.

2.20    For purposes of this Plan,

(a)    “Good Reason” shall mean, unless otherwise provided in an Agreement, the
occurrence after a Change in Control of any of the following events or
conditions:

(i)    a change in the Optionee’s or Grantee’s status, title, position or
responsibilities (including reporting responsibilities) which, in the Optionee’s
or Grantee’s reasonable judgment, represents an adverse change from the
Optionee’s or Grantee’s status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Optionee or Grantee of any
duties or responsibilities which, in the Optionee’s or Grantee’s reasonable
judgment, are inconsistent with the Optionee’s or Grantee’s status, title,
position or responsibilities; or any removal of the Optionee or Grantee from or
failure to reappoint or reelect the Optionee or Grantee to any of such offices
or positions, except in connection with the termination of the Optionee’s or
Grantee’s employment for Disability, Cause, as a result of the Optionee’s or
Grantee’s death or by the Optionee or Grantee other than for Good Reason;

(ii)    a reduction in the Optionee’s or Grantee’s annual base salary below the
amount as in effect immediately prior to the Change in Control;

(iii)    the relocation of the offices of the Optionee’s or Grantee’s place of
employment to a location more than twenty-five (25) miles from the location of
such employment immediately prior to such Change in Control, or requiring the
Grantee to be based anywhere other than such offices, except to the extent the
Grantee was not previously assigned to a principal location and except for
required travel on business to the extent substantially consistent with the
Optionee’s or Grantee’s business travel obligations at the time of the Change in
Control;

(iv)    the failure to pay to the Optionee or Grantee any portion of the
Optionee’s or Grantee’s current compensation or to pay to the Optionee or
Grantee any portion of an installment of deferred compensation under any
deferred compensation program of the Company or any of its Subsidiaries in which
the Optionee or Grantee participated, within seven (7) days of the date such
compensation is due;

(v)    the failure to (A) continue in effect (without reduction in benefit
level, and/or reward opportunities) any material compensation or employee
benefit plan in which the Optionee or Grantee was participating immediately
prior to the Change in Control, unless a substitute or replacement plan has been
implemented which provides substantially identical compensation or benefits to
the Optionee or Grantee or (B) provide the Optionee or Grantee with compensation
and benefits, in the aggregate, at least equal (in terms of benefit levels
and/or reward opportunities) to those provided for under each other compensation
or employee benefit plan, program and practice in which the Optionee or Grantee
was participating immediately prior to the Change in Control; or

 

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(vi)    the failure of the Company to obtain from its successors or assigns the
express assumption and agreements required under Section 13 hereof.

(b)    Any event or condition described in Section 2.20(a)(i), (ii), (iii),
(iv), or (vi) which occurs at any time prior to the date of a Change in Control
and (1) which occurred after the Company entered into a definitive agreement,
the consummation of which would constitute a Change in Control or (2) which the
Optionee or Grantee reasonably demonstrates was at the request of a third party
who has indicated an intention or has taken steps reasonably calculated to
effect a Change in Control, shall constitute Good Reason for purposes of this
Agreement, notwithstanding that it occurred prior to a Change in Control.

2.21    “Grantee” means a person to whom an Award has been granted under the
Plan.

2.22    “Grant Price” means the price established at the time of a grant of a
Stock Appreciation Right used to determine whether there is any payment due upon
exercise of the Stock Appreciation Right.

2.23    “Incentive Stock Option” means an Option satisfying the requirements of
Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.

2.24    “Non-Employee Director” means a Director who is not an employee of the
Company.

2.25    “Non-qualified Stock Option” means an Option which is not an Incentive
Stock Option.

2.26    “Option” means a Non-qualified Stock Option, an Incentive Stock Option
or either or both of them.

2.27    “Optionee” means a person to whom an Option has been granted under the
Plan.

2.28    “Parent” means any corporation which is a parent corporation within the
meaning of Section 424(e) of the Code with respect to the Company.

2.29    “Performance Awards” means Performance Units, Performance Shares or
either or both of them.

2.30    “Performance Cycle” means the time period specified by the Committee at
the time Performance Awards are granted during which the performance of the
Company, a Subsidiary or a Division will be measured.

2.31    “Performance Objectives” has the meaning set forth in Section 9.

2.32    “Performance Shares” means Shares issued or transferred to an Eligible
Individual under Section 9.

2.33    “Performance Units” means performance units granted to an Eligible
Individual under Section 9.

 

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2.34    “Plan” means Community Health Systems, Inc. 2009 Stock Option and Award
Plan, as amended and restated from time to time.

2.35    “Restricted Stock” means Shares issued or transferred to an Eligible
Individual pursuant to Section 8.1.

2.36    “Restricted Stock Unit” means rights granted to an Eligible Individual
under Section 8.2 representing a number of hypothetical Shares.

2.37    “Share Award” means an Award of Shares granted pursuant to Section 10.

2.38    “Shares” means shares of the Common Stock of the Company, par value $.01
per share, and any other securities into which such shares are changed or for
which such shares are exchanged.

2.39    “Stock Appreciation Right” means a right to receive all or some portion
of the increase in the value of the Shares as provided in Section 7 hereof.

2.40    “Subsidiary” means (i) except as provided in subsection (ii) below, any
corporation which is a subsidiary corporation within the meaning of
Section 424(f) of the Code with respect to the Company, and (ii) in relation to
the eligibility to receive Options or Awards other than Incentive Stock Options
and continued employment for purposes of Options and Awards (unless the
Committee determines otherwise), any entity, whether or not incorporated, in
which the Company directly or indirectly owns 50% or more of the outstanding
equity or other ownership interests.

2.41    “Successor Corporation” means a corporation, or a Parent or Subsidiary
thereof within the meaning of Section 424(a) of the Code, which issues or
assumes a stock option in a transaction to which Section 424(a) of the Code
applies.

2.42    “Ten-Percent Stockholder” means an Eligible Individual, who, at the time
an Incentive Stock Option is to be granted to him or her, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
a Parent or a Subsidiary.

 

3. Administration.

3.1    The Plan shall be administered by the Committee, which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. If the Committee
consists of more than one (1) member, a quorum shall consist of not fewer than
two (2) members of the Committee and a majority of a quorum may authorize any
action. Any decision or determination reduced to writing and signed by a
majority of all of the members of the Committee shall be as fully effective as
if made by a majority vote at a meeting duly called and held. The Committee
shall consist of at least one (1) Director and may consist of the entire Board;
provided, however, that with respect to any Option or Award granted to an
Eligible Individual who is subject to Section 16 of the Exchange Act, the
Committee shall consist of at least two (2) Directors each of whom shall be a
“non-employee director” within the meaning of Rule 16b-3 promulgated under the
Exchange Act. For purposes of the preceding sentence, if any member of the
Committee fails to qualify as a non-employee director (within the meaning of the
preceding sentence), but recuses himself or herself or abstains from voting with
respect to a particular action taken by the Committee, then

 

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the Committee, with respect to that action, shall be deemed to consist only of
the members of the Committee who have not recused themselves or abstained from
voting. Subject to applicable law, the Committee may delegate its authority
under the Plan to any other person or persons.

3.2    No member of the Committee shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect to this
Plan or any transaction hereunder. The Company hereby agrees to indemnify each
member of the Committee for all costs and expenses and, to the extent permitted
by applicable law, any liability incurred in connection with defending against,
responding to, negotiating for the settlement of or otherwise dealing with any
claim, cause of action or dispute of any kind arising in connection with any
actions in administering this Plan or in authorizing or denying authorization to
any transaction hereunder.

3.3    Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:

(a)    determine those Eligible Individuals to whom Options shall be granted
under the Plan and the number of such Options to be granted, prescribe the terms
and conditions (which need not be identical) of each such Option, including the
exercise price per Share, the vesting schedule and the duration of each Option,
and make any amendment or modification to any Option Agreement consistent with
the terms of the Plan;

(b)    select those Eligible Individuals to whom Awards shall be granted under
the Plan, determine the number of Shares in respect of which each Award is
granted, the terms and conditions (which need not be identical) of each such
Award, and make any amendment or modification to any Award Agreement consistent
with the terms of the Plan;

(c)    construe and interpret the Plan and the Options and Awards granted
hereunder, establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable, including so that the Plan and the operation of the Plan comply with
Rule 16b-3 under the Exchange Act, the Code to the extent applicable and other
applicable law, and otherwise make the Plan fully effective. All decisions and
determinations by the Committee in the exercise of this power shall be final,
binding and conclusive upon the Company, its Subsidiaries, the Optionees and
Grantees, and all other persons having any interest therein;

(d)    determine the duration and purposes for leaves of absence which may be
granted to an Optionee or Grantee on an individual basis without constituting a
termination of employment or service for purposes of the Plan;

(e)    exercise its discretion with respect to the powers and rights granted to
it as set forth in the Plan; and

(f)    generally, exercise such powers and perform such acts as are deemed
necessary or advisable to promote the best interests of the Company with respect
to the Plan.

3.4    The Committee may delegate to one or more officers of the Company the
authority to grant Options or Awards to Eligible Individuals (other than to
himself or herself) and/or determine the number of Shares subject to each Option
or Award (by resolution that

 

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specifies the total number of Shares subject to the Options or Awards that may
be awarded by the officer and the terms of any such Options or Awards, including
the exercise price), provided that such delegation is made in accordance with
the Delaware General Corporation Law and are not made to executive officers of
the Company covered by Rule 16b-3 under the Exchange Act.

 

4. Shares Subject to the Plan; Grant Limitations.

4.1    Shares Subject to the Plan. The maximum number of Shares that may be made
the subject of Options and Awards granted under the Plan is the sum of:

(a)    7,000,000 Shares added to the Plan as a result of the amendment and
restatement effective on the Restatement Effective Date; and

(b)    1,418,445 Shares remaining in the Plan as of March 14, 2018;

(c)    for a total of 8,418,445 Shares, less any Shares subject to Options or
Awards granted after March 14, 2018.

The Company shall reserve for the purposes of the Plan, out of its authorized
but unissued Shares or out of Shares held in the Company’s treasury, or partly
out of each, such number of Shares as shall be determined by the Board. No
further grants may be made under the 2000 Stock Option and Award Plan, but
Options and Awards made under the 2000 Stock Option and Award Plan shall remain
outstanding in accordance with their terms.

4.2    Shares Returned to the Plan from Previous Plan. Whenever any outstanding
Option or Award or portion thereof granted pursuant to the 2000 Stock Option and
Award Plan and outstanding as of March 14, 2018 would have again been available
for grant as an Option or Award pursuant to Section 4.3 of the 2000 Stock Option
and Award Plan as in effect on March 20, 2013, the number of Shares allocable to
the expired, canceled, forfeited, settled or otherwise terminated portion of
such Option or Award, determined in accordance with Section 4.3 of the 2000
Stock Option and Award Plan, shall be added to the maximum number of Shares
available to be granted as Options or Awards granted hereunder.

4.3    Grant Limitations. The following grant limitations shall apply when
making Awards pursuant to the Plan:

(a)    The maximum grant date fair value of all Awards granted during any
calendar year to a single Non-Employee Director shall not exceed $800,000;

(b)    In no event shall more than an aggregate of 2,000,000 Shares be issued
upon the exercise of Incentive Stock Options granted under the Plan.

4.4    Fungible Plan Design. Upon the granting of an Option or an Award, the
number of Shares available under Section 4.1 for the granting of further Options
and Awards shall be reduced as follows:

(a)    In connection with the granting of an Option or an Award, the number of
Shares shall be reduced by the number of Shares in respect of which the Option
or Award is granted or denominated.

 

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(b)    Stock Appreciation Rights to be settled in Shares shall be counted in
full against the number of Shares available for award under the Plan, regardless
of the number of Shares issued upon settlement of the Stock Appreciation Right.

(c)    Notwithstanding the foregoing, Awards granted in the form of Restricted
Stock (including Restricted Stock Units), Share-settled Performance Awards and
other Awards that are granted as “full value awards” shall reduce the number of
Shares that may be the subject to Options and Awards under the Plan by 1.52
Shares for each Share subject to such an Award.

4.5    Shares Returned to the Plan. Whenever any outstanding Option or Award or
portion thereof expires, is canceled, is forfeited, is settled in cash or is
otherwise terminated for any reason without having been exercised or Shares
having been issued in respect of the Option or Award (or such portion thereof to
which the expiration, forfeiture, cash settlement or other termination occurs),
the Shares allocable to the expired, canceled, forfeited, cash-settled or
otherwise terminated portion of the Option or Award may again be the subject of
Options or Awards granted hereunder. With regard to Awards referred to in
Section 4.4(c), for each Share subject to an Award that is cancelled, forfeited,
settled in cash or other otherwise terminated as provided in the foregoing
sentence, 1.52 Shares may again be the subject of Options or Awards under the
Plan. Notwithstanding the foregoing, the following events shall not result in
any increase in Shares available for issuance of Options or Awards under the
Plan or such Shares again becoming available for issuance of Options or Awards:

(a)    Withholding of Shares to pay Taxes on any Option or Award,

(b)    The excess of the number of Shares subject to any stock-settled Stock
Appreciation Rights over the number of Shares actually issued in settlement
thereof,

(c)    Tendering of Shares to pay for Option exercise prices or Withholding
Taxes (i.e., net settlement of Shares), and

(d)    The purchase of Shares on the open market as a result of Option
exercises.

4.6    Minimum Vesting Period. Unless otherwise determined by the Committee, in
no event shall an Option or Award to a Participant other than a Non-Employee
Director not subject to performance-based conditions have a vesting schedule
resulting in such Option or Award vesting in full prior to the third anniversary
of the grant date. For purposes of clarity, this restriction will not prohibit
any Option or Award from having partial vesting dates prior to the third
anniversary of the grant date in accordance with a proportionate vesting
schedule determined at the discretion of the Committee, so long as such Option
or Award does not vest in full prior to the third anniversary of the grant date.

 

5. Option Grants for Eligible Individuals.

5.1    Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, and the terms and conditions of the grant
to such Eligible Individuals shall be set forth in an Agreement. Incentive Stock
Options may be granted only to Eligible Individuals who are employees of the
Company or any Subsidiary.

 

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5.2    Exercise Price. The purchase price or the manner in which the exercise
price is to be determined for Shares under each Option shall be determined by
the Committee and set forth in the Agreement; provided, however, that the
exercise price per Share under each Option shall not be less than 100% of the
Fair Market Value of a Share on the date the Option is granted (110% in the case
of an Incentive Stock Option granted to a Ten-Percent Stockholder).

5.3    Maximum Duration. Options granted hereunder shall be for such term as the
Committee shall determine, provided that an Incentive Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted
(five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder) and a Non-qualified Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted;
provided, however, that unless the Committee provides otherwise, an Option
(other than an Incentive Stock Option) may, upon the death of the Optionee prior
to the expiration of the Option, be exercised for up to one (1) year following
the date of the Optionee’s death even if such period extends beyond ten
(10) years from the date the Option is granted. The Committee may, subsequent to
the granting of any Option, extend the term thereof, but in no event shall the
term as so extended exceed the maximum term provided for in the preceding
sentence.

5.4    Vesting. Subject to Section 5.10, each Option shall become exercisable in
such installments (which need not be equal) and at such times as may be
designated by the Committee and set forth in the Agreement. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Option expires. The Committee may accelerate the exercisability of any Option or
portion thereof at any time.

5.5    Deferred Delivery of Option Shares. The Committee may, in its discretion,
permit Optionees to elect to defer the issuance of Shares upon the exercise of
one or more Non-qualified Stock Options granted pursuant to the Plan. The terms
and conditions of such deferral shall be determined at the time of the grant of
the Option or thereafter and shall be set forth in the Agreement evidencing the
Option.

5.6    Limitations on Incentive Stock Options. To the extent that the aggregate
Fair Market Value (determined as of the date of the grant) of Shares with
respect to which Incentive Stock Options granted under the Plan and “incentive
stock options” (within the meaning of Section 422 of the Code) granted under all
other plans of the Company or its Subsidiaries (in either case determined
without regard to this Section 5.6) are exercisable by an Optionee for the first
time during any calendar year exceeds $100,000, such Incentive Stock Options
shall be treated as Non-qualified Stock Options. In applying the limitation in
the preceding sentence in the case of multiple Option grants, Options which were
intended to be Incentive Stock Options shall be treated as Non-qualified Stock
Options according to the order in which they were granted such that the most
recently granted Options are first treated as Non-qualified Stock Options.

5.7    Non-Transferability. No Option shall be transferable by the Optionee
otherwise than by will or by the laws of descent and distribution or, in the
case of an Option other than an Incentive Stock Option, pursuant to a domestic
relations order (within the meaning of Rule 16a-12 promulgated under the
Exchange Act), and an Option shall be exercisable during the lifetime of such
Optionee only by the Optionee or his or her guardian or legal representative.
Notwithstanding the foregoing, the Committee may set forth in the Agreement
evidencing an Option (other than an Incentive Stock Option), at the time of
grant or thereafter, that the Option may be transferred to members of the
Optionee’s immediate family, to trusts solely for the

 

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benefit of such immediate family members and to partnerships in which such
family members and/or trusts are the only partners, and for purposes of this
Plan, a transferee of an Option shall be deemed to be the Optionee. For this
purpose, immediate family means the Optionee’s spouse, parents, children,
stepchildren and grandchildren and the spouses of such parents, children,
stepchildren and grandchildren. The terms of an Option shall be final, binding
and conclusive upon the beneficiaries, executors, administrators, heirs and
successors of the Optionee.

5.8    Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person or by mail, or by such other means acceptable
to the Committee and communicated to an Optionee, to the Secretary of the
Company at the Company’s principal executive office, specifying the number of
Options to be exercised and, to the extent applicable, accompanied by payment
therefor and otherwise in accordance with the Agreement pursuant to which the
Option was granted; provided, however, that Options may not be exercised by an
Optionee following a hardship distribution to the Optionee to the extent such
exercise is prohibited under the Community Health Systems, Inc. 401(k) Plan. The
exercise price for any Shares purchased pursuant to the exercise of an Option
shall be paid in either of the following forms (or any combination thereof):
(a) cash or (b) the transfer, either actually or by attestation, to the Company
of Shares owned by the Optionee prior to the exercise of the Option, such
transfer to be upon such terms and conditions as determined by the Committee or
(c) a combination of cash and the transfer of Shares; provided, however, that
the Committee may determine that the exercise price shall be paid only in cash.
In addition, subject to applicable securities laws, Options may be exercised
pursuant to such other cashless exercise procedures which are, from time to
time, deemed acceptable by the Committee. Any Shares transferred to the Company
as payment of the exercise price under an Option shall be valued at their Fair
Market Value on the day of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the Option to the
Secretary of the Company who shall endorse thereon a notation of such exercise
and return such Agreement to the Optionee. No fractional Shares (or cash in lieu
thereof) shall be issued upon exercise of an Option and the number of Shares
that may be purchased upon exercise shall be rounded to the nearest number of
whole Shares.

5.9    Rights of Optionees. No Optionee shall be deemed for any purpose to be
the owner of any Shares subject to any Option unless and until (a) the Option
shall have been exercised pursuant to the terms thereof, (b) the Company shall
have issued and delivered Shares to the Optionee, and (c) the Optionee’s name
shall have been entered as a stockholder of record on the books of the Company
or otherwise evidenced by a “book entry” (i.e., a computerized or manual entry)
in the records of the Company or its designated agent. Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with respect to such
Shares, subject to such terms and conditions as may be set forth in the
applicable Agreement.

5.10    Effect of Change in Control. Section 13(b) shall control the treatment
of any Options outstanding at the time of a Change in Control. Except as
otherwise provided by the Committee, any Options that are exercisable as of a
Change in Control shall remain exercisable for a period ending not before the
earlier of (x) the six (6) month anniversary of the Change in Control or (y) the
expiration of the stated term of the Option.

 

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6. Limitations on Repricing.

Notwithstanding anything in the Plan to the contrary, except as permitted or
required by the provisions of Sections 12 or 13 hereof, neither the Board nor
the Committee shall have the power to (i) lower the Option Price of an Option
after it is granted, (ii) lower the Grant Price of a Stock Appreciation Right
after it is granted, (iii) cancel an Option when the exercise price thereof
exceeds the Fair Market Value of the underlying Shares in exchange for cash or
another Award or grant substitute Options with a lower exercise price than the
cancelled Options, (iv) cancel a Stock Appreciation Right when the Grant Price
exceeds the Fair Market Value of the underlying Shares in exchange for cash or
another Award, or grant substitute Stock Appreciation Rights with a lower Grant
Price than the cancelled Award, or (v) take any other action with respect to an
Option or Stock Appreciation Right that would be treated as a repricing under
the rules and regulations of the principal securities exchange on which the
Shares are traded, in each case without the approval of the Company’s
stockholders.

 

7. Stock Appreciation Rights.

The Committee may in its discretion, either alone or in connection with the
grant of an Option, grant Stock Appreciation Rights in accordance with the Plan,
the terms and conditions of which shall be set forth in an Agreement. If granted
in connection with an Option, a Stock Appreciation Right shall cover the same
Shares covered by the Option (or such lesser number of Shares as the Committee
may determine) and shall, except as provided in this Section 7, be subject to
the same terms and conditions as the related Option.

7.1    Time of Grant. A Stock Appreciation Right may be granted (a) at any time
if unrelated to an Option, or (b) if related to an Option, either at the time of
grant or at any time thereafter during the term of the Option.

7.2    Stock Appreciation Right Related to an Option.

(a)    Exercise. A Stock Appreciation Right granted in connection with an Option
shall be exercisable at such time or times and only to the extent that the
related Option is exercisable, and will not be transferable except to the extent
the related Option may be transferable. A Stock Appreciation Right granted in
connection with an Incentive Stock Option shall be exercisable only if the Fair
Market Value of a Share on the date of exercise exceeds the exercise price
specified in the related Incentive Stock Option Agreement. In no event shall a
Stock Appreciation Right related to an Option have a term of greater than ten
(10) years.

(b)    Amount Payable. Upon the exercise of a Stock Appreciation Right related
to an Option, the Grantee shall be entitled to receive an amount determined by
multiplying (i) the excess of the Fair Market Value of a Share on the date of
exercise of such Stock Appreciation Right over the per Share exercise price
under the related Option, by (ii) the number of Shares as to which such Stock
Appreciation Right is being exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement evidencing the
Stock Appreciation Right at the time it is granted.

(c)    Treatment of Related Options and Stock Appreciation Rights Upon Exercise.
Upon the exercise of a Stock Appreciation Right granted in connection with an
Option, the Option shall be canceled to the extent of the number of Shares as to
which the Stock Appreciation Right is exercised, and upon the exercise of an
Option granted in connection with a Stock Appreciation Right, the Stock
Appreciation Right shall be canceled to the extent of the number of Shares as to
which the Option is exercised or surrendered.

 

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7.3    Stock Appreciation Right Unrelated to an Option. The Committee may grant
to Eligible Individuals Stock Appreciation Rights unrelated to Options. Stock
Appreciation Rights unrelated to Options shall contain such terms and conditions
as to exercisability (subject to Section 7.7), vesting and duration as the
Committee shall determine, but in no event shall they have a term of greater
than ten (10) years. The Committee shall establish the Grant Price at the time
each Stock Appreciation Right unrelated to an Option is granted, which shall not
be less than the Fair Market Value of a Share on the date the Stock Appreciation
Right is granted. Upon exercise of a Stock Appreciation Right unrelated to an
Option, the Grantee shall be entitled to receive an amount determined by
multiplying (a) the excess of the Fair Market Value of a Share on the date of
exercise of such Stock Appreciation Right over the Grant Price of the Stock
Appreciation Right, by (b) the number of Shares as to which the Stock
Appreciation Right is being exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement evidencing the
Stock Appreciation Right at the time it is granted.

7.4    Non-Transferability. No Stock Appreciation Right shall be transferable by
the Grantee otherwise than by will or by the laws of descent and distribution or
pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act), and such Stock Appreciation Right shall be
exercisable during the lifetime of such Grantee only by the Grantee or his or
her guardian or legal representative. The terms of such Stock Appreciation Right
shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Grantee.

7.5    Method of Exercise. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered in person or by mail, or by such
other means acceptable to the Committee and communicated to the Grantee, to the
Secretary of the Company at the Company’s principal executive office, specifying
the number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and the
Agreement evidencing any related Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Grantee.

7.6    Form of Payment. Payment of the amount determined under Sections 7.2(b)
or 7.3 may be made in the discretion of the Committee solely in whole Shares in
a number determined at their Fair Market Value on the date of exercise of the
Stock Appreciation Right, or solely in cash, or in a combination of cash and
Shares. If the Committee decides to make full payment in Shares and the amount
payable results in a fractional Share, payment for the fractional Share will be
made in cash.

7.7    Effect of Change in Control. Section 13(b) shall control the treatment of
any Stock Appreciation Rights outstanding at the time of a Change in Control.
Except as otherwise provided by the Committee, any Stock Appreciation Rights
that are exercisable as of a Change in Control shall remain exercisable for a
period ending not before the earlier of (x) the six (6) month anniversary of the
Change in Control or (y) the expiration of the stated term of the Stock
Appreciation Right.

 

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8. Restricted Stock and Restricted Stock Units.

8.1    Restricted Stock. The Committee may grant Awards to Eligible Individuals
of Restricted Stock, which shall be evidenced by an Agreement between the
Company and the Grantee. Each Agreement shall contain such restrictions, terms
and conditions as the Committee may, in its discretion, determine and (without
limiting the generality of the foregoing) such Agreements may require that an
appropriate legend be placed on Share certificates. The Committee may, in its
discretion, provide that a Participant’s ownership of Restricted Stock prior to
the lapse of any transfer restrictions or any other applicable restrictions
shall, in lieu of such certificates, be evidenced by a “book entry” (i.e., a
computerized or manual entry) in the records of the Company or its designated
agent in the name of the Participant who has received such Award, and
confirmation and account statements sent to the Participant with respect to such
book entry Shares may bear the restrictive legend referenced in the preceding
sentence. Such records of the Company or such agent shall, absent manifest
error, be binding on all Participants who receive Restricted Stock Awards
evidenced in such manner. Awards of Restricted Stock shall be subject to the
terms and provisions set forth below in this Section 8.1.

(a)    Rights of Grantee. Subject to the foregoing provisions concerning book
entry issuance, Shares of Restricted Stock granted pursuant to an Award
hereunder shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted provided that the Grantee has executed an
Agreement evidencing the Award, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the Agreement evidencing a Restricted Stock Award,
or any documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the discretion of the Committee, Shares issued in connection
with a Restricted Stock Award shall be deposited together with the stock powers
with an escrow agent (which may be the Company) designated by the Committee.
Unless the Committee determines otherwise and as set forth in the Agreement,
upon delivery of the Shares to the escrow agent, the Grantee shall have all of
the rights of a stockholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions paid or made
with respect to the Shares.

(b)    Non-Transferability. Until all restrictions upon the Shares of Restricted
Stock awarded to a Grantee shall have lapsed in the manner set forth in
Section 8.1(c), such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated.

(c)    Lapse of Restrictions.

(i)    Generally. Restrictions upon Shares of Restricted Stock awarded hereunder
shall lapse at such time or times and on such terms and conditions as the
Committee may determine. The Agreement evidencing the Award shall set forth any
such restrictions.

(ii)    Effect of Change in Control. Section 13(b) shall control the treatment
of any Shares of Restricted Stock then outstanding in the event of a Change in
Control.

(d)    Treatment of Dividends. At the time an Award of Shares of Restricted
Stock is granted, the Committee may, in its discretion, determine that the
payment to the

 

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Grantee of dividends, or a specified portion thereof, declared or paid on such
Shares by the Company shall be (a) deferred until the lapsing of the
restrictions imposed upon such Shares and (b) held by the Company for the
account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the Shares in respect
of which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Shares of Restricted Stock
shall be forfeited upon the forfeiture of such Shares. For the avoidance of
doubt, if deferred dividends are not paid with respect to a Share of Restricted
Stock, no dividends shall be paid on such Share of Restricted Stock.

(e)    Delivery of Shares. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate to be delivered
to the Grantee with respect to such Shares, free of all restrictions hereunder
(or, in the case of book entry Shares, such restrictions and legend shall be
removed from the confirmation and account statements delivered to the
Participant or the Participant’s beneficiary or estate, as the case may be, in
book-entry form).

8.2    Restricted Stock Units. The Committee may grant to Eligible Individuals
Awards of Restricted Stock Units, which shall be evidenced by an Agreement. Each
such Agreement shall contain such restrictions, terms and conditions as the
Committee may, in its discretion, determine. Awards of Restricted Stock Units
shall be subject to the terms and provisions set forth below in this
Section 8.2.

(a)    Payment of Awards. Each Restricted Stock Unit shall represent the right
of a Grantee to receive a payment upon vesting of the Restricted Stock Unit or
on any later date specified by the Committee equal to the Fair Market Value of a
Share as of the date the Restricted Stock Unit was granted, the vesting date or
such other date as determined by the Committee at the time the Restricted Stock
Unit was granted. The Committee may, at the time a Restricted Stock Unit is
granted, provide a limitation on the amount payable in respect of each
Restricted Stock Unit and may provide for Dividend Equivalent Rights with
respect to such Award; provided, that no Dividend Equivalent Rights shall be
paid except to the extent the underlying Restricted Stock Unit is paid or
settled. The Committee may provide for the settlement of Restricted Stock Units
in cash or with Shares having a Fair Market Value equal to the payment to which
the Grantee has become entitled.

(b)    Effect of Change in Control. Section 13(b) shall control the treatment of
any Restricted Stock Units then outstanding in the event of a Change in Control.

 

9. Performance Awards.

9.1    Performance Units. The Committee, in its discretion, may grant Awards of
Performance Units to Eligible Individuals, the terms and conditions of which
shall be set forth in an Agreement between the Company and the Grantee.
Contingent upon the attainment of specified Performance Objectives within the
Performance Cycle, Performance Units represent the right to receive payment as
provided in Section 9.1(b) of (i) the Fair Market Value of a Share

 

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on the date the Performance Unit was granted, the date the Performance Unit
became vested or any other date specified by the Committee or (ii) a percentage
(which may be more than 100%) of the amount described in clause (i) depending on
the level of Performance Objective attainment; provided, however, that the
Committee may at the time a Performance Unit is granted specify a maximum amount
payable in respect of a vested Performance Unit. Each Agreement shall specify
the number of Performance Units to which it relates, the Performance Objectives
which must be satisfied in order for the Performance Units to vest and the
Performance Cycle within which such Performance Objectives must be satisfied. At
the time a Performance Unit is granted, the Committee may provide for Dividend
Equivalent Rights with respect to such Award; provided, that no Dividend
Equivalent Rights shall be paid except to the extent the underlying Performance
Unit is paid or settled.

(a)    Vesting and Forfeiture. Subject to Section 9.4, a Grantee shall become
vested with respect to the Performance Units to the extent that the Performance
Objectives set forth in the Agreement are satisfied for the Performance Cycle.

(b)    Payment of Awards. Payment to Grantees in respect of vested Performance
Units shall be made as soon as practicable after the last day of the Performance
Cycle to which such Award relates unless the Agreement evidencing the Award
provides for the deferral of payment, in which event the terms and conditions of
the deferral shall be set forth in the Agreement. Subject to Section 9.4, such
payments may be made entirely in Shares valued at their Fair Market Value,
entirely in cash, or in such combination of Shares and cash as the Committee in
its discretion shall determine at any time prior to such payment, provided,
however, that if the Committee in its discretion determines to make such payment
entirely or partially in Shares of Restricted Stock, the Committee must
determine the extent to which such payment will be in Shares of Restricted Stock
and the terms of such Restricted Stock at the time the Award is granted.

9.2    Performance Shares. The Committee, in its discretion, may grant Awards of
Performance Shares to Eligible Individuals, the terms and conditions of which
shall be set forth in an Agreement between the Company and the Grantee. Each
Agreement may require that an appropriate legend be placed on Share
certificates. Awards of Performance Shares shall be subject to the following
terms and provisions:

(a)    Rights of Grantee. The Committee shall provide at the time an Award of
Performance Shares is made the time or times at which the actual Shares
represented by such Award shall be issued in the name of the Grantee; provided,
however, that no Performance Shares shall be issued until the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of such
Performance Shares. If a Grantee shall fail to execute the Agreement evidencing
an Award of Performance Shares, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require within the time period prescribed by the Committee at
the time the Award is granted, the Award shall be null and void. At the
discretion of the Committee, Shares issued in connection with an Award of
Performance Shares shall be deposited together with the stock powers with an
escrow agent (which may be the Company) designated by the Committee.
Alternatively, the Committee may, in its discretion, provide that Performance
Shares shall be evidenced by the book entry procedures set forth in Section 8.1.
Except as restricted by the terms of the Agreement, upon delivery of the Shares
to the escrow agent, or the book entry of such Shares, the Grantee shall have,
in the discretion of the Committee, all of the rights of a stockholder with
respect to such Shares, including the right to vote the Shares and to receive
all dividends or other distributions paid or made with respect to the Shares.

 

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(b)    Non-Transferability. Until any restrictions upon the Performance Shares
awarded to a Grantee shall have lapsed in the manner set forth in Section 9.2(c)
or 9.4, such Performance Shares shall not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated, nor shall they
be delivered to the Grantee. The Committee may also impose such other
restrictions and conditions on the Performance Shares, if any, as it deems
appropriate.

(c)    Lapse of Restrictions. Subject to Section 9.4, restrictions upon
Performance Shares awarded hereunder shall lapse and such Performance Shares
shall become vested at such time or times and on such terms, conditions and
satisfaction of Performance Objectives as the Committee may, in its discretion,
determine at the time an Award is granted.

(d)    Treatment of Dividends. The payment to the Grantee of dividends, or a
specified portion thereof, declared or paid on Shares represented by an Award of
Performance Shares which have been issued by the Company to the Grantee shall be
(i) deferred until the lapsing of the restrictions imposed upon such Performance
Shares and (ii) held by the Company or its agent for the account of the Grantee
until such time. The Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Performance
Shares) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Performance Shares in respect of which
the deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.

(e)    Delivery of Shares. Upon the lapse of the restrictions on Performance
Shares awarded hereunder, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder, or in the case of book entry Shares, such restrictions and legend
shall be removed from the confirmation and account statements delivered to the
Participant or the Participant’s beneficiary or estate, as the case may be.

9.3    Performance Objectives.

(a)    Establishment. Performance Objectives for Performance Awards may be
expressed in terms of (i) earnings per Share, (ii) net revenue, (iii) adjusted
EBITDA (iv) Share price, (v) pre-tax profits, (vi) net earnings, (vii) return on
equity or assets, (viii) operating income, (ix) EBITDA margin, (x) EBITDA margin
improvement, (xi) bad debt expense, (xii) cash receipts, (xiii) uncompensated
care expense, (xiv) days in net revenue in net patient accounts receivable,
(xv) gross income, (xvi) net income (before or after taxes), (xvii) cash flow;
(xviii) gross profit, (xix) gross profit return on investment, (xx) gross margin
return on investment, (xxi) gross margin; (xxii) operating margin,
(xxiii) working capital, (xxiv) earnings before interest and taxes, (xxv) return
on capital, (xxvi) return on invested capital, (xxvii) revenue growth,
(xxviii) annual recurring revenues, (xxix) recurring revenues, (xxx) total
shareholder return, (xxxi) economic

 

18

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value added, (xxxii) specified objectives with regard to limiting the level of
increase in all or a portion of the Company’s bank debt or other long-term or
short-term public or private debt or other similar financial obligations of the
Company, which may be calculated net of cash balances and/or other offsets and
adjustments as may be established by the Committee in its sole discretion,
(xxxiii) reduction in operating expenses, or (xxxiv) any combination of the
foregoing. Performance Objectives may be in respect of the performance of the
Company, any of its Subsidiaries, any of its Divisions or any combination
thereof. Performance Objectives may be absolute or relative (to prior
performance of the Company or to the performance of one or more other entities
or external indices) and may be expressed in terms of a progression within a
specified range.

(b)    Effect of Certain Events. At the time of the granting of a Performance
Award, or at any time thereafter, in either case to the extent permitted under
applicable accounting rules consistently with a “grant” thereof, the Committee
may provide for the manner in which performance will be measured against the
Performance Objectives (or may adjust the Performance Objectives) to reflect the
impact of specified corporate transactions, accounting or tax law changes, other
extraordinary, unusual or nonrecurring events, and such other matters that the
Committee determines is consistent with the intent of the Performance Award.

9.4    Effect of Change in Control. Section 13(b) shall control the treatment of
any Performance Units then outstanding in the event of a Change in Control.

9.5    Non-Transferability. Until the vesting of Performance Units or the
lapsing of any restrictions on Performance Shares, as the case may be, such
Performance Units or Performance Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated.

 

10. Share Awards.

The Committee may grant a Share Award to any Eligible Individual on such terms
and conditions as the Committee may determine in its sole discretion. Share
Awards may be made as additional compensation for services rendered by the
Eligible Individual or may be in lieu of cash or other compensation to which the
Eligible Individual is entitled from the Company.

 

11. Effect of a Termination of Employment.

The Agreement evidencing the grant of each Option and each Award shall set forth
the terms and conditions applicable to such Option or Award upon a termination
or change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), which shall be as the Committee may,
in its discretion, determine at the time the Option or Award is granted or
thereafter.

 

12. Adjustment Upon Changes in Capitalization.

(a)    In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the maximum
number and class of Shares or other stock or securities with respect to which
Options or Awards may be granted under the Plan, (ii) the number and class of
Shares or other stock or securities which are subject to outstanding Options or
Awards granted under the Plan and the exercise price therefor, if applicable,
and (iii) the Performance Objectives.

 

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(b)    Any such adjustment in the Shares or other stock or securities subject to
outstanding Incentive Stock Options (including any adjustments in the exercise
price) shall be made in such manner as not to constitute a modification as
defined by Section 424(h)(3) of the Code and only to the extent permitted by
Sections 422 and 424 of the Code. In addition, (a) no adjustment to any Option
or Award that is not subject to Section 409A of the Code shall be made in a
manner that would subject the Option or Award to Section 409A of the Code and
(b) any adjustment to an Option or Award that is subject to Section 409A of the
Code shall be made only in a manner and to the extent permitted by Section 409A
of the Code.

(c)    If, by reason of a Change in Capitalization, a Grantee of an Award shall
be entitled to, or an Optionee shall be entitled to exercise an Option with
respect to, new, additional or different shares of stock or securities of the
Company or any other corporation, such new, additional or different shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the Shares subject to the Award or Option, as
the case may be, prior to such Change in Capitalization.

 

13. Effect of Certain Transactions; Effect of Change in Control.

(a)    Effect of Certain Transactions. Subject to Sections 5.10, 7.7, 8.2(b) and
9.4 or as otherwise provided in an Agreement, in the event of (a) the
liquidation or dissolution of the Company or (b) a merger or consolidation of
the Company (a “Transaction”), the Plan and the Options and Awards issued
hereunder shall continue in effect in accordance with their respective terms,
except that following a Transaction either (i) each outstanding Option or Award
shall be treated as provided for in the agreement entered into in connection
with the Transaction or (ii) if not so provided in such agreement, each Optionee
and Grantee shall be entitled to receive in respect of each Share subject to any
outstanding Options or Awards, as the case may be, upon exercise of any Option
or payment or transfer in respect of any Award, the same number and kind of
stock, securities, cash, property or other consideration that each holder of a
Share was entitled to receive in the Transaction in respect of a Share;
provided, however, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Options and Awards prior to
such Transaction. For the avoidance of doubt, the Committee may, without the
consent of any Optionee or Grantee, provide for the cancellation of outstanding
Awards in connection with a Transaction in exchange for the payment in cash or
property equal in value to the Fair Market Value of the Shares underlying such
Awards, less, in the case of Options (and Stock Appreciation Rights), the
aggregate exercise price (or Grant Price) thereof; provided that Options with an
aggregate exercise price that is equal to or in excess of the aggregate Fair
Market Value of the Shares underlying such Options, and Stock Appreciation
Rights whose Grant Price is equal to or in excess of the Fair Market Value of a
Share to which such Stock Appreciation Rights relate, may be cancelled in
connection with such Transaction without any consideration being paid in respect
thereof. The treatment of any Option or Award as provided in this Section 13(a)
shall be conclusively presumed to be appropriate for purposes of Section 12.

 

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(b)    Effect of Change in Control. Notwithstanding any other provision of the
Plan to the contrary, in the event of a Change in Control, the following
provisions of this Section 13(b) shall apply except to the extent an Option or
Award Agreement provides for a different treatment (in which case the Option or
Award Agreement shall govern and this Section 13(b) shall not be applicable):

(i)    If and to the extent that outstanding Options or Awards under the Plan
(A) are assumed by the successor corporation (or affiliate thereto) or continued
or (B) are replaced with equity awards that preserve the existing value of the
Options or Awards at the time of the Change in Control and provide for
subsequent payout in accordance with a vesting schedule and Performance
Objectives, as applicable, that are the same or more favorable to the
Participants than the vesting schedule and Performance Objectives applicable to
the Options or Awards, then all such Options or Awards or such substitutes
thereof shall remain outstanding and be governed by their respective terms and
the provisions of the Plan, subject to Section 13(b)(iv) below.

(ii)    If and to the extent that outstanding Options or Awards under the Plan
are not assumed, continued or replaced in accordance with Section 13(b)(i)
above, then upon the Change in Control the following treatment (referred to as
“Change-in-Control Treatment”) shall apply to such Options or Awards:
(A) outstanding Options and Stock Appreciation Rights shall immediately vest and
become exercisable; (B) the restrictions and other conditions applicable to
outstanding Restricted Shares, Restricted Stock Units and Stock Awards,
including vesting requirements, shall immediately lapse; such Awards shall be
free of all restrictions and fully vested; and, with respect to Restricted Stock
Units, shall be payable immediately in accordance with their terms or, if later,
as of the earliest permissible date under Code Section 409A; and (C) outstanding
Performance Awards granted under the Plan shall immediately vest and shall
become immediately payable in accordance with their terms as if the Performance
Objectives have been achieved at the target performance level.

(iii)    If and to the extent that outstanding Options or Awards under the Plan
are not assumed, continued or replaced in accordance with Section 13(b)(i)
above, then in connection with the application of the Change-in-Control
Treatment set forth in Section 13(b)(ii) above, the Board may, in its sole
discretion, provide for cancellation of such outstanding Awards at the time of
the Change in Control in which case a payment of cash, property or a combination
thereof shall be made to each such Optionee or Grantee upon the consummation of
the Change in Control that is determined by the Board in its sole discretion and
that is at least equal to the excess (if any) of the value of the consideration
that would be received in such Change in Control by the holders of the Company’s
securities relating to such Options or Awards over the exercise or purchase
price (if any) for such Options or Awards (except that, in the case of an Option
or Stock Appreciation Right, such payment shall be limited as necessary to
prevent the Option or Stock Appreciation Right from being subject to tax under
Code Section 409A).

(iv)    If and to the extent that (A) outstanding Options or Awards are assumed,
continued or replaced in accordance with Section 13(b)(i) above and (B) a
Optionee’s or Grantee’s employment with, or performance of services for, the
Company or any of its Subsidiaries or successors is terminated by the Company or
such Subsidiary or successor for any reasons other than Cause or by such
Optionee or Grantee for Good Reason, in each case, within the two-year period
commencing on the Change in Control, then, as of the date of such Participant’s
termination, the Change-in-Control Treatment set forth in Section 13(b)(ii)
above shall apply to all assumed or replaced Options or Awards of such
Participant then outstanding.

(v)    Outstanding Options or Stock Appreciation Rights that are assumed,
continued or replaced in accordance with Section 13(b)(i) may be exercised by
the Optionee or Grantee in accordance with the applicable terms and conditions
of

 

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such Option or Award as set forth in the applicable Agreement or elsewhere;
provided, however, that Options or Stock Appreciation Rights that become
exercisable in accordance with Section 13(b)(iv) may be exercised until the
expiration of the original full term of such Option or Stock Appreciation Right
notwithstanding the other original terms and conditions of such Award, to the
extent allowed without such Option or Stock Appreciation Right becoming subject
to tax under Code Section 409A.

 

14. Interpretation.

Following the required registration of any equity security of the Company
pursuant to Section 12 of the Exchange Act,

(a)    The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.

(b)    To the extent that any legal requirement of Section 16 of the Exchange
Act as set forth in the Plan ceases to be required under Section 16 of the
Exchange Act, that Plan provision shall cease to apply.

 

15. Termination and Amendment of the Plan or Modification of Options and Awards.

15.1    Plan Amendment or Termination. The Plan shall terminate on the day
preceding the tenth anniversary of the Restatement Effective Date and no Option
or Award may be granted thereafter. The Board may sooner terminate the Plan and
the Board, subject to Section 7, may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:

(a)    no such amendment, modification, suspension or termination shall impair
or adversely alter any Options or Awards theretofore granted under the Plan,
except with the written consent of the applicable Optionee or Grantee, nor shall
any amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan; and

(b)    to the extent necessary under any applicable law, regulation or exchange
requirement with which the Committee determines it is necessary or desirable for
the Company to comply, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with any such law, regulation or
exchange requirement.

15.2    Modification of Options and Awards. No modification of an Option or
Award shall materially and adversely alter or impair any rights or obligations
under the Option or Award without the written consent of the Optionee or
Grantee, as the case may be.

 

16. Non-Exclusivity of the Plan.

The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

 

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17. Limitation of Liability.

As illustrative of the limitations of liability of the Company, but not intended
to be exhaustive thereof, nothing in the Plan shall be construed to:

(a)    give any person any right to be granted an Option or Award other than at
the sole discretion of the Committee;

(b)    give any person any rights whatsoever with respect to Shares except as
specifically provided in the Plan;

(c)    limit in any way the right of the Company or any Subsidiary to terminate
the employment of any person at any time; or

(d)    be evidence of any agreement or understanding, expressed or implied, that
the Company will employ any person at any particular rate of compensation or for
any particular period of time.

 

18. Regulations and Other Approvals; Governing Law.

18.1    Except as to matters of federal law, the Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of Delaware without giving effect to conflicts of laws
principles thereof.

18.2    The obligation of the Company to sell or deliver Shares with respect to
Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

18.3    The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Individuals granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.

18.4    Each Option and Award is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or Award or the
issuance of Shares, no Options or Awards shall be granted or payment made or
Shares issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.

18.5    Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the “Securities Act”), and is not otherwise
exempt from such registration, such Shares shall be restricted against transfer
to the extent required by the Securities Act and Rule 144 or other regulations
thereunder. The Committee may require any individual receiving Shares pursuant
to an Option or Award granted under the Plan, as a condition precedent to
receipt of such Shares, to represent and warrant to the Company in writing that
the Shares acquired by such individual

 

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are acquired without a view to any distribution thereof and will not be sold or
transferred other than pursuant to an effective registration thereof under the
Securities Act or pursuant to an exemption applicable under the Securities Act
or the rules and regulations promulgated thereunder. The certificates evidencing
any such Shares shall be appropriately amended or have an appropriate legend
placed thereon to reflect their status as restricted securities as aforesaid.

18.6    Compliance With Section 409A. All Options and Awards granted under the
plan are intended either not to be subject to Section 409A of the Code or, if
subject to Section 409A of the Code, to be administered, operated and construed
in compliance with Section 409A of the Code and any guidance issued thereunder.
Notwithstanding this or any other provision of the Plan to the contrary, the
Committee may amend the Plan or any Option or Award granted hereunder in any
manner, or take any other action, that it determines, in its sole discretion, is
necessary, appropriate or advisable to cause the Plan or any Option or Award
granted hereunder to comply with Section 409A and any guidance issued
thereunder. In the event that it is reasonably determined by the Board or
Committee that, as a result of Section 409A of the Code, payments in respect of
any Award under the Plan may not be made at the time contemplated by the terms
of the Plan or the relevant Agreement, as the case may be, without causing the
Participant holding such Award to be subject to taxation under Section 409A of
the Code, the Company will make such payment on the first day that would not
result in the Participant incurring any tax liability under Section 409A of the
Code; which, if the Participant is a “specified employee” within the meaning of
the Section 409A, generally shall be the first day following the six-month
period beginning on the date of Participant’s termination of employment. Any
such action, once taken, shall be deemed to be effective from the earliest date
necessary to avoid a violation of Section 409A and shall be final, binding and
conclusive on all Eligible Individuals and other individuals having or claiming
any right or interest under the Plan. Although the Company intends to administer
the Plan so that Awards will be exempt from, or will comply with, the
requirements of Section 409A of the Code, the Company does not warrant that any
Award under the Plan will qualify for favorable tax treatment under Section 409A
of the Code or any other provision of federal, state, local or foreign law. The
Company shall not be liable to any Participant for any tax, interest, or
penalties that Participant might owe as a result of the grant, holding, vesting,
exercise, or payment of any Award under the Plan.

 

19. Miscellaneous.

19.1    Forfeiture and Clawback Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to Options and Awards granted
under the Plan, the Committee shall have the right to provide, in an Agreement,
or to require a Participant to agree by separate written or electronic
instrument at or after grant, that all Options and Awards (including any
proceeds, gains or other economic benefit actually or constructively received by
the Participant upon any receipt or exercise of any Option or Award or upon the
receipt or resale of any Shares underlying the Option or Award) will be subject
to repayment or reimbursement to the extent set forth in any recoupment or
clawback provisions which may be included in any such Agreement or separate
instrument. In addition, without limiting the foregoing, any Option or Award
granted pursuant to this Plan shall be subject to repayment or reimbursement by
the Participant to the Company (i) to the extent provided in the Company’s
current “Clawback Policy,” as it may be amended from time to time, (ii) to the
extent that Participant in the future becomes subject to any other recoupment or
clawback policy hereafter adopted by the Company, including any such policy (or
amended version of the Company’s current Clawback Policy) adopted by the Company
to comply with the requirements of any applicable laws, rules or regulations,
including pursuant to final SEC rules under the Dodd-Frank Wall Street Reform

 

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and Consumer Protection Act, or (iii) to the extent provided under any
applicable laws which impose mandatory recoupment, under circumstances set forth
in such applicable laws, including the Sarbanes-Oxley Act of 2002.

19.2    Multiple Agreements. The terms of each Option or Award may differ from
other Options or Awards granted under the Plan at the same time or at some other
time. The Committee may also grant more than one Option or Award to a given
Eligible Individual during the term of the Plan, either in addition to, or in
substitution for, one or more Options or Awards previously granted to that
Eligible Individual.

19.3    Beneficiary Designation. Each Optionee or Grantee may, from time to
time, name one or more individuals (each, a “Beneficiary”) to whom any benefit
under the Plan is to be paid or who may exercise any rights of the Optionee or
Grantee under any Option or Award granted under the Plan in the event of the
Optionee’s or Grantee’s death before he or she receives any or all of such
benefit or exercises such Option. Each such designation shall revoke all prior
designations by the same Optionee or Grantee, shall be in a form prescribed by
the Company, and will be effective only when filed by the Optionee or Grantee in
writing with the Company during the Optionee’s or Grantee’s lifetime. In the
absence of any such designation, benefits remaining unpaid at the Optionee’s or
Grantee’s death and rights to be exercised following the Optionee’s or Grantee’s
death shall be paid to or exercised by the Optionee’s or Grantee’s estate.

19.4    Withholding of Taxes.

(a)    At such times as an Optionee or Grantee recognizes taxable income in
connection with the receipt of Shares or cash hereunder (a “Taxable Event”), the
Optionee or Grantee shall pay to the Company an amount equal to the federal,
state and local income taxes and other amounts as may be required by law to be
withheld by the Company in connection with the Taxable Event (the “Withholding
Taxes”) prior to the issuance, or release from escrow, of such Shares or the
payment of such cash. The Company shall have the right to deduct from any
payment of cash to an Optionee or Grantee an amount equal to the Withholding
Taxes in satisfaction of the obligation to pay Withholding Taxes. The Committee
may provide in an Agreement evidencing an Option or Award at the time of grant
or thereafter that the Optionee or Grantee, in satisfaction of the obligation to
pay Withholding Taxes to the Company, may elect to have withheld a portion of
the Shares issuable to him or her pursuant to the Option or Award having an
aggregate Fair Market Value equal to the Withholding Taxes. In the event Shares
are withheld by the Company to satisfy any obligation to pay Withholding Taxes,
such Shares shall be retired and cancelled and shall not thereafter be available
to grant an Option or Award with respect thereto. In determining the procedures
by which Shares will be withheld for Withholding Taxes, to the extent required
to avoid the Company’s incurring an adverse accounting charge, the amount of any
Shares so withheld shall not exceed the amount necessary to satisfy Withholding
Taxes determined using the maximum statutory withholding rates for federal,
state, local and/or foreign tax purposes, including payroll taxes, that are
applicable to supplemental taxable income.

(b)    If an Optionee makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such Optionee pursuant to the exercise of an Incentive Stock Option
within the two-year period commencing on the day after the date of the grant or
within the one-year period commencing on the day after the date of transfer of
such Share or Shares to the Optionee pursuant to such exercise, the Optionee
shall, within ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Company at its principal executive office.

 

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19.5    Effective Date. The effective date of this Plan shall be March 14, 2018
(the “Restatement Effective Date”), subject only to the approval by the holders
of a majority of the securities of the Company entitled to vote thereon, in
accordance with the applicable laws, within twelve (12) months of the adoption
of the Plan by the Board.

 

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