dcs8ex4_1.htm


     

     

    


      Exhibit
        4.1

       Community
        Health Systems, Inc.

      2000
        STOCK OPTION AND AWARD PLAN

      (As
        Amended and Restated March 30, 2007)

      


      
        	
                1.  

              	
                Purpose.

              


      

      


      The
        purpose of this Plan is to strengthen Community Health Systems, Inc., a Delaware
        corporation (the ?Company?), and its Subsidiaries by providing 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, Nonqualified Stock Options, Stock Appreciation
        Rights, Performance Units, Performance Shares, Share Awards, Phantom Stock
        and
        Restricted Stock (as each term is herein defined).

       

      
        	
                2.  

              	
                Definitions.

              


      

      


      For
        purposes of the Plan:

      


      2.1           ?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.

       

      2.2           ?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.

       

      2.3           ?Award?
        means a grant of Restricted Stock, Phantom Stock, a Stock Appreciation Right,
        a
        Performance Award, a Share Award or any or all of them.

       

      2.4           ?Board?
        means the Board of Directors of the Company.

       

      2.5           ?Cause?
        means, except as otherwise set forth herein,

       

      (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

       

      (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 2.5(b) shall not constitute ?Cause.?

       

      2.6           ?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, combination or exchange
        of shares, repurchase of shares, change in corporate structure or
        otherwise.

       

      2.7           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 2.7(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 February 23, 2005, 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

       

      (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 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.

      


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

      


      2.8           ?Code?
        means the Internal Revenue Code of 1986, as amended.

       

      2.9           ?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.

       

      2.10           ?Company?
        means Community Health Systems, Inc.

       

      2.11           ?Director?
        means a director of the Company.

       

      2.12           ?Disability?
        means:

       

      (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 2.12(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 his or her duties for a period
        of
        ninety-one (91) consecutive days.

       

      2.13           ?Division?
        means any of the operating units or divisions of the Company designated as
        a
        Division by the Committee.

       

      2.14           ?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.

       

      2.15           ?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, officer or employee of the Company or
        a Subsidiary, (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.

       

      2.16           ?Exchange
        Act? means the Securities Exchange Act of 1934, as amended.

       

      2.17           ?Fair
        Market Value? on any date 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 and, in the case
        of an
        Incentive Stock Option, in accordance with Section 422 of the Code.

       

      2.18           ?Formula
        Restricted Share Award? means Restricted Stock awarded pursuant to Section 7.7
        hereof.

       

      2.19           ?Grantee?
        means a person to whom an Award has been granted under the Plan.

       

      2.20           ?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.

       

      2.21           ?Non-employee
        Director? means a director of the Company who is a ?non-employee director?
within the meaning of Rule 16b-3 promulgated under the Exchange
        Act.

       

      2.22           ?Nonqualified
        Stock Option? means an Option which is not an Incentive Stock
        Option.

       

      2.23           ?Option?
        means a Nonqualified Stock Option, an Incentive Stock Option or either or
        both
        of them.

       

      2.24           ?Optionee?
        means a person to whom an Option has been granted under the Plan.

       

      2.25           ?Outside
        Director? means a director of the Company who is an ?outside director? within
        the meaning of Section 162(m) of the Code and the regulations promulgated
        thereunder.

       

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

       

      2.27           ?Performance
        Awards? means Performance Units, Performance Shares or either or both of
        them.

       

      2.28           ?Performance-Based
        Compensation? means any Option or Award that is intended to constitute
?performance based compensation? within the meaning of Section 162(m)(4)(C) of
        the Code and the regulations promulgated thereunder.

       

      2.29           ?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.

       

      2.30           ?Performance
        Objectives? has the meaning set forth in Section 8.

       

      2.31           ?Performance
        Shares? means Shares issued or transferred to an Eligible Individual under
        Section 8.

       

      2.32           ?Performance
        Units? means performance units granted to an Eligible Individual under Section
        8.

       

      2.33           ?Phantom
        Stock? means a right granted to an Eligible Individual under Section 9
        representing a number of hypothetical Shares.

       

      2.34           ?Plan?
        means Community Health Systems, Inc. 2000 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 7.

       

      2.36           ?Share
        Award? means an Award of Shares granted pursuant to Section 9.

       

      2.37           ?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.

       

      2.38           ?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 6 hereof.

       

      2.39           ?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.

       

      2.40           ?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.

       

      2.41           ?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 (A) 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 and (B) to the
        extent necessary for any Option or Award intended to qualify as
        Performance-Based Compensation to so qualify, the Committee shall consist
        of at
        least two (2) Directors, each of whom shall be an Outside
        Director.  For purposes of the preceding sentence, if any member of
        the Committee is neither a Non-employee Director nor an Outside Director
        but
        recuses himself or herself or abstains from voting with respect to a particular
        action taken by the Committee, then 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 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 with respect to
Options and Awards that are not intended to qualify as Performance-Based
Compensation.




4.           Stock Subject to the Plan; Grant
Limitations.




4.1           The
maximum number of Shares that may be made the subject of Options and Awards
granted under the Plan is 22,862,791 (17,062,791 subject to the prior
amendment and restatement and 5,800,000 additional shares authorized pursuant to
the amendment and restatement dated March 30, 2007); provided, however, that (i) in any calendar year, (a) no
Eligible Individual may be granted Options or Awards in the aggregate in respect
of more than 1,000,000 Shares, and (b) the dollar amount of cash or Fair Market
Value of Shares that any Eligible Individual may receive in respect of
Performance Units denominated in dollars may not exceed $250,000, and (ii) in no
event shall more than an aggregate of 30,000 Shares be issued upon the exercise
of Incentive Stock Options granted under the Plan.  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.

 

4.2           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 (other than the granting
of a Performance Unit denominated in dollars), the number of Shares shall be
reduced by the number of Shares in respect of which the Option or Award is
granted or denominated.

 

(b)           In
connection with the granting of a Performance Unit denominated in dollars, the
number of Shares shall be reduced by an amount equal to the quotient of (i) the
dollar amount in which the Performance Unit is denominated, divided by (ii) the
Fair Market Value of a Share on the date the Performance Unit is
granted.

 

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

 

(d)  Notwithstanding the foregoing, Awards granted in the form of
Restricted Stock, Performance Awards (including Shares issued in respect to
Performance Awards), Phantom Stock, and other Awards that are granted after
March 30, 2007 as ?full value awards? shall reduce the number of shares that may
be the subject to Options and Awards under the Plan by 2.24 Shares for each
Share subject to such an Award.

 

4.3           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 payment having been made in respect of the entire
Option or Award, the Shares allocable to the expired, canceled, forfeited,
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 4.2(d), for each Share subject to an Award that is
cancelled, forfeited, settled in cash or other otherwise terminated as provided
in the foregoing sentence, 2.24 Shares may again be the subject of Options or
Awards under the Plan.

 

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.

 

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 Nonqualified Stock Option and each Incentive Stock 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 Nonqualified 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 Nonqualified 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 Nonqualified 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 Nonqualified Stock Options according to the
order in which they were granted such that the most recently granted Options are
first treated as Nonqualified 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 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 to the
Secretary of the Company at the Company's principal executive office, specifying
the number of Shares 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 or Treasury Regulation ?
1.401(k)-1(d)(2)(iv)(B)(4).  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 that have been held
by the Optionee for at least six (6) months (or such lesser period as may be
permitted by the Committee) 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, Options may be exercised through a
registered broker-dealer pursuant to such 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.  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.  In the event of
a Change in Control, each Option held by the Optionee as of the date of the
Change in Control shall become immediately and fully exercisable and shall,
notwithstanding any shorter period set forth in the Agreement evidencing the
Option, 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.  In addition, the Agreement evidencing the
grant of an Option may provide for any other treatment of the Option in the
event of a Change in Control.

 


	
      6.  
	
      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 6, be subject to the same terms and conditions as the
related Option.




6.1           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.

 

6.2           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; provided, however,
that the Committee may provide that a Stock Appreciation Right may, upon the
death of the Grantee, be exercised for up to one (1) following the date of the
Grantee?s death even if such period extends beyond ten (10) years from the date
the Stock Appreciation Right is granted.  

 

(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.

 

6.3           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 6.7), vesting and duration as the Committee
shall determine, but in no event shall they have a term of greater than ten (10)
years; provided, however, that the Committee may
provide that a Stock Appreciation Right may, upon the death of the Grantee, be
exercised for up to one (1) year following the date of the Grantee?s death even
if such period extends beyond ten (10) years from 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 Fair Market Value
of a Share on the date the Stock Appreciation Right was granted, 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.

 

6.4           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.

 

6.5           Method of Exercise.  Stock Appreciation Rights
shall be exercised by a Grantee only by a written notice delivered in person or
by mail 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.

 

6.6           Form of Payment.  Payment of the amount
determined under Sections 6.2(b) or 6.3 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.

 

6.7           Effect of Change in Control.  In the event of
a Change in Control, each Stock Appreciation Right held by the Grantee shall
become immediately and fully exercisable and shall, notwithstanding any shorter
period set forth in the Agreement evidencing the Stock Appreciation Right,
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.  In addition, the Agreement
evidencing the grant of a Stock Appreciation Right unrelated to an Option may
provide for any other treatment of such Stock Appreciation Right in the event of
a Change in Control.

 

7.           Restricted Stock.




7.1           Grant.  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.  Awards of Restricted Stock shall be subject to the
terms and provisions set forth below in this Section 7.

 

7.2           Rights of Grantee.  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.

 

7.3           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 7.4, such Shares shall not be sold, transferred
or otherwise disposed of and shall not be pledged or otherwise
hypothecated.

 

7.4           Lapse of Restrictions.

 

(a)           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.

 

(b)           Effect of Change in Control.  The Committee
may determine at the time of the grant of an Award of Restricted Stock the
extent to which the restrictions upon Shares of Restricted Stock shall lapse
upon a Change in Control.  The Agreement evidencing the Award shall
set forth any such provisions.

 

7.5           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 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.

 

7.6           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.

 

7.7           Restricted Stock Awards for
Non-employee Directors.  Except as otherwise provided in this
Section 7.7, all Formula Restricted Share Awards shall be governed by the same
terms and conditions of the other provisions of Section 7.  All
Formula Restricted Share Awards shall be evidenced by a Restricted Stock Award
Agreement containing such other terms and conditions not inconsistent with the
provisions of this Plan as determined by the Committee; provided, however, that such terms shall not vary the
amount or timing of Formula Restricted Share Awards provided under this Section
7.7 and provisions dealing with lapsing of restrictions and the forfeiture of
such Formula Restricted Share Awards.

 

(a)           Grant.  Formula Restricted Stock Awards shall
be granted to Non-employee Directors as follows:

 

(i)           Initial Grant.  Each Non-employee Director
shall, upon becoming a Director, be granted a Formula Restricted Share Award in
respect of 6,000 Shares.

 

(ii)           Annual Grant.  Each Non-employee Director
shall be granted a Formula Restricted Share Award in respect of 3,000 Shares on
the first business day after January 1st of each calendar year that the Plan is
in effect provided that the Non-employee Director is a Director on such date;
provided further, however, that, if the Initial
Grant to a Non-employee Director is made after June 30th of any calendar year,
the first Annual Grant to be made to the Non-employee Director shall be made on
the first business day after January 1st of the second calendar year following
the year in which the Initial Grant was made provided that the Non-employee
Director is a Director on such date.

 

(b)           Lapse of Restrictions Generally.  Subject to
paragraphs (c) and (d) of this Section 7.7, one-third (1/3) of the number of
Shares of Restricted Stock issued pursuant to a Formula Restricted Share Award
(rounded up to the next whole Share, if necessary) shall vest, and the
restrictions with respect to such Restricted Stock shall lapse, on each of the
first three (3) anniversaries of the date of grant of the Formula Restricted
Share Award.




(c)           Effect of Certain Terminations. If the Grantee ceases to
serve as a director as a result of the Grantee?s death, Disability, or removal
from the Board other than for Cause prior to the expiration of the Grantee?s
term, in each case if such termination occurs on or after the date of grant of
the Formula Restricted Share Award, all Shares of Restricted Stock which have
not become vested in accordance with paragraph (b) or (d) of this Section 7.7
shall vest, and the restrictions on such Restricted Stock shall lapse, as of the
date of such termination.




(d)           Effect of Change in Control.  In the event of
a Change in Control at any time on or after the date of grant of the Formula
Restricted Share Award, all Shares of Restricted Stock which have not become
vested in accordance with paragraphs (b) or (c) of this Section 7.7 shall vest,
and the restrictions on such Restricted Stock shall lapse,
immediately.




(e)           Forfeiture of Restricted Stock.  Any
and all Shares of Restricted Stock granted pursuant to a Formula Restricted
Share Award which have not become vested in accordance with paragraphs (b), (c),
or (d) of this Section 7.7 shall be forfeited and shall revert to the Company
upon the termination of the Grantee?s service as a director for any reason other
than those set forth in with paragraph (d) of this Section 7.7 prior to such
vesting.




8.           Performance Awards.




8.1           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.  Performance Units may be denominated in
Shares or a specified dollar amount and, contingent upon the attainment of
specified Performance Objectives within the Performance Cycle, represent the
right to receive payment as provided in Section 8.1(b) of (i) in the case of
Share-denominated Performance Units, the Fair Market Value of a Share on the
date the Performance Unit was granted, the date the Performance Unit became
vested or any other date specified by the Committee, (ii) in the case of
dollar-denominated Performance Units, the specified dollar amount or (iii) a
percentage (which may be more than 100%) of the amount described in clause (i)
or (ii) 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.

 

(a)           Vesting and Forfeiture.  Subject to Sections
8.3(c) and 8.4, 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.  Subject to Section 8.3(c),
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 8.4, 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.

 

8.2           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.  Except as restricted
by the terms of the Agreement, upon delivery of the Shares to the escrow agent,
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.

 

(b)           Non-transferability.  Until any restrictions
upon the Performance Shares awarded to a Grantee shall have lapsed in the manner
set forth in Section 8.2(c) or 8.4, 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 Sections
8.3(c) and 8.4, 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.  At the time the Award
of Performance Shares is granted, the Committee may, in its discretion,
determine that the payment to the Grantee of dividends, or a specified portion
thereof, declared or paid on Shares represented by such Award 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 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 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.

 

8.3           Performance Objectives.

 

(a)           Establishment.  Performance Objectives for
Performance Awards may be expressed in terms of (i) earnings per Share, (ii)
Share price, (iii) pre-tax profits, (iv) net earnings, (v) return on equity or
assets, (vi) sales or (vii) 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.  The Performance Objectives with
respect to a Performance Cycle shall be established in writing by the Committee
by the earlier of (x) the date on which a quarter of the Performance Cycle has
elapsed or (y) the date which is ninety (90) days after the commencement of the
Performance Cycle, and in any event while the performance relating to the
Performance Objectives remain substantially uncertain.

 

(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 Section 162(m) of the Code and the regulations
thereunder without adversely affecting the treatment of the Performance Award as
Performance-Based Compensation, 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 and other extraordinary or
nonrecurring events.

 

(c)           Determination of Performance.  Prior to the
vesting, payment, settlement or lapsing of any restrictions with respect to any
Performance Award that is intended to constitute Performance-Based Compensation
made to a Grantee who is subject to Section 162(m) of the Code, the Committee
shall certify in writing that the applicable Performance Objectives have been
satisfied to the extent necessary for such Award to qualify as Performance Based
Compensation.

 

8.4           Effect of Change in Control.  The Agreements
evidencing Performance Shares and Performance Units may provide for the
treatment of such Awards (or portions thereof) in the event of a Change in
Control, including, but not limited to, provisions for the adjustment of
applicable Performance Objectives.

 

8.5           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.

 

9.           Other Share Based Awards.

 

9.1           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.

 

9.2           Phantom Stock Awards.

 

(a)           Grant.  The Committee may, in its discretion,
grant shares of Phantom Stock to any Eligible Individuals.  Such
Phantom Stock shall be subject to the terms and conditions established by the
Committee and set forth in the applicable Agreement.

 

(b)           Payment of Awards.  Upon the vesting of a
Phantom Stock Award, the Grantee shall be entitled to receive a cash payment in
respect of each share of Phantom Stock which shall be equal to the Fair Market
Value of a Share as of the date the Phantom Stock Award was granted, or such
other date as determined by the Committee at the time the Phantom Stock Award
was granted.  The Committee may, at the time a Phantom Stock Award is
granted, provide a limitation on the amount payable in respect of each share of
Phantom Stock.  In lieu of a cash payment, the Committee may settle
Phantom Stock Awards with Shares having a Fair Market Value equal to the cash
payment to which the Grantee has become entitled.

 

10.           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, except for Formula Restricted Share Awards, shall be as the Committee
may, in its discretion, determine at the time the Option or Award is granted or
thereafter.


 

11.           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.

 

(b)           Any
such adjustment in the Shares or other stock or securities (i) 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 otherwise
permitted by Sections 422 and 424 of the Code, or (ii) subject to outstanding
Options or Awards that are intended to qualify as Performance-Based Compensation
shall be made in such a manner as not to adversely affect the treatment of the
Option or Award as Performance-Based Compensation.

 

(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.

 

12.           Effect of Certain Transactions.




Subject to Sections 5.10, 6.7, 7.4(b), 7.7(d) and 8.4 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.  The treatment of any Option or
Award as provided in this Section 12 shall be conclusively presumed to be
appropriate for purposes of Section 11.




13.           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)           Unless
otherwise expressly stated in the relevant Agreement, each Option, Stock
Appreciation Right and Performance Award granted under the Plan is intended to
be Performance-Based Compensation.  The Committee shall not be
entitled to exercise any discretion otherwise authorized hereunder with respect
to such Options or Awards if the ability to exercise such discretion or the
exercise of such discretion itself would cause the compensation attributable to
such Options or Awards to fail to qualify as Performance-Based
Compensation.

 

(c)           To
the extent that any legal requirement of Section 16 of the Exchange Act or
Section 162(m) of the Code as set forth in the Plan ceases to be
required  under Section 16 of the Exchange Act or Section 162(m) of
the Code, that Plan provision shall cease to apply.

 


	
       
	
      14.
	
      Termination and Amendment of
      the Plan or Modification of Options and
  Awards.







14.1           Plan Amendment or Termination.  The Plan shall
terminate on the day preceding the tenth anniversary of the date of its adoption
by the Board and no Option or Award may be granted thereafter.  The
Board may sooner terminate the Plan and the Board 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 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 no amendment shall be effective unless approved by the stockholders
of the Company in accordance with applicable law, regulation or exchange
requirement.

 

14.2           Modification of Options and Awards.  No
modification of an Option or Award shall 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.

 

14.3           No Repricing of Options or Stock Appreciation
Rights.  The Committee shall have no authority to make any adjustment
(other than in connection with a stock dividend, recapitalization or other
transaction where an adjustment is permitted or required under the terms of the
Plan) or amendment, and no such adjustment or amendment shall be made, that
reduces or would have the effect of reducing the exercise price of an Option or
Stock Appreciation Right previously granted under the Plan, whether through
amendment, cancellation or replacement grants, or other means, unless the
Company?s stockholders shall have approved such adjustment or
amendment. 

 

15.           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.




16.           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.

 

17.           Regulations and Other Approvals; Governing
Law.




17.1           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.

 

17.2           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.

 

17.3           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.

 

17.4           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.

 

17.5           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 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.           Miscellaneous.




18.1           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.

 

18.2           Beneficiary Designation.  Each Participant
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 Participant under any Option or Award granted under the Plan in the event of
the Participant?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 Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with the Company during the Participant?s lifetime.  In the absence of
any such designation, benefits remaining unpaid at the Participant?s death and
rights to be exercised following the Participant?s death shall be paid to or
exercised by the Participant?s estate.

 

18.
3           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.

 

(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.

 

18.4           Effective Date.  The effective date of this
Plan shall be as determined by the Board, 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.