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Exhibit 4.1  


 
 

COMMUNITY HEALTH SYSTEMS, Inc.
  2000 STOCK OPTION AND AWARD PLAN
  (As Amended and Restated February 25, 2003)    
    





 
 
 

Community Health Systems, Inc.
  2000 STOCK OPTION AND AWARD PLAN
  (As Amended and Restated February 25, 2003)    
    


        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, 



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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), other than Forstmann Little & Co. Equity Partnership—V, L.P. and Forstmann Little & Co. Subordinated Debt and
Equity Management Buyout Partnership—VI, L.P. or any of their affiliates (collectively, the "FL Partnerships"), 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 May 22, 2003, 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 either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or 


        (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, 






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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 one
hundred eighty (180) consecutive days. 




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



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        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
Option" means a Nonqualified Stock Option granted pursuant to Section 6. 


        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 "Nonemployee
Director" means a director of the Company who is a "nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act; provided, however, that for purposes of Section 6 hereof, the term "Nonemployee Director" means a Director who is neither an
employee of the Company nor a general partner of the FL Partnerships. 


        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, a Formula Option, or any or all 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 9. 


        2.31 "Performance
Shares" means Shares issued or transferred to an Eligible Individual under Section 9. 



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        2.32 "Performance
Units" means performance units granted to an Eligible Individual under Section 9. 


        2.33 "Phantom
Stock" means a right granted to an Eligible Individual under Section 10 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 8. 


        2.36 "Share
Award" means an Award of Shares granted pursuant to Section 10. 


        2.37 "Shares"
means shares of the Class A 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 7 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 Nonemployee 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 Nonemployee 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. 


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        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 12,562,791;  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 


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may
receive in respect of Performance Units denominated in dollars may not exceed $250,000, (ii) in no event shall the aggregate number of shares of Restricted Stock granted under the Plan
exceed 2,000,000, and (iii) 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; provided,however, that if any Option is exercised by tendering
Shares, either actually or by attestation, to the Company as full or partial payment of the exercise price, the maximum number of Shares available under Section 4.1 shall be increased by the
number of Shares so tendered. 


        (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. 




        4.3   Whenever
any outstanding Option or Award or portion thereof expires, is canceled, is settled in cash (including the settlement of tax withholding obligations using
Shares) 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,
settled or otherwise terminated portion of the Option or Award may again be the subject of Options or Awards granted hereunder. 



        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
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. 


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        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 


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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 or otherwise
such Shares have been recorded by the Optionee's securities broker in street name, and (c) the Optionee's name or his or her broker's name, as the case may be, 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 an Optionee's employment with the Company and its Subsidiaries is
terminated by the Company without Cause following a Change in Control, or in the case of a Director who is not an employee of the Company or any Subsidiary, his service as a Director of the Company
ceases following a Change in Control, each Option held by the Optionee as of the date of termination of the Optionee's employment or service 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 termination of the Optionee's employment or service 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.     Option Grants for Nonemployee Directors.    



        6.1   Grant.    Formula Options shall be granted to Nonemployee Directors as follows: 



        (a)   Initial Grant.    Each Nonemployee Director shall, upon becoming a Director, be granted a Formula Option in
respect of 10,000 Shares. 


        (b)   Annual Grant.    Each Nonemployee Director shall be granted a Formula Option in respect of 5,000 Shares on the
first business day after January 1st of each calendar year that the Plan is in effect provided that the Nonemployee Director is a Director on such date; provided
further, however, that, if the Initial Grant to a Nonemployee Director is made after June 30th of any calendar year, the first Annual Grant to be made to the Nonemployee
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 Nonemployee Director is a
Director on such date. 




        All
Formula Options shall be evidenced by an 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 price, amount or timing of Formula Options
provided under this Section 6, including provisions dealing with vesting, forfeiture and termination of such Formula Options. 


        6.2   Purchase Price.    The purchase price for Shares under each Formula Option granted pursuant to
Section 6.1(a) or 6.1(b) shall be equal to 100% of the Fair Market Value of such Shares on the date the Formula Option is granted. 


        6.3   Vesting and Exercisability.    Subject to Sections 6.4 and 6.5, each Formula Option shall become fully vested
with respect to 50% of the Shares subject thereto on each of the first and second anniversaries of the date of grant; provided, however, that the
Optionee continues to serve as a Director 


10





 



as
of such date; provided further, however, that if a Director dies prior to such date and while a Director, the Formula Option shall become fully
vested and exercisable with respect to 100% of the Shares on that date. If an Optionee ceases to serve as a Director for any reason, the Optionee shall have no rights with respect to any Formula
Option which has not then vested pursuant to the preceding sentence, and the Optionee shall automatically forfeit any Formula Option which remains unvested. 


        6.4   Duration.    Each Formula Option shall terminate on the date which is the tenth anniversary of the date of
grant (or if later, the first anniversary of the date of the Director's death if such death occurs prior to such tenth anniversary), unless terminated earlier as follows: 



        (a)   Other than Disability, Death or Cause.    Except as provided in Section 6.5 below, if an Optionee's
service as a Director terminates for any reason other than Disability, death or Cause, the Optionee may, for a period of six (6) months after the termination of the Optionee's service, but in
no event after the expiration of the stated term of the Formula Option, exercise his or her Formula Option to the extent, and only to the extent, that such Formula Option or portion thereof was vested
as of the date the Optionee's service as a Director terminated, after which time the Formula Option shall automatically terminate in full. 


        (b)   Disability.    If an Optionee's service as a Director terminates by reason of the Optionee's resignation or
removal from the Board due to Disability, the Optionee may, for a period of one (1) year after the termination of the Optionee's service, but in no event after the expiration of the stated term
of the Formula Option, exercise his or her Formula Option to the extent, and only to the extent, that such Formula Option or portion thereof was vested as of the date the Optionee's service as a
Director terminated, after which time the Formula Option shall automatically terminate in full. For this purpose, "Disability" shall mean "long-term disability" as determined under the
rules and procedures that apply under the Company's long-term disability plan as then in effect. 


        (c)   Cause.    If an Optionee's service as a Director terminates for Cause, any unexercised portion of the Formula
Option granted to the Optionee hereunder shall immediately terminate in full and no rights thereunder may be exercised. For this purpose, "Cause" means any act of (1) fraud or intentional
misrepresentation, or (2) embezzlement, misappropriation or conversion of assets or opportunities of the Company or any direct or indirect majority-owned subsidiary of the Company. 


        (d)   Death.    If an Optionee dies while a Director or within the exercise period described in clause (a) or
(b) of this Section 6.4 or referred to in Section 6.5 hereof, the Formula Option granted to the Optionee may be exercised at any time within one (1) year after the
Optionee's death, but in no event after the expiration of the stated term of the Formula Option, by the person or persons to whom such rights under the Formula Option shall pass by will, or by the
laws of descent or distribution, to the extent, and only to the extent, that such Formula Option or portion thereof was vested as of the date of the Optionee's death or earlier termination (as
applicable), after which time the Formula Option shall automatically terminate in full. 




        6.5.  Effect of Change in Control.    The provisions in Section 5.10 shall apply to any Formula Options
granted pursuant to this Section 6. 


        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. 


11





 

        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. 


        (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. 




        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; 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. 


12







   
        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 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.    In the event a Grantee's employment with the Company is terminated by the
Company without Cause following 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 the six (6) month anniversary of (x) the termination of
the Grantee's employment 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. 


        8.    Restricted Stock.    


        8.1    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 8. 


        8.2    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 


13





 



the
right to vote the Shares and to receive all dividends or other distributions paid or made with respect to the Shares. 


        8.3    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 8.4, such Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated. 



        8.4    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. 


        8.5    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. 



        8.6    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. 


        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. 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 9.1(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. 


14





 



        (a)    Vesting and Forfeiture.    Subject to Sections 9.3(c) and 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.    Subject to Section 9.3(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 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. 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 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 Sections 9.3(c) and 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.    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 



15





 




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. 




        9.3    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. 


        9.4    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. 


        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. 


16





 



        10.    Other Share Based Awards.    


        10.1    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. 


        10.2    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. 


        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, except for Formula
Options, 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, (iii) the number and class of Shares or other securities in respect of which Formula Options
are to be granted under Section 6 and (iv) 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. 


17





 



        13.    Effect of Certain Transactions.    


        Subject
to Sections 5.10, 6.5, 7.7, 8.4(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. The treatment of any Option or Award as provided in this Section 13
shall be conclusively presumed to be appropriate for purposes of Section 12. 


        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)   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. 




        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
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
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. 



18





 





        15.2    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 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. 


        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 


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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. 


        19.    Miscellaneous.    


        19.1    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. 


        19.2    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. 


        (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. 


        19.3    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. 


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QuickLinks


COMMUNITY HEALTH SYSTEMS, Inc. 2000 STOCK OPTION AND AWARD PLAN (As Amended and Restated February 25, 2003)

Community Health Systems, Inc. 2000 STOCK OPTION AND AWARD PLAN (As Amended and Restated February 25, 2003)