Document:

EXHIBIT 10.1

SECOND
AMENDMENT TO

LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Second
Amendment”), effective as of December 31, 2004, is entered into by and between EBIX, INC., a Delaware corporation f/k/a EBIX.COM, INC. (the “Borrower”), and LaSALLE BANK NATIONAL ASSOCIATION, a
national banking association (the “Bank”).

RECITALS

WHEREAS, the Bank has previously loaned or committed
to loan the Borrower the original principal sum of up to $5,000,000.00,
comprised of a certain Revolving Credit Loan Commitment not to exceed the sum
of $5,000,000.00 as evidenced, secured and governed by, among other
documentation, that certain Business Loan Agreement dated October 31, 2003 by
and between the Borrower and the Bank (the “Original Revolving Credit Loan”),
which was amended by that certain Amended & Restated Loan and Security
Agreement dated April 21, 2004 and the First Amendment to Loan Agreement dated
July 1, 2004 (collectively, the “Loan Agreement”) the terms of which are incorporated
by reference and made a part of this Amendment as though fully set out herein;
and

WHEREAS, the parties wish to amend the terms of the
Loan Agreement, according to the terms of this Agreement.

AGREEMENTS

NOW THEREFORE, in consideration of the
above recitals, the mutual promises and agreements of the parties set forth
herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

Section 1.              Article I, Definitions, is hereby amended as
follows:

The
following definitions are added to the Loan Agreement:

“EBITDA”
shall mean for any period, the Net Earnings (or loss) for Borrower for such
period, plus (to the extent included in determining Net Earnings (or loss)),
the sum of the following: (i) interest expense of 1 Borrower, (ii) income tax
expense of Borrower, (iii) depreciation, amortization, and similar non-cash
charges of Borrower, (iv) extraordinary losses of Borrower, minus extraordinary
gains of Borrower.

“Senior
Debt to EBITDA Ratio” shall mean the ratio of Senior Debt to EBITDA.

“Senior
Debt” shall mean, with respect to the Borrower, all of Borrower’s
Obligations to Bank.

Section 2.              Article VII, Affirmative Covenants, is hereby
amended as follows:

7.01
(ii) as soon as practicable, and in any event within forty-five (45) days after
the end of the each fiscal quarter of Borrower, (a) a statement of cash flows
of the Borrower for 

 

such
month and the quarter of the fiscal year then ended, (b) an income statement of
the Borrower for such month and the portion of the fiscal year then ended, (c)
an income statement of the Borrower showing the EBITDA for such month and the
portion of the fiscal year then ended, and (d) a balance sheet of the Borrower
as of the end of such month; all in reasonable detail and certified by an
Authorized Borrower Representative as complete and accurate in all material
respects, fairly presenting the financial condition of the Borrower and
prepared in accordance with GAAP;

Section 3.              Article VIII, Financial Covenants, is hereby
amended as follows:

Section
A, Tangible Net Worth is deleted in its entirety and replaced with the
following financial covenant:

A.            Maximum Senior Debt.  Maintain a maximum Senior Debt to EBITDA
Ratio of not greater than 2.50:1.0, measured on a quarterly basis for each
preceding twelve (12) month period on a rolling basis, beginning for the
quarter ended December 31, 2004.

 

[Signature Page to Follow]

 

 

2

 

IN
WITNESS WHEREOF, the parties have hereunto caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  EBIX,
  INC., A DELAWARE CORPORATION, F/K/A EBIX.COM, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard J. Baum

  	
   

  
	
   

  	
  Print Name:

  	
  Richard J. Baum

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
   

  	
  LaSALLE
  BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William Robertson

  	
   

  
	
   

  	
  Print Name:

  	
  William Robertson

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

3Exhibit 10.1

 

Community Health Systems, Inc.

2000 STOCK OPTION AND AWARD PLAN

(As Amended and Restated February 25, 2003 and February 23,
2005)

 

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

 

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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

 

A - 3

 

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 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         “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.

 

A - 4

 

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.

 

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 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.

 

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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 - 6

 

(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 17,062,791; 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 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, Performance
Awards (including Shares issued in respect to Performance

 

A - 7

 

Awards), Phantom Stock,
and other Awards that are granted as “full value awards” granted under the Plan
exceed 4,500,000, 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.

 

(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 forfeited, 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, forfeited, 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 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

 

A - 8

 

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

 

A - 9

 

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 termination 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.             [Option
Grants for Non-employee Directors.

 

6.1           Grant.  Formula
Options shall be granted to Non-employee Directors as follows:

 

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

 

(b)           Annual Grant. 
Each Non-employee 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 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.

 

A - 10

 

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 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.

 

(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 (1) any act
of (A) fraud or intentional misrepresentation, or (B) embezzlement,
misappropriation or conversion of assets or opportunities of the Company or any
direct or indirect majority-owned subsidiary of the Company, or (2) willful violation
of any law, rule or regulation in connection with the performance of an
Optionee’s duties (other than traffic violations or similar offenses).

 

(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

 

A - 11

 

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.

 

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

 

A - 12

 

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.

 

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 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 the six (6) month anniversary of (x) 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.

 

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

 

A - 13

 

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 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

 

A - 14

 

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.

 

(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

 

A - 15

 

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 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.

 

A - 16

 

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.

 

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.

 

A - 17

 

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.

 

A - 18

 

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

 

A - 19

 

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.

 

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.

 

A - 20

 

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

 

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

 

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

 

A - 21

 

(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.

 

A - 22

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