As filed with the Securities and Exchange Commission on February 11,
1994
Registration No. 33-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COLUMBIA/HCA HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 75-2497104
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
201 West Main Street
Louisville, Kentucky 40202
(Address of Principal Executive Offices, Zip Code)
HCA-Hospital Corporation of America
1992 Stock Compensation Plan
HCA-Hospital Corporation of America
1989 Nonqualified Stock Option Plan
Stock Option Agreement between
Columbia Hospital Corporation
and T. Michael Long
(Full title of the plans)
STEPHEN T. BRAUN
Senior Vice President and General Counsel
Columbia/HCA Healthcare Corporation
201 West Main Street
Louisville, Kentucky 40202
(502) 572-2000
(Name, address and telephone number of agent for service)
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CALCULATION OF REGISTRATION FEE
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Proposed
Maximum Proposed
Title of Offering Maximum Amount
Securities Amount Price Aggregate of
To Be To Be Per Offering Registration
Registered Registered(1) Share(2) Price Fee
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Common Stock 2,164,447 .5952 1,288,278.85 $ 444
Par Value 3,539,235 19.2857 68,256,624.43 23,537
$.01 per share 3,750 12.75 47,812.50 17
--------- ------------- ------
5,707,432 69,592,715.78 $23,998
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(1) Plus such additional shares as may become issuable by reason of
the antidilution provisions of the HCA-Hospital Corporation of
America 1992 Stock Compensation Plan; the HCA-Hospital
Corporation of America 1989 Nonqualified Stock Option Plan; and
the Stock Option Agreement between Columbia Hospital Corporation
and T. Michael Long.
(2) Pursuant to Rule 457(h), the fee is computed upon the basis of
the price at which the options may be exercised.
PART II
Item 3. Incorporation of Documents by Reference
The following documents shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from
the date of filing of such document:
(a) The Registrant's latest Annual Report on Form 10-K filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, or if the financial statements therein are more current,
the Registrant's latest prospectus, other than the prospectus of
which this document is a part, filed pursuant to Rule 424(b) of
the Securities Exchange Commission under the Securities Act of
1933.
(b) The Company's Registration Statement on Form S-4, as amended,
(Registration Number 33-50735) as filed with the Commission on
December 14, 1993.
(c) All other reports filed pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 since the end of the
fiscal year covered by the Annual Report referred to in paragraph
(a) above.
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(d) The description of the Common Stock contained in the
Registrant's registration statement filed pursuant to Section 12
of the Securities Exchange Act of 1934, including any amendment
or report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14, and 15(d) of the Securities Exchange Act of
1934, prior to the filing of any post-effective amendment which
indicates that all stock offered has been sold or which deregisters all
stock then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from
the date of their filing. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent
that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interest of Named Experts and Counsel
The validity of the issuance of the shares of Common Stock being
offered by the Registration Statement will be passed upon for the
Registrant by Stephen T. Braun, Senior Vice President and General
Counsel of the Registrant. As of January 31, 1994, Mr. Braun owned
1,072 shares and had stock options to purchase 44,500 shares of Common
Stock of the Registrant.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law (the "GCL")
permits a Delaware corporation to indemnify any person who was or is,
or is threatened to be made, a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of such corporation) by reason of the fact that such person is or
was a director, officer, employee or agent of such corporation, or is
or was serving at the request of such corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees) actually and reasonably incurred by such
person in connection with such action, suit or proceeding, provided
that such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of
the corporation, and with respect to any criminal action or proceeding,
such person had no reasonable cause to believe the conduct was
unlawful. A Delaware corporation may indemnify such persons in actions
brought by or in the right of the corporation to procure a judgment in
its favor under the same conditions, except that no indemnification is
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permitted in respect of any claim, issue or matter as to which such
person has been adjudged to be liable to the corporation unless and to
the extent the Court of Chancery of the State of Delaware, or the court
in which such action or suit is brought, determines upon application
that, in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the
Court of Chancery or other such court deems proper. To the extent such
person has been successful on the merits or otherwise in defense of any
action referred to above, or in defense of any claim, issue or matter
therein, the corporation must indemnify such person against expenses
(including attorneys' fees) actually and reasonably incurred by such
person in connection therewith. Corporations, under certain
circumstances, may pay expenses incurred by an officer or director in
advance of the final disposition of an action for which indemnification
may be permitted or required. The indemnification and advancement of
expenses provided for or granted pursuant to Section 145 of the GCL are
not exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or
otherwise. Section 145 further provides that a corporation may
maintain insurance against liabilities for which indemnification is not
expressly provided by statute.
The Sixteenth Article of the Company's Restated Certificate of
Incorporation essentially provides for the indemnification of
directors, officers, employees and agents of the Company to the fullest
extent authorized by the GCL.
The Company will have in effect officers and directors liability
insurance policies with various insurance companies. The policies
provide indemnity to the directors and officers of the Company for loss
arising from claims concerning a covered wrongful act where there is no
corporate indemnification. The insurance will also reimburse the
Company for indemnification it may be required by statute or the
Company's Restated Certificate of Incorporation or By-laws to make to
any of its directors and officers in connection with a claim by reason
of a wrongful act. The policy covers negligent acts, errors,
omissions, or breach of duty by a director or officer. The principal
exclusions from coverage include the following: (i) violations of
Section 16(b) of the Securities Exchange Act of 1934; (ii) dishonest
acts; and (iii) libel, slander or non-monetary damages. The policy
provides for a $1,000,000 deductible self-insurance retention by the
Company. The limit of liability under the policies is $60,000,000 in
the aggregate annually for coverage in excess of deductibles and
participation.
The Company has entered into Indemnity Agreements (the
"Agreements") with certain of its directors and officers
("Indemnities"), whereby the Company will indemnify such parties and
advance expenses to the fullest extent permitted by the GCL.
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An Indemnitee will not be entitled to indemnification or
advancement of expenses under the Agreements with respect to any
proceeding or claim brought or made by the Indemnitee against the
Company. If the Indemnitee is not entitled to indemnification of all
expenses, he or she may still be indemnified for a portion of the
expenses. The determination of entitlement to indemnification under
the Agreements will be made by a majority of a quorum of disinterested
directors, independent counsel or by the stockholders of the Company.
In the event of a change in control of the Company (as defined in the
Agreements), the determination of entitlement will be made, if the
Indemnitee so elects, by an independent counsel selected by the
Indemnitee, and the Company will have the burden of proof to overcome
a presumption that the Indemnitee is entitled to indemnification.
The Agreements further provide that to the extent the Company
maintains a liability insurance policy for directors, officers,
employees, agents or fiduciaries, the Indemnitee will be covered by
such policy in accordance with its terms to the maximum extent of the
coverage available for any such officer, director, employee, agent or
fiduciary under the policy. The Agreements will terminate upon the
later of: (a) 10 years after the date the Indemnitee ceases to serve;
or (b) the final termination of all pending proceedings covered
thereunder.
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
The Exhibit Index immediately preceding the exhibits is
incorporated herein by reference.
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i)
to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933; (ii) to reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; (iii) to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement; provided,
however, that paragraphs (i) and (ii) do not apply if the Registration
Statement is on Form S-3 or Form S-8, and the information required to
be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration Statement.
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That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8
and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Louisville, Commonwealth of Kentucky, on the 11th day of February,
1994.
COLUMBIA/HCA HEALTHCARE CORPORATION
By: Stephen T. Braun
Senior Vice President and General Counsel
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated. Each person
whose signature to the Registration Statement appears below hereby
appoints Stephen T. Braun and David C. Colby and each of them, any one
of whom may act without the joinder of the others, as his or her
attorney-in-fact to execute in the name and on behalf of any such
person, individually and in the capacity stated below, and to file all
amendments and post-effective amendments to this Registration
Statement, which amendment or amendments may make such changes and
additions in this Registration Statement as such attorney-in-fact may
deem necessary or appropriate.
Signature Title Date
Richard L. Scott Chief Executive Officer February 11, 1994
(Principal Executive
Officer) and Director
David C. Colby Chief Financial Officer February 11, 1994
(Principal Financial
Officer)
Richard A. Lechleiter Vice President and February 11, 1994
Controller
(Principal Accounting
Officer)
Magdalena Averhoff, M.D. Director February 11, 1994
Thomas F. Frist Jr.,M.D. Chairman of the Board February 11, 1994
J. David Grissom Director February 11, 1994
Ethan Jackson Director February 11, 1994
Charles J. Kane Director February 11, 1994
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Signature Title Date
John W. Landrum Director February 11, 1994
T. Michael Long Director February 11,1994
Darla D. Moore Director February 11, 1994
Rodman W. Moorhead III Director February 11, 1994
Carl F. Pollard Director February 11, 1994
Carl E. Reichardt Director February 11, 1994
Frank S. Royal, M.D. Director February 11, 1994
Robert D. Walter Director February 11, 1994
William T. Young Director February 11, 1994
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INDEX TO EXHIBITS
Exhibits
4.1 Restated Certificate of Incorporation filed as Exhibit 3(a) to
the Company's Form 8-K dated February 11, 1994 is incorporated by
reference herein.
4.2 Form of the HCA-Hospital Corporation of America 1992 Stock
Compensation Plan.
4.3 Form of the HCA-Hospital Corporation of America 1989 Non-
qualified Stock Option Plan.
4.4 Form of the Stock Option Agreement between Columbia Hospital
Corporation and T. Michael Long.
4.5 Form of Amended and Restated Rights Agreement dated February 10,
1994 between Columbia Healthcare Corporation and Mid-America Bank
of Louisville and Trust Company. Exhibit 4.9 to the Company's
Registration Statement on Form S-4 (File No. 33-50735) is
incorporated by reference herein.
5 Opinion of Stephen T. Braun, Senior Vice President and General
Counsel of the Registrant, as to the validity of the securities
registered herein.
23.1 Consent of Stephen T. Braun, Senior Vice President and General
Counsel of the Registrant, included in 5 above.
23.2 Consent of Coopers & Lybrand.
24 Power of Attorney (included on the signature page of this
Registration Statement).
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EXHIBIT 4.2
HCA-HOSPITAL CORPORATION OF AMERICA
1992 STOCK COMPENSATION PLAN
SECTION 1.Purposes
The purpose of the 1992 Stock Compensation Plan (the "Plan")
is to advance the interests of HCA-Hospital Corporation of America (the
"Company") and its stockholders by providing incentives to officers,
directors and other key employees of the Company and its subsidiaries who
contribute significantly to the strategic and long-term performance
objectives and growth of the Company by their invention, ability,
industry, loyalty or exceptional service. The Plan is intended not only
as a means of attracting and retaining outstanding management but also of
promoting a close identity of interests between the Company's management
and its stockholders.
SECTION 2.Definitions
The following terms, when used in the Plan, shall have the
meanings set forth below:
Award: An award or grant of any Stock Option, Stock Appreciation
Right, Restricted Stock, Restricted Unit, Performance Share or Performance
Unit, or any combination thereof, by the Committee in its discretion to a
Participant under the Plan or at the election of a Participant who is a
director but not an employee of the Company or its subsidiary pursuant to
the provisions of Section 10(d) of the Plan.
Board: The Board of Directors of the Company.
Code: The Internal Revenue Code of 1986, as in effect from time to
time or any successor thereto, together with the rules, regulations and
interpretations promulgated thereunder.
Committee: The Compensation Committee of the Board, or such other
committee as may be duly appointed by the Board from time to time to
administer the Plan, in either case so constituted as to permit the Plan
to comply with Rule 16b-3 with respect to grants to individuals subject to
Section 16 of the Exchange Act.
Common Stock: The Class A Common Stock of HCA-Hospital Corporation
of America having a par value of $.01 per share, or such other class of
shares or other securities as may be applicable pursuant to Section 14.
Company: HCA-Hospital Corporation of America, a Delaware
corporation.
<PAGE>
Deferred Compensation Stock Option: Any Stock Option
granted pursuant to Section 6 of the Plan that is specifically designated
as such.
Director: A member of the Board of Directors of the Company.
Disability: Long-term disability as determined in accordance with
the Company's long-term disability plan.
Exchange Act: The Securities Exchange Act of 1934 as amended and in
effect from time to time, or any successor statute.
Fair Market Value: As applied to the Common Stock on any given day,
the average of the "high" and "low" prices of such stock on the trading
day next preceding such date as reported by The Wall Street Journal or if
the "high" and "low" prices were not so reported, the average of the "bid"
and "asked" prices as reported by The Wall Street Journal for the previous
trading day, or if such stock is not so reported, as determined by the
Committee in good faith.
Fiscal Year: The twelve-month period used as the annual accounting
period by the Company.
Incentive Stock Option: Any Stock option granted pursuant to the
provisions of Section 6 of the Plan that qualifies as an "incentive stock
option" within the meaning of Section 422 of the Code.
Non-Qualified Stock Option: Any Stock Option granted pursuant to
the provisions of section 6 of the Plan that does not qualify as an
Incentive Stock Option.
Participant: Any officer, director or other employee of the Company
or of any direct or indirect subsidiary of the Company who is selected to
participate in the Plan by the Committee provided grants to any Director
who is not an employee of the Company must be made in a manner so that the
Plan is and remains in compliance with Rule 16b-3.
Performance Award: An Award granted pursuant to the provisions of
Section 9 of the Plan, the vesting of which is contingent on attainment of
Performance Goals.
Performance Cycle: The period of time, designated by the Committee,
during which performance is measured for the purpose of determining
whether a Performance Award has been earned.
Performance Share: A unit of value with each unit equivalent in
value to one (1) share of Common Stock and granted pursuant to the
provisions of Section 9 of the Plan.
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Performance Goals: The financial, strategic or other goals and
objectives of the Company or any division or financial unit thereof and
such other individual performance criteria and objectives as may be
established from time to time by the Committee, including, but not limited
to, continuous service with the Company, achievement of specific business
objectives, increases in specified indices and attaining growth rates and
other comparable measurements of Company performance.
Performance Unit: A unit of value with each unit representing such
monetary amount as designated by the Committee and granted pursuant to the
provisions of Section 9 of the Plan.
Plan: The Stock Compensation Plan herein set forth, as amended from
time to time.
Restricted Award: An Award granted pursuant to the
provisions of Section 8 of the Plan.
Restricted Period: The period of time, designated by the Committee,
Restricted Awards are subject to the restrictions determined in accordance
with Section 8 of the Plan.
Restricted Stock: Shares of Common Stock awarded pursuant to the
provisions of Section 8 of the Plan.
Restricted Unit: A unit of measurement equivalent to one share of
Common Stock awarded pursuant to the provisions of Section 8 of the Plan
but with none of the attendant rights of a stockholder including without
limitation the right to vote; provided, however, such unit, at the
discretion of the Committee, may be accompanied by dividend equivalent or
payment rights.
Retirement: Separation from service at or after the attainment of
age 65 or at an earlier age only if (i) permitted by the Committee in its
sole discretion or (ii) as the result of an election to take early
retirement pursuant to any tax-qualified employee pension benefit plan
sponsored by the Company or its subsidiary.
Rule 16b-3: Securities Exchange Commission Regulation 240.16b-3 or
any successor regulation.
Share Reserve: The share reserve established pursuant to Section 5
of the Plan.
Stock Appreciation Right: An Award entitling a Participant to
receive an amount equal to (or if the Committee shall determine at the
time of grant, less than) the excess of the Fair Market Value of a share
of Common Stock on the date of exercise over the Fair Market Value of a
share of Common Stock on the date of Grant, or such other price as set by
the Committee, multiplied by the number of shares of Common Stock with
respect to which the Stock Appreciation Right shall have been exercised.
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Stock Option: An option to purchase shares of Common Stock granted
pursuant to the provisions of Section 6 of the Plan.
SECTION 3.Administration
The Plan shall be administered by the Committee, which shall have
the power to interpret the Plan and, subject to its provisions, to
prescribe, amend, waive and rescind rules and regulations, to determine
the terms of Awards and to make all other determinations necessary or
desirable for the Plan's administration. All action taken by the
Committee in the administration and interpretation of the Plan, and all
financial statements certified by the Company's Controller in respect of
the Plan, shall be final and binding on all concerned. The Plan is
intended to be administered by disinterested parties and to qualify for
the exemption provided in Rule 16b-3 and shall be interpreted and
construed in accordance with this purpose.
SECTION 4.Participation
Subject to the provisions of the Plan, the Committee may at any
time, and from time to time, make Awards under the Plan in any form
provided pursuant to Sections 6 through 10 of the Plan, or in any
combination thereof or in tandem. Awards may also be made in combination
or in tandem with, in replacement of, or as alternatives to, grants or
rights under the Plan or any other employee plan of the Company, including
the plan of any acquired entity. The Committee shall select the
Participants to be granted Awards, determine the amounts and type or types
of Awards to be made, set forth the terms, conditions and limitations
applicable to each Award, and prescribe the form of the instruments
embodying Awards made under the Plan. No individual shall at any time
have the right to be selected as a Participant. No Participant, having
been granted an Award, shall have the right to be granted an additional
Award in the future. At the Committees's sole discretion, the Committee
may cancel any Award (with the consent of the Participant) provided such
cancelled Award is replaced with a new Award containing such terms and
conditions (including, without limitation, current pricing) as the
Committee deems in the best interest of the Company.
SECTION 5.Share Reserve
Subject to adjustment as permitted under this Section 5 or as
required by Section 14 hereof, the aggregate number of shares of Common
Stock that may be distributed to Participants under the Plan may not
exceed 9,500,000 shares plus additional shares on each December 31
commencing on December 31, 1992 equal to the lesser of (i) 1% of the sum
of (x) the Company's outstanding shares of Common Stock on such date and
(y) the shares of Common Stock any person has a right to acquire within 60
days through the exercise of options or warrants or through the conversion
of a security or (ii) 5% of the sum of (x) the Company's outstanding
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shares of Common Stock on such date and (y) the shares of Common Stock any
person has a right to acquire within 60 days through the exercise of
options or warrants or through the conversion of a security minus the
number of shares then available for the granting of Awards under this Plan
on such date (the "Share Reserve"). Such shares may be either authorized
but unissued shares, treasury shares or shares issued and thereafter
acquired by the Company. For the purpose of computing the total number of
shares of Common Stock available for Awards under the Plan, there shall be
counted against the foregoing limitations the number of shares of Common
Stock subject to issuance upon exercise or settlement of Awards and the
number of shares of Common Stock which equal the value of Restricted
Units, Stock Appreciation Rights and Performance Shares and other stock
based Awards in each case determined as at the dates on which such Awards
are granted. If any Awards are forfeited or terminate, expire
unexercised, are settled in cash in lieu of stock or are exchanged for
other Awards (in the discretion of the Committee), the shares of Common
Stock which were theretofore subject to such Awards shall again be
available for Awards under the Plan in accordance with the following
provisions: (i) shares of Common Stock underlying expired or cancelled
and unexercised Stock Options or other derivative securities may freely be
added back in determining the number of shares available for issuance
under the Plan and (ii) shares previously counted against the maximum
issuable under the Plan may be added back to the number available under
the Plan (x) where the shares are subject to the limited stock
appreciation rights exercised for cash as set forth in Section 7 hereof,
(y) where the shares are reacquired or otherwise never issued due to a
forfeiture of an Award of Restricted Stock or similar Award provided the
forfeiting Participant received no benefits of ownership such as dividends
from the forfeited shares or (z) in those further factual circumstances
(beyond the factual circumstances identified in clauses (i) and (ii)(x)
and (ii)(y) above) in which the Securities and Exchange Commission, or its
staff, allows such adding back of shares to plans. (A Participant shall
not have been deemed to receive benefits of ownership where the
Participant has voting rights or where dividends accumulate but due to
forfeiture never are realized.) No fractional shares of Common Stock
shall be issued under the Plan. The proceeds received by the Company from
the Participants hereunder shall be added to the general funds of the
Company and as such shall be used from time to time for such corporate
purposes as the Board may determine.
SECTION 6.Stock Options
(a) Awards of Stock Options. Stock Options may be granted
under the Plan on such terms and conditions not inconsistent with the
provisions of the Plan and in such form as the Committee may from time to
time approve. Awards of Stock Options made pursuant to the Plan may be in
the form of Incentive Stock Options, Non-Qualified Stock Options or
Deferred Compensation Stock Options. Stock Options may be granted alone,
in addition to or in tandem with other Awards under the Plan. In
addition, reload Stock Options may be granted whereby when any Stock
Option is exercised by paying the exercise price with Common Stock, the
Participant automatically will be granted an additional Stock Option with
such terms and conditions as the Committee may approve under guidelines
adopted to conform with Rule 16b-3.
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(b) Exercise Price. The exercise price per share of Common
Stock deliverable upon the exercise of each Stock Option shall be
determined by the Committee at the date such Stock Option is granted.
Such exercise price may be less than the Fair Market Value of Common Stock
at the time of grant but in no event shall the exercise price be less than
the par value of the Common Stock; provided, however, in no event shall
the exercise price of an Incentive Stock Option be less than one hundred
percent (100%) of the Fair Market Value of the Common Stock at the time of
grant of such Incentive Stock Option. If the exercise price is less than
the Fair Market Value, the Committee shall establish the method used for
determining the exercise price. The Committee may grant to Participants
holding outstanding Stock Options, in exchange for the surrender and
cancellation of such Stock Options, new Stock Options having purchase
prices higher or lower than the purchase price as provided in the
surrendered Stock Options and containing such other terms and conditions
as the Committee may deem appropriate in its sole discretion.
(c) Exercise Period. Stock Options shall become exercisable
in whole or in part on such date or dates as shall be determined by the
Committee at the date of grant. The Committee may, in its sole
discretion, accelerate the time at which any Stock Option may be exercised
whether or not such right is set forth in the terms of any option
certificate or agreement evidencing such Stock Option. Each Stock Option
which is not yet exercisable by the Participant shall terminate and be
forfeited back to the Company if and when the Participant shall terminate
employment with the Company, except as the Committee may otherwise
determine. Any exercisable Stock Options shall remain exercisable for
such period after termination of employment as shall be determined by the
Committee either (i) at the time the Stock Option is granted or (ii) at or
around the time of termination of employment, and such period of
exercisability after termination of employment may extend beyond the
expiration of the original exercise period of the Stock Option except with
respect to Incentive Stock Options.
(d) Option Term. Each Stock Option shall expire on such
date or dates as the Committee may determine at the time the Stock option
shall be granted; provided, however, the term of Incentive Stock Options
shall not exceed the earlier of three (3) months after termination of
employment (or in the case of death or disability twelve (12) months) or
ten (10) years after the date of grant.
(e) Method of Exercise. Any Stock Option granted under the
Plan may be exercised solely by the person to whom granted (or, in the
event of Disability, by his guardian or legal representative) or, in the
case of such person's death, by the person's legal representative. Each
Stock Option shall be exercised by written notice to the Company in the
manner set forth in the option certificate or agreement evidencing such
Stock Option. As soon as practicable after receipt by the Company of the
notice of exercise and of payment of the option price for all shares of
Common Stock with respect to which a Stock Option has been exercised, a
certificate or certificates representing such shares shall be registered
in the name or names of the Participant or his successor and shall be
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delivered to the Participant or his successor at the Participant's address
as it appears in the records of the Company or such other address as may
be designated by the Participant. Payment for shares purchased upon
exercise of a Stock Option shall be made (a) in full in cash or by check
at the time of exercise, (b) in whole or in part by the surrender of
shares of Common Stock, such Common Stock to be credited against the
option price in an amount equal to its Fair Market Value, (c) pursuant to
Regulation T cashless exercises or pursuant to such procedures therefore
established by the Committee, or (d) with the consent of the Committee and
subject to any applicable restrictions imposed by law, in deferred
compensation credits, notes, restricted stock, other contingent awards
denominated in stock or cash, or other means, and upon such terms and
conditions including provision for securing the payment of the same, as
the Committee, in its discretion, shall determine are consistent with the
Plan's purposes and applicable law. In no event, however, shall the
Committee provide for the payment of any option price unless, at the time
of exercise of the Stock Option to which such option price relates, the
holder of the Stock Option pays in cash or by check an amount equal to not
less than the aggregate par or stated value of the shares being acquired.
(f) Option Certificate or Agreement. Each Participant shall
receive an option certificate or agreement, which shall contain such
provisions, consistent with the provisions of this Plan, as may be
established at any time or from time to time by the Committee. Each
option certificate or agreement may provide, in the discretion of the
Committee, that the issuance of the Common Stock shall be conditioned upon
the receipt from the person exercising such Stock Option of a
representation, or other instruments in form and substance satisfactory to
the Committee, indicating that at the time of such exercise it is his
present intention to acquire the Common Stock being purchased for
investment and not with a view to the resale or distribution of any part
thereof. Neither the Participant nor his legal representative shall be,
or have any of the rights and privileges of, a stockholder of the Company
in respect of any shares purchasable upon the exercise of any Stock
Option, in whole or in part, unless and until certificates for such shares
shall have been issued. The form of option certificate or agreement
authorized by the Plan may contain such other provisions as the Committee
shall deem advisable. The Committee may vary the terms and provisions of
individual option certificates or agreements on a case by case basis and
shall not be required to make all option certificates or agreements
uniform.
(g) Special Rules for Incentive Stock Options. With respect
to Incentive Stock Options granted under the Plan, (i) the aggregate Fair
Market Value (determined as of the time the Incentive Stock Option is
granted) of the number of shares with respect to which Incentive Stock
Options are exercisable for the first time by a Participant during any
calendar year shall not exceed one Hundred Thousand Dollars ($100,000) or
such other limit as may be required by the Code and (ii) if the
Participant owns more than 10% of the voting stock of the Company (or a
subsidiary thereof), the exercise price of the Incentive Stock Options
must be at least 110% of the Fair Market Value of the Common Stock at the
time of grant and such Incentive Stock Options cannot be exercisable after
five (5) years.
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(h) Deferred Compensation Stock Options. Deferred
Compensation Stock Options are intended to provide a means by which
compensation payments can be deferred to future dates. The number of
shares of Common Stock subject to a Deferred Compensation Stock Option
shall be determined by the Committee, in its sole discretion, in
accordance with the following formula:
Amount of Compensation to be Deferred Number of
Fair Market Value - Stock Option Price = Shares
Amounts of compensation deferred may include amounts earned under Awards
granted under the Plan or under any other compensation plan, program or
arrangement of the Company as permitted by the Committee. Deferred
Compensation Stock Options will be granted only if the Committee has
reasonably determined that the recipient of such a Stock Option will not
be deemed at the date of grant to be in receipt of the amount of income
being deferred for purposes of the Code and, in this regard, the Committee
shall consider whether the Award shall not be exercisable for at least six
months from the date of grant.
(i) Limited Rights. If so authorized by the Committee, any
option certificate or agreement may provide that the Company may with the
consent of the Participant, or the Participant may, at any time or from
time to time, cancel all or any portion of any Stock Option granted under
the Plan then subject to exercise, in which event the Company may
discharge its obligation in respect of the Stock Option either by payment
to the Participant of an amount of cash equal to the excess, if any, of
the Fair Market Value, at such time, of the shares subject to the portion
of the Stock Option so cancelled over the aggregate option price of such
shares, or by issuance or transfer to the Participant of shares of Common
Stock with a Fair Market Value, at such time, equal to any such excess, or
by a combination of cash and shares provided the form of any such limited
stock appreciation right shall comply with Rule 16b-3 and the
pronouncements of the Securities and Exchange Commission related thereto.
In addition, if so authorized by the Committee, a limited right may be
awarded, at any time or from time to time, in connection with any Stock
Option granted under the Plan subject to such terms and conditions as may
be determined by the Committee with respect to the exercise of such
limited right in the event there is a threatened or actual change in
control of the Company provided the form of any such limited stock
appreciation right in respect of a change in control of the Company shall
comply with Rule 16b-3 and the pronouncements of the Securities and
Exchange Commission related thereto. Upon any such payment such Stock
Options shall be deemed to have been exercised.
SECTION 7.Stock Appreciation Rights
(a) Awards of Stock Appreciation Rights. Stock Appreciation
Rights may be granted under the Plan in such form as the Committee may
from time to time approve. Stock Appreciation Rights may be granted in
tandem with, in addition to or completely independent of a Stock Option or
any other Award under the Plan.
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(b) Exercise. A Stock Appreciation Right may be exercised
by a Participant in accordance with procedures established by the
Committee. The Committee may also provide that a Stock Appreciation Right
shall be automatically exercised on one or more specified dates. Unless
the Committee has established an automatic exercise date, a stock
appreciation right may be exercised by a person subject to Section 16 of
the Exchange Act only during the window periods following the Company's
release of financial data pursuant to Section 13(a) of the Exchange Act,
as set forth in Rule 16b-3.
(c) Form of Payment. Payment upon exercise of a Stock
Appreciation Right may be made in cash, in shares of Common Stock, in
Deferred Compensation Stock Options or any combination thereof, as the
Committee shall determine; provided, however, that any Stock Appreciation
Right exercised upon or subsequent to the occurrence of a Change in
Control (as defined in Section 17(h)) shall be paid in cash.
SECTION 8. Restricted Awards
(a) Awards of Restricted Shares or Restricted Units. Awards of
Restricted Stock or Restricted Units may be granted under the Plan in such
form and on such terms and conditions as the Committee may from time to
time approve including, without limitation, restrictions on the sale,
assignment, transfer or other disposition or encumbrance of such shares or
units during the Restricted Period and the requirement that the
Participant forfeit such shares or units back to the Company upon
termination of employment for specified reasons within the Restricted
Period. Restricted Awards may be granted alone, in addition to or in
tandem with other Awards under the Plan.
(b) Restricted Period. At the time an Award of Restricted
Stock or Restricted Units is made, the Committee shall establish the
Restricted Period applicable to such Restricted Stock or Restricted Units
during which period of time such Restricted Stock or Restricted Units are
subject to a substantial risk of forfeiture in accordance with this
Section and Section 13 hereof. During the Restricted Period, such
Restricted Stock or Restricted Units may not be sold, assigned,
transferred, made subject to gift, or otherwise disposed of, mortgaged,
pledged or encumbered. Each Restricted Award may have a different
Restricted Period. The Committee may, at its sole discretion, at the time
a Restricted Award is made prescribe conditions for the incremental lapse
of restrictions during the Restricted Period and for the lapse or
termination of restrictions upon the satisfaction of other conditions in
addition to or other than the expiration of the Restricted Period with
respect to all or any portion of the Restricted Stock or Restricted Units.
The Committee may also, at its sole discretion, shorten or terminate the
Restricted Period or waive any conditions for the lapse or termination of
restrictions with respect to all or any portion of the Restricted Stock or
Restricted Units.
(c) Rights of Holders of Restricted Stock. Except for the
restrictions described in Section 8(b), the Participant shall be the owner
of the Restricted Stock and shall have all the rights of a stockholder,
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including the right to receive dividends paid on such Restricted Stock and
the right to vote such Restricted Stock; provided, however, at the
discretion of the Committee cash, stock or other dividends with respect to
the Restricted Stock may be either currently paid or withheld by the
Company for the Participant's account, and interest may be paid on the
amount of cash dividends at a rate and subject to such terms as determined
by the Committee. Dividends so withheld shall not be subject to
forfeiture.
(d) Delivery of Restricted Stock. Restricted Stock awarded to
a Participant under the Plan may be held under the Participant's name in
a book entry account maintained by the Company or, if not so held, stock
certificates for Restricted Stock awarded pursuant to the Plan may be
registered in the name of the Participant and issued and deposited,
together with a stock power endorsed in blank, with the Company or an
agent appointed by the Company and shall bear an appropriate legend
restricting the transferability thereof. A Participant shall be entitled
to delivery of stock certificates only when they become vested in
accordance with the provisions of this Section and Section 13 and upon the
expiration or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Committee.
(e) Forfeitures. Except to the extent that the Participant's
right to receive a Restricted Award without restrictions shall have
vested, each Participant's right to any Restricted Award shall be
forfeited if and when such Participant ceases to be a Participant or when
any prescribed condition for the lapse or termination of restrictions is
not satisfied. If forfeited, all such stock shall become the property of
the Company and shall again immediately become available for award under
the Plan and all of the rights of such Participant to such Restricted
Award and as a stockholder shall terminate without further obligation on
the part of the Company.
(f) Section 83(b) Election. A Participant who files an
election with the Internal Revenue Service to include the fair market
value of any Restricted Stock in gross income while they are still subject
to Restrictions shall promptly furnish the Company with a copy of such
election together with the amount of any federal, state, local or other
taxes required to be withheld to enable the Company to claim an income tax
deduction with respect to such election.
(g) Special Provision Regarding Restricted Units. In the case
of an Award of Restricted Units, no shares of Common Stock shall be issued
at the time the Award is made, and the Company shall not be required to
set aside a fund for the payment of any such Award. The Committee shall,
in its sole discretion, determine whether to include in the Award and, if
included whether to credit to the account of, or to currently pay to, a
Participant who has an Award of Restricted Units an amount equal to the
cash, stock or other dividends paid by the Company upon one share of
Common Stock for each Restricted Unit then credited to such Participant's
Account ("Dividend Equivalents") as provided in Section 12 hereof. Neither
the Participant nor his legal representative shall be, or have any of the
rights and privileges of, a stockholder of the Company in respect of
Restricted Units.
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(h) Payment of Restricted Units. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
restrictions or conditions prescribed by the Committee in respect of a
Restricted Unit, the Company shall deliver to the Participant or the
Participant's estate or beneficiary, as the case may be, one share of
Common Stock for each vested Restricted Unit together with any Dividend
Equivalent held in respect thereof; provided, however, the Committee may,
in its sole discretion, elect to pay cash or part cash and part Common
Stock in lieu of delivering only Common Stock for the vested Restricted
Units. The amount of any such cash payment shall be determined by
multiplying the Fair Market Value of one share of Common Stock at the time
the Restricted Unit vested by the number of Restricted Units for which
such Participant is receiving payment in cash. No payment will be
required from the Participant upon the award of any Restricted Unit, the
crediting or payment of any Dividend Equivalents, or the delivery of
Common Stock or the payment of cash in respect of vested Restricted Units,
except as set forth in Section 17(c). The Restricted Unit award agreement
may permit a Participant to request that the payment of vested Restricted
Units (and Dividend Equivalents and the interest thereon with respect to
such vested Restricted Units) be deferred beyond the payment date
specified in the agreement. The Committee shall, in its sole discretion,
determine whether to permit such deferment and to specify the terms and
conditions, which are not inconsistent with the Plan, to be contained in
the agreement. In the event of such deferment the Committee may determine
whether and at what rate interest shall be credited on any Dividend
Equivalents.
SECTION 9. Performance Awards
(a) Awards of Performance Shares or Performance Units.
Performance Awards may be granted under the Plan in the form of
Performance Share Grants or Performance Units Grants and subject to such
terms and conditions as the Committee may from time to time approve,
including, without limitation, the requirement that the Participant
forfeit such Award or a portion of such Award in the event certain
Performance Goals are not met within the Performance Cycle. Performance
Awards may be granted alone, in addition to or in tandem with other Awards
under the Plan. Subject to the terms of the Plan, the Committee shall
determine the number of Performance Awards to be granted to a Participant
and the Committee may impose different terms and conditions on any
particular Performance Award made to any particular Participant.
(b) Performance Goals and Performance Cycles. Performance
Awards shall provide that in order for a Participant to vest in such
Awards certain Performance Goals must be achieved over a designated
performance period ("Performance Cycle") as shall be established by the
Committee, in its sole discretion. The Committee shall establish
Performance Goals for each Performance Cycle before, or as soon as
practicable after, the commencement of the Performance Cycle. The
Committee may also establish a schedule or schedules for such Performance
Cycle setting forth the portion of the Performance Award which will be
earned or forfeited based on the degree of achievement of the Performance
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Goals actually achieved or exceeded. During the Performance Cycle, the
Committee shall have the authority to adjust upward or downward the
Performance Goals in such manner as it deems appropriate in recognition of
extraordinary or nonrecurring events, changes in applicable accounting
rules or principles or such other events, changes, occurrences, conditions
or circumstances as the Committee determines warrant such adjustment.
(c) Payment of Performance Awards. In the case of Performance
Stock, the Participant shall be entitled to receive payment for each unit
earned in an amount equal to the aggregate Fair Market Value of the shares
of Common Stock covered by such Award. In the case of a Performance Unit,
the Participant shall be entitled to receive payment for each unit earned
in an amount equal to the dollar value of each unit times the number of
units earned or in the discretion of the Committee only the appreciation
of the value of such unit. Payment in settlement of a Performance Award
shall be made as soon as practicable following the conclusion of the
respective Performance Cycle in cash, in shares of Common Stock, in
Deferred Compensation Stock Options, in other equity-based units or any
combination thereof, as the Committee in its sole discretion shall
determine.
SECTION 10.Other Stock-Based and Combination Awards; Outside Director
Election of Awards; Certain Awards to Section 16 Persons
(a) Grant. The Committee may grant to Participants other
Awards under the Plan pursuant to which Common Stock is or may in the
future be acquired (including, without limitation, the grant of
unrestricted shares of Common Stock equal to the amount of cash
compensation, cash bonuses or other cash payments under any other
incentive compensation plan or arrangement forgiven by a Participant), or
Awards denominated in stock units, including, without limitation, ones
valued using measures other than Fair Market Value. Such Other Stock -
Based Grants may be granted either alone, in addition to or in tandem with
any other type of Award granted under the Plan.
(b) Combination Awards. The Committee may also grant Awards
under the Plan in tandem or combination with other Awards or in exchange
of Awards, or in tandem or combination with, or as alternatives to grants
or rights under any other incentive compensation arrangement or employee
plan of the Company, including the plan of any acquired entity.
(c) Eligibility. Subject to the provisions of the Plan, the
Committee shall have authority to determine the individuals to whom and
the time or times at which such Awards shall be made, the number of shares
of Common Stock to be granted or covered pursuant to such Awards, and any
and all other conditions and/or terms of the Awards.
(d) Outside Director Election of Awards. A director who is
not an employee of the Company or its subsidiary may elect to receive his
director fees (i) in an Award hereunder of Deferred Compensation Stock
Options pursuant to the formula set forth in Section 6(h) with the Stock
Option Price being $1.00 per share, (ii) in an Award hereunder of Common
Stock pursuant to the following formula:
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Number of = Amount of Cash Compensation Invested
Shares Fair Market Value
or (iii) partly in cash and partly in the foregoing securities. Such
election by such Director shall be made pursuant to an irrevocable
election made by the director at least six months in advance of the
effective date of the transaction, unless counsel for the Company advises
that such six-month advance election shall not be necessary for the
transaction to be exempt from Section 16(b) of the Exchange Act.
Notwithstanding the foregoing, no such director may elect Deferred
Compensation Stock Options if tax counsel for the Company has not
reasonably concluded that the recipient of such a Stock Option will not be
deemed at the date of grant to be in receipt of the amount of income being
deferred for purposes of the Code and each such Award shall contain a
provision stating that it is not exercisable for six months from the date
of grant unless tax counsel for the Company approves the omission of such
provision. Notwithstanding the provisions of Section 3 above, the
provisions of this Section 10(d) shall be administered by the Company's
Chief Executive Officer, to the same extent that the Committee administers
the remainder of the Plan pursuant to said Section 3.
(e) Certain Awards to Section 16 Persons. In the event the
Committee wishes to grant an Award of either (i) Deferred Compensation
Stock Options or (ii) shares of Common Stock to an individual subject to
Section 16 of the Exchange Act equal to cash compensation otherwise due
such individual by the Company or a subsidiary, such Award by the
Committee shall only be made if such individual has made an irrevocable
election to receive such Award in lieu of cash compensation at least six
months prior to the grant, unless counsel for the Company advises that
such six-month advance election shall not be necessary for the transaction
to be exempt from Section 16(b) of the Exchange Act.
SECTION 11.Deferral Elections
The Committee may permit a Participant to elect to defer his or her
receipt of the payment of cash or the delivery of shares of Common Stock
that would otherwise be due to such Participant by virtue of the exercise,
earn out or vesting of an Award made under the Plan. If any such election
is permitted, the Committee shall establish rules and procedures for such
payment deferrals, including the possible (a) payment or crediting of
interest on such deferred amounts credited in cash, (b) the payment or
crediting dividend equivalents in respect of deferrals credited in units
of Common Stock, (c) granting of Deferred Compensation Stock Options; and
(d) granting of other equity-based units, or any combination thereof, as
determined by the Committee in its sole discretion.
SECTION 12.Dividend Equivalents
Awards of Stock Options, Stock Appreciation Rights, Restricted
Units, Performance Awards, and other stock-based Awards may, in the
discretion of the Committee, include Dividend Equivalents. In respect of
any such Award which is outstanding on a dividend record date for Common
Stock, the Participant may be credited with an amount equal to the amount
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of cash, stock or other dividends that would have been paid on the shares
of Common Stock covered by such Award had such covered shares been issued
and outstanding on such dividend record date. The Committee shall
establish such rules and procedures governing the crediting of Dividend
Equivalents, including the timing, form of payment and payment
contingencies of such dividend equivalents, as it deems are appropriate or
necessary.
SECTION 13. Special Vesting Rules
(a) Death, Disability or Retirement. Notwithstanding any
other provision of the Plan, the Committee may provide that a Participant
shall be vested in none, any part or all or any portion of such
Participant's Awards not previously vested if his employment by the
Company is terminated because of death, Disability or Retirement.
(b) Termination of Employment. A Participant shall cease
vesting in all or any portion of an Award as of the date of his
termination of employment if he voluntarily terminates his employment by
the Company or if he is terminated for "Cause," which shall mean any
discharge for reasons other than Disability or Retirement based upon
dishonest or fraudulent actions or willful misconduct, for violation of
the policies and procedures of the Company or for other job performance or
conduct which is detrimental to the best interests of the Company. The
Committee may provide in the Award or, in its discretion at or about the
time of a termination of employment of the Participant by the Company
without Cause, that a Participant whose employment is terminated by the
Company without Cause shall vest in all or any portion of his Award in
which he would otherwise have vested either (i) at the end of the Fiscal
Year in which his termination occurs if his employment had not actually
terminated or (ii) at any date subsequent thereto in the discretion of the
Committee. Any Award (or portion thereof) not so vested upon the
termination of employment shall be forfeited.
(c) Amendments. The Committee may amend the vesting
schedules, restrictions or other conditions in any Award; provided,
however, that no such amendment shall reduce interests in the Plan that
were vested prior to the date of such amendment without the consent of the
Participant holding such vested interest; provided further, however, the
Committee may, notwithstanding any other provision hereof or in the Award,
annul any Awards made to a Participant if such Participant is terminated
for "Cause" as defined in Section 13(b) hereof, or if such Participant
becomes employed with a competing company as determined by the Committee
in its sole discretion.
SECTION 14. Adjustment Provisions
In the event that the Common Stock should, as a result of a stock
split, stock dividend, stock rights offering or special dividend or
combination of shares or other change or exchange for other securities by
reclassification or otherwise, be increased or decreased or changed into,
or exchanged for, a different number of kind of shares or other securities
of the Company or any other corporation, or in the event of a spin-off,
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spin-out or other distribution of assets to stockholders or the assumption
or conversion of outstanding grants pursuant to an acquisition, the number
and kind of shares then subject to Awards granted under the Plan and the
number of shares then remaining in the Share Reserve and the exercise
price per share in outstanding Options, shall be appropriately adjusted by
the Committee to reflect such action.
SECTION 15. Amendment or Discontinuance of the Plan
The Plan may be amended, suspended or terminated by the Board in
whole or in part at any time, with prospective or retroactive effect,
provided that, no amendment, suspension or termination of the Plan shall
adversely affect, except with the consent of the holder, and rights or
obligations with respect of Awards theretofore granted and provided,
further, if any such amendment requires stockholder approval pursuant to
Rule 16b-3 or other regulatory requirement, such approval shall be
obtained at the level of approval so required and provided, further, that,
without shareholder approval, the Board may not (a) materially increase
the benefits accruing to Participants under the Plan, (b) materially
increase the number of shares which may be issued under the Plan (except
as provided herein) or (c) materially modify the requirements as to
eligibility for participation under the Plan. Notwithstanding anything to
the contrary set forth herein, if any provision herein shall be determined
at any time to be in violation of Rule 16b-3, or to have created any
unintended tax results, such provision shall, upon such determination,
automatically be deemed inoperative, void and of no force and effect as if
never set forth herein and may be deleted from the Plan or amended by the
Board at any time with prospective or retroactive effect.
SECTION 16. Listing and Qualification of Shares
The Company, in its discretion, may postpone the issuance or
delivery of shares of Common Stock pursuant to any Award until completion
of such stock exchange listing, or other qualification of such shares
under any state or federal law, rule or regulation as the Company may
consider appropriate, and may require any Participant to make such
representations, including, but not limited to a written representation
that the shares are to be acquired for investment and not for resale or
with a view to the distribution thereof, and furnish such information as
it may consider appropriate in connection with the issuance or delivery of
the shares in compliance with applicable laws, rules and regulations. The
Committee may cause a legend or legends to be placed on such certificates
to make appropriate reference to such representation and to restrict
transfer in the absence of compliance with applicable federal or state
securities laws.
SECTION 17. Other Provisions
The following miscellaneous terms and conditions are also in
effect under the Plan:
(a) No Right to Employment, etc. No person shall have any
claim or right to be granted an Award under the Plan, and no Participant
shall have any right under the Plan to be retained in the employ of the
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Company. No Participant or other person shall have any right with respect
to the Plan or in any Award, contingent or otherwise, until written
evidence of the Award shall have been delivered to the recipient and all
the terms, conditions and provisions of the Plan and the Award applicable
to such recipient (and each person claiming under or through him) have
been met. No person shall have any rights as a stockholder by virtue of
an Award of a Stock Option to him except with respect to Common Stock
actually issued to him, and the issuance of shares under an Option
Agreement shall confer no retroactive right to dividends.
(b) Non-Transferability of Awards. Except by will or the laws
of descent and distribution, no right or interest of any Participant in
the Plan shall be assignable or transferable and no security, right or
interest of any Participant shall be liable for, or subject to, any lien,
obligation or liability of such Participant.
(c) Tax Withholding. All Awards and distributions of shares
or other payments pursuant to the Plan shall be subject to withholding
required by applicable Federal, state and local laws, and the Committee
may make such arrangements for the payment of any withholding taxes on
Awards or distributions as it deems satisfactory, including, but not
limited to (i) reducing the number of shares of Common Stock, based upon
their Fair Market Value, or cash, otherwise deliverable to permit
deduction of the amount of any such withholding taxes from the amount
otherwise payable under the Plan, (ii) with the consent of the
Participant, deducting the amount required to be withheld from salary or
any other amount then or thereafter payable to a Participant, beneficiary
or legal representative, and (iii) requiring Participant, beneficiary or
legal representative to pay to the Company the amount required to be
withheld in cash or in Common Stock already owned (valued at the Fair
Market Value) as a condition of releasing the Common Stock and any other
distributions related thereto. If a Participant subject to Section 16 of
the Exchange Act wishes to pay his tax withholding by having the shares of
Common Stock otherwise deliverable to him be reduced by the Company, the
Committee (i) may require such Participant to make a standing written
election to utilize stock withholding to pay such taxes at least six
months prior to the date required for the stock withholding, (ii) may
require the Participant otherwise to comply with the provisions of Rule
16b-3 in connection with such withholding or (iii) may require only that
such Participant acknowledge in a form provided by the Company that such
share withholding may be a "sale" pursuant to Section 16 of the Exchange
Act.
(d) Expenses. Any expenses of administering the Plan shall be
borne by the Company.
(e) New Participants. Certain Awards may be granted under the
Plan from time to time in substitution for stock options, restricted
shares, restricted units, performance units, stock appreciation rights or
other equity incentives held by employees of other corporations who are or
are about to become employees of the Company as the result of a merger or
consolidation of the employing corporation with the Company, or the
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acquisition by the Company of the assets of the employing corporation, or
the acquisition by the Company of stock of the employing corporation as a
result of which it becomes a subsidiary of the Company. The terms and
conditions of the substituted Awards so granted may vary from the terms
and conditions set forth in this Plan to such extent as the Committee may
deem appropriate to conform, in whole or in part, to the provisions of the
substituted equity incentives.
(f) Notices. All notices under the Plan shall be in writing,
and if to the Company, shall be mailed to:
HCA-Hospital Corporation of America
One Park Plaza
Nashville, Tennessee 37203
Attention: Chairman of the Board and
Chief Executive Officer
Notices to the Participant shall be delivered personally or mailed to the
Participant at his address appearing in the payroll records of the
Company. The address of any party may be changed at any time by written
notice to the other party given in accordance with this provision.
(g) Other Company Plans. Nothing contained herein shall
prevent the Company from establishing other incentive plans in which
Participants in the Plan may also participate. No Award under this Plan
shall be considered as compensation in calculating any insurance, pension
or other benefit for which the recipient is eligible unless any such
insurance, pension or other benefit is granted under a plan which
expressly provides that compensation under this Plan (and specifying the
type of such compensation) shall be considered as compensation under such
plan, or except where the Committee expressly determines that inclusion of
an Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been
made in lieu of a portion of competitive annual cash compensation.
(h) Change in Control. Notwithstanding the provisions of the
Plan, if there should be a "Change in Control" of the Company, all Stock
Options and limited stock appreciation rights that are outstanding under
the Plan shall become fully exercisable and all Awards to Participants
shall become fully vested as of the date of such Change in Control unless
otherwise provided in the Award agreement. For purposes of the Plan, the
term "Change in Control" shall mean (a) a merger, consolidation or other
reorganization of the Company in which the Company is not the surviving
entity, (b) a sale or other transfer of all or substantially all of the
assets of the Company, or (c) a change in the composition of a majority of
the Board elected by stockholders within 12 months after any "person" (as
such term is used in Section 3(a)(9) and 13(d)(3) of the Exchange Act) is
or becomes the beneficial owner, directly or indirectly, of securities
representing 20% of the combined voting power of the then outstanding
securities of the Company (other than an employee stock ownership plan or
other plan of the Company).
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(i) Indemnification. No member of the Committee or the Board
shall be personally liable by reason of any contract or other instrument
executed by such member or on such member's behalf in his or her capacity
as a member of the Committee for any mistake of judgment made in good
faith, and the Company shall indemnify and hold harmless each employee,
officer or Director of the Company to whom any duty or power relating to
the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the
consent of the Company) arising out of any act or omission to act in
connection with the Plan unless arising out of such person's own fraud or
bad faith.
(j) Unfunded Plan, etc. The Plan shall be unfunded. The
Company shall not be required to establish any special or separate fund or
to make any other segregation of assets to assure the payment of any Award
under the Plan, nor shall the Company be deemed to be a trustee of any
rights granted under the Plan and rights to payment of Awards shall be no
greater than the rights of the Company's general creditors. Any liability
of the Company to any Participant with respect to a Award under the Plan
shall be based solely upon any contractual obligations which may be
created by the Plan and any agreement consistent with the Plan; no such
obligation of the Company shall be deemed to be secured by any pledge or
other encumbrance on any property of the Company. Neither the Company nor
the Board nor the Committee shall be required to give any security or bond
for the performance of any obligation which may be created by the Plan.
(k) Payments to Trust. The Committee is authorized to cause
to be established one or more trust agreements from time to time
whereunder the Committee may make payments of amounts due or to become due
to Participants in the Plan.
(l) Six Months Holding Period. To avoid potential Section
16(b) violations, any equity security granted in an Award hereunder shall
be held by any Participant who is subject to Section 16 of the Exchange
Act for six months from the date of Award or, in the case of a derivative
security, at least six months shall have elapsed from the date of Award to
the date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying equity security.
(m) Individual Awards; Officer Authority. The Committee may
vary the terms and provisions of individual Awards of any type on a case
by case basis and shall not be required to make all Awards of any type
uniform. Proper officers of the Company are hereby authorized to prepare,
execute and deliver Award agreements or certificates, and amendments
thereto, in the name of the Company with such provisions therein as from
time to time may be directed by the Committee.
(n) Governing Law. The Plan shall be governed by and
construed in accordance with the laws of the State of Tennessee, without
reference to the principles of conflicts of law thereof.
(o) Effective Date. The Plan shall become effective as of
February 1, 1992.
Adopted: December 16, 1991
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EXHIBIT-4.3
As amended through December 13, 1993
HCA - HOSPITAL CORPORATION OF AMERICA
1989 NONQUALIFIED STOCK OPTION PLAN
1. Purpose
The HCA - Hospital Corporation of America 1989 Nonqualified Stock Option
Plan (the "Plan") is designed to enable key employees and officers of HCA
- - Hospital Corporation of America (the "Company") and its subsidiaries to
acquire or increase a proprietary interest in the Company and thus to
share in the future success of the Company's business.
2. Definitions
Whenever used herein, the following terms shall have the meanings set
forth below:
"Bank Memorandum" means the Confidential Memorandum dated December 1988
prepared by the management of HCA with the assistance of Morgan Guaranty
Trust Company of New York.
"Board" means the Board of Directors of the Company.
"Class A Stock" means the Class A Common Stock, par value $0.01 per
share, of the Company.
"Class B Stock" means the Class B Common Stock, par value $0.01 per
share, of the Company.
"Class C Stock" means the Class C Common Stock, par value $0.01 per
share, of the Company.
"Committee" means the Compensation Committee of the Board, or such other
committee as may be duly appointed by the Board from time to time to
administer the Plan, in either case so constituted as to permit the Plan
to comply with Rule 16b-3 with respect to grants to individuals subject to
Section 16 of the Exchange Act.
"Common Stock" means the Class A Stock, the Class B Stock and the Class
C Stock.
"Debt Repayment Option" means an option which vests as provided in
Section 9.3. The total number of Debt Repayment Options granted under the
Plan shall not exceed 7,660,400.
"Debt Repayment Target" means the reduction in aggregate Indebtedness
of HCA for any fiscal year in accordance with the following schedule
(dollar figures are in millions):
Fiscal Year Ending Debt Repayment
December 31, Target
1989 $ 405.0
1990 1,232.4
1991 113.9
1992 171.0
1993 237.0
For the purposes of determining the reduction in aggregate Indebtedness
for the fiscal year ending December 31, 1989, the level of aggregate
Indebtedness at December 31, 1988 is deemed to be $5,735.5 million.
"Earnings Option" means an option which vests as provided in Section
9.4. The total number of Earnings Options granted under the Plan shall
not exceed 7,660,400.
"Effective Date" means the date the Merger becomes effective.
"Employee" means a regular salaried employee (including directors who
are also employees and officers) of the Company or any of its
subsidiaries.
"Exchange Act" means the Securities Exchange Act of 1934 as amended and
in effect from time to time, or any successor statute.
"Exit Transaction" means: (i) any Third Party Exit Transaction; (ii)
the acquisition by any person (except Frist (or any successor proxyholder
under the Proxy Agreement) by virtue of his proxy to vote the Class A
Stock of certain stockholders pursuant to the Proxy Agreement) of
beneficial ownership (as defined in Rule 13(d)-3 under the Exchange Act)
of securities of the Company representing 50% or more of the outstanding
Common Stock; (iii) the complete liquidation of the Company; (iv) the
partial liquidation of the Company involving the distribution to
stockholders of assets having a fair market value (determined, in good
faith, by the Board) in excess of $300 million; or (v) (x) any
recapitalization or reclassification, (y) any restructuring of the Company
by way of merger, dividend, distribution, exchanges and/or liquidation or
otherwise, or (z) any other extraordinary transaction, provided that, in
the case of this clause (v), such transaction is approved by the Board and
either (1) the transaction involves a distribution to stockholders with a
fair market value (determined in good faith by the Board of Directors) of
at least $300 million or (2) any person or group of persons who hold at
least 50% of the shares of Common Stock outstanding at the Effective Date
cease, as a result of such transaction, to own any shares of Common Stock
after giving effect to the transaction.
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<PAGE>
"Fair Market Value" means (a) with respect to any share of Common Stock:
(i) if, as of the date of determination, there is a public trading market
for shares of Common Stock for which price quotations are readily
available, the average of the "high" and "low" prices per share of Common
Stock for the day on which trading occurs immediately preceding the date
of determination as reported in The Wall Street Journal, or if no such
"high" and "low" prices are so reported, but there is so reported only a
"bid" and "asked" price for such day, the average of the "bid" and "asked"
prices as so reported in The Wall Street Journal; or (ii) if, as of the
date of determination, there is no public trading market for shares of
Common Stock for which price quotations are readily available, the sum of
(A) the fair market value of a share of Common Stock as determined by an
appraiser (selected pursuant to the Stockholders Agreement) as of the last
day of each fiscal year of the Company and (B) the amount (or, if
applicable, fair market value, as determined in good faith by the Board of
Directors) of any declared but unpaid cash dividend or property
distribution if such dividend or distribution was subtracted by the
appraiser in calculating the amount described in the preceding clause (A).
In determining the fair market value of any share of Common Stock, the
appraiser shall not take into account any premiums for control, any
discounts for minority interests or any restrictions or other limitations
on such shares contained in the Stockholders Agreement, including, without
limitation, the transfer restrictions and the right of the Company to
purchase such shares as provided in the Stockholders Agreement.
"First Option" means an option granted under the Plan prior to December
31, 1989.
"Frist" means Thomas F. Frist, Jr., Chairman of the Board, Chief
Executive Officer and President of HCA.
"Grantee" means a person to whom an option or options under this Plan
has or have been granted.
"HCA" means Hospital Corporation of America, a Tennessee corporation.
"HPC" means HCA Psychiatric Company, a Delaware corporation, and its
subsidiaries.
"Indebtedness" means (i) all obligations of the Company and its
subsidiaries for borrowed money, (ii) all obligations of the Company and
its subsidiaries evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of the Company and its subsidiaries to
pay the deferred purchase price of property or services, except trade
accounts payable, deferred employee compensation and like accrued
liabilities arising in the ordinary course of business, (iv) all
obligations of the Company and its subsidiaries as lessee under leases
which are capitalized in accordance with generally accepted accounting
principles, (v) all obligations, fixed or contingent, of the Company and
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<PAGE>
its subsidiaries to reimburse or prepay any bank or other person in
respect of amounts paid under a letter of credit, banker's acceptance or
similar instrument, whether drawn or undrawn, (vi) all obligations of the
Company and its subsidiaries to purchase securities which arise out of or
in connection with the sale of the same or substantially similar
securities, (vii) all Indebtedness of others secured by a lien on any
asset of the Company and its subsidiaries, whether or not such debt is
assumed by the Company and its subsidiaries, (viii) all Indebtedness of
others guaranteed by the Company and its subsidiaries and (ix) the
Cumulative Exchangeable Preferred Stock, par value $0.01 per share, of the
Company; provided, notwithstanding the foregoing, any indebtedness or
obligation shall not constitute Indebtedness under this definition either
(a) if it was incurred prior to January 1, 1990, but only to the extent it
is not recorded on the Company's consolidated balance sheet in accordance
with generally accepted accounting principles or (b) if it was incurred on
or after January 1, 1990, but only to the extent both (x) it is not
recorded on the Company's consolidated balance sheet in accordance with
generally accepted accounting principles and (y) it is designated by
majority vote or unanimous consent of the Company's Board of Directors as
an indebtedness or obligation which is not to be considered Indebtedness
under this Plan.
"Initial Options" means an option to purchase shares of Class A Stock
granted pursuant to the HCA - Hospital Corporation of America Nonqualified
Initial Option Plan.
"Initial Public Offering" shall mean the completion of the sale or sales
of shares of Common Stock pursuant to an effective registration statement
under the Securities Act of 1933 (the "Securities Act") (other than a
registration statement relating to shares of Common Stock issuable upon
exercise of options granted under the Plan or relating to any other
employee benefit plan of the Company) in which the aggregate public
offering price of such sale or sales equals or exceeds $50 million.
"Merger" means the merger of TF Acquisition, Inc. into HCA, with HCA as
the surviving corporation, pursuant to the Agreement and Plan of Merger,
dated November 21, 1988, as amended as of February 7, 1989, by and between
the Company, TF Acquisition, Inc. and HCA.
"Non-operating Asset" means any asset (including any stock in a
subsidiary or any other equity investment in any affiliate) other than the
assets of HCA's acute care hospital business, psychiatric hospital
business, clinical laboratories business, international business or
management contract business.
"Non-operating Assets Option" means an option which vests as provided
in Section 9.5. The total number of Non-operating Assets Options granted
under the Plan shall not exceed 3,806,800.
"Non-Performance Option" means an option granted under the Plan which
vests as provided in Section 9.2. The total number of Non-Performance
Options granted under the Plan shall not exceed 7,356,800.
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<PAGE>
"Operating Earnings" means HCA's net operating revenues less HCA's
operating expenses as reflected in consolidated operating income in the
projected consolidated income statement in the Bank Memorandum, a copy of
which is attached hereto as Exhibit A provided that the amount of any
compensation expense which is required by generally accepted accounting
principles for the vesting of employee stock options shall be deducted
from the amount of HCA's operating expenses. Operating Earnings for each
year shall be computed on a basis consistent with the computation of
operating income in the Bank Memorandum and shall be conclusively
determined by the Company's independent auditor based on generally
accepted accounting principles consistently applied and approved by the
Board. For the fiscal year ending December 31, 1989, Operating Earnings
shall be the sum of Operating Earnings for HCA and the Company, without
duplication.
"Operating Earnings Target" means the amount of Operating Earnings for
each fiscal year in accordance with the following schedule (dollar figures
are in millions):
Fiscal Year Ending Operating Earnings
December 31, Target
1989 $ 889.3
1990 932.1
1991 796.4
1992 873.9
1993 973.3
"Option Agreement" means the written agreement to be entered into by the
Company and each Grantee, as provided in Section 7 hereof.
"Original Stockholders" means the persons who hold shares of Common
Stock immediately after the Effective Date.
"Proxy Agreement" means the Proxy and Authorization Agreement, dated as
of the Effective Date, among certain stockholders pursuant to which
certain stockholders will grant to Frist an irrevocable proxy to vote such
stockholder's Class A Shares.
"Rate of Return" means the annualized internal rate of return before
taxes on the investment in Common Stock by the Original Stockholders.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Effective Date, by the Company and all persons who,
immediately after the Effective Date, will hold shares of Common Stock or
Initial Options, providing such persons and holders of options granted
under this Plan with certain registration rights.
"Reserved Options" means those options available under the Plan which
are not granted prior to December 31, 1989. Reserved Options may be Non-
Performance Options, Debt Repayment Options, Earnings Options or Non-
operating Assets Options. Reserved Options may be granted at any time
prior to the tenth anniversary of the date the Plan first becomes
effective.
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<PAGE>
"Retirement" shall mean the termination of employment of a Grantee on
or after age 65, or, if earlier, the termination of employment of a
Grantee as the result of an election to take early retirement pursuant to
any tax-qualified employee pension benefit plan sponsored by the Company
or by HCA.
"Rule 16b-3" means the Securities Exchange Commission Regulation
240.16b-3 or any successor regulation.
"Special Options" shall mean (x) Reserved Options granted on or after
July 1, 1991, except those Reserved Options granted on or after July 1,
1991 specifically determined by the Committee not to be Special Options
and (y) all options held by Grantees who either (i) the Company or its
subsidiary terminates from employment prior to January 1, 1992, and
effective no later than March 31, 1992, or (ii) resigns from such
employment prior to January 1, 1992, and effective no later than March 31,
1992, except, in either case those options held by such Grantees which
vest or would vest on or before December 31, 1991, other than pursuant to
the provisions of Section 15 hereof.
"Spread" shall mean, with respect to any option surrendered in
accordance with Section 15.2 upon the occurrence of a Third Party Exit
Transaction, an amount equal to the product computed by multiplying (i)
the excess of (A) the price per share paid in the Third Party Exit
Transaction over (B) the purchase price per share at which the surrendered
option is then exercisable by (ii) the number of shares covered by such
option with respect to which it has not theretofore been exercised.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
the Effective Date, by and among the Company and all persons who,
immediately after the Effective Date, will hold shares of Common Stock or
Initial Options.
"Subscription Agreement" means the Subscription Agreement to be executed
and delivered on or prior to the Effective Date, pursuant to which the
Company will issue and sell shares of Common Stock and deliver option
agreements for Initial Options.
"Third Party Exit Transaction" means the sale of all or substantially
all of the Company to any person or entity, whether by way of the sale of
all or substantially all of the assets of the Company to such person or
entity pursuant to a plan of liquidation or otherwise, or by way of merger
or consolidation of the Company with another entity, or otherwise, and as
a result of which Stockholders receive consideration for their Stock.
"Voting Agreement" means the Voting Agreement, dated as of the Effective
Date, among the Company and certain stockholders of the Company with
respect to the management and corporate governance of the Company and HCA.
3. Effective Date of Plan
The Plan shall become effective on March 15, 1989 contingent upon the
approval of the sole stockholder of the Company. No options shall be
granted until 90 days after the Effective Date at which time options shall
be granted as provided in Section 6(a) hereof. No options may be granted
under the Plan after the tenth anniversary of the date the Plan first
becomes effective.
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<PAGE>
4. Number and Source of Shares Subject to the Plan
(a) The Company may grant options under the Plan for not more than the
following amount of shares of its Class A Stock:
the lesser of (1) 26,001,851 and (2) 26,001,851 minus all options which
shall have been cancelled and shall have been restored to the total
number available for grant under the Plan during the period December 13,
1993 until immediately before the close of business on the day before
that day on which the Company merges with CHOS Acquisition Corporation
("CHOS"), a wholly-owned subsidiary of Columbia Healthcare Corporation
which will be provided by the issuance of shares authorized but unissued.
(b) Shares as to which options previously granted shall have failed
to vest and shall have been cancelled for any reason shall be restored to
the total number available for grant options, provided that such shares
may be regranted only for the type of option for which such shares were
originally granted.
5. Administration of the Plan
(a) The Plan shall be administered by the Committee. The Plan is
intended is be administered by disinterested parties and to qualify for
the exemption provided in Rule 16b-3 and shall be interpreted and
construed in accordance with this purpose.
(b) The Committee shall adopt such rules of procedure as it may deem
proper, subject to the provisions of the Company's charter and bylaws.
(c) The powers of the Committee shall include authority to administer
and interpret the Plan, and, subject to the provisions hereof, to
determine the persons to whom options shall be granted, the type of option
to be granted, the number of shares subject to each option, the terms and
provisions of each option, and the date on which options shall be granted.
6. Granting Options
(a) Options may be granted under the Plan to key employees and
officers (who may be members of the Board) employed by the Company or any
subsidiary, provided that the Committee shall grant, no earlier than 90
days after the Effective Date and no later than 150 days after the
Effective Date, First Options to the individuals or categories of
individuals, in the amounts, and of the types, all as set forth on
Schedule A hereto. Notwithstanding the foregoing, the Board may, upon
consultation with senior management of the Company and prior to 150 days
after the Effective Date, revise, in good faith, the allocation of the
options set forth on Schedule A.
(b) Reserved Options shall vest in such increments as may be
determined by the Committee but shall not vest and become exercisable
earlier than First Options of the same type. If the Committee determines
that the period during which any Reserved Option may vest shall extend
beyond December 31, 1993, the Committee shall, with respect to Debt
Repayment Options, Earnings Options or Non-operating Assets Options, and
in consultation with senior management of HCA, set appropriate performance
targets for the fiscal years beginning after December 31, 1993.
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<PAGE>
(c) Notwithstanding the foregoing, in the event that any available
Non-Performance Options, Debt Repayment Options, Earnings Options or Non-
operating Assets Options have not been granted by the Committee at or
prior to the time of an occurrence of an Exit Transaction, then all
options not theretofore granted shall be immediately granted to the
Grantees to whom options have been previously granted under the Plan
(provided each such Grantee is an Employee at the time of the occurrence
of any such event) pro rata as Non-Performance Options, Debt Repayment
Options, Earnings Options or Non-operating Assets Options, as the case may
be, in accordance with the number of shares of Class A Stock subject to
such options and the number of shares of Class A Stock subject to options
theretofore granted to such Grantees, and such options shall vest and
become exercisable in accordance with Section 15 hereof.
7. Option Agreement
(a) Option Agreements for options granted hereunder shall contain such
provisions as may be required by the terms hereof, provisions concerning
the time and manner by which the options may be exercised and such other
provisions (including restrictions on the option and the option stock) as
the Committee shall in its discretion impose. The Committee may vary the
terms and provisions of individual Option Agreements on a case by case
basis and shall not be required to make all Option Agreements uniform.
(b) No option shall be exercised by a Grantee unless he shall have
executed and delivered to the Company an Option Agreement.
(c) Appropriate officers of the Company are hereby authorized to
prepare, execute and deliver Option Agreements, and amendments thereto, in
the name of the Company, with such provisions as from time to time may be
dictated by the Committee consistent with the provisions hereof.
8. Exercise Price
The exercise price per share of Class A Stock with respect to all
options granted pursuant to this Plan shall be $0.625.
9. Terms and Exercise of Options
9.1 General. Subject to earlier vesting as hereinafter provided, each
option granted under the Plan shall be exercisable in the proportion in
which it becomes vested only during a term commencing six months after the
date when the option was granted and ending (unless the option shall have
terminated earlier under other provisions of the Plan) on the date to be
fixed by the Committee but not later than fifteen (15) years from the date
of grant.
9.2 Non-Performance Options. Unless the Committee shall determine
otherwise in the case of Reserved Options only, Non-Performance Options
shall vest and become exercisable in 20% increments at the end of each of
the five fiscal years of the Company, beginning with the fiscal year
ending December 31, 1989.
9.3 Debt Repayment Options.
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<PAGE>
(a) Debt Repayment Options shall vest and become exercisable in
increments in each of the five consecutive fiscal years of the Company,
beginning with the fiscal year ending December 31, 1989, as follows: If
the reduction in aggregate Indebtedness of the Company and its
subsidiaries during each of the fiscal years ending December 31, 1989,
1990, 1991, 1992 and 1993, equals or exceeds the Debt Repayment Target for
such fiscal year, then the Debt Repayment Options shall vest and become
exercisable in accordance with the following schedule:
Fiscal Year Total
Ending Vesting Percentage
December 31, Percentage Vested
1989 20% 20%
1990 40% 60%
1991 20% 80%
1992 10% 90%
1993 10% 100%
(b) If the reduction in aggregate Indebtedness of the Company and its
subsidiaries in any fiscal year is less than the Debt Repayment Target for
such fiscal year, but the reduction in aggregate Indebtedness in such
fiscal year and all prior fiscal years equals or exceeds the sum of the
Debt Repayment Targets for such fiscal year and all prior fiscal years,
then a percentage of the Debt Repayment Options shall vest and become
exercisable, which percentage shall equal the Vesting Percentage for such
fiscal year set forth in the schedule in paragraph (a) above.
(c) If the reduction in aggregate Indebtedness of the Company and its
subsidiaries in any fiscal year is less than the Debt Repayment Target for
such fiscal year and the full increment of Debt Repayment Options for such
fiscal year do not vest and become exercisable in accordance with
paragraph (b) above, but the reduction in aggregate Indebtedness in such
fiscal year and any successive subsequent fiscal years equals or exceeds
the sum of the Debt Repayment Targets for such fiscal year, all prior
years and such successive subsequent fiscal years, then a percentage of
the Debt Repayment Options shall vest and become exercisable, which
percentage shall equal the Vesting Percentage for such fiscal year set
forth in the schedule in paragraph (a) above.
(d) If the net proceeds from the sales of Non-operating Assets are
used to pay Indebtedness in any fiscal year, then, at the option of the
Company, either (i) the Debt Repayment Target for such fiscal year shall
be increased by the amount of net proceeds used to pay Indebtedness or
(ii) the Debt Repayment Target shall not be so increased, but then,
notwithstanding the definition of "Non-operating Asset" set forth herein,
the assets so sold shall not be considered "Non-operating Assets" and the
net after tax proceeds of such asset sales will not be considered in the
vesting of Non-operating Assets Options.
(e) In the event of a public offering, the net proceeds from such
public offering that are used to pay Indebtedness in any fiscal year shall
be treated, for purposes of determining whether the Debt Repayment Target
for such fiscal year has been met, as a reduction in aggregate
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Indebtedness toward the achievement of the Debt Repayment Target for such
fiscal year only if (i) at the time of such public offering, the Debt
Repayment Options for all prior fiscal years had vested in accordance with
paragraph (a) above, or (ii) any Original Stockholder sells any shares of
Common Stock pursuant to such public offering and realizes a Rate of
Return on the shares of Common Stock sold in such Initial Public Offering
of at least 50%.
(f) To the extent the Company undertakes capital investment projects
not contemplated in the projections contained in the Bank Memorandum or
completes divestitures at times different from the times contemplated in
such projections, the Committee shall, in good faith, appropriately revise
the Debt Repayment Targets.
9.4 Earnings Options
(a) Earnings Options shall vest and become exercisable in each fiscal
year upon the attainment of the Operating Earnings Targets as follows:
(i) For each full 1% of Operating Earnings Target by which
Operating Earnings for the fiscal year ending December 31, 1989
exceed 98% of the Operating Earnings Target for such fiscal year,
5% of the Earnings Options shall vest and become exercisable, up
to a maximum of 10% of the Earnings Options.
(ii) For each full 1% of Operating Earnings Target by which
Operating Earnings for the fiscal year ending December 31, 1990
exceed 96% of the Operating Earnings Target for such fiscal year,
2.5% of the Earnings Options shall vest and become exercisable up
to a maximum of 10% of the Earnings Options.
(iii)For each full 1% of Operating Earnings Target by which
Operating Earnings for the fiscal year ending December 31, 1991
exceed 94% of the Operating Earnings Target for such fiscal year,
1.67% of the Earnings Options shall vest and become exercisable
up to a maximum of 10% of the Earnings Options.
(iv) For each full 1% of Operating Earnings Target by which
Operating Earnings for the fiscal year ending December 31, 1992
exceed 92% of the Operating Earnings Target for such fiscal year,
2.5% of the Earnings Options shall vest and become exercisable up
to a maximum of 20% of the Earnings Options.
(v) For each full 1% of Operating Earnings Target by which
Operating Earnings for the fiscal year ending December 31, 1993
exceed 90% of the Operating Earnings Target for such fiscal year,
5% of the Earnings Options shall vest and become exercisable up
to a maximum of 50% of the Earnings Options.
(b) If Operating Earnings in any fiscal year (the "Base Year"), except
the fiscal year ending December 31, 1989, exceed the Operating Earnings
Target for such fiscal year, such excess shall be treated, for purposes of
determining whether the Operating Earnings Targets shall have been met, as
Operating Earnings for the most recent preceding fiscal year with respect
to which Earnings Options have not fully vested and have not become
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exercisable to determine whether Earnings Options with respect to such
preceding year should vest and become exercisable in accordance with
paragraph (a) above. If the Earnings Options with respect to such
preceding fiscal year become fully vested and exercisable as a result of
such special treatment of the excess Operating Earnings for the Base Year,
the excess Operating Earnings for such Base Year less the amount, if any,
which was treated as Operating Earnings in such preceding fiscal year in
order to vest Earnings Options, will be similarly treated as Operating
Earnings in the fiscal years preceding such preceding fiscal year (most
recent years first), if any, to determine whether Earnings Options in
those preceding years should vest and become exercisable in accordance
with paragraph (a) above. This special treatment of the excess Operating
Earnings for any Base Year will be continued until the excess is reduced
to zero or the Earnings Options for all years preceding the Base Year are
fully vested.
(c) If the Company sells (i) any Non-operating Assets, which assets
had operating income included in the projections set forth in the Bank
Memorandum, or (ii) any division or direct or indirect subsidiary of the
Company (other than Non-operating Assets), the Committee shall, in good
faith, revise downward the Operating Earnings Targets for the fiscal year
in which the sale occurs and for all subsequent fiscal years to reflect
such sale, to the extent that the Operating Earnings Targets do not
reflect the sale of such Non-operating Assets, and to ensure that the
Grantees hereunder shall not be penalized for the reduced earnings base of
the Company as a result of such sale.
(d) To the extent the Company undertakes capital investment projects
not contemplated in the projections contained in the Bank Memorandum or
completes divestitures at times different from the times contemplated in
such projections, the Committee shall, in good faith, appropriately revise
the Operating Earnings Targets.
9.5 Non-operating Assets Options. Non-operating Assets Options shall
vest and become exercisable upon the sale of Non-operating Assets as
described in this Section 9.5. The aggregate amount of Non-operating
Asset Options is based upon the shareholders' objectives of receiving at
least $1 billion in value in respect of Non-operating Assets by December
31, 1993. To encourage early sales of Non-operating Assets, the Non-
operating Asset Options will vest in the proportion which the future value
("Future Value") of the net after tax proceeds of such asset sales bears
to $1 billion. The Future Value of any Non-operating Asset sale is the
value of the net after tax proceeds of such asset sale compounded on a
quarterly basis from the end of the quarter in which such sale occurs
until December 31, 1993 at a rate of 10% per annum for asset sales with
net after tax proceeds of no more than $100 million and at a rate to be
determined by the Committee for asset sales with net after tax proceeds in
excess of $100 million. If shareholders realize the value of Non-
operating Assets in an Exit Transaction on or before December 31, 1993,
Non-operating Asset Options shall vest, based upon the value realized and
the future value concept described in this paragraph. The value realized
will be determined in good faith by the Committee. If any Non-operating
Asset Options fail to vest, such Options shall be subject to Section 9.6.
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9.6 Future Performance Goals. In the event any Earnings Options, Non-
operating Assets Options, or Debt Repayment Options are not fully vested
at or prior to December 31, 1993, the Committee, in consultation with
senior management of HCA, may, in its discretion, set appropriate
performance targets and criteria for each subsequent fiscal year until all
Earnings Options, Non-operating Assets Options and Debt Repayment Options
under the Plan shall be fully vested and exercisable.
9.7 Determinations. Within 120 days after the end of each fiscal
year, the Committee shall determine the extent to which Debt Repayment
Options, Non-operating Assets Options and Earnings Options have vested and
are exercisable for such fiscal year based on the principal amount of
Indebtedness repaid, the proceeds from the sale of Non-operating Assets
and the level of Operating Earnings, and shall communicate in writing to
each Grantee of the percentage of his options which have vested, such
options then being deemed to have vested and be exercisable on the last
day of such fiscal year.
9.8 Exercise.
(a) Options shall be exercised by delivering or mailing to the
Committee:
(1) A notice, in the form and at times prescribed by the
Committee specifying the number of shares to be purchased.
(2) The full option price (i) by means of a check or money
order payable to the Company, (ii) by the delivery of
certificates for Class A Stock, valued at Fair Market Value
for all or part of the option price and/or (iii) at any
time after an Initial Public Offering, by Regulation T
cashless exercises or pursuant to the procedure theretofore
determined by the Committee. Prior to the Initial Public
Offering, appropriate post-closing adjustments to the
exercise price shall be made upon the determination of Fair
Market Value.
(3) If the Grantee has not previously executed the Stockholders
Agreement, the Voting Agreement, the Proxy Agreement or the
Registration Rights Agreement and any of such agreements
are in effect on the date of the exercise, an executed copy
of each such agreement then in effect.
(4) Subject to the provisions of subsection (c) below, the
Committee may require a Grantee receiving Class A Stock
pursuant to an option granted hereunder to pay the Company
the amount determined by the Company to be the amount
required by it to be withheld with respect to the exercise
of the option either in cash or securities (i) in
accordance with Section 3402 of the Internal Revenue Code
of 1986, as amended (the "Code"), (ii) in order to satisfy
the relevant requirements of Section 83 of the Code and the
regulations thereunder and (iii) in order to satisfy any
similar requirements of state or local governments.
(b) Upon receipt of such notice and upon payment of the option price,
the Company shall promptly deliver to the Grantee a certificate or
certificates for the shares purchased, without charge to him for issue or
transfer tax.
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(c) At any time after an Initial Public Offering, a Grantee shall be
permitted to pay all or a portion of any federal, state or local
withholding taxes due pursuant to paragraph (a)(4) above in connection
with the exercise of options granted under the Plan:
(i) by electing to have the Company withhold shares of Common
Stock due such Grantee upon such exercise, or
(ii) by tendering previously owned shares of Common Stock,
such shares withheld pursuant to clause (i) or tendered pursuant to
clauses (ii) having a Fair Market Value equal to the amount of tax to be
withheld. A Grantee's election in respect of the use for withholding of
Common Stock is subject to the following conditions:
(1) the election must be made on or prior to the date on which
the amount to be withheld is required to be determined;
(2) the election must be irrevocable; and
(3) the election is subject to disapproval by the Committee.
In addition, if the Grantee is subject to the reporting and liability
provisions of Section 16 of the Exchange Act (a "Section 16 Person"), each
election in respect of the Company withholding shares of Common Stock
otherwise issuable is subject to the further conditions that either (1)
the Section 16 Person shall have given to the Company, prior to six months
before the option exercise, an advance standing election in the form of
Schedule A hereto; (2) the exercise of the option and the stock
withholding must take place in the four, 10-day periods beginning on the
third day following the release of the Company's annual or quarterly
earnings statements and the Company and the Section 16 Person otherwise in
the transaction comply with the requirements of Rule 16b-3(e) or (3) such
Participant shall acknowledge on a form provided by the Company that such
share withholding may be a "sale" pursuant to Section 16 of the Exchange
Act. As part of the withholding election, a Grantee may pay withholding
taxes in excess of the statutory minimum as long as the amount paid does
not exceed the Grantee's estimated federal, state and local tax
obligations associated with the exercise, including FICA and FUTA taxes to
the extent applicable.
9.10 Nontransferability. Subject to Section 10 hereof, all options
granted under the Plan shall be non-transferable other than by will or by
the laws of descent and distribution. During a Grantee's lifetime, an
option granted under the Plan may be exercised only by him.
9.11 Common Stock Agreements.
(a) Each Grantee shall execute and deliver the Stockholders Agreement
upon the initial vesting of any portion of the options granted to such
Grantee hereunder.
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(b) All options granted pursuant to this Plan and shares of Class A
Stock acquired pursuant to the exercise of options shall be subject to the
provisions of the Stockholders Agreement. In particular, all options and
shares of Class A Stock acquired pursuant to an exercise of options shall
be subject to the provisions of the Stockholders Agreement relating to
"puts" and "calls" in the event of the termination of employment of the
Grantee.
9.12 HPC Recapitalization. For all purposes of this Plan (except those
provisions of this Plan relating to option recipients), the borrowing by
HPC of $500 million on August 30, 1990, and HPC's payment of such $500
million to HCA on August 30, 1990, in repayment of intercompany debt owed
by HPC to HCA, shall be deemed to have been HCA's sale of HPC, effective
August 30, 1990.
10. Exercise of Options Upon Termination of Employment.
(a) Upon the termination of employment, death or disability of any
Grantee, any portion of such Grantee's options that have not vested and
become exercisable as of the date of termination of employment, death or
disability shall be cancelled and any portion of such Grantee's options
that have vested and become exercisable as of such date shall be
exercisable in accordance with the following provisions of this Section
10. Notwithstanding the immediately preceding sentence, if options for
the fiscal year in which such Grantee's death or disability occurs vest
pursuant to the provisions of the Plan, such Grantee's options for such
fiscal year which would have vested if such Grantee had been an Employee
at the end of such fiscal year shall be deemed vested on a pro rata basis
based on the date in such fiscal year when such Grantee's death or
disability shall have occurred.
(b) If a Grantee dies prior to exercising any option granted
hereunder, the option may be exercised to the extent such option is vested
and exercisable on the date of the Grantee's death by the estate of the
deceased Grantee, in whole or in part, until the expiration of the later
of (i) one year from the date of the Grantee's death or (ii) the original
term of the option. Such exercise shall otherwise be subject to all
applicable conditions and restrictions prescribed in Section 9 hereof and
in the Option Agreement.
(c) Upon a Grantee's voluntary termination of employment (other than
for Retirement or disability), or termination of employment for cause, the
Grantee may exercise any option granted hereunder, to the extent such
option is vested and exercisable on the date of such termination of
employment, for a period of thirty (30) days from the date of such
termination. Any options not exercised within such thirty-day period, and
any portion of the options which had not vested as of the date of the
Grantee's termination of employment, shall be cancelled.
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(d) Upon the Grantee's Retirement or termination of employment as a
result of the Grantee's disability, or the Grantee's termination of
employment for any reason other than the Grantee's voluntary termination
of employment or termination of employment for cause, the Grantee may
exercise the options granted hereunder, to the extent such options are
vested and exercisable on the date of Retirement or any such termination
of employment, until the expiration of the original term thereof. Any
portion of the options which has not vested as of the date of such
Retirement or any such termination of employment shall be cancelled.
(e) Notwithstanding any other provision of this Plan, the Committee
may provide that a Grantee shall be vested in none, any part or all or any
portion of such Grantee's options not previously vested if his employment
by the Company is terminated because of death, disability or Retirement.
11. Stockholders' Rights and Obligations.
(a) No person shall have any rights as a stockholder by virtue of a
stock option except with respect to Common Stock actually issued to him,
and the issuance of shares under an Option Agreement shall confer no
retroactive right to dividends.
(b) (i) This Plan, and the grant and exercise of options hereunder,
and the Company's obligation to sell and deliver stock under such
options, shall be subject to all applicable federal, state and
local laws, rules and regulations and to such approvals by
regulatory or governmental agencies as may be required.
(ii) If the shares of Common Stock issuable upon exercise of any
option have not been registered under the Securities Act of 1933,
as amended (the "Securities Act") the Company may in its
discretion require that, as a condition precedent to the exercise
of any option, the person exercising the option give to the
Company a written representation and undertaking, satisfactory in
form and substance to the Company, that he is acquiring the shares
for his own account for investment and not with a view to the
distribution or resale thereof and otherwise establish to the
Company's satisfaction that the offer or sale of the shares
issuable upon exercise of the option will not constitute or result
in any breach or violation of the Securities Act or any similar
act or statute or any rules or regulations thereunder. If the
shares of Common Stock issuable upon exercise of an option have
not been registered under the Securities Act, the Company may
place upon any stock certificate an appropriate legend referring
to the restrictions on disposition under the Securities Act.
(iii)If, upon the exercise of any portion of the options granted
to a Grantee hereunder, any of the Stockholders Agreement, Voting
Agreement, or Proxy Agreement is still in effect, the stock
certificates for the shares of Common Stock issuable upon such
exercise will bear the legends required by any such agreement in
effect.
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(iv) In the event the class of shares issuable upon exercise of
any option is listed on any national securities exchange, the
Company shall not be required to issue or deliver any certificate
for shares upon the exercise of any option prior to the listing
of the shares so issuable on such national securities exchange.
12. Adjustment of Changes in Capitalization, Reorganization, etc.
(a) Any change in the number of outstanding shares of Common Stock
occurring through stock splits, stock rights offering, special dividend,
stock dividends or stock consolidations after the adoption of the Plan
shall be reflected proportionately in a change in the aggregate number of
shares of Common Stock then available for the grant of options under the
Plan, or becoming available through the termination of operations
previously granted but unexercised, in the number subject to options then
outstanding, and in the amounts remaining available for purchase under
outstanding options, and a proportionate change shall be made in the per
share option price as to any outstanding options or portions thereof not
yet exercised; provided, however, that fractional shares shall be rounded
to the nearest whole share. If changes in capitalization other than those
considered above shall occur, the Committee shall make such adjustments as
it may consider appropriate in the number of shares for which options may
thereafter be granted, and in the number of shares remaining subject to
options previously granted and in the per share option price, and all such
adjustments shall be conclusive.
(b) In the event that the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of shares or
other securities or property (including cash) of the Company or of another
corporation by reason of reorganization, merger, sale or transfer of all
or substantially all the Company's assets to another corporation, or
consolidation, appropriate adjustments shall be made by the Committee in
the number and kind of shares of Common Stock, other securities or
property for the purchase of which options may be granted under the Plan
including the maximum number that may be granted to any one participant.
In addition, the Committee shall make appropriate adjustment in the number
and kind of shares of Common Stock, other securities or property as to
which outstanding options, or portions thereof then unexercised, shall be
exercisable. Any adjustment of the Plan or in outstanding options shall
be effective on the effective date of the event giving rise to such
adjustment.
13. Termination, Suspension or Amendment of Plan.
The Board may at any time terminate, suspend or amend the Plan by the
affirmative vote of at least three-quarters of the directors eligible to
vote at a meeting of the Board at which at least three-quarters of the
directors are present, except that the Board shall not, without the
authorization of the holders of at least two-thirds of the shares of Class
A Stock voted at a stockholders' meeting duly called and held, change any
provisions (other than through adjustment for changes in capitalization as
hereinabove provided) which determine (a) the classes or persons eligible
for options; (b) the minimum option price; (c) the terms of payment; or
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(d) the duration of the Plan or the maximum term of any option. In
addition, without such stockholder authorization, no amendment shall be
made to the Plan which would (A) materially increase the benefits accruing
to participants under the Plan, (B) materially increase the number of
securities which may be issued under the Plan (other than as provided
herein), or (C) materially modify the requirements as to eligibility for
participation in the Plan. No termination, suspension or amendment of the
Plan shall adversely affect any right acquired by a Grantee, or by any
estate of a Grantee (as provided in Section 10 hereof), under the terms
of an option granted before the date of such termination, suspension or
modification, unless such Grantee or successor shall consent; but it shall
be conclusively presumed that any adjustment for changes in capitalization
as provided in Section 12 does not adversely affect any such right.
Notwithstanding anything to the contrary set forth herein, if any
provision herein shall be determined at any time to be in violation of
Rule 16b-3, such provision shall, upon such determination, automatically
be deemed inoperative, void and of no force and effect as if never set
forth herein and may be deleted from the Plan or amended by the Board at
any time with prospective or retroactive effect.
14. Application of Proceeds.
The proceeds received by the Company from the sale of its shares of
Common Stock under the Plan will be used for general corporate purposes.
15. Event of Acceleration.
15.1 Vesting Upon Exit Transaction. Notwithstanding anything to the
contrary in the Plan, upon the occurrence of an Exit Transaction:
(a) All Non-Performance Options which have not previously vested shall
vest and become immediately exercisable.
(b) The portion of the Debt Repayment Options which may vest in
accordance with Section 9.3(a) hereof in the fiscal year in which the Exit
Transaction occurs (the "Exit Transaction Year") and the portion of the
Debt Repayment Options which may vest in accordance with Section 9.3(a)
hereof in the fiscal years subsequent to the Exit Transaction Year shall
vest and become immediately exercisable. Except as otherwise provided in
this Section 15, any Debt Repayment Options which may vest in accordance
with Section 9.3(a) hereof in any fiscal year prior to the Exit
Transaction Year which have not vested prior to the Exit Transaction shall
be cancelled.
(c) All Earnings Options which may vest in accordance with Section
9.4(a) hereof in the Exit Transaction Year shall vest if the annualized
Operating Earnings for the Exit Transaction Year (calculated on the basis
of the number of days elapsed in the year prior to the occurrence of the
Exit Transaction), based on actual Operating Earnings results for such
year available at the time the Exit Transaction is consummated, equal or
exceed the Operating Earnings Target for the Exit Transaction Year. All
Earnings Options which may vest in accordance with Section 9.4(a) hereof
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in any year subsequent to the Exit Transaction year shall vest and become
immediately exercisable. If the annualized Operating Earnings for the
Exit Transaction Year exceed the Operating Earnings Target for the Exit
Transaction Year, such excess shall be treated, for purposes of
determining whether the Operating Earnings Targets have been met, as
Operating Earnings for the most recent preceding fiscal year with respect
to which Earnings Options have not fully vested and become exercisable, to
determine whether Earnings Options with respect to such preceding fiscal
year should vest and become exercisable. If the Earnings Options with
respect to such preceding fiscal year become fully vested and exercisable
as a result of such special treatment of the excess annualized Operating
Earnings for the Exit Transaction Year, the excess annualized Operating
Earnings for the Exit Transaction Year less the amount, if any, which was
treated as Operating Earnings in such preceding fiscal year in order to
vest Earnings Options, will be similarly treated as Operating Earnings in
the fiscal years preceding the preceding fiscal year (most recent years
first), if any, to determine whether Earnings Options in those preceding
fiscal years should vest and become exercisable. This special treatment
of the excess annualized Operating Earnings for the Exit Transaction Year
will be continued until the excess is reduced to zero or the Earnings
Options for all fiscal years preceding the Exit Transaction Year are fully
vested.
(d) The Committee may, in its discretion and in light of all the
circumstances, cause Debt Repayment Options and Earnings Options which
have not vested and become exercisable prior to the Exit Transaction Year
or which would not vest and become exercisable pursuant to paragraphs (b)
and (c) above, to vest if the Original Stockholders realize a Rate of
Return no less than 50% on their Common stock after giving effect to the
Exit Transaction. The number of such Debt Repayment Options and Earnings
Options which the Committee may cause to vest pursuant to this paragraph
(d) shall not exceed the number of Debt Repayment Options and Earnings
Options which, after giving effect to the exercise of such options, would
reduce the Rate of Return realized by the Original Stockholders to 50%
after giving effect to the Exit Transaction.
15.2 Vesting Upon December 31, 1991. Notwithstanding anything to the
contrary in the Plan, upon the occurrence of December 31, 1991:
(a) All Non-Performance Options which have not previously vested shall
vest and become immediately exercisable, except Special Options.
(b) All Debt Repayment Options which have not previously vested shall
vest and become immediately exercisable, except Special Options.
(c) All Earnings Options which have not previously vested shall vest
and become immediately exercisable, except Special Options.
(d) All Non-operating Assets Options which have not previously vested
shall vest and become immediately exercisable, except Special Options.
(e) All Special Options held by Grantees shall become Non-Performance
Options and vest pursuant to those special vesting provisions which were
determined by the Committee for each Grantee of Special Options and which
were set forth in the Grantee's Option Agreement to be the vesting
schedule if and when the option became a Non-Performance Option on
December 31, 1991.
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15.3 Section 16 Person's Sale of Accelerated Options. In respect of
the options held by Section 16 Persons which have their vesting periods
accelerated in accordance with the provisions of Section 15.1 or 15.2
hereof, each such Section 16 Person shall not sell or otherwise dispose of
the shares of Common Stock issuable to him upon exercise of such options
until six months has elapsed from the date that the option has vested,
except with the approval of securities counsel for the Company
15.4 Cash Out. Upon the occurrence of a Third Party Exit Transaction,
all Non-Performance Options, Debt Repayment Options, Non-operating Assets
Options and Earnings Options which have vested and become exercisable
(including those options which vested and became exercisable pursuant to
Section 15.1) shall be surrendered by the Grantees to the Company for
cancellation and the Grantees will receive upon such surrender a payment
in the amount equal to the Spread applicable to such surrendered option
and in the kind of, and in the same proportions as, the consideration
received by stockholders in the Third Party Exit Transaction.
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EXHIBIT A
to 1989 Nonqualified
Stock Option Plan
____________________
(date)
HCA-Hospital Corporation of America
One Park Plaza
Nashville, Tennessee 37203
Re: Standing Electing to Withhold Shares for Section 16 Persons
Gentlemen:
Henceforth, whenever I exercise a Company employee stock option
(including any options which hereafter may be granted to me), I request
that the Company withhold from my exercise the number of shares of Company
Common Stock equal in value to the federal and state withholding taxes due
upon exercise. This election may not be changed without six months'
notice.
Very truly yours,
EXHIBIT-4.4
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement"), made as of July 8, 1991
between Columbia Hospital Corporation, a Nevada corporation (the
"Company"), and T. Michael Long, ("Director").
WITNESSETH:
To encourage stock ownership by Director and to provide incentive
for such Director to expand and improve the profits and prosperity of the
Company, the Company grants Director the opportunity to purchase shares of
the $.01 par value common stock of the Company ("Stock"), the Company and
Director hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to
Director the right and option ("Option") to purchase all or part of an
aggregate of 3,750 shares of Stock, on the terms and conditions set forth
herein.
2. Purchase Price. The purchase price of Stock purchased
pursuant to the exercise of this Option shall be $12.75 per share.
3. Exercise of Option. Subject to the earlier expiration of this
Option as herein provided, this Option may be exercised, by written notice
of the Company (addressed to its principal executive offices), at any time
and from time to time after the date of grant hereof, but this Option
shall be exercisable only in cumulative increments equal to one-fourth of
the number of shares offered by this Option each 12 months from the date
of grant hereof to the date of such exercise. (For purposes of
illustration, one-fourth of the number of shares offered by this Option
may be so purchased beginning July 8, 1992, three-fourths of such shares
may be so purchased beginning July 8, 1994, and all of such shares may be
so purchased beginning July 8, 1995, in each case subject to the earlier
expiration of this Option as herein provided.) Notwithstanding the
foregoing, in the event of any change of control of the Company, then this
Option shall become exercisable in full (as provided in Paragraph 5).
This Option is not transferable by Director otherwise than by will or the
laws of descent and distribution, and may be exercised only by Director
during his lifetime and while he remains a Director of the Company, except
that:
(a) If Director ceases to be a director of the Company for
reasons other than by death (whether by resignation,
retirement, dismissal or otherwise), Director may exercise
this Option at any time during this period of three months
following the date of such cessation of directorship, but only
as to the number of shares Director was entitled to purchase
hereunder as of the date his directorship so terminates.
<PAGE>
(b) If Director dies while a director of the Company or within
the three-month period specified in (a) above, his estate, or
the person who acquires this Option at any time during the
period of one year following the date of Director's death, but
only as to the number of shares Director was entitled to
purchase hereunder as of the date of his death.
In any event this Option shall not be exercisable as to any shares
of Stock offered hereby after the expiration of five years from the date
of grant of this Option. The purchase price of shares of Stock as to
which this Option is exercised shall be paid in full at the time of
exercise (a) in cash (including check, bank draft or money order payable
to the order of the Company), (b) by delivery to the Company of shares of
Stock having a fair market value equal to the purchase price, or (c) by a
combination of cash and Stock; provided that the fair market value of
Stock so delivered shall be the mean of the reported high and low sales
price of Stock on the NASDAQ/NMS on the date on which the Option is
exercised or, if no prices are so reported on such day, on the next
preceding day on which such prices of Stock are so reported. Unless and
until a certificate for such shares shall have been issued by the Company
to him, Director (or the person permitted to exercise this Option in the
event of Director's death) shall not be or have any of the rights or
privileges of a shareholder of the Company with respect to shares
acquirable upon an exercise of this Option.
4. Shares Subject to the Plan. The shares which may be issued under
this Option may consist of authorized but unissued shares of Stock or
previously issued shares reacquired by the Company. Any of such shares
which remains unissued at the termination of this Option shall cease to be
subject thereto, but until termination of this Option the Company shall at
all times make available a sufficient number of shares to meet the
requirements of this Option. The aggregate number of shares issuable
under this Option shall be adjusted to reflect a change in capitalization
of the Company, such as a stock dividend or stock split, as provided in
Paragraph 5 of this Agreement.
5. Recapitalization or Reorganization. (a) The existence of an Option
shall not affect in any way the right or power of the Board of Directors
or the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger of consolidation of the Company, and
issue of bonds, debentures, warrants, preferred or prior preference stocks
ahead of or affecting Stock or the rights thereof, the dissolution of
liquidation of the Company or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding.
(b) The shares offered by an Option are shares of Stock as
presently constituted, but if, and whenever, prior to the expiration of an
Option, the Company shall effect a subdivision or consolidation of shares
of Stock or the payment of a stock dividend on Stock without receipt of
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consideration by the Company, the number of shares of Stock with respect
to which an Option may thereafter be exercised (i) in the event of an
increase in the number of outstanding shares shall be proportionately
increased, and the purchase price per share shall be proportionately
reduced (but in no event to less than the par value of the Stock), and
(ii) in the event of a reduction in the number of outstanding shares shall
be proportionately reduced, and the purchase price per share shall be
proportionately increased.
(c) If the Company recapitalizes or merges or consolidates with
one or more corporations and the Company shall be the surviving
corporation, thereafter upon any exercise of an Option, Director shall be
entitled to purchase under such Option, in lieu of the number of shares of
Stock as to which such Option shall then be exercisable, the number and
class of shares of stock and other securities or other property to which
Director would have been entitled pursuant to the terms of the
recapitalization or agreement of merger or consolidation, or if,
immediately prior to the effective time of such recapitalization or merger
or consolidation, Director had been the holder of record of the number of
shares of Stock as to which such Option is then exercisable. If the
Company shall not be the surviving corporation in any merger of
consolidation, or if the Company is to be dissolved or liquidated, then
unless a surviving corporation assumed or substitutes new options for an
Option, (i) the time at which an Option may be exercised shall be
accelerated and this Option shall become exercisable in full on or before
a date fixed by the Company prior to the effective date of such merger or
consolidation or such dissolution or liquidation (if the Company does not
specify a date, then thirty days prior to the effective date of such
merger or consolidation or such dissolution or liquidation), and (ii) upon
such effective date an Option shall expire.
(d) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class of securities convertible into
shares of stock of any class, for cash, property, labor or services, upon
direct sale, upon the exercise of rights or warrants to subscribe
therefore, or upon conversion of shares of obligations of the Company
convertible into such shares or other securities, and in any case whether
or not fair value, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of shares of Stock subject to
this Option or the purchase price per share.
6. Status of Stock. The Company does not presently intend to register
for issue under the Securities Act of 1933, as amended (the "Act"), the
shares of Stock acquirable upon exercise of this Option, and instead
proposes to rely on the private offering exemption from the registration
requirements of the Act afforded by Section 4(2) thereof. In order to
assure that exemption from registration under the Act is available upon an
exercise of this Option, Director (or the person permitted to exercise
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this Option in the event of Director's death), if requested by the Company
to do so, will execute and deliver to the Company in writing an agreement
containing such provisions as the Company may reasonably require to assure
compliance with applicable securities laws. No sale or disposition of
shares of Stock acquired upon exercise of this Option shall be made in the
absence of a registered statement being on file with respect to such
shares under the Act unless an opinion of counsel satisfactory to the
Company that such sale or disposition will not constitute a violation of
the Act or any other applicable securities laws first obtained. The
certificates representing shares of Stock acquired under this Option may
bear such legend as the Company deems appropriate, referring to the
provisions of this Paragraph 6.
7. Registration Rights. With respect to any shares of Stock which are
issued and delivered upon exercise of this Option (the "Shares"):
(a) Upon written request made by Director at any time before
July 8, 1998, the Company shall take such steps as may be
necessary promptly to register (but not more than once), at
the Company's sole expense (save for any underwriting
commissions or discounts applicable to any Shares and
Director's counsel's fees), such of the Shares under the Act
(and under regulations of the Securities and Exchange
Commission under the Act or under any similar federal act or
acts then in effect and under the so-called "Blue Sky" laws of
the several states and regulations thereunder then in effect),
as Director may by written request given to the Company within
15 days following such initial request, desire to have so
registered. The Company will cause such a registration
statement to be filed within 90 days after the initial request
is made. The Company will use its best efforts to cause any
such registration statement to become and to remain effective
and current for such period (not to exceed 120 days) as
Director may request.
(b) In connection with any registration under this Paragraph
7, the parties agree to indemnify each other in the customary
manner, and, in the case of an organized secondary or primary
underwritten offering, the Company agrees to indemnify
Director and the underwriters and Director agrees to indemnify
the Company (provided Director is then a director, officer or
employee of the Company), in the manner and to the extent as
is customary in secondary or primary underwritten offerings.
(c) The Company shall have the sole right to designate the
underwriters to be employed in any organized secondary or
primary underwritten offering under this Paragraph 7.
-4-
<PAGE>
(d) In connection with any registration under this Paragraph
7, Director shall furnish to the Company such information
regarding the Shares and such other information as the Company
may reasonably request.
8. Director Relationship. Any questions as to whether and when there
has been a termination of directorship, and the cause of such termination,
shall be determined by the Board of Directors of the Company, and its
determination shall be final. No obligation as to length of Director's
status as a director of the Company shall be implied from the terms of
this Agreement.
9. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of any successors to the Company and all persons lawfully
claiming under Director.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Director has
executed this Agreement, all as of the day and year first above written.
ATTEST: COLUMBIA HOSPITAL CORPORATION
(a Delaware corporation)
______________________________By: _______________________________
David C. Colby, Secretary Richard L. Scott, Chairman
By: _______________________________
T. Michael Long
-5-
EXHIBIT-5
February 11, 1994
Columbia/HCA Healthcare Corporation
201 W. Main Street
Louisville, KY 40202
RE: Registration Statement on Form S-8
Columbia/HCA Healthcare Corporation
Ladies and Gentlemen:
I am Senior Vice President and General Counsel for Columbia/HCA
Healthcare Corporation, a Delaware corporation (the "Company"), and have
been involved with the registration under the Securities Act of 1933, as
amended (the "Act"), of an aggregate of 5,707,432 shares of Common Stock,
$.01 par value of the Company, (the "Common Stock") being offered to
certain employees of the Company, a Delaware corporation under various
stock option arrangements.
In connection with the offering of the Columbia Common Stock, I have
examined originals or copies submitted to me that I have assumed are
genuine, accurate, and complete, of all such corporate records of the
Company, and other documents I have deemed necessary or appropriate to
require as the basis for the opinion hereinafter expressed.
Based and relying solely upon the foregoing, it is my opinion that
when the 5,707,432 shares of Common Stock, or any portion thereof, are
issued as described in the Registration Statement, such shares will be
legally issued, fully paid, and nonassessable.
This opinion may be filed as an exhibit to the Registration
Statement. Consent is also given to the reference to me under the caption
"Interests of Named Experts and Counsel" in the Registration Statement as
having passed upon the validity of the issuance of the Common Stock. In
giving this consent, I do not hereby admit that I come within the category
of persons whose consent is required under Section 7 of the Act or rules
and regulations of the Securities and Exchange Commission promulgated
thereunder.
Respectfully submitted,
BY: Stephen T. Braun
Senior Vice President &
General Counsel
EXHIBIT-23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-8 of our report dated September 27, 1993 (which
includes explanatory paragraphs regarding the merger of Columbia Hospital
Corporation and Galen Health Care, Inc. and a change in accounting for
income taxes) on our audits of the supplemental consolidated financial
statements and supplemental financial statement schedules of Columbia
Healthcare Corporation as of December 31, 1992 and 1991 and for each of
the three years in the period ended December 31, 1992, which report is
included in Columbia Healthcare Corporation's Current Report on Form 8-K
dated September 29, 1993. Additionally, we consent to the incorporation
by reference of (i) our report dated October 20, 1992, except as to the
information presented in Note 11, for which the date is November 13, 1992,
(which report includes an explanatory paragraph regarding a change in
accounting for income taxes) on our audits of the consolidated financial
statements and financial statement schedules of Humana Inc. ("Galen Health
Care, Inc.") as of August 31, 1992 and 1991 and for each of the three
years in the period ended August 31, 1992, and (ii) our report dated
October 20, 1992, except as to the information presented in Note 13, for
which the date is November 13, 1992, (which report includes an explanatory
paragraph regarding a change in accounting for income taxes) on our audits
of the consolidated financial statements and financial statement schedules
of the health plan operations of Humana Inc. ("Humana Health Plans") as of
August 31, 1992 and 1991 and for each of the three years in the period
ended August 31, 1992, which reports are included in Galen Health Care,
Inc.'s General Form for Registration of Securities on Form 10 dated
December 31, 1992 (File No. 1-11233) and Galen Health Care, Inc.'s Form 8,
Amendment No 1 to General Form for Registration of Securities on Form 10
dated February 17, 1993.
COOPERS & LYBRAND
Louisville, Kentucky
February 11, 1994
