LifePoint Hospitals, Inc. Nonqualified Stock Option Agreement
Nonqualified Stock Option Agreement
Grant Number <<Option Number>>
This Agreement is made and entered into by and between LifePoint Hospitals, Inc. (the “Company”), and <<Participant>> (the “Participant”), in connection with the grant of an Option under the LifePoint Hospitals, Inc. 1998 Long Term Incentive Plan (the “Plan”) that was made on <<Date of Grant>> (the “Date of Grant”).
The Company established the Plan effective November 5, 1998 and amended and restated the Plan effective June 30, 2005. The Participant is eligible to receive this Option, and the Company desires to encourage the Participant to own Common Stock for the purposes stated in Article 1 of the Plan. The Option evidenced by this Agreement is intended to be a Nonqualified Option that is subject to the terms and conditions of the Plan and this Agreement. The Participant’s rights under the Option are conditioned on acceptance of the terms contained herein.
(a) For purposes hereof, a “family member” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the employee’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the employee) control the management of assets, and any other entity in which these persons (or the employee) own more than 50% of the voting interests.
(b) No transfer of an Option by the Participant by will or by laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Board may deem necessary to establish the validity of the transfer. During the lifetime of a Participant, except as provided above, the Option shall be exercisable only by the Participant, except that, in the case of a Participant who is legally incapacitated, the Option shall be exercisable by the Participant’s guardian or legal representative. In the event of any transfer of an Option to a family member in accordance with the provisions of this Paragraph 3, such family member shall thereafter have all rights that would otherwise be held by such Participant (or by such Participant’s guardian, legal representative or beneficiary), except as otherwise provided herein.
(a) The Participant shall not have any privileges of a stockholder of the Company with respect to any Common Stock subject to (but not yet acquired upon valid exercise of) the Option, nor shall the Company have any obligation to issue any dividends or otherwise afford, with respect to such Common Stock, any rights to which holders of Common Stock are entitled, until the date of the issuance to the Participant of a stock certificate evidencing such shares.
(b) Nothing in this Agreement or the Option shall confer upon the Participant any right to continue as an employee of the Company or to interfere in any way with the right of the Company to terminate the Participant’s employment at any time.
(a) Except as provided in subsection (b) below, if Participant’s employment with the Company or Subsidiary is terminated for any reason prior to the occurrence of any otherwise applicable vesting date provided in Paragraph 1, the Participant shall forfeit his interest in the Option to the extent that it has not yet become vested and exercisable, but shall have the right to exercise the vested portion of the Option until the expiration of the Option term or, if sooner, through the appropriate period specified below:
(i) If Participant’s employment is terminated for any reason other than Cause (as defined below), death, Disability (as defined below), normal retirement (as defined below), or early retirement (as defined below), the Participant shall retain the right to exercise the Option, to the extent exercisable on the date of such termination, for three months after the effective date of such termination, and thereupon the Option shall expire.
(ii) If Participant’s employment is terminated due to death or Disability (as defined below), the Option shall immediately, as of the date of termination, become fully (100%) vested and exercisable. The Participant shall retain the right to exercise the Option for one year after the effective date of such termination of service (the “Exercise Period”), and the Option shall be automatically exercised in a cashless method as described in Paragraph 2 on the last day of the Exercise Period if it has not been exercised prior to such date by the Participant or, as applicable, his beneficiaries. For purposes hereof, “Disability” shall mean the inability of the Participant, after reasonable accommodation, to perform Participant’s required duties for a period equal to or in excess of the waiting period under the Company’s long-term disability insurance policy, as determined in good faith by the Board.
(iii) In the event the Participant’s employment shall terminate by normal retirement (i.e., termination after the Participant has attained age 65, or has attained age 55 with 10 years of service), the Option may be exercised within 36 months after the Participant’s retirement, to the extent exercisable on the date of the Participant’s retirement, and thereupon the Option shall expire; provided, however, that if the Participant is also eligible for early retirement pursuant to subsection (b) below and the Participant agrees to be bound by the noncompete provision in subsection (b) below, this subsection (a)(iii) shall not apply and the terms of subsection (b) will apply instead.
(iv) If Participant’s service as an employee is terminated by the Company for Cause (as defined below), any portion of this Option that is vested as of such termination date shall remain exercisable for 30 calendar days following such termination. For purposes hereof, “Cause” shall mean: (A) the conviction of the Participant of a felony under the laws of the United States or any state thereof, whether or not appeal is taken, as determined by the Board of Directors in good faith; (B) the conviction of the Participant for a violation of criminal law involving the Company and its business that materially damages the Company as determined by the Board in good faith; (C) the willful misconduct of the Participant, or the willful or continued failure by the Participant (except in the case of a Disability) to substantially perform his duties hereunder, in either case which has a material adverse effect on the Company as determined by the Board in good faith; (D) the willful fraud or material dishonesty of the Participant in connection with the performance of the Participant’s duties to the Company and involving the finances of the Company as determined by the Board in good faith; (E) the Participant’s repeated use of alcohol in a manner which in the opinion of the Board materially impairs the ability of the Participant to effectively perform the Participant’s duties and obligations owed to the Company, or the illegal use, possession, or sale of, or impaired performance due to the illegal use of, controlled substances; or (F) a violation of the Company’s policies on sexual or other illegal harassment of a Company employee by the Participant as determined by the Board in good faith; provided, however, in no event shall the Participant’s employment be considered to have been terminated for “Cause” unless and until the Participant receives written notice from the Company stating the acts or omissions constituting Cause and the Participant has the opportunity to cure to the Company’s satisfaction any such acts or omissions (in the case of (C), (D) or (E) above) within 30 days of the Participant’s receipt of such notice.
(b) Notwithstanding any other provision of this Agreement, if the Participant terminates employment with the Company on or after his early retirement date, which is the date he attains age 62 and has completed at least five (5) years of continuous employment with the Company, this Award will continue to vest pursuant to the schedule set forth in Paragraph 1 above and the Participant shall have the right to exercise the vested portion of the Option until the expiration of the original Option term; provided, however, that, during the period (the “Restricted Period”) beginning on the date the Participant terminates employment after his early retirement date (the “Retirement Date”) and continuing until the date the Option is fully vested pursuant to the schedule set forth in Paragraph 1 above, the Participant agrees that he will not, in any capacity (including, but not limited to, as an owner, member, partner, shareholder, consultant, advisor, financier, agent, employee, officer, director, manager or otherwise), whether directly or indirectly, engage in a Competitive Activity (as such term is hereinafter defined). If the Participant fails to comply with this provision, the Participant will forfeit any unvested Options as of the date the Participant violates this provision. As used in this Agreement, the term “Competitive Activity” shall mean and refer to: any person or entity (including their successors (including any successor(s) that results from any business combination, sale or merger), assigns and transferees, whether by operation of law or otherwise) that, whether on the Retirement Date or at any time within the Restricted Period, derives more than fifty percent of its revenues from one or more non-urban acute care hospitals (and associated outpatient healthcare facilities) (together, a “Non-Urban Hospital”). Nothing in this subsection (b) shall prohibit the Participant’s ownership of stock in any publicly held company (other than the Company) listed on a national securities exchange or whose shares of stock are regularly traded in the over the counter market as long as such holding at no time exceeds two percent (2%) of the total outstanding stock of such company.
(a) Notwithstanding the provisions of the Plan regarding the acceleration of the right to exercise this Option upon a Change in Control, a portion of the acceleration of vesting described in the Plan shall not occur with respect to this Option to the extent such acceleration of vesting would cause the Participant or holder thereof to realize less income, net of taxes, after deducting the amount of excise taxes that would be imposed pursuant to section 4999 of the Code, than if accelerated vesting of that portion of the Option did not occur. This limitation shall not apply to the extent that the stockholders of the Company or the acquirer approve the acceleration of vesting hereunder in a manner that satisfies section 280G(b)(5)(B) of the Code, or to the extent that the Participant is a party to an agreement in which the Participant is fully indemnified or otherwise held harmless for the taxes that result from section 4999 of the Code.
(b) Except as modified by this Paragraph 8, the provisions of Article 12 of the Plan shall otherwise apply to this Option upon the occurrence of a Change in Control.
13. Governing Law. This Award Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.
In Witness Whereof, the Company has adopted this instrument as the Agreement to govern the terms of the Option described herein. The Participant acknowledges and consents to the terms of this Agreement by accepting the grant of this Option and/or by signifying acceptance electronically through the administrative system adopted by the Company.
LifePoint Hospitals, Inc. | |
Executive Vice President, Chief | |
Administrative Officer |