Exhibit 10.3
STOCKHOLDER'S AGREEMENT, dated as of ______________, between
Community Health Systems Holdings Corp., a Delaware corporation, and the
undersigned (the "Employee"), who was granted the right and option (the
"Option") to acquire shares of Class C Nonvoting Common Stock, par value $.01
per share, of the Company pursuant to the terms and conditions of the Community
Health Systems Holdings Corp. Employee Stock Option Plan (the "Plan") and a
Stock Option Agreement, dated as of March 31, 1999, between the Company and the
Employee (the "Option Agreement").
WHEREAS, the Option Agreement requires the Employee to enter into a
Stockholder's Agreement upon and as a condition to the exercise of the Option;
WHEREAS, the Employee wishes to exercise the Option to acquire
shares of Class C Common Stock; and
WHEREAS, the Employee and the Company wish to provide for certain
arrangements with respect to the Employee's rights to hold and dispose of the
shares of Class C Common Stock acquired by the Employee upon exercise of the
Option.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS.
1.1 DEFINITIONS; RULES OF CONSTRUCTION.
(a) The following terms, as used herein, shall have the
following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Affiliate" shall mean, with respect to any Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person.
"Affiliate Securities" shall mean any securities issued by
an Affiliate of the Company.
"Agreement" shall mean this Stockholder's Agreement, as amended,
supplemented or modified from time to time.
"Book Value of the Company" shall mean the sum of (i) the total
assets minus the total liabilities of the Company on a consolidated basis, plus
(ii) the
amount of any reduction in stockholders' equity resulting from the application
of EITF Issue Summary No. 88-16, Basis in Leveraged Buyouts, as of the Valuation
Date. For purposes of calculating the Book Value of the Company and the Book
Value Per Share, (i) all options and other rights to acquire equity interests in
the Company outstanding immediately prior to the date of the Repurchase Notice
or exercised between the Valuation Date and the date of the Repurchase Notice
shall be deemed to have been exercised on the Valuation Date, and (ii) the
number of outstanding shares on the Valuation Date shall be increased by the
number of shares subject to each such option or other right and the assets of
the Company shall be increased by the aggregate exercise price payable in
respect of the exercise of each such option or other right (with respect to
clauses (i) and (ii), in the case of any such option or other right, unless the
effect thereof would be to increase the Book Value Per Share).
"Book Value Per Share" shall mean the amount which would be
payable on the Valuation Date in respect of one share of Class C Common Stock in
the event of a dissolution, liquidation or winding-up of the affairs of the
Company if the amount of assets available for distribution in the event of such
dissolution, liquidation or winding-up with respect to all shares of capital
stock of the Company outstanding (or deemed to be outstanding, as set forth in
the definition of "Book Value of the Company") on the Valuation Date were equal
to the Book Value of the Company. In the event there has been a Stock Dividend
after the Valuation Date and prior to the date of the Repurchase Notice, the
number of shares outstanding for purposes of determining Book Value Per Share
shall be the number of shares that would have been outstanding immediately after
the Stock Dividend on the Valuation Date had the Stock Dividend occurred on the
Valuation Date.
"Capital Transaction" shall mean any Stock Dividend,
recapitalization (including, without limitation, any special dividend or
distribution), reclassification, spin-off, partial liquidation or similar
capital adjustments (including, without limitation, through merger or
consolidation).
"Certificate of Incorporation" shall mean the Restated
Certificate of Incorporation of the Company, as in effect from time to time.
"CHS Hospital" shall have the meaning ascribed to such term in
the definition of Competitor.
"Class A Common Stock" shall mean the Class A Common Stock, par
value $0.01 per share, of the Company. There shall be included within the term
Class A Common Stock any Class A Common Stock now or hereafter authorized to be
issued, and any and all securities of any kind whatsoever of the Company which
may be issued
after the date hereof in respect of, or in exchange for, shares of Class A
Common Stock pursuant to a Capital Transaction or otherwise.
"Class C Common Stock" shall mean the Class C Nonvoting Common
Stock, par value $0.01 per share, of the Company. There shall be included within
the term Class C Common Stock any Class C Common Stock now or hereafter
authorized to be issued, and any and all securities of any kind whatsoever of
the Company which may be issued after the date hereof in respect of, or in
exchange for, shares of Class C Common Stock pursuant to a Capital Transaction
or otherwise. Without limiting the generality of the foregoing, all references
herein to the Class C Common Stock shall include, and the provisions hereof
(including, without limitation, Sections 3 and 4 hereof) shall also be
applicable to, the Class A Common Stock for which the Class C Common Stock shall
be exchanged pursuant to the Certificate of Incorporation.
"Class C Exchange Rate" shall have the meaning ascribed to such
term in Section 3.2 hereof.
"Company" shall mean Community Health Systems Holdings Corp., a
Delaware corporation, and shall include any successor thereto by merger,
consolidation, acquisition of substantially all the assets thereof, or
otherwise.
"Competing Hospital" shall have the meaning ascribed to such
term in the definition of Competitive Activity.
"Competing Operations" shall have the meaning ascribed to such
term in the definition of Competitive Activity.
"Competitive Activity" shall mean engaging in any of the
following activities: (i) serving as a director of any Competitor; (ii) directly
or indirectly (X) controlling any Competitor or (Y) owning any equity or debt
interests in any Competitor (other than equity or debt interests which are
publicly traded and do not exceed 2% of the particular class of interests then
outstanding) (it being understood that, if any such interests in any Competitor
are owned by an investment vehicle or other entity in which the Employee owns an
equity interest, a portion of the interests in such Competitor owned by such
entity shall be attributed to the Employee, such portion determined by applying
the percentage of the equity interest in such entity owned by the Employee to
the interests in such Competitor owned by such entity); (iii) directly or
indirectly soliciting, diverting, taking away, appropriating or otherwise
interfering with any of the customers or suppliers of the Company or any
Affiliate controlled by the Company; or (iv) employment by (including serving as
an officer of), or providing consulting services to, any Competitor; provided,
however, that if the Competitor has more than one discrete and readily
distinguishable part of its business, employment by
or providing consulting services to any Competitor shall be Competitive Activity
only if (1) his or her employment duties are at or involving the part of the
Competitor's business that competes with any of the businesses conducted by the
Company or any of its subsidiaries (the "Competing Operations"), including
serving in a capacity where any person at the Competing Operations reports to
the Employee, or (2) the consulting services are provided to or involve the
Competing Operations. For purposes of this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of any Competitor, whether through the
ownership of equity or debt interests, by contract or otherwise. Notwithstanding
the foregoing, the Employee shall not be deemed to be engaged in a Competitive
Activity so long as his or her employment duties are not at or involving any
general acute care hospital located within a 50-mile radius of any CHS Hospital
(a "Competing Hospital"), including serving in a capacity where any person at
the Competing Hospital reports to the Employee. For purposes hereof, a person
shall be deemed to report to the Employee whether he or she reports directly to
the Employee or indirectly through one or more other persons.
"Competitor" shall mean any Person that is engaged in owning,
operating or acquiring directly or indirectly (through a corporation, trust,
partnership or other Person) one or more short-term, general acute care
hospitals located within a 50-mile radius of any hospital which, at the time the
Employee is Terminated, is owned or operated by the Company or any of its
subsidiaries or which the Company or any of its subsidiaries intend to own,
operate or acquire (which intention was disclosed to the Employee prior to or in
connection with his Termination) (a "CHS Hospital").
"Expenses of Sale" shall mean all expenses incurred by the FL &
Co. Companies in connection with the sale of the shares of the selling
stockholders pursuant to Section 3.2, 3.3 or 3.4 hereof to the extent that such
expenses are not paid or reimbursed by the Company.
"FL & Co. Companies" shall mean the collective reference to
Forstmann Little & Co. Equity Partnership-V, L.P., a Delaware limited
partnership, and Forstmann Little & Co. Subordinated Debt and Equity Management
Buyout Partnership-VI, L.P., a Delaware limited partnership.
"Legal Representative" shall mean the guardian, executor,
administrator or other legal representative of the Employee. All references
herein to the Employee shall be deemed to include references to the Employee's
Legal Representative, if any, unless the context otherwise requires.
"Litigation" shall mean any actions, suits or proceedings
arising out of or relating to this Agreement and the transactions contemplated
hereby.
"Option," "Option Agreement" and "Plan" shall have the
respective meanings ascribed to such terms in the first paragraph hereof.
"Permitted Transferee" shall have the meaning ascribed to such
term in Section 3.1(b) hereof.
"Person" shall mean an individual, a corporation, a partnership,
an association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Prohibited Activity" shall have the meaning ascribed to such
term in Section 4.1 hereof.
"Release Date" shall mean the date on which the FL & Co.
Companies and their Affiliates shall cease to own in the aggregate directly or
indirectly at least 25 percent of the then outstanding securities of the Company
having the power to vote in the election of directors of the Company.
"Representative" shall have the meaning ascribed to such term
in Section 6.13(b).
"Repurchase Notice" shall have the meaning ascribed to such term
in Section 4.2 hereof.
"Sale Obligations" shall mean any liabilities and obligations
(including liabilities and obligations for indemnification, amounts paid into
escrow and post-closing adjustments) incurred by the selling stockholders in
connection with the sale of their shares pursuant to Section 3.2, 3.3 or 3.4
hereof.
"Section 3.2 Notice" shall have the meaning ascribed to such
term in Section 3.2(a) hereof.
"Section 3.3 Notice" shall have the meaning ascribed to such
term in Section 3.3(a) hereof.
"Stock Dividend" shall mean any stock split, stock dividend,
reverse stock split or similar transaction which changes the number of
outstanding shares of capital stock of the Company.
"Terminated" or "Termination" shall mean that the Employee's
employment on a full-time basis by the Company and its subsidiaries shall have
ceased
for any reason whatsoever (including by reason of death, permanent disability or
adjudicated incompetency).
"Third Party" shall mean any Person other than any of the FL &
Co. Companies or an Affiliate or a partner of any of the FL & Co.
Companies or an Affiliate of such partner.
"Transaction" shall mean any sale pursuant to Section 3.2,
3.3 or 3.4 hereof.
"Valuation Date" shall mean the last day of the fiscal year of
the Company immediately preceding the fiscal year in which the Employee's
employment is Terminated.
(b) In this Agreement, unless the context otherwise requires,
words in the singular number or in the plural number shall each include the
singular number and the plural number.
2. ACQUISITION OF CLASS C COMMON STOCK.
2.1 EXERCISE OF OPTION. The Employee hereby elects to exercise the
Option in respect of the shares of Class C Common Stock set forth in Annex A
hereto. Promptly upon payment in full of the exercise price for the shares of
Class C Common Stock in respect of which the Option is being exercised and
compliance by the Employee with the other provisions of Article 5 of the Option
Agreement and Section 6.13(a)(ii) hereof, the Company shall issue a stock
certificate in the name of the Employee representing the shares of Class C
Common Stock in respect of which the Option is being exercised and shall enter
the Employee's name on the books of the Company as the stockholder of record of
such shares of Class C Common Stock.
3. RIGHTS AND RESTRICTIONS ON CLASS C COMMON STOCK.
3.1 NO SALE OR TRANSFER.
(a) The Employee shall not sell, transfer, assign, exchange,
pledge, encumber or otherwise dispose of any shares of Class C Common Stock
acquired hereunder or grant any option or right to purchase such shares or any
legal or beneficial interest therein, except in accordance with the provisions
of this Agreement.
(b) The Employee may transfer any shares of Class C Common
Stock acquired hereunder by will, but only to:
(i) any spouse, parent, child (whether natural or
adopted), grandchild, brother or sister of the
Employee, or
(ii) any corporation or partnership which is controlled
by any spouse, parent, child (whether natural or
adopted), grandchild, brother or sister of the
Employee
(the person or persons to which shares of Class C Common Stock are transferred
in accordance with this Section 3.1(b) being herein referred to as the
"Permitted Transferee"); provided, that, for any transfer to the Permitted
Transferee to be effective hereunder, the Permitted Transferee shall agree in
writing to be bound by all the terms of this Agreement applicable to the
Employee (including, without limitation, Sections 4 and 6.13(b) hereof) as if
the Permitted Transferee originally had been a party hereto; and provided,
further, that all of the stockholders of any Permitted Transferee that is a
corporation and all of the partners of any Permitted Transferee that is a
partnership shall agree in writing not to transfer any shares they then own or
may hereafter acquire in the corporate Permitted Transferee or any partnership
interests they then own or may hereafter acquire in the partnership Permitted
Transferee except to a person described in paragraph (i) or (ii) above that has
made the same agreement in writing to the Company, so long as the corporate or
partnership Permitted Transferee shall own any shares of Class C Common Stock.
Any reference herein to the Employee shall be to the Permitted Transferee from
and after the date the transfer is effected in accordance with this Section
3.1(b). Without limiting the generality of the foregoing, the provisions of
Section 4.2 hereof shall be likewise applicable to any Permitted Transferee,
commencing upon the date that such person becomes a Permitted Transferee, for
the respective periods they would have applied to the Employee.
3.2 PARTICIPATION IN SALE OF CLASS A COMMON STOCK. The Employee, at
the Employee's option, may participate proportionately (and the FL & Co.
Companies shall allow the Employee to participate proportionately) in any sale
(other than a public offering, which shall be governed by Section 3.3 hereof) of
all or a portion of the shares of Class A Common Stock owned by either of the FL
& Co. Companies to any Third Party by (a) exchanging (i) the same percentage of
the Employee's shares of Class C Common Stock as the FL & Co. Companies propose
to sell of their shares of Class A Common Stock to the Third Party (determined
on the basis of the aggregate number of shares of Class A Common Stock owned,
and the aggregate number of such shares being sold, by the FL & Co. Companies)
for (ii) shares of Class A Common Stock in accordance with the Class C Exchange
Rate, as defined in Subsection 5(d) of Section A of Article Fourth of the
Certificate of Incorporation (the "Class C Exchange Rate"), and (b) selling the
Class A Common Stock received in such exchange to the Third Party. Schedule I
hereto sets forth an example illustrating the calculation of the Class C
Exchange Rate. For purposes of determining the number of shares of Class C
Common
Stock in respect of which the Employee may participate in such sale pursuant to
this Section 3.2, the Employee shall be deemed to own the shares of Class C
Common Stock acquired upon exercise of the Option at any time plus the shares of
Class C Common Stock subject to any then unexercised portion of the Option, in
each case other than any shares with respect to which any section of this
Agreement (including Section 4.3 hereof) or the Option Agreement (including
Section 6.2(c) thereof) provides that the Employee may not participate in such
sale. The Company shall notify the Employee in writing of the FL & Co.
Companies' intention to effect such a sale to a Third Party and the nature and
per share amount of consideration to be paid by such Third Party, and shall set
forth its calculation of the Class C Exchange Rate, at least 10 days, or such
shorter time as the Company deems practicable, before the closing of any such
proposed sale of shares of Class A Common Stock (the "Section 3.2 Notice"), and
the Employee shall notify the Company in writing within five days after receipt
of the Section 3.2 Notice of his or her intention to participate in such sale,
including the number of shares of Class C Common Stock with respect to which he
or she will so participate. Any failure by the Employee to so notify the Company
within such five-day period shall be deemed an election by the Employee not to
participate in such sale with respect to any of his or her shares. Any sale of
shares of Class A Common Stock by the Employee pursuant to this Section 3.2
shall be for the same consideration per share, on the same terms and subject to
the same conditions as the sale of shares of Class A Common Stock owned by the
FL & Co. Companies. The Company shall, immediately prior to, and contingent
upon, the consummation of such sale, exchange the shares of Class C Common Stock
with respect to which the Employee will participate in the sale for shares of
Class A Common Stock in accordance with the Class C Exchange Rate. If the
Employee sells any shares of Class A Common Stock pursuant to this Section 3.2,
the Employee shall pay and be responsible for the Employee's proportionate share
of the Expenses of Sale and the Sale Obligations.
3.3 PUBLIC OFFERING OF CLASS A COMMON STOCK.
(a) If the FL & Co. Companies propose to sell all or any
portion of the shares of Class A Common Stock owned by the FL & Co. Companies in
a public offering, the Employee shall be entitled and required to participate in
such public offering by selling in the public offering the same percentage of
the Employee's shares of Class A Common Stock (such Class A Common Stock having
been or being received by him pursuant to the Certificate of Incorporation,
which provides that, upon the initial public offering of shares of Class A
Common Stock, immediately prior to, and contingent upon, the consummation of the
offering, all outstanding shares of Class C Common Stock shall be exchanged for
shares of Class A Common Stock in accordance with the Class C Exchange Rate) as
the FL & Co. Companies propose to sell of their shares in the public offering
(determined on the basis of the aggregate number of shares of Class A Common
Stock owned, and the aggregate number of such shares being sold,
by the FL & Co. Companies). For purposes of determining the number of shares of
Class A Common Stock in respect of which the Employee may participate in such
public offering pursuant to this Section 3.3, the Employee shall be deemed to
own the shares of Class C Common Stock acquired upon exercise of the Option at
any time plus the shares of Class C Common Stock subject to any then unexercised
portion of the Option, in each case other than any shares with respect to which
any section of this Agreement (including Section 4.3 hereof) or the Option
Agreement (including Section 6.2(c) thereof) provides that the Employee may not
participate in such public offering. The Company shall notify the Employee in
writing of the FL & Co. Companies' intention to effect such public offering at
least 10 days, or such shorter time as the Company deems practicable, before the
filing with the Securities and Exchange Commission of the registration statement
relating to such public offering (the "Section 3.3 Notice") and shall cause the
Employee's shares to be sold in such public offering to be included therein. The
Employee shall notify the Company in writing within five days after receipt of
the Section 3.3 Notice of his or her intention to participate in such public
offering, including the number of shares of Class C Common Stock with respect to
which he or she will so participate. Any failure by the Employee to so notify
the Company within such five-day period shall be deemed an election by the
Employee not to participate in such public offering with respect to any of his
or her shares. If the Employee sells any shares of Class A Common Stock pursuant
to this Section 3.3, the Employee shall pay and be responsible for the
Employee's proportionate share of the Expenses of Sale and the Sale Obligations,
including, without limitation, indemnifying the underwriters of such public
offering, on a proportionate basis, to the same extent as the FL & Co. Companies
are required to indemnify such underwriters.
(b) In connection with any proposed public offering of
securities of the Company, whether by any of the FL & Co. Companies or the
Company or otherwise, the Employee agrees (i) to supply any information
reasonably requested by the Company in connection with the preparation of a
registration statement and/or any other documents relating to such public
offering, and (ii) to execute and deliver any agreements and instruments
reasonably requested by the Company to effectuate such public offering,
including, without limitation, an underwriting agreement, a custody agreement
and a "hold back" agreement pursuant to which the Employee will agree not to
sell or purchase any securities of the Company (whether or not such securities
are otherwise governed by this Agreement) for the same period of time following
the public offering as is agreed to by the FL & Co. Companies with respect to
themselves. If the Company requests that the Employee take any of the actions
referred to in clause (i) or (ii) of the previous sentence, the Employee shall
take such action promptly but in any event within five days following the date
of such request.
3.4 REQUIRED PARTICIPATION IN SALE OF CLASS A COMMON STOCK BY THE FL
& CO. COMPANIES. Notwithstanding any other provision of this Agreement to the
contrary, if the FL & Co. Companies shall propose to sell (including by
exchange, in a business combination or otherwise) all or any portion of their
shares of Class A Common Stock in a bona fide arm's-length transaction, the FL &
Co. Companies, at their option, may require that (x) the Employee exchange the
same percentage of the Employee's shares of Class C Common Stock as the FL & Co.
Companies propose to sell of their shares in the transaction (determined on the
basis of the aggregate number of shares of Class A Common Stock owned, and the
aggregate number of such shares then being sold, by the FL & Co. Companies) for
shares of Class A Common Stock in accordance with the Class C Exchange Rate, and
(y) sell all the Class A Common Stock received in such exchange for the same
consideration per share, on the same terms and subject to the same conditions in
the same transaction and, if stockholder approval of the transaction is required
and the Employee is entitled to vote thereon, that the Employee vote the
Employee's shares in favor thereof. For purposes of determining the number of
shares of Class C Common Stock in respect of which the Employee is to
participate in such sale pursuant to this Section 3.4, the Employee shall be
deemed to own the shares of Class C Common Stock acquired upon exercise of the
Option at any time plus the shares of Class C Common Stock subject to any then
unexercised portion of the Option, in each case other than any shares with
respect to which any section of this Agreement (including Section 4.3 hereof) or
the Option Agreement (including Section 6.2(c) thereof) provides that the
Employee may not participate in such sale. The Company shall calculate the Class
C Exchange Rate and shall, immediately prior to, and contingent upon, the
consummation of the transaction, exchange the shares of Class C Common Stock
with respect to which the Employee will participate in the transaction for
shares of Class A Common Stock in accordance with the Class C Exchange Rate. If
the Employee sells any shares pursuant to this Section 3.4, the Employee shall
pay and be responsible for the Employee's proportionate share of the Expenses of
Sale and the Sale Obligations.
3.5 TERMINATION OF RESTRICTIONS AND RIGHTS. Notwithstanding any other
provision of this Agreement to the contrary, but subject to the restrictions of
all applicable federal and state securities laws, including the restrictions in
this Agreement relating thereto, from and after the Release Date any and all
shares of Class C Common Stock owned by the Employee (a) may be sold,
transferred, assigned, exchanged, pledged, encumbered or otherwise disposed of
(and the Employee may grant any option or right to purchase such shares or any
legal or beneficial interest therein, or may continue to hold such shares), free
of the restrictions contained in this Agreement and (b) shall no longer be
entitled to any of the rights contained in this Agreement. Without limiting the
generality of the foregoing, from and after the Release Date, the provisions of
Articles 3 and 4 hereof (other than this Section 3.5 and Section 4.1 hereof)
shall terminate and have no further force or effect.
4. PROHIBITED ACTIVITIES.
4.1 PROHIBITION AGAINST CERTAIN ACTIVITIES. The Employee agrees that
(a) the Employee will not, at any time during the Employee's employment (other
than in the course of such employment) with the Company or any Affiliate thereof
or after a Termination, directly or indirectly disclose or furnish to any other
Person or use for the Employee's own or any other Person's account any
confidential or proprietary knowledge or information or any other information
which is not a matter of public knowledge and which was obtained in the course
of the Employee's employment with, or other performance of services for, the
Company or any Affiliate thereof or any predecessor of any of the foregoing, no
matter from where or in what manner the Employee may have acquired such
knowledge or information, and the Employee shall retain all such knowledge and
information in trust for the benefit of the Company, its Affiliates and the
successors and assigns of any of them, (b) if the Employee is Terminated, the
Employee will not for 18 months following such Termination directly or
indirectly solicit for employment, including without limitation recommending to
any subsequent employer the solicitation for employment of, any employee of the
Company (other than such Employee's secretary or administrative assistant), (c)
the Employee will not, at any time during the Employee's employment with the
Company or any Affiliate thereof or after a Termination, publish any statement
or make any statement (under circumstances reasonably likely to become public or
that the Employee might reasonably expect to become public) critical of the
Company or any Affiliate of the Company, or in any way adversely affecting or
otherwise maligning the business or reputation of any of the foregoing entities,
and (d) the Employee will not breach the provisions of Section 3.1 hereof (any
activity prohibited by clause (a), (b), (c) or (d) of this Section 4.1 being
referred to as a "Prohibited Activity").
4.2 RIGHT TO PURCHASE SHARES. The Employee understands and agrees
that the Company has granted to the Employee the right to acquire shares of
Class C Common Stock to reward the Employee for the Employee's future efforts
and loyalty to the Company and its Affiliates by giving the Employee the
opportunity to participate in the potential future appreciation of the Company.
Accordingly, (a) if the Employee engages in any Prohibited Activity, or (b) if,
at any time during the Employee's employment with the Company or any of its
Affiliates or during the 18 months following a Termination, the Employee engages
in any Competitive Activity, or (c) if, at any time (whether during the
Employee's employment or after any Termination thereof), the Employee is
convicted of a crime against the Company or any of its Affiliates, then, in
addition to any other rights and remedies available to the Company, the Company
shall be entitled, at its option, exercisable by written notice (the "Repurchase
Notice") to the Employee, to purchase all of the shares of Class C Common Stock
then held by the Employee.
4.3 PURCHASE PRICE; CLOSING. The purchase price per share of the
shares of Class C Common Stock purchased pursuant to this Article 4 shall be
equal to the lesser of (a) $587.50 (adjusted to reflect any Capital Transaction
effected after the date hereof and prior to the date of the Repurchase Notice)
and (b) the Book Value Per Share. The closing of such purchase shall take place
at the principal office of the Company 10 days following the date of the
Repurchase Notice, except that if the Company is prohibited from repurchasing
any shares of Class C Common Stock pursuant to this Article 4 by any contractual
obligation of the Company or any of its Affiliates or by applicable law, the
closing of such purchase shall take place on the first practicable date on which
the Company is permitted to purchase such shares. At such closing, the Employee
shall sell, convey, transfer, assign and deliver to the Company all right, title
and interest in and to the shares of Class C Common Stock being purchased by the
Company, which shall constitute (and, at the closing, the Employee shall certify
the same to the Company in writing) good and unencumbered title to such shares,
free and clear of all liens, security interests, encumbrances and adverse claims
of any kind and nature (other than those in favor of the Company and the FL &
Co. Companies pursuant to this Agreement), and shall deliver to the Company the
certificates representing the shares duly endorsed for transfer, or accompanied
by appropriate stock transfer powers duly executed, and with all necessary
transfer tax stamps affixed thereto at the expense of the Employee, and the
Company shall deliver to the Employee, in full payment of the purchase price
payable pursuant to this Section 4.3 for the shares of Class C Common Stock
purchased, a check payable to the order of the Employee in the amount of the
aggregate purchase price for the shares purchased. Notwithstanding anything
herein to the contrary, from and after the date of the Repurchase Notice, the
Employee shall not have any rights with respect to any shares of Class C Common
Stock which the Employee is required to sell to the Company pursuant to this
Article 4 (including any rights pursuant to Section 3.2 or 3.3 hereof), except
to receive the purchase price therefor.
4.4 TRANSACTION PROCEEDS. Notwithstanding anything to the contrary
set forth in Section 3.2, 3.3 or 3.4 hereof, if at the time of a Transaction in
which the Employee is participating, the Company is entitled to purchase the
Employee's shares of Class C Common Stock pursuant to this Article 4, and if the
purchase price per share for a purchase pursuant to this Article 4 would be less
than the proceeds per share to the Employee from such Transaction, then the
Employee shall be entitled to receive only the aggregate purchase price payable
under this Article 4, with the balance of the proceeds of sale in the
Transaction being remitted to the other stockholders of the Company
participating in such Transaction pro rata in accordance with their respective
participation in such Transaction.
5. STOCK CERTIFICATE LEGEND AND INVESTMENT REPRESENTATIONS; OTHER
REPRESENTATIONS.
5.1 LEGEND. All certificates representing shares of Class C Common
Stock acquired hereunder or hereafter by the Employee (unless registered under
the Act) shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any
securities regulatory authority of any state, and may not be sold,
transferred, assigned, exchanged, pledged, encumbered or otherwise
disposed of except in compliance with all applicable securities laws
and except in accordance with the provisions of a Stockholder's
Agreement with the Company, a copy of which is available for
inspection at the offices of the Company."
5.2 REPRESENTATIONS OF THE EMPLOYEE. The Employee represents and
warrants that: (a) the Employee understands that (i) the offer and sale of
shares of Class C Common Stock in accordance with this Agreement have not been
and will not be registered under the Act, and it is the intention of the parties
hereto that the offer and sale of the securities be exempt from registration
under the Act and the rules promulgated thereunder by the Securities and
Exchange Commission; (ii) the shares of Class C Common Stock being acquired
hereunder cannot be sold, transferred, assigned, exchanged, pledged, encumbered
or otherwise disposed of unless they are registered under the Act or an
exemption from registration is available; and (iii) the acquisition of Class C
Common Stock hereunder does not entitle the Employee to participate in any other
equity program of the Company, whether now existing or hereafter established;
(b) the Employee is acquiring the shares of Class C Common Stock being acquired
hereunder for investment for the Employee's own account and not with a view to
the distribution thereof; (c) the Employee will not, directly or indirectly,
sell, transfer, assign, exchange, pledge, encumber or otherwise dispose of any
shares of Class C Common Stock being acquired hereunder except in accordance
with this Agreement; (d) the Employee has, or the Employee together with the
Employee's advisers, if any, have, such knowledge and experience in financial
and business matters that the Employee is, or the Employee together with the
Employee's advisers, if any, are, and will be capable of evaluating the merits
and risks relating to the Employee's acquisition of shares of Class C Common
Stock under this Agreement; (e) the Employee has been given the opportunity to
obtain information and documents relating to the Company and to ask questions of
and receive answers from representatives of the Company concerning the Company
and the Employee's investment in the Class C Common Stock; (f) the Employee's
decision to invest in the Company has been based upon independent investigations
made by the Employee and the Employee's advisers, if any; (g) the
Employee is able to bear the economic risk of a total loss of the Employee's
investment in the Company; and (h) the Employee has adequate means of providing
for the Employee's current needs and foreseeable personal contingencies and has
no need for the Employee's investment in the Class C Common Stock to be liquid.
6. MISCELLANEOUS.
6.1 DISTRIBUTIONS. In the event of any dividend, distribution or
exchange paid or made in respect of the Class C Common Stock consisting of
Affiliate Securities, (a) the restrictions and rights with respect to the Class
C Common Stock that are contained in this Agreement shall be applicable to the
Affiliate Securities without further action of the parties (with the references
to Class C Common Stock being deemed references to the Affiliate Securities and
the references to the Company being deemed references to the Affiliate), and (b)
as a condition precedent to the receipt of the Affiliate Securities by the
Employee, the Employee shall enter into a stockholder's agreement containing
substantially equivalent terms with respect to the Affiliate Securities (but
reflecting the economics of the dividend, distribution or exchange and the
capitalization of the Affiliate) as are contained in Section 4.3 hereof. The
Board of Directors of the Company, in good faith, shall determine such economics
and its determination shall be final and binding on the Employee.
6.2 FURTHER ASSURANCES. Each party hereto shall do and perform or
cause to be done and performed all further acts and things and shall execute and
deliver all other agreements, certificates, instruments, and documents as any
other party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.3 GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereto shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
6.4 SPECIFIC PERFORMANCE. The parties hereto acknowledge that there
will be no adequate remedy at law for a violation of any of the provisions of
this Agreement and that, in addition to any other remedies which may be
available, all of the provisions of this Agreement shall be specifically
enforceable in accordance with their respective terms.
6.5 INVALIDITY OF PROVISIONS. The invalidity or unenforceability of
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction. If
any provision of this Agreement is held unlawful or unenforceable in any
respect, such provision shall be revised or applied in a manner that renders it
lawful and enforceable to the fullest extent possible.
6.6 NOTICE. All notices and other communications hereunder shall be
in writing and, unless otherwise provided herein, shall be deemed to have been
given when received by the party to whom such notice is to be given at its
address set forth below, or such other address for the party as shall be
specified by notice given pursuant hereto:
(a) If to the Company, to:
Community Health Systems Holdings Corp.
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000
Attention: President
with a copy to:
Forstmann Little & Co. Equity Partnership-V, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
(b) If to the Employee, to the address set forth below the
Employee's signature, and if to the Legal Representative,
to such Person at the address of which the Company is
notified in accordance with this Section 6.6.
6.7 BINDING EFFECT. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns. In addition, each of the FL & Co.
Companies shall be a third party beneficiary of this Agreement and shall be
entitled to enforce this Agreement.
6.8 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of the party against whom
enforcement of such amendment, modification or supplement is sought.
6.9 HEADINGS; EXECUTION IN COUNTERPARTS. The headings and captions
contained herein are for convenience only and shall not control or affect the
meaning or construction of any provision hereof. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
and which together shall constitute one and the same instrument.
6.10 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.
6.11 WITHHOLDING. The Company shall have the right to deduct from any
amount payable under this Agreement any taxes or other amounts required by
applicable law to be withheld. The Employee agrees to indemnify the Company
against any Federal, state and local withholding taxes (but not penalties or
interest) for which the Company may be liable in connection with the Employee's
acquisition, ownership or disposition of any Class C Common Stock.
6.12 NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement shall not
confer upon the Employee any right with respect to continuance of employment by
the Company or any Affiliate thereof, nor shall it interfere in any way with the
right of the Company or any Affiliate thereof to terminate the Employee's
employment at any time.
6.13 POSSESSION OF CERTIFICATES; POWER OF ATTORNEY.
(a) In order to provide for the safekeeping of the certificates
representing the shares of Class C Common Stock acquired by the Employee
pursuant hereto and to facilitate the enforcement of the terms and conditions
hereof, (i) the Company shall retain physical possession of all certificates
representing shares of Class C Common Stock issued to the Employee, and (ii)
concurrently with the Employee's execution and delivery to the Company of this
Agreement, the Employee shall deliver to the Company an undated stock power,
duly executed in blank, for each such certificate. The Employee shall be
relieved of any obligation otherwise imposed by this Agreement to deliver
certificates representing shares of Class C Common Stock if the same are in the
custody of the Company.
(b) The Employee hereby irrevocably appoints the FL & Co.
Companies, and each of them (individually and collectively, the
"Representative"), the Employee's true and lawful agent and attorney-in-fact,
with full powers of substitution, to act in the Employee's name, place and
stead, to do or refrain from doing all such acts and things, and to execute and
deliver all such documents, as the Representative shall deem necessary or
appropriate in connection with a public offering of securities of the Company or
a sale pursuant to Section 3.2, 3.4 or 4.2 hereof, including, without in any way
limiting the generality of the foregoing, in the case of a sale pursuant to
Section 3.2 or 3.4 hereof, to execute and deliver on behalf of the Employee a
purchase and sale agreement and any other agreements and documents that the
Representative deems necessary in connection with any such sale, and in the case
of a public offering, to execute and deliver on behalf of the Employee an
underwriting agreement, a "hold
back" agreement, a custody agreement, and any other agreements and documents
that the Representative deems necessary in connection with any such public
offering, and in the case of any sale pursuant to Section 3.2 or 3.4 hereof and
any public offering pursuant to Section 3.3(a) hereof, to receive on behalf of
the Employee the proceeds of the sale or public offering of the Employee's
shares, to hold back from any such proceeds any amount that the Representative
deems necessary to reserve against the Employee's share of any Expenses of Sale
and Sale Obligations and to pay such Expenses of Sale and Sale Obligations. The
Employee hereby ratifies and confirms all that the Representative shall do or
cause to be done by virtue of its appointment as the Employee's agent and
attorney-in-fact. In acting for the Employee pursuant to the appointment set
forth in this Section 6.13(b), the Representative shall not be responsible to
the Employee for any loss or damage the Employee may suffer by reason of the
performance by the Representative of its duties under this Agreement, except for
loss or damage arising from willful violation of law or gross negligence by the
Representative in the performance of its duties hereunder. The appointment of
the Representative shall be deemed coupled with an interest and as such shall be
irrevocable and shall survive the death, incompetency, mental illness or
insanity of the Employee, and any person dealing with the Representative may
conclusively and absolutely rely, without inquiry, upon any act of the
Representative as the act of the Employee in all matters referred to in this
Section 6.13(b). The Representative shall advise the Employee in writing of any
Sale Obligations imposed on the Employee in any document executed by the
Representative as the Employee's attorney-in-fact pursuant to this Section
6.13(b).
6.14 CONSENT TO JURISDICTION. Each party hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America, in each case
located in the County of New York, for any Litigation (and agrees not to
commence any Litigation except in any such court), and further agrees that
service of process, summons, notice or document by U.S. registered mail to such
party's respective address set forth in Section 6.6 hereof shall be effective
service of process for any Litigation brought against such party in any such
court. Each party hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Litigation in the courts of the State of New York or
of the United States of America, in each case located in the County of New York,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any Litigation brought in any such court
has been brought in an inconvenient forum.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties hereto, all as of the date first above written.
EMPLOYEE COMMUNITY HEALTH SYSTEMS
HOLDINGS CORP.
______________________________ By: ______________________________
Name: Title:
Address:
The undersigned hereby agree to be bound by the provisions of Sections 3.2 and
3.3 of the foregoing Agreement.
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-V, L.P.
By: FLC XXX Partnership,
its general partner
By: ____________________________
Xxxxxx X. Xxxxxxx,
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED
DEBT AND EQUITY MANAGEMENT
BUYOUT PARTNERSHIP-VI, L.P.
By: FLC XXIX Partnership,
its general partner
By: ____________________________
Xxxxxx X. Xxxxxxx,
a general partner
The undersigned acknowledges that the undersigned has read the
foregoing Agreement between Community Health Systems Holdings Corp. and the
undersigned's spouse, understands that the undersigned's spouse has acquired
shares of Class C Common Stock of Community Health Systems Holdings Corp. as
reflected in such Agreement and agrees to be bound by the foregoing Agreement.
___________________________
Employee's Spouse
ANNEX A
Number Of Shares In Cumulative Number Of
Respect Of Which Option Shares Subject To The
Is Being Exercised On Stockholder's Agreement
Date The Date Indicated On The Date Indicated
---- ------------------ ---------------------
SCHEDULE I
Assume: 1) Aggregate amount of assets available for distribution is
$2,200,000,000. THERE IS NO ASSURANCE THAT THE ACTUAL AMOUNT
OF ASSETS AVAILABLE FOR DISTRIBUTION WILL REACH THIS LEVEL.
2) 449,123 shares of Class A Common Stock and 39,600 shares of
Class B Common Stock outstanding, and options granted to
acquire 9,000 shares of Class C Common Stock and 1,600 shares
of Class A Common Stock, all at the time of distribution.
STEP 1
------
To To To
CLASS A CLASS B CLASS C
------- ------- -------
First to A: $1,073.52 x 450,723 = $483,860,155
Second to B: 357.84 x 39,600 = $14,170,464
Third to C: 587.50 x 9,000 = $5,287,500
Fourth to A: 279.17 x 450,723 = 125,828,340
and to C: 279.17 x 9,000 = 2,512,530
Fifth to A 3,140.93* x 450,723 =
and to B: 3,140.93* x 39,600 = 1,415,691,577 124,381,020 28,268,414
------------- ----------- ----------
and to C: 3,140.93* x 9,000 =
Total $2,025,380,072 $138,551,484 $36,068,444
============== ============ ===========
STEP 2 PER SHARE PROCEEDS COST OF SHARES NET GAIN
------ ------------------ -------------- --------
x = $ total for Class A divided by 450,723 = $4,493.62 ($1,073.52) $3,420.10
STEP 3
------
y = $ total for Class B divided by 39,600 = $3,498.77 ($357.84) $3,140.93
STEP 4
------
z = $ total for Class C divided by 9,000 = $4,007.60 ($587.50) $3,420.10
Class B Exchange Rate = y/x or 0.779 of a share of Class A Common Stock for each
share of Class B Common Stock.
Class C Exchange Rate = z/x or 0.892 of a share of Class A Common Stock for each
share of Class C Common Stock.
---------------
* Equals $2,200,000,000 less the payments from the first, second, third and
fourth steps ($631,658,989) divided by 499,323 (449,123 plus 39,600 plus
9,000 plus 1,600), rounded for presentation purposes.
