WPC /# UN % 0(b)w@14q 0J 0T 0^: 0h 0r 0|r 0 0t 1u 0dyU>B) AQD  0D[ 0@ 0D DC# D/f B B D3 AM U*O &y v~ vHP LaserJet 4SiHPPCL5MS,,,,,,0nLh(9 Z 6Times New Roman RegularX($- - u9Ev9w9x9Ey9z9D{9|9E}9Ӏ9 _#3|x92 0Indent123  2" 0Indent20 23  2, 0Indent30 0 23  26 0Indent40 0 0 23  2@ 0Indent50 0 0 0 23  2J 0Indent60 0 0 0 0 23  2T 0Indent70 0 0 0 0 0 23  2^ 0Indent80 0 0 0 0 0 0 23   ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P 8Mac DefaultMac Default ` X<  9p`(&Times New Roman% Line 7 d!"#$&C<< CLevel 1Level 2Level 3Level 4Level 5(3$ !  ("$    ($$   1  7Border 1dd((' dxd dP Pd'''''dxd!#%C << G<  9p`(Arial  !  #d#  ""  ++   YYY FILED+XJuly1,1998CecilW.CrowsonAppellateCourtClerk  PtPtHH(FG(HH(d'hStyl{WP}01  HH  2$HH  Geneva  <Px443!#4$*$$*$ KK  Geneva  Geneva .,6 Geneva   ellan Geneva  ellan Geneva ! .       \RA'\7v9XXdd7    W.HUDSONCONNERY,JR.,ET.AL., )      ) DavidsonChancery Plaintiffs/Appellants,  ) No.953865I      ) VS.      )      ) COLUMBIA/HCAHEALTHCARE ) AppealNo.CORPORATION,ET.AL.,  ) 01A019709CH00529      )!ٜR*,%A1-j|D`  `@Rߛ Defendants/Appellees.  )@ INTHECOURTOFAPPEALSOFTENNESSEE@ ATNASHVILLE@ APPEALFROMTHECHANCERYCOURTOFDAVIDSONCOUNTY@ ATNASHVILLE,TENNESSEE  HONORABLEIRVINH.KILCREASE,JR.,CHANCELLOR  RobertS.Patterson,#6189PatriciaHeadMoskal,#11621BOULT,CUMMINGS,CONNERS&BERRY,PLC414UnionStreet,Suite1600P.O.Box198063NashvilleTennessee37219ATTORNEYSFORPLAINTIFFS/APPELLANTSPaulS.Davidson,#11789CharlesW.Cook,III,#14274STOKES&BARTHOLOMEW,P.A.2800SunTrustCenter424ChurchStreetNashvilleTennessee37219ATTORNEYSFORDEFENDANTS/APPELLEES  XXXXXXX.         HENRYF.TODD      PRESIDINGJUDGE,MIDDLESECTIONCONCURS:WILLIAMC.KOCH,JR.,JUDGEWIILLIAMB.CAIN,JUDGE W.HUDSONCONNERY,JR.,ET.AL., )      ) DavidsonChancery Plaintiffs/Appellants,  ) No.953865I      ) VS.      )      ) COLUMBIA/HCAHEALTHCARE ) AppealNo.CORPORATION,ET.AL.,  ) 01A019709CH00529      ) Defendants/Appellees.  ) @  OPINIONX    Twentyformeremployeesof HealthTrust,a____________suedHealthTrustandits successorininterest,ColumbiaHealthCareCorporation,torecovershareofstock(orthevaluethereof)whichtheyhadpurchasedwithearnedbonusesandforthevalueofsharesofstockduesomeoftheplaintiffsduethemupondischarge.Twooftheplaintiffsnonsuited,leavingeighteen. Fourteenoftheplaintiffsalsosuedonthetheorythattheirrightswerebasedupontheir dischargewithcause. Theplaintiffssoughtadeclarationoftheirrightsanddamagesforbreachofcontract,breachoffiduciarydutyandconversion. Allplaintiffsmovedforsummaryjudgmentinregardtotheirclaimsfordeclaratoryrelief,forbreachofcontract,andforthevestingofstockupon changeofcontrol.Thedefendantsmovedforsummaryjudgmentuponthesameissues.TheTrialCourtoverruledplaintiffsmotionandsustaineddefendantsmotion. Thedefendantsmovedforsummaryjudgmentupontheremainingclaims,i.e.,theterminationwithoutcausebasisofthesuitsoffourteenoftheplaintiffs.TheTrialCourtsustainedthemotionanddismissedthesuitsofalleighteenplaintiffswhohaveappealedandpresentedthefollowingissues:   ` I. WhethertheplaintiffsrightstotherestrictedstockatissuevestedupontheoccurrenceofthemergerbetweenHealthTrustnotwithstandingthefactthatHealthTrustsCompensationCommitteedeterminedthatthestockwouldnotbestupontheoccurrenceofthemergerandtheplaintiffsweresonotifiedorallyandinwriting.Also,inthisregard:̛ (a) WhetherHealthTrustnegatedtheautomaticvestingprovisioninthe1990Plan,whichprovidedthataparticipantsrighttorestrictedstockvestsautomaticallyunlessHealthTrustprovidesotherwiseinan Awardagreement,whenonOctober31,1994,HealthTrustsCompensationCommitteemetandawardedtherestrictedstocksubjecttotheconditionthattheplaintiffsrightswouldnotbestuponthemerger,andHealthTrustsentmemoranda,worksheets,andheldmeetingswiththeplaintiffswhereinitinformedthemthattherestrictedstockwouldnotbestupontheoccurrenceofthemerger. (b) WhethertheCompensationCommitteesDecember21,1993,awardof(i)theplaintiffstargetedbonusamounts(theamountofbonustheycouldearnattheendofthefollowingfiscalyear)and(ii)theplaintiffsrighttoelectapercentageoftheactualbonusawardedatyearendtopurchaserestrictedstockconstitutedanawardofrestrictedstocksoastopreventtheCompensationCommitteefrombeingabletooverridetheautomaticvestingprovisionnotwithstandingthefactthatthebonusesandawardsofrestrictedstockwerenotactuallymadeuntilOctober31,1994,andtheoperativeplanallowstheCompensationCommitteetherighttooverrideand/oramendvestingprovisions.II. WhetherplaintiffsConnery,Francis,Hobbs,Hough,Kennedy,Lambert,Martin,McCain,Moore,Price,SlusserandWallacewereterminatedwithoutcausesoastotriggertheirbestingintherestrictedstockatissuenotwithstandingthefactthattheyadmitthattheywereofferedpositionswithColumbia,andtheychosetoresignratherthanacceptsuchpositions.III. Whether,totheextentthatplaintiffsConnery,Francis,Hobbs,Hough,Kennedy,Lambert,Martin,McCain,Moore,Price,SlusserandWallaceseektorecovertherestrictedstockand/oritsappreciatedvaluebasedonthecircumstancesoftheirtermination,theywaivedtheirrighttherestrictedstockwhentheyexecutedSeveranceProtectionAgreementswhichprovidedthatthebenefitsgrantedthereunderwereinlieuofanyotherseveranceorterminationpay.     ItisundisputedthattheplaintiffswereemployeesofHealthTrustduringits1994fiscalyearwhichendedAugust31,1994,andwereparticipantsinarestrictedstockpurchaseplanscalledthe TotalDirectCompensationPlan,the AmendedandRestatedHealthTrust,Inc.,andthe HospitalCompany1990StockCompensationPlan. OnOctober15,1991,theboardofdirectorsofHealthCarecreateda CompensationCommitteeofitsmembers.AccordingtotheCompensationPlan:    Thepurposeofthe[1990Plan]istoadvancetheinterestsof[HealthTrust]anditsshareholdersbyprovidingincentivestoofficersandotherkeyemployeesorindividualswhocontributesignificantlytothestrategicandlongtermperformanceobjectivesandgrowthof[HealthTrust]bytheirinvention,ability,industry,loyaltyorexceptionalservice.The[1990]Planisintendednotonlyasameansofattractingandretainingoutstandingmanagementbutalsoofpromotingacloseidentityofinterestsbetween[HealthTrusts]managementanditsstockholders.   `  The1990Plandefinesan Awardofrestrictedstockas Anawardorgrantof...RestrictedStock...bytheCommitteetoaparticipantunderthePlan.1990Plan,2(App.I,18). Notwithstandingtheexistenceofthe1990Plan,the1990Planstatesthat, NopersonshallhaveanyclaimorrighttobegrantedanAwardunderthePlan,andnoParticipantshallhaveanyrightunderthePlantoberetainedintheemployoftheCompany.1990Plan,18(a)(App.I,39). The1990PlanalsoprovidesthatthePlan shallbeadministeredbytheCommittee,whichshallhavethepowertointerpretthePlanand,subjecttoitsprovisions,toprescribe,amend,waiveandrescindrulesandregulations,todeterminethetermsofAwardsandtomakeallotherdeterminationsnecessaryordesirableforthePlansadministration.1990Plan,3(App.I,2223)(emphasisadded).Moreover, allactiontakenbytheCommitteeintheadministrationandinterpretationofthePlan...shallbefinalandbindingonallconcerned.1990Plan,3(App.I,2223)(emphasisadded).TheCommitteeisalsoentitledtoselecttheParticipantstobegrantedAwards,determinetheamountsandtypeortypesofAwardstobemade,setforththeterms,conditionsandlimitationsapplicabletoeachAward,andprescribetheformoftheinstrumentsembodyingAwardsmadeundertheplan.1990Plan,4(App.I,237)(emphasisadded). WithregardtoAwardsofrestrictedstock,suchastherestrictedstockatissueinthiscase,Section8ofthe1990Planprovidesspecificallyasfollows:     (a) AwardsofRestrictedSharesorRestrictedUnits .AwardsofRestrictedStockorRestrictedUnitsmaybegrantedunderthePlaninsuchformandonsuchtermsandconditionsastheCommitteemayfromtimetotimeapprove,including,withoutlimitation,restrictionsonthesale,assignment,transferorotherdispositionorencumbranceofsuchsharesorunitsduringtheRestrictedPeriodandtherequirementthattheParticipantforfeitsuchshareorunitsbacktotheCompanyuponterminationofemploymentforspecifiedreasonswithintheRestrictedPeriod.RestrictedAwardsmaybegrantedalone,inadditiontoorintandemwithotherAwardsunderthePlan. (b) RestrictedPeriod.AtthetimeanAwardofRestrictedStockorRestrictedUnitsismade,theCommitteeshallestablishtheRestrictedPeriodapplicabletosuchRestrictedStockorRestrictedUnitsduringwhichperiodoftimesuchRestrictedStockorRestrictedUnitsaresubjecttoasubstantialriskofforfeitureinaccordancewiththisSectionandSection13hereof.DuringtheRestrictedPeriod,suchRestrictedStockorRestrictedUnitsmaynotbesold,assigned,transferred,madesubjecttogift,orotherwisedisposedof,mortgaged,pledgedorencumbered.EachRestrictedAwardmayhaveadifferentRestrictedPeriod.TheCommitteemay,initssolediscretion,atthetimeaRestrictedAwardismadeprescribeconditionsfortheincrementallapseofrestrictionsduringtheRestrictedperiodandforthelapseorterminationofrestrictionsuponthesatisfactionofotherconditionthantheexpirationoftheRestrictedPeriodwithrespecttoalloranyportionoftheRestrictedStockorRestrictedUnits.TheCommitteemayalso,initssolediscretion,shortenorterminatetheRestrictedPeriodorwaiveanyconditionsforthelapseorPeriodorwaiveanyconditionsforthelapseorterminationofrestrictionswithrespecttoalloranyportionoftheRestrictedStockorRestrictedUnits.   `   ӄ   AsisstatedintheTDCPlan,theactualbonusawardedtoeachemployeeattheendofthefiscalyearwascontingentuponthesatisfactionoftheobjectivesestablishedbytheCompensationCommitteeandtheplanparticipants.̀....theactualbonuswouldnotbedetermineduntiltheendofthefiscalyear,andthatthebonuscouldbeaboveorbelowthetargetincentiveopportunityamount,andHealthTrustwouldnowknowhowmuchstocktoawarduntilyearend.        OnOctober4,1994,HealthTrustdecidedtomergewithColumbiaHCAandannouncedthisdecisiontoitsemployees. OnOctober31,1994,theCompensationCommitteeagreedtoawardplaintiffstheir1994cashincentivebonusesunderthe1990planunderthefollowingrestrictions:    Ӝ(i) forvestingonAugust31,1996,(ii)thatvestingofawardswillnotacceleratepursuanttoSection18(h)ofsuchStockCompensationPlanintheeventofa changeincontroland,(iii)forsuchfurthertermsandconditionsasshallbesetforthinanawardagreementasexecutedbytheCommitteeChairmanorhisdesigneeonbehalfoftheCommittee;andRESOLVED,thattheproperofficersoftheCorporationbeandtheyherebyareauthorizedtotakeallsuchactionsandexecuteallsuchagreementsorotherdocumentsastheydeemnecessaryoradvisableorconvenientorpropertocarryouttheintentoftheforegoingresolution.     InJanuary,1994,HealthTrustdistributedtoitsemployeesamemorandumandworksheetwith ElectionForms. OnFebruary28,theboardofdirectorsofHealthTrustadoptedandapprovedtheplanofitsCompensationCommittee. OnApril24,1994,HealthCaremergedwithColumbiaHCA.  XXXXXXXXX .             _________________________________       HENRYF.TODD        PRESIDINGJUDGE,MIDDLESECTION  CONCUR:_____________________________WILLIAMC.KOCH,JR.,JUDGE_____________________________WILLIAMB.CAIN,JUDGE