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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of June 8, 2000
(the "Effective Date"), between LifePoint Hospitals, Inc., a Delaware
corporation ("LifePoint" or the "Company") and Xxxxx X. Xxxxxxxxx, Xx. (the
"Executive").
W I T N E S S E T H:
WHEREAS, LifePoint desires to secure the services of the Executive as
its Chairman of the Board of Directors and Chief Executive Officer, on the terms
and conditions set forth herein; and
WHEREAS, the Executive is willing to serve LifePoint as the Chairman of
the Board of Directors, a member of such Board and Chief Executive Officer,
LifePoint Hospitals, Inc. on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby
covenant and agree as follows:
1. TERMS AND CONDITIONS OF EMPLOYMENT
(a) Employment. LifePoint hereby agrees to employ the Executive and the
Executive hereby agrees to remain in the employ of LifePoint on and subject to
the terms and conditions of this Agreement.
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(b) Positions, Duties and Responsibilities. The Executive at all times
shall serve as, and with the title, office, and authority of, the Chief
Executive Officer of LifePoint, reporting directly to the Board of Directors of
LifePoint (the "Board of Directors" or "Board") as well as serving as a member
of the Board and as the Chairman of the Board. LifePoint shall use its best
efforts to take such action as may be required to maintain the Executive's
status as such.
(c) Full-Time Employment. The Executive agrees to devote substantially
all of his professional working time and attention to the benefit of LifePoint
under the terms of this Agreement; provided, however, that nothing in this
Agreement is intended nor shall be construed as limiting or restricting the
Executive's right to engage in any activity that is unrelated to his position
specified in paragraph (b) above, including, without limitation, managing
private, passive investments, engaging in church, community, and civic
activities and other activities approved by the Board, and serving as a director
or a member of an advisory committee of any corporation or other entity on which
the Executive is serving as of the Effective Date or any other corporation or
entity that is not in competition with LifePoint, provided that such activities
do not impinge in any material way upon the requirement that the Executive
devote substantially all of his professional working time and attention to the
Company and perform the duties of his position specified in paragraph (b) above.
2. COMPENSATION
In consideration of the services rendered by the Executive during the
Agreement Term (as defined below), LifePoint shall (except as otherwise provided
in item (iii) of paragraph (b) below), pay or provide the Executive with the
compensation and benefits set forth below.
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(a) Salary. The Executive shall be paid a base salary (his "Base
Salary") equal to $350,000 per annum, payable in bi-weekly installments. His
Base Salary shall be reviewed not less than once each calendar year by the
Compensation Committee of the Board of Directors of LifePoint and may be
increased, but not decreased, in such Compensation Committee's sole and absolute
discretion.
(b) Annual Bonus. Effective for calendar year 2000, and continuing for
each subsequent calendar year ending during the Agreement Term, the Executive
shall be entitled to receive a bonus (an "Annual Bonus") based on the extent to
which LifePoint achieves or exceeds its target performance goals for the
relevant calendar year (the "Annual Targets"). Such Annual Bonus for any
calendar year shall equal 50% of his Base Salary (as in effect on the last day
of such year) if LifePoint shall achieve but not exceed the applicable Annual
Targets and shall exceed 50% of such Base Salary if LifePoint shall exceed the
applicable Annual Targets, but in no event shall such Annual Bonus exceed 100%
of such Base Salary. The establishment of Annual Targets for each calendar year,
the adjustment to be made in the Annual Bonus in the event of attainment of
specified percentages of such Annual Targets, and the method for determining the
achievement of such Annual Targets shall be established by the Compensation
Committee of the LifePoint Board of Directors in consultation with the Executive
prior to the commencement of the calendar year in question.
(c) Benefits. The Executive as of any date shall be entitled to
participate in the benefit plans offered at such time at a level which is no
less than commensurate with the benefit level offered generally to other senior
executives at such time.
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3. TERM AND TERMINATION OF EMPLOYMENT
(a) Term. The term of this Agreement shall commence on the Effective
Date and shall end on the third anniversary of the Effective Date (the
"Agreement Term"); provided, however, that the Agreement Term shall be
automatically extended for an additional year on the second anniversary of the
Effective Date and on each succeeding anniversary of the Effective Date, unless
written notice of non-extension is provided by LifePoint or the Executive to the
other party at least 90 days prior to the applicable anniversary.
(b) Termination of Employment. Nothing in this Agreement shall be
construed to prevent the Executive from voluntarily terminating his employment
with LifePoint at any time or to prevent LifePoint from terminating the
Executive's employment at any time. Upon such termination, the provisions of
Section 4 shall apply.
4. COMPENSATION UPON TERMINATION OF EMPLOYMENT
If the Executive's employment with LifePoint is terminated during the
Agreement Term, the Executive shall be entitled to the following in full
satisfaction of his rights under this Agreement, notwithstanding anything
elsewhere in this Agreement:
(a) Involuntary Termination Without Cause or Termination for Good
Reason. In the event the Executive's employment is terminated by the Company
other than for Cause, death, or Disability, or is terminated by the Executive
for Good Reason, the Company shall pay the Executive, and provide him with, the
following:
(i) His earned but unpaid Base Salary through the date of
termination, any earned but unpaid bonus under Section 2(b) for the
calendar year that ended prior to the
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date of termination and amounts due to the Executive from the Company
as of the date of termination, all of which amounts shall be paid in a
lump sum no later than fifteen (15) days after the date the Executive's
employment terminates, and any payments, rights and benefits due as of
the date of termination under the terms of all employee benefit plans
and programs (in which he was a participant) in accordance with the
terms of such plans and programs (collectively the "Accrued Rights").
(ii) Continued monthly payments at an annual rate of 100% of
the Base Salary from the date of such termination until the second
anniversary of such termination or, if earlier, the end of the then
current Agreement Term (the "Cut-Off Date").
(iii) 50% of Base Salary (based on his Base Salary at the time
of his termination) for each calendar year or fraction of a calendar
year in the period from the first day of the calendar year in which
such termination occurs through the Cut-Off Date, with the amount
payable hereunder for the calendar year in which the Cut-Off Date
occurs to be prorated (based on calendar days), all of which amounts
shall be paid in a lump sum no later than fifteen (15) days after the
date the Executive's employment terminates.
(iv) His Insurance Coverage.
(b) Voluntary Termination; Termination for Cause. In the event the
Executive voluntarily terminates his employment hereunder (other than a
voluntary termination under Section 4(a) hereof) or is terminated by the Company
for Cause, the Company shall pay the Executive, and provide him with, any
Accrued Rights. If such termination shall be voluntary and not for Cause, any
vested options covering shares of Common Stock held by the Executive at the time
of such termination shall remain exercisable in accordance with their terms for
three months
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following such termination (but not beyond their expiration date). If such
termination shall be for Cause, all such vested options shall remain exercisable
in accordance with their terms for thirty days following such termination (but
not beyond their expiration date).
(c) Disability; Death. In the event the Executive's employment is
terminated by reason of the Executive's death, or the Board of Directors
determines in good faith that the Executive is Disabled, the Company shall pay,
and provide the Executive (or his legal representative) with, the following:
(i) His Accrued Rights.
(ii) Continued monthly payments at an annual rate of 100% of
his then Base Salary from the date of such termination until the
Cut-Off Date.
(iii) 50% of his Base Salary (based in each case on the Base
Salary at the time of his termination) for each calendar year or
fraction of a calendar year in the period from the first day of the
calendar year in which such termination occurs through the Cut-Off
Date, with the amount payable hereunder for the calendar year in which
the Cut-Off Date occurs to be prorated (based on calendar days) and
with the amount payable hereunder for any calendar year to be payable
as promptly as practicable after the close of such calendar year.
(iv) His Insurance Coverage (if he is Disabled).
Any options covering shares of Common Stock held by the Executive at
the time of such termination shall become fully vested and exercisable as of the
date of such termination and shall remain exercisable in accordance with their
terms for one year following such
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termination (but not beyond their expiration date). For purposes of this
Agreement, "Disability" shall mean the inability of the Executive, after
reasonable accommodation, to perform the duties required hereunder 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 of
Directors.
(d) Termination after Agreement Term. If the Executive's employment
with the Company is terminated upon or following the close of the Agreement
Term, he shall be entitled to the following in full satisfaction of his rights
under this Agreement, notwithstanding anything elsewhere in this Agreement:
(i) His Accrued Rights.
(ii) If his employment terminates in the calendar year in
which the Agreement Term ends and is not for Cause, 50% of his Base
Salary prorated (based on calendar days) for the portion of such
calendar year prior to the close of the Agreement Term (based on the
Base Salary on the last day of the Agreement Term), all of which
amounts shall be paid in a lump sum no later than fifteen (15) days
after the date his employment terminates.
Any vested options covering shares of Common Stock held by the
Executive at the time of such termination of employment shall remain exercisable
in accordance with their terms for three months following such termination,
except that such period shall be one year in the case of death or Disability
(but in no event beyond their expiration date).
(e) If there is a determination that the payments and other benefits
called for under this Agreement, in combination with any other payments or
benefits to or for the benefit of the
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Executive from LifePoint or any predecessor or successor organization, will
result in the Executive's being subject to an excise tax under Section 4999 of
the Code and/or if such an excise tax is assessed against the Executive as a
result of such payments or other benefits, LifePoint (the "Payor") shall make a
Gross Up Payment (as defined in this Section 5(g)) to or on behalf of the
Executive as and when such determination(s) and assessment(s), as appropriate,
are made, provided the Executive takes such action as the Payor reasonably
requests under the circumstances to mitigate or challenge, or to mitigate and
challenge, such tax and the Payor complies with its obligations described below
in this Section 5(g).
A "Gross Up Payment" means a payment to or on behalf of the Executive
which shall be sufficient to pay (i) any such excise tax in full, (ii) any
federal, state and local income tax and social security and other employment tax
on the payment made to pay the Executive's excise tax as well as any additional
excise tax on such payment and (iii) any interest or penalties assessed by the
Internal Revenue Service on the Executive if such interest or penalties are
attributable to the Payor's failure to comply with its obligations under this
Section 5(g) or applicable law. Any determination under this Section 5(g) by the
Payor or the Payors accountants shall be made in accordance with Section 280G of
the Code and any applicable related regulations (whether proposed, temporary or
final) and any related Internal Revenue Service rulings and any related case law
and, if the Payor reasonably requests that the Executive take action to mitigate
or challenge, or to mitigate and challenge, any such tax or assessment and the
Executive complies with such request, the Payor shall provide Executive with
such information and such expert advice and assistance from the Payor's
accountants, lawyers and other advisors as he may reasonably request and shall
pay for all expenses incurred in effecting such compliance and any related
fines, penalties, interest and other assessments.
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5. TAX WITHHOLDING
All compensation payable pursuant to this Agreement shall be subject to
reduction by all applicable withholding, social security and other federal,
state and local taxes and deductions.
6. RESTRICTIVE COVENANTS
(a) Confidentiality/Trade Secrets. The Executive acknowledges that his
position with the Company will be one of the highest trust and confidence, both
by reason of his position and by reason of his access to and contact with the
trade secrets and confidential and proprietary business information of the
Company and all of its Affiliates (which term as used in this Agreement shall
include, any person, corporation, partnership, general partner or other entity
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Company), both during the term
of this Agreement and thereafter. The Executive covenants and agrees as follows:
(i) Protection. That he shall at all times use his best
efforts and exercise diligence to protect and safeguard the trade
secrets and confidential and proprietary information of the Company and
its Affiliates, including, without limitation, the identity of their
patients or customers (including third-party payers of any kind or
nature) and suppliers, their arrangements with their patients or
customers and suppliers, and their technical data, records,
compilations of information, processes, computer software, and
specifications relating to their patients or customers, suppliers,
products and services.
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(ii) Nondisclosure. That he shall not at any time disclose any
of such trade secrets and confidential and proprietary information,
except as Executive reasonably decides may be required in the course of
his employment with the Company under Section 1 hereof or as may be
required by law.
(iii) Nonusage. That he shall not at any time use directly or
indirectly, for his own benefit or for the benefit of another, any of
such trade secrets and confidential and proprietary information.
The covenants contained in this Section 6(a) shall not be applicable to
any information which is in the public domain, other than as a result of action
by the Executive in violation of this Section 6(a), or which was obtained from
sources other than the Company or its Affiliates who are not under a duty of
nondisclosure. All files, records, documents, drawings, specifications, computer
software, memoranda, notes, or other documents relating to the business of the
Company and its Affiliates, whether prepared by the Executive or otherwise
coming into his possession, shall be the exclusive property of the Company and
its Affiliates and shall be delivered to the Company or its Affiliates as
appropriate, and not retained by the Executive, upon termination of his
employment for any reason whatsoever.
(b) Non-Competition. The Executive covenants and agrees that, so long
as he is employed by the Company, and for a period of two years following his
termination of employment for Good Reason or his voluntary termination under
Section 5(c), the Executive shall not, without the prior written consent of the
Company, directly or indirectly, as an employee, company, agent, principal,
proprietor, partner, ten percent (10% or more) stockholder,
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consultant, director, or corporate officer, engage in any business that is in
competition with the hospitals owned by the Company at the time of termination.
(c) Modification. If the scope of any of the restrictions contained in
this Section 6 is too broad to permit enforcement of such restrictions to their
full extent, then such restrictions shall be enforced to the maximum extent
permitted by law, and the Executive hereby consents and agrees that such scope
may be modified accordingly in any proceeding brought to enforce such
restrictions.
(d) Remedies for Breach of Restrictive Covenants. The covenants set
forth in this Section 6 shall continue to be binding upon the Executive
notwithstanding the termination of his employment with the Company for any
reason whatsoever. Such covenants shall be deemed and construed as separate
agreements independent of any other provision of this Agreement. The existence
of any claim or cause of action by the Executive against the Company or any of
its Affiliates, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company or any of its Affiliates
of any or all of such covenants. It is expressly agreed that the remedy at law
for the breach of any such covenant is inadequate and that temporary and
permanent injunctive relief shall be available to prevent the breach or any
threatened breach thereof, without the necessity of proof of actual damages and
without the necessity of posting a bond, cash or otherwise.
7. SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to the benefit
of LifePoint, its successors and assigns and any person, firm, corporation or
other entity which succeeds to all or substantially all of the business, assets
or property of LifePoint in accordance
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with Section 8(b). Any successor to LifePoint shall be treated the same as
LifePoint under this Agreement. LifePoint will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business, assets or property of such company, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that such company would be required to perform it if no such
succession had taken place.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts are due and
payable to him hereunder, all such amounts, unless otherwise provided herein,
shall be paid to the legal representatives of the Executive's estate.
8. NOTICES
Any notice, demand, or communication required, permitted or desired to
be given hereunder must be in writing to be effective, and shall be deemed
effectively given when personally delivered or mailed by prepaid certified mail,
return receipt requested, addressed as follows:
If to the Executive: Xxxxx X. Xxxxxxxxx, Xx.
2 Wynstone
Xxxxxxxxx, XX 00000
If to LifePoint: LifePoint Hospitals, Inc.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Senior Vice President, Human Resources
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9. GOVERNING LAW
This Agreement has been executed and delivered and shall be
interpreted, construed, and enforced in accordance with the laws of the State of
Tennessee.
10. ENTIRE AGREEMENT
This Agreement shall constitute the entire agreement of the parties
hereto and may not be amended except in writing signed by all of the parties
hereto. No oral statements or prior written materials not specifically
incorporated herein shall be of any force or effect.
11. SEVERABILITY
In the event any provision of this Agreement is held to be
unenforceable or void for any reason, the remainder of this Agreement shall be
unaffected and shall remain in full force and effect in accordance with its
terms.
12. NO ASSIGNMENT BY EXECUTIVE; BINDING EFFECT
The Executive shall not assign this Agreement to any other party or
parties without the prior written consent of LifePoint. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
13. HEADINGS
The headings used herein are for convenience only and do not limit the
contents of this Agreement.
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14. DEFINITIONS
(a) For purposes of this Agreement, "Cause" shall mean:
(i) The conviction of the Executive 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.
(ii) The conviction of the Executive for a violation of
criminal law involving the Company and its business that materially
damages the Company as determined by the Board of Directors in good
faith.
(iii) The willful misconduct of the Executive, or the willful
or continued failure by the Executive (except in the case of a
Disability as provided in Section 5(d) hereof) to substantially perform
his duties hereunder, in either case which has a material adverse
effect on the Company as determined by the Board of Directors in good
faith.
(iv) The willful fraud or material dishonesty of the Executive
in connection with his performance of his duties to the Company and
involving the finances of the Company as determined by the Board of
Directors in good faith.
(v) Executive's repeated use of alcohol in a manner which in
the opinion of the Board of Directors materially impairs the ability of
the Executive to effectively perform the Executive's duties and
obligations under this Agreement, or the illegal use, possession, or
sale of, or impaired performance due to the illegal use of, controlled
substances.
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(vi) a violation of the Company's policies on sexual or other
illegal harassment of a Company employee by the Executive as determined
by the Board of Directors in good faith.
In no event, however, shall the Executive's employment be considered to have
been terminated for "Cause" under this Agreement unless and until the Executive
receives written notice from the Board of Directors stating in detail the acts
or omissions constituting Cause and the Executive has the opportunity to cure to
the Board of Directors' satisfaction any such acts or omissions, in the case of
(iii), (v) or (vi) above, within 30 days of the Executive's receipt of such
notice. The foregoing shall not limit the right of the Board of Directors to
suspend the Executive from his day-to-day responsibilities with the Board of
Directors pending the completion of such notice and cure procedures.
(b) For purposes of this Agreement, "Good Reason" shall mean: (i) the
assignment to the Executive of any duties inconsistent with the Executive's
position (including the loss of any of his titles or position as Chairman of the
Board, a member of the Board and Chief Executive Officer, and any other status,
offices, titles or reporting relationships), authority, duties or
responsibilities as contemplated by Section 1 hereof, any adverse change in the
Executive's reporting responsibilities, or any action by LifePoint that results
in a diminution in such position, authority, duties or responsibilities, but
excluding for these purposes an isolated and insubstantial action not taken in
bad faith and which is remedied by LifePoint promptly after receipt of notice
thereof given by the Executive; (ii) any diminution in Executive's total
compensation in violation of Section 2; (iii) the relocation, without the
consent of the Executive, of LifePoint's principal executive offices or the
offices of the Executive to a location more than 40 miles from Nashville,
Tennessee, (iv) a termination of Executive's employment for any reason (other
than his death)
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within twelve months after a Change in Control, or (v) any breach under Section
8 of this Agreement.
(c) For purposes of this Agreement, "Change in Control" shall mean:
(i) An acquisition (other than directly from LifePoint) of any
voting securities of LifePoint (the "Voting Securities") by any
"Person" (as the term Person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act")) immediately after which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the 0000 Xxx) of
twenty percent (20%) or more of the combined voting power of the then
outstanding Voting Securities; provided, however, that in determining
whether a Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would cause a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (i) an employee
benefit plan (or a trust forming a part thereof) maintained by (A)
LifePoint or (B) any corporation or other Person of which a majority of
its voting power or its equity securities or equity interest is owned
directly or indirectly by LifePoint (a "Subsidiary") or (ii) LifePoint
or any Subsidiary.
(ii) The individuals who are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election or
nomination for election by LifePoint's stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent
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Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if (1) such individual
initially assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under the
0000 Xxx) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest or (2) such individual was
designated by a Person who has entered into an agreement with LifePoint
to effect a transaction described in clause (a) or (c) of this Section
3(f)(ii); or
(iii) The consummation, after approval by stockholders of
LifePoint, of:
(A) merger, consolidation or reorganization involving
LifePoint unless
(1) The stockholders of LifePoint, immediately before
such merger, consolidation or reorganization, own,
directly or indirectly immediately following such
merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting
power of the outstanding Voting Securities of the
corporation resulting from such merger or
consolidation or reorganization or its parent
corporation (the "Surviving Corporation") in
substantially the same proportion as their ownership
of the Voting Securities immediately before such
merger, consolidation or reorganization;
(2) The individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such
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merger, consolidation or reorganization constitute at
least two-thirds of the members of the board of
directors of the Surviving Corporation; and
(3) No Person (other than LifePoint, any Subsidiary,
any employee benefit plan (or any trust forming a
part thereof) maintained by LifePoint, the Surviving
Corporation or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation or
reorganization, had Beneficial Ownership of twenty
percent (20%) or more of the then outstanding Voting
Securities) has Beneficial Ownership of twenty
percent (20%) or more of the combined voting power of
the Surviving Corporations then outstanding Voting
Securities.
(B) A complete liquidation or dissolution of LifePoint; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of LifePoint to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by LifePoint which, by
reducing the number of Voting Securities outstanding, increased the proportional
number of shares Beneficially Owned by the Subject Person; provided, however, if
a Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by LifePoint, and after such
share acquisition by LifePoint, the Subject Person becomes the Beneficial Owner
of any additional Voting Securities
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which increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.
15. COUNTERPARTS
This Agreement may be executed in counterparts, each of which will deem
to be an original, but all of which together will constitute one in the same
Agreement.
IN WITNESS WHEREOF, LifePoint and the Executive have executed this
Agreement as of the date first above written.
XXXXX X. XXXXXXXXX, XX.
/s/ Xxxxx X. Xxxxxxxxx, Xx.
---------------------------------------------
LIFEPOINT HOSPITALS, INC.
/s/ Xxxx X. Xxxxxxxx
---------------------------------------------
By: Xxxx X. Xxxxxxxx
Title: Senior Vice President, Human Resources
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