<PAGE>
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
--------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 0-29818
--------------------------------
LifePoint Hospitals, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-2165845
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
4525 Harding Road
Nashville, Tennessee 37205
(Address of principal executive offices) (Zip Code)
(615) 344-6261
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES ___ NO X
-
Indicate the number of shares outstanding of each of the issuer's classes of
common stock of the latest practical date.
Class of Common Stock Outstanding at May 11, 1999
--------------------- ---------------------------
Common stock, $ .01 par value 29,898,688 shares
================================================================================
<PAGE>
LIFEPOINT HOSPITALS, INC.
FORM 10-Q
March 31, 1999
<TABLE>
<CAPTION>
Page of
Part I: Financial Information Form 10-Q
- ----------------------------- ---------
<S> <C>
Item 1. Financial Statements
Condensed Combined Statements of Income - for the three months ended
March 31, 1999 and 1998............................................................ 3
Condensed Combined Balance Sheets - March 31, 1999 and December 31, 1998............. 4
Condensed Combined Statements of Cash Flows - for the three months ended
March 31, 1999 and 1998............................................................ 5
Notes to Condensed Combined Financial Statements..................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations...................................................................... 10
Part II: Other Information
- --------------------------
Item 5: Other Information.................................................................... 22
Item 6: Exhibits and Reports on Form 8-K..................................................... 29
</TABLE>
2
<PAGE>
Part I: Financial Information
Item 1: Financial Statements
LIFEPOINT HOSPITALS, INC.
CONDENSED COMBINED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1999 1998
------------- ------------
<S> <C> <C>
Revenues................................................................. $ 134.2 $ 130.0
Salaries and benefits.................................................... 57.1 55.0
Supplies................................................................. 16.4 16.0
Other operating expenses................................................. 28.5 29.3
Provision for doubtful accounts.......................................... 10.3 9.9
Depreciation and amortization............................................ 7.5 6.6
Interest expense allocated from Columbia/HCA............................. 4.7 4.6
Management fees allocated from Columbia/HCA.............................. 2.4 2.3
------------ ------------
126.9 123.7
------------ ------------
Income from continuing operations before minority interests and
income taxes......................................................... 7.3 6.3
Minority interests in earnings of consolidated entities.................. 0.4 0.6
------------ ------------
Income from continuing operations before income taxes.................... 6.9 5.7
Provision for income taxes............................................... 2.9 2.3
------------ ------------
Income from continuing operations........................................ 4.0 3.4
Loss from discontinued operations, net of tax benefit of ($1.2).......... -- (1.8)
------------ ------------
Net income........................................................... $ 4.0 $ 1.6
============ ============
Basic and diluted earnings per share:
Income from continuing operations.................................... $ 0.13 $ 0.11
Loss from discontinued operations.................................... - (0.06)
============ ============
Net income......................................................... $ 0.13 $ 0.05
============ ============
Shares used in earnings per share calculations (000s):
Basic................................................................ 29,899 29,899
Dilutive securities - stock options................................ 269 150
------------ ------------
Diluted.............................................................. 30,168 30,049
============ ============
</TABLE>
See accompanying notes.
3
<PAGE>
LIFEPOINT HOSPITALS, INC.
CONDENSED COMBINED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
<TABLE>
<CAPTION>
Pro Forma
(to reflect
Distribution and
Assumption of Debt)
March 31, 1999 March 31, December 31,
ASSETS (See Note 1) 1999 1998
------ ----------------------- ---------------- -------------
<S> <C> <C> <C>
Current assets:
Accounts receivable, less allowance for doubtful accounts of $48.5
and $48.3 at March 31, 1999 and December 31, 1998.................... $ 48.8 $ 36.4
Inventories............................................................ 13.9 14.0
Deferred taxes and other current assets................................ 21.3 18.6
------ ------
84.0 69.0
Property and equipment, at cost:
Land................................................................... 7.1 7.2
Buildings.............................................................. 204.9 203.1
Equipment.............................................................. 225.9 221.9
Construction in progress (estimated cost to complete and equip
after March 31, 1999 - $55.8)........................................ 15.3 10.4
------ ------
453.2 442.6
Accumulated depreciation................................................... (175.5) (176.2)
------ ------
277.7 266.4
Intangible assets, net of accumulated amortization of $ 7.0 and $ 6.9
at March 31, 1999 and December 31, 1998................................ 15.1 15.2
Other...................................................................... 4.6 4.4
------ ------
$ 381.4 $ 355.0
====== ======
<CAPTION>
LIABILITIES AND EQUITY
----------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable....................................................... $15.2 $15.2 $15.5
Accrued salaries....................................................... 11.4 11.4 11.7
Other current liabilities.............................................. 16.6 16.6 14.9
------ ------ ------
43.2 43.2 42.1
Intercompany balances payable to Columbia/HCA.............................. -- 188.0 167.6
Long-term debt............................................................. 260.3 0.3 0.3
Deferred taxes and other liabilities....................................... 22.4 22.4 21.4
Minority interests in equity of consolidated entities...................... 4.8 4.8 4.9
Equity, investments by Columbia/HCA........................................ 50.7 122.7 118.7
------ ------ ------
$381.4 $381.4 $355.0
====== ====== ======
</TABLE>
See accompanying notes.
4
<PAGE>
LIFEPOINT HOSPITALS, INC.
CONDENSED COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from continuing operating activities:
Net income................................................................. $ 4.0 $ 1.6
Adjustments to reconcile net income to net cash provided by (used in)
continuing operating activities:
Provision for doubtful accounts........................................ 10.3 9.9
Depreciation and amortization.......................................... 7.5 6.6
Loss from discontinued operations...................................... -- 1.8
Increase (decrease) in cash from operating assets and liabilities:
Accounts receivable................................................. (22.7) (12.9)
Inventories and other assets........................................ (0.3) (1.0)
Accounts payable and accrued expenses............................... 1.1 (1.1)
Other.................................................................. (0.1) (0.4)
----- -----
Net cash provided by (used in) operating activities................. (0.2) 4.5
Cash flows from investing activities:
Purchase of property and equipment, net.................................... (14.7) (8.4)
Other...................................................................... (0.2) 0.8
----- -----
Net cash used in investing activities............................... (14.9) (7.6)
Cash flows from financing activities:
Decrease in long-term debt, net............................................ -- (1.1)
Increase in intercompany balances with Columbia/HCA, net................... 15.1 4.2
----- -----
Net cash provided by financing activities........................... 15.1 3.1
----- -----
Change in cash and cash equivalents............................................ $ -- $ --
===== =====
Interest payments.............................................................. $ 4.7 $ 4.6
Income tax payments, net....................................................... $ 2.3 $ 1.1
</TABLE>
See accompanying notes.
5
<PAGE>
LIFEPOINT HOSPITALS, INC
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
On May 11, 1999, Columbia/HCA Healthcare Corporation ("Columbia/HCA")
completed the spin-off of its operations comprising the America Group to its
shareholders (the "Distribution") as an independent, publicly-traded company
named LifePoint Hospitals, Inc. (hereinafter referred to as "LifePoint
Hospitals, Inc." or the "Company"). Owners of Columbia/HCA common stock
received one share of the Company's common stock for every 19 shares of
Columbia/HCA common stock which resulted in approximately 29.9 million shares of
the Company's common stock outstanding.
At March 31, 1999, the Company was comprised of 23 general, acute care
hospitals and related health care entities. The entities are located in non-
urban areas in the states of Alabama, Florida, Georgia, Kansas, Kentucky,
Louisiana, Tennessee, Utah and Wyoming. Subsequent to March 31, 1999 and in
connection with the Distribution, all intercompany amounts payable by the
Company to Columbia/HCA were eliminated and the Company assumed certain
indebtedness from Columbia/HCA (see Note 4). In addition, the Company entered
into various agreements with Columbia/HCA which are intended to facilitate
orderly changes for both companies in a way which would be minimally disruptive
to each entity.
The accompanying unaudited condensed combined financial statements,
prepared on the pushed down basis of historical cost to Columbia/HCA, represent
the combined financial position, results of operations and cash flows of the net
assets contributed to the Company. They have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the quarter ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1999. This Form 10-Q should be read in conjunction with the audited combined
financial statements and notes included in the Company's Form 10 Registration
Statement, as amended. Certain estimates, assumptions and allocations were
made in preparing such financial statements. Therefore such financial
statements may not necessarily be indicative of the results of operations,
financial position or cash flows that would have existed had the Company been a
separate, independent company throughout the periods presented.
On May 11, 1999, Columbia/HCA also completed the spin-off of a separate,
independent company, Triad Hospitals, Inc.
Pro Forma Data
The pro forma liabilities and equity amounts shown on the condensed combined
balance sheet as of March 31, 1999 include adjustments to reflect the
elimination of intercompany balances payable to Columbia/HCA and the assumption
of $260.6 million (including $0.3 million included in other current liabilities)
in debt financing in connection with the Distribution. The debt financing
consists of senior term loans and subordinated notes (See Note 4).
NOTE 2 - CONTINGENCIES
Columbia/HCA Investigations
Columbia/HCA is currently the subject of several Federal investigations into
certain of its business practices, as well as governmental investigations by
various states. Columbia/HCA is cooperating in these investigations and
understands that it is a target in these investigations. Given the breadth of
the ongoing investigations, Columbia/HCA expects additional investigative and
prosecutorial activity to occur in these
6
<PAGE>
and other jurisdictions in the future. Columbia/HCA is a defendant in several
qui tam actions brought by private parties on behalf of the United States of
America, which have been unsealed and served on Columbia/HCA. The actions
allege, in general, that Columbia/HCA and certain subsidiaries and/or affiliated
partnerships violated the Federal False Claims Act for improper claims submitted
to the government for reimbursement. The lawsuits seek damages of three times
the amount of all Medicare or Medicaid claims (involving false claims) presented
by the defendants to the Federal government, civil penalties of not less than
$5,000 nor more than $10,000 for each such Medicare or Medicaid claim,
attorneys' fees and costs. To the Company's knowledge, the government has
intervened in three qui tam actions against Columbia/HCA. Columbia/HCA is aware
of additional qui tam actions that remain under seal and believes that there are
other sealed qui tam cases of which it is unaware.
Columbia/HCA is a defendant in a number of other suits, which allege, in
general, improper and fraudulent billing, overcharging, coding and physician
referrals, as well as other violations of law. Certain of the suits have been
conditionally certified as class actions.
It is too early to predict the effect or outcome of any of the ongoing
investigations or qui tam and other actions, or whether any additional
investigations or litigations will be commenced. If Columbia/HCA is found to
have violated Federal or state laws relating to Medicare, Medicaid or similar
programs, Columbia/HCA could be subject to substantial monetary fines, civil and
criminal penalties, and exclusion from participation in the Medicare and
Medicaid programs. Similarly, the amounts claimed in the qui tam and other
actions may be substantial, and Columbia/HCA could be subject to substantial
costs resulting from an adverse outcome of one or more of such actions.
Management believes that the ongoing governmental investigations and
related media coverage may have had a negative effect on Columbia/HCA's results
of operations (which includes the Company for the periods prior to the date of
the Distribution which are presented herein). The extent to which the Company
may or may not continue to be affected after the Distribution by the ongoing
investigations of Columbia/HCA, the initiation of additional investigations, if
any, and the related media coverage cannot be predicted. It is possible that
these matters could have a material adverse effect on the financial condition or
results of operations of the Company in future periods.
In connection with the Distribution, Columbia/HCA has agreed to indemnify
the Company in respect of any losses which it may incur arising from the
proceedings described above. Columbia/HCA has also agreed to indemnify the
Company in respect of any losses which it may incur as a result of proceedings
which may be commenced by government authorities or by private parties in the
future that arise from acts, practices or omissions engaged in prior to the date
of the Distribution and relate to the proceedings described above. Columbia/HCA
has also agreed that, in the event that any hospital owned by the Company as of
the date of the Distribution is permanently excluded from participation in the
Medicare and Medicaid programs as a result of the proceedings described above,
then Columbia/HCA will make cash payments to the Company based on amounts as
defined in the Distribution Agreement by and among Columbia/HCA and the Company.
The Company has agreed that, in connection with the pending governmental
investigations, it will participate with Columbia/HCA in negotiating with the
government one or more compliance agreements setting forth each of their
respective agreements to comply with applicable laws and regulations. If any of
such indemnified matters were successfully asserted against the Company, or any
of its facilities, and Columbia/HCA failed to meet its indemnification
obligations, then such losses could have a material adverse effect on the
business, financial position, results of operations or prospects of the Company.
Columbia/HCA will not indemnify the Company for losses relating to any acts,
practices and omissions engaged in by the Company after the distribution date,
whether or not the Company is indemnified for similar acts, practices and
omissions occurring prior to the date of the Distribution. Information regarding
Columbia/HCA included in this Report on Form 10-Q is derived from reports
and other information filed by Columbia/HCA with the Securities and Exchange
Commission.
7
<PAGE>
General Liability Claims
The Company is subject to claims and suits arising in the ordinary course of
business. In certain of these actions claimants may ask for punitive damages
against the Company, which are usually not covered by insurance. It is
management's opinion that the ultimate resolution of pending claims and legal
proceedings will not have a material adverse effect on the Company's results of
operations or financial position.
Physician Commitments
The Company has committed to provide certain financial assistance pursuant
to recruiting agreements with various physicians practicing in the communities
it serves. In consideration for a physician relocating to one of its
communities and agreeing to engage in private practice for the benefit of the
respective community, the Company may loan certain amounts of money to a
physician normally over a period of one year to assist in establishing his or
her practice. Amounts committed to be advanced approximated $15.8 million at
March 31, 1999. The actual amount of such commitments to be subsequently
advanced to physicians often depends upon the financial results of a physician's
private practice during the guaranteed period. Generally, amounts advanced under
the recruiting agreements may be forgiven pro rata over a period of 48 months
contingent upon the physician continuing to practice in the respective
community. It is management's opinion that amounts actually advanced and not
repaid will not have a material adverse effect on the Company's results of
operations or financial position.
NOTE 3 - DISCONTINUED OPERATIONS
Discontinued operations represent the Company's home health care business.
The Company implemented plans to dispose of this business during 1997. During
the fourth quarter of 1998, the Company completed the sale of substantially all
of the Company's home health care operations for total proceeds of approximately
$3.8 million. The proceeds were used to repay intercompany balances to
Columbia/HCA. Revenues of the home health care business totaled approximately
$7.5 million for the quarter ended March 31, 1998.
NOTE 4 - SUBSEQUENT EVENTS
Assumption of Certain Indebtedness from Columbia/HCA
In connection with and on the distribution date of May 11, 1999, all
intercompany amounts payable by the Company to Columbia/HCA were eliminated, and
the Company assumed certain indebtedness from Columbia/HCA. The indebtedness
was comprised of a Bank Credit Agreement and Senior Subordinated Notes.
Bank Credit Agreement
On May 11, 1999, the Company assumed from Columbia/HCA the obligations under a
Bank Credit Agreement (the "Credit Agreement") with a group of lenders with
commitments aggregating $210 million. The Credit Agreement consists of a $60
million term loan facility, a $85 million term loan facility, and a $65 million
revolving credit facility (collectively the "Bank Facilities").
At the time of the Distribution, $25 million of the $60 million term loan
facility had been drawn, with the remaining $35 million available for limited
purposes to be drawn in up to two subsequent draws within one year. The final
payment under this term loan facility is due November 11, 2004.
The $85 million term loan facility was drawn in full at the time of the
Distribution. The final payment under this term loan is due November 11, 2005.
8
<PAGE>
The revolving credit facility, which was undrawn at the time of the
Distribution, is expected to be available for working capital and other general
corporate purposes, and any outstanding amounts thereunder will be due and
payable on November 11, 2004.
Repayments under the term loan facilities are due in quarterly installments
with quarterly amortization based on annual amounts. Interest on the Bank
Facilities are currently based on LIBOR plus an applicable margin (determined
based on certain financial ratios).
The Company's bank debt is secured by a pledge of substantially all of its
assets. The Credit Agreement contains certain covenants that among other things,
will limit the Company and certain of its subsidiaries' ability to incur
additional indebtedness, pay dividends on, redeem or purchase its capital stock,
make investments and capital expenditures, engage in transactions with
affilitates, create certain liens, sell assets and consolidate, merge or
transfer assets. In addition, the Company is required to comply with various
financial ratios and tests, including a minimum net worth test, a leverage ratio
and a minimum fixed charge coverage ratio.
Senior Subordinated Notes
On May 11, 1999, the Company assumed from Columbia/HCA $150 million in Senior
Subordinated Notes maturing on May 15, 2009 and bearing interest at 10.75% (the
"Notes"). Interest is payable semi-annually. The Notes are unsecured
obligations and are subordinated in right of payment to all existing and future
senior indebtedness.
The indenture for the Notes contains certain covenants including but not
limited to restrictions on additional indebtedness, payment of dividends,
investments, the pledge or disposition of assets, transactions with affiliates
and the ability to merge or consolidate. The indenture also requires that the
Company offer to repurchase all Notes at 101% of their principal amount in the
event of a change in control of the Company.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the unaudited Condensed
Combined Financial Statements included herein.
Overview
On May 11, 1999, Columbia/HCA Healthcare Corporation ("Columbia/HCA")
completed the spin-off of its operations comprising the America Group to its
shareholders (the "Distribution") as an independent, publicly-traded company
named LifePoint Hospitals, Inc. (hereinafter referred to as "LifePoint
Hospitals, Inc." or the "Company"). Owners of Columbia/HCA common stock
received one share of the Company's common stock for every 19 shares of
Columbia/HCA common stock which resulted in approximately 29.9 million shares of
the Company's common stock outstanding.
At March 31, 1999, the Company was comprised of 23 general, acute care
hospitals and related health care entities. The entities are located in non-
urban areas in the states of Alabama, Florida, Georgia, Kansas, Kentucky,
Louisiana, Tennessee, Utah and Wyoming. Subsequent to March 31, 1999 and in
connection with the Distribution, all intercompany amounts payable by the
Company to Columbia/HCA were eliminated and the Company assumed certain
indebtedness from Columbia/HCA (see Note 4). In addition, the Company entered
into various agreements with Columbia/HCA which are intended to facilitate
orderly changes for both companies in a way which would be minimally disruptive
to each entity. Information regarding Columbia/HCA included in this Report on
Form 10-Q is derived from reports and other information filed by
Columbia/HCA with the Securities and Exchange Commission.
Forward-Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results
of Operations contains disclosures which are forward-looking statements.
Forward-looking statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of words such as
"may", "believe", "will", "expect", "project", "estimate", "anticipate", "plan"
or "continue". These forward-looking statements are based on the current plans
and expectations of the Company and are subject to a number of uncertainties and
risks that could significantly affect current plans and expectations and the
Company's future financial condition and results. These factors include, but are
not limited to, (i) the highly competitive nature of the health care business,
(ii) the efforts of insurers, health care providers and others to contain health
care costs, (iii) possible changes in the Medicare program that may further
limit reimbursements to health care providers and insurers, (iv) changes in
Federal, state or local regulation affecting the health care industry, (v) the
possible enactment of Federal or state health care reform, (vi) the ability to
attract and retain qualified management and personnel, including physicians,
(vii) liabilities and other claims asserted against the Company, (viii)
fluctuations in the market value of the Company's common stock, (ix) changes in
accounting practices, (x) changes in general economic conditions, (xi) the
complexity of integrated computer systems and the success and expense of the
remediation efforts of Columbia/HCA, the Company and relevant third parties in
achieving Year 2000 readiness, and (xii) other risk factors. As a consequence,
current plans, anticipated actions and future financial condition and results
may differ from those expressed in any forward-looking statements made by or on
behalf of the Company. You are cautioned not to unduly rely on such forward-
looking statements when evaluating the information presented in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
Results of Operations
Revenue/Volume Trends
The Company has experienced an increase in revenues and volume growth for the
three months ended March 31, 1999. However, the Company's revenues per
equivalent admission continues to decrease from prior periods. Management
believes the decline in revenue per equivalent admission is primarily
attributable to the impact of reductions in Medicare payments mandated by the
Federal Balanced Budget Act of 1997 (the "Balanced Budget Act"), the increasing
percentage of
10
<PAGE>
patient volume related to patients participating in managed care plans and the
continuing trend toward the conversion of more services to an outpatient basis.
The Company's revenues continue to be affected by an increasing proportion of
revenue being derived from fixed payment, higher discount sources, including
Medicare, Medicaid and managed care plans. In addition, insurance companies,
government programs (other than Medicare) and employers purchasing health care
services for their employees are also negotiating discounted amounts that they
will pay health care providers rather than paying standard prices. The Company
expects patient volumes from Medicare and Medicaid to continue to increase due
to the general aging of the population and the expansion of state Medicaid
programs. However, under the Balanced Budget Act, the Company's reimbursement
from the Medicare and Medicaid programs was reduced in 1998 and for the three
months ended March 31, 1999 and will be further reduced as some reductions in
reimbursement levels are phased in over the next two years. The Company
generally receives lower payments per patient under managed care plans than
under traditional indemnity insurance plans. With an increasing proportion of
services being reimbursed based upon prospective payment amounts regardless of
the cost incurred, revenues, earnings and cash flows are being significantly
reduced. Admissions related to Medicare, Medicaid and managed care plan patients
were 89.0% and 88.4% of total admissions for the three months ended March 31,
1999 and 1998, respectively. Revenues from capitation arrangements (prepaid
health service agreements) are less than 1.0% of revenues.
The Company's revenues also continue to be adversely affected by the trend
toward certain services being performed more frequently on an outpatient basis.
The Company anticipates that further payment reductions will occur as a result
of the implementation of a prospective payment system for Medicare outpatient
services (pursuant to the Balanced Budget Act and scheduled for the second
quarter of 2000). Growth in outpatient services is expected to continue in the
health care industry as procedures performed on an inpatient basis are converted
to outpatient procedures through continuing advances in pharmaceutical and
medical technologies. The redirection of certain procedures to an outpatient
basis is also influenced by pressures from payers to perform certain procedures
as outpatient care rather than inpatient care. Generally, the payments received
for an outpatient procedure are less than for a similar procedure performed in
an inpatient setting. Outpatient revenues grew to 44.3% of net patient revenues
for the three months ended March 31, 1999 from 43.7% for the three months ended
March 31, 1998.
Management also believes that the impact of the ongoing governmental
investigations of certain of Columbia/HCA's business practices and the related
media coverage have created uncertainties with physicians, patients and payers
in certain markets.
Reductions in Medicare and Medicaid reimbursement, the increasing percentage
of the patient volume being related to patients participating in managed care
plans and continuing trends toward more services being performed on an
outpatient basis are expected to present ongoing challenges. The challenges
presented by these trends are magnified by the Company's inability to control
these trends and the associated risks. To maintain and improve its operating
margins in future periods, the Company must increase patient volumes while
controlling the costs of providing services. If the Company is not able to
achieve reductions in the cost of providing services through increased
operational efficiencies, and the trend toward declining reimbursements and
payments continues, results of operations and cash flow will deteriorate.
Management believes that the proper response to these challenges includes the
delivery of a broad range of quality health care services to patients by
assuring that physicians with appropriate specializations practice in the
hospitals, that the appropriate equipment and range of specialized services are
available within the hospitals, and that the hospitals are positioned as
community assets.
As part of Columbia/HCA, the Company's facilities were included in managed
care contracts negotiated by Columbia/HCA on a market-wide basis emphasizing
large urban facilities. The Company's management believes that independence from
Columbia/HCA will help the Company over time to negotiate contract terms that
are generally more favorable for its facilities and to decrease the level of
discount arrangements in which the Company participates.
Operating Results Summary
The following is a summary of results from continuing operations for the
three months ended March 31, 1999 and 1998 (dollars in millions):
11
<PAGE>
<TABLE>
<CAPTION>
Three Months ended March 31,
1999 1998
---- ----
Amount Percentage Amount Percentage
----------------------------------------------
<S> <C> <C> <C> <C>
Revenues $134.2 100.0 $130.0 100.0
Salaries and benefits 57.1 42.6 55.0 42.3
Supplies 16.4 12.2 16.0 12.3
Other operating expenses 28.5 21.3 29.3 22.6
Provision for doubtful accounts 10.3 7.6 9.9 7.6
Depreciation and amortization 7.5 5.6 6.6 5.0
Interest expense allocated from Columbia/HCA 4.7 3.5 4.6 3.6
Management fees allocated from Columbia/HCA 2.4 1.8 2.3 1.8
------ ----- ------ -----
126.9 94.6 123.7 95.2
Income from continuing operations before minority
interests and income taxes 7.3 5.4 6.3 4.8
Minority interests in earnings of consolidated entities 0.4 0.3 0.6 0.4
------ ----- ------ -----
Income from continuing operations before income taxes 6.9 5.1 5.7 4.4
Provision for income taxes 2.9 2.1 2.3 1.8
------ ------ ------ -----
Income from continuing operations $ 4.0 3.0 $ 3.4 2.6
====== ====== ====== =====
% changes from prior year:
Revenues 3.2%
Income from continuing operations before income taxes 19.4
Income from continuing operations 15.4
Admissions (a) 7.2
Equivalent admissions (b) 8.2
Revenues per equivalent admission (4.6)
</TABLE>
(a) Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to the Company's hospitals and is used by
management and certain investors as a general measure of inpatient volume.
(b) Equivalent admissions are used by management and certain investors as a
general measure of combined inpatient and outpatient volume. Equivalent
admissions are computed by multiplying admissions (inpatient volume) by the
sum of gross inpatient revenue and gross outpatient revenue and then
dividing the resulting amount by gross inpatient revenue. The equivalent
admissions computation "equates" outpatient revenue to the volume measure
(admissions) used to measure inpatient volume resulting in a general measure
of combined inpatient and outpatient volume.
For the Three Months Ended March 31, 1999 and 1998
Revenues increased 3.2% to $134.2 million for the three months ended March
31, 1999 compared to $130.0 million for the three months ended March 31, 1998.
Inpatient admissions increased 7.2%, equivalent admissions (adjusted to reflect
combined inpatient and outpatient volume) increased 8.2% and revenues per
equivalent admission decreased 4.6% for the three months ended March 31, 1999
compared to the three months ended March 31, 1998. The decline in revenues per
equivalent admission was due to several factors, including decreases in Medicare
reimbursement rates mandated by the Balanced Budget Act which became effective
October 1, 1997 (such rates lowered revenues by approximately $1.7 million for
the three months ended March 31, 1999), continued increases in discounts from
the growing number of managed care payers (managed care as a percentage of total
admissions increased to 19.0% for the three months ended March 31, 1999 compared
to 18.2% for the three months ended March 31, 1998) and delays experienced in
obtaining Medicare cost report settlements (cost report filings and settlements
resulted in favorable revenue adjustments of $0.4 million for the three months
ended March 31,1999 compared to favorable adjustments of $0.9 million for the
three months ended March 31, 1998).
Salaries and benefits, as a percentage of revenues, increased to 42.6% for
the three months ended March 31, 1999 from 42.3% for the three months ended
March 31, 1998. The increase was primarily due to a decline in revenues per
equivalent admission, increase in corporate office employees related to the
establishment of the Company's corporate office and certain severance costs.
12
<PAGE>
Supply costs decreased slightly to 12.2% as a percentage of revenues for the
three months ended March 31, 1999 from 12.3% for the three months ended March
31, 1998.
Other operating expenses decreased as a percentage of revenues to 21.3% for
the three months ended March 31, 1999 from 22.6% for the three months ended
March 31, 1998. Other operating expenses consist primarily of contract
services, professional fees, repairs and maintenance, rents and leases,
utilities, insurance, marketing and non-income taxes. The decrease was primarily
due to decreases in professional fees and contract services.
Provision for doubtful accounts, as a percentage of revenues, was 7.6% for
the three months ended March 31, 1999 and 1998.
Interest expense, which is primarily represented by interest incurred on the
net intercompany balance with Columbia/HCA, increased slightly to $4.7 million
for the three months ended March 31, 1999 from $4.6 million for the three months
ended March 31, 1998.
Management fees allocated by Columbia/HCA were $2.4 million for the three
months ended March 31, 1999 and $2.3 million for the three months ended March
31, 1998. These amounts represent allocations, using revenues as the allocation
basis, of the corporate, general and administrative expenses of Columbia/HCA.
The Company's management estimates that if they had managed comparable general
and administrative functions for the Company (as a separate, independent entity)
the costs incurred would be approximately $3.8 million for the three months
ended March 31, 1999, including approximately $1.8 million previously recorded
in the Company's 1999 historical financial results.
Minority interests decreased slightly as a percentage of revenues to 0.3% for
the three months ended March 31, 1999 from 0.4% for the three months ended March
31, 1998.
Income from continuing operations before income taxes increased 19.4% to $6.9
million for the three months ended March 31, 1999 from $5.7 million for the
three months ended March 31, 1998 due to increases in revenues and improvements
in operating expenses as a percentage of revenues in various line items as
described above.
Net income increased to $4.0 million for the three months ended March 31,
1999 compared to $1.6 million for the three months ended March 31, 1998. For the
three months ended March 31, 1998, the Company incurred a $1.8 million after-tax
loss from its discontinued home health operations, primarily due to declines in
Medicare rates of reimbursement under the Balanced Budget Act and declines in
home health visits.
Liquidity and Capital Resources
Prior to the distribution date, the Company had relied upon Columbia/HCA for
liquidity and sources of capital to supplement any needs not met by operations.
As an independent, publicly-traded company, the Company has direct access to the
capital markets and has entered into its own bank borrowing arrangements. At
March 31, 1999, the Company had working capital of $40.8 million compared to
$26.9 million at December 31, 1998.
Cash used in operating activities was $0.2 million for the three months ended
March 31, 1999 compared to cash provided by operating activities of $4.5 million
for the three months ended March 31, 1998. The decrease was due to higher growth
in accounts receivable balances in the current period due primarily to an
increase in revenues for the three months ended March 31, 1999.
Cash used in investing activities was $14.9 million for the three months
ended March 31, 1999 compared to $7.6 million for the three months ended March
31, 1998. The increase was primarily due to capital expenditures of $14.7
million during the three months ended March 31, 1999 compared to $8.4 million
for the three months ended March 31, 1998. Management believes that its capital
expenditure program is adequate to expand, improve and equip the Company's
existing health care facilities. At March 31, 1999, there were projects under
construction which had an estimated cost to complete and equip over the next
twelve months of approximately $55.8 million (including the construction of a
replacement hospital located in Florida that is estimated to cost approximately
$33.0 million).
13
<PAGE>
Management does not consider the sale of any assets to be necessary to repay
the Company's indebtedness or to provide working capital. However, for other
reasons, certain of the Company's hospitals may be sold in the future from time
to time. Three of the Company's hospitals are held for sale. Although the
Company's indebtedness will be more substantial than was historically the case
for its predecessor entities, management expects that operations and working
capital facilities will provide sufficient liquidity for fiscal 1999.
The Company does not expect to pay dividends on its common stock in the
foreseeable future.
Subsequent Event
Assumption of Certain Indebtedness from Columbia/HCA
In connection with and on the distribution date of May 11, 1999, all
intercompany amounts payable by the Company to Columbia/HCA were eliminated, and
the Company assumed certain indebtedness from Columbia/HCA. The indebtedness
was comprised of a Bank Credit Agreement and Senior Subordinated Notes.
Bank Credit Agreement
On May 11, 1999, the Company assumed from Columbia/HCA the obligations under
a Bank Credit Agreement (the "Credit Agreement") with a group of lenders with
commitments aggregating $210 million. The Credit Agreement consists of a $60
million term loan facility, a $85 million term loan facility, and a $65 million
revolving credit facility (collectively the "Bank Facilities").
At the time of the Distribution, $25 million of the $60 million term loan
facility had been drawn, with the remaining $35 million available for limited
purposes to be drawn in up to two subsequent draws within one year. The final
payment under this term loan facility is due November 11, 2004.
The $85 million term loan facility was drawn in full at the time of the
Distribution. The final payment under this term loan is due November 11, 2005.
The revolving credit facility, which was undrawn at the time of the
Distribution, is expected to be available for working capital and other general
corporate purposes, and any outstanding amounts thereunder will be due and
payable on November 11, 2004.
Repayments under the term loan facilities are due in quarterly installments
with quarterly amortization based on annual amounts. Interest on the Bank
Facilities are currently based on LIBOR plus an applicable margin (determined
based on certain financial ratios).
The Company's bank debt is secured by a pledge of substantially all of its
assets. The Credit Agreement contains certain covenants that among other things,
will limit the Company and certain of its subsidiaries' ability to incur
additional indebtedness, pay dividends on, redeem or purchase its capital stock,
make investments and capital expenditures, engage in transactions with
affilitates, create certain liens, sell assets and consolidate, merge or
transfer assets. In addition, the Company is required to comply with various
financial ratios and tests, including a minimum net worth test, a leverage ratio
and a minimum fixed charge coverage ratio.
Senior Subordinated Notes
On May 11, 1999, the Company assumed from Columbia/HCA $150 million in Senior
Subordinated Notes
14
<PAGE>
maturing on May 15, 2009 and bearing interest at 10.75% (the "Notes"). Interest
is payable semi-annually. The Notes are unsecured obligations and are
subordinated in right of payment to all existing and future senior indebtedness.
The indenture for the Notes contains certain covenants including but not
limited to restrictions on additional indebtedness, payment of dividends,
investments, the pledge or disposition of assets, transactions with affiliates
and the ability to merge or consolidate. The indenture also requires that the
Company offer to repurchase all Notes at 101% of their principal amount in the
event of a change in control of the Company.
Contingencies
Columbia/HCA is currently the subject of several Federal investigations into
certain of its business practices, as well as governmental investigations by
various states. Columbia/HCA is cooperating in these investigations and
understands that it is a target in these investigations. Given the breadth of
the ongoing investigations, Columbia/HCA expects additional investigative and
prosecutorial activity to occur in these and other jurisdictions in the future.
Columbia/HCA is a defendant in several qui tam actions brought by private
parties on behalf of the United States of America, which have been unsealed and
served on Columbia/HCA. The actions allege, in general, that Columbia/HCA and
certain subsidiaries and/or affiliated partnerships violated the False Claims
Act for improper claims submitted to the government for reimbursement. The
lawsuits seek damages of three times the amount of all Medicare or Medicaid
claims (involving false claims) presented by the defendants to the Federal
government, civil penalties of not less than $5,000 nor more than $10,000 for
each such Medicare or Medicaid claim, attorneys' fees and costs. To the
Company's knowledge, the government has intervened in three qui tam actions
against Columbia/HCA. Columbia/HCA is aware of additional qui tam actions that
remain under seal and believes that there are other sealed qui tam cases of
which it is unaware.
Columbia/HCA is a defendant in a number of other suits, which allege, in
general, improper and fraudulent billing, overcharging, coding and physician
referrals, as well as other violations of law. Certain of the suits have been
conditionally certified as class actions.
It is too early to predict the effect or outcome of any of the ongoing
investigations or qui tam and other actions, or whether any additional
investigations or litigations will be commenced. If Columbia/HCA is found to
have violated Federal or state laws relating to Medicare, Medicaid or similar
programs, Columbia/HCA could be subject to substantial monetary fines, civil and
criminal penalties, and exclusion from participation in the Medicare and
Medicaid programs. Similarly, the amounts claimed in the qui tam and other
actions may be substantial, and Columbia/HCA could be subject to substantial
costs resulting from an adverse outcome of one or more of such actions.
Management believes that the ongoing governmental investigations and
related media coverage may have had a negative effect on Columbia/HCA's results
of operations (which includes the Company for the periods prior to the date of
Distribution which are presented herein). The extent to which the Company may or
may not continue to be affected after the Distribution by the ongoing
investigations of Columbia/HCA, the initiation of additional investigations, if
any, and the related media coverage cannot be predicted. It is possible that
these matters could have a material adverse effect on the financial condition or
results of operations of the Company in future periods.
In connection with the Distribution, Columbia/HCA has agreed to indemnify the
Company in respect of any losses which it may incur arising from the
governmental investigations described above. Columbia/HCA has also agreed to
indemnify the Company in respect of any losses which it may incur as a result of
proceedings which may be commenced by government authorities or by private
parties in the future that arise from acts, practices or omissions engaged in
prior to the
15
<PAGE>
the date of the Distribution and relate to the proceedings described above.
Columbia/HCA has also agreed that, in the event that any hospital owned by the
Company as of the date of the Distribution is permanently excluded from
participation in the Medicare and Medicaid programs as a result of the
proceedings described above, then Columbia/HCA will make cash payments to the
Company based on amounts as defined in the Distribution Agreement by and among
Columbia/HCA and the Company. The Company has agreed that, in connection with
the pending governmental investigations, it will participate with Columbia/HCA
in negotiating one or more compliance agreements setting forth each of their
agreements to comply with applicable laws and regulations. If any of such
indemnified matters were successfully asserted against the Company, or any of
its facilities, and Columbia/HCA failed to meet its indemnification obligations,
then such losses could have a material adverse effect on the business, financial
position, results of operations or prospects of the Company. Columbia/HCA will
not indemnify the Company for losses relating to any acts, practices and
omissions engaged in by the Company after the distribution date, whether or not
the Company is indemnified for similar acts, practices and omissions occurring
prior to the date of the Distribution.
Impact of Year 2000 Computer Issues
Background and General Information
The Year 2000 problem is the result of two potential malfunctions that could
have an impact on systems and equipment on which the Company relies. The first
problem arises due to computers being programmed to use two rather than four
digits to define the applicable year. The second problem arises in embedded
chips, where microchips and microcontrollers have been designed using two rather
than four digits to define the applicable year. Certain computer programs,
building infrastructure components (e.g., alarm systems and HVAC systems) and
medical devices that are date sensitive, may recognize a date using 00 as the
year 1900 rather than the year 2000. If uncorrected, the problem could result in
computer system and program failures that could result in a disruption of
business operations or equipment and medical device malfunctions that could
affect patient diagnosis and treatment.
In connection with the Distribution, Columbia/HCA's wholly owned subsidiary,
Columbia Information Services, Inc. ("CIS") and the Company entered into a
Computer and Data Processing Services Agreement, pursuant to which the Company
obtains most of its information technology and information technology
infrastructure systems. CIS does not warrant that the software and hardware used
by CIS in providing services to the Company will be Year 2000 ready, but CIS is
currently making efforts in a professional, timely, and workmanlike manner that
it deems reasonable to address Year 2000 issues with respect to the software
licensed to the Company under the Computer and Data Processing Services
Agreement. In connection with its participation in Columbia/HCA's Year 2000
project, the Company has made and will continue to make certain expenditures in
respect of software systems and applications not obtained from CIS and non-
information technology systems (e.g., vendor products, medical equipment and
other related equipment with embedded chips) to ensure that they are Year 2000
ready.
Pursuant to the Computer and Data Processing Services Agreement, the Company
will rely on CIS to provide virtually all of its computer support and
information technology services. In connection with the Distribution,
Columbia/HCA's wholly owned subsidiary CHCA Management Services, L.P. ("CHCA")
and the Company entered into a Year 2000 Professional Services Agreement,
pursuant to which CHCA will continue its ongoing program to inspect medical
equipment at the Company's facilities for Year 2000 readiness. The Company is
dependent upon Columbia/HCA in substantially all respects for the Year 2000
readiness of its information technology and non-information technology systems
and for contingency planning in respect of Year 2000 related risks. Any failure
by Columbia/HCA to adequately address such matters could have a material adverse
effect on the business, financial condition, results of operations or prospects
of the Company.
Columbia/HCA is utilizing both internal and external resources to manage and
implement its Year 2000
16
<PAGE>
program. With the assistance of external resources, Columbia/HCA has undertaken
development of contingency plans in the event that its Year 2000 efforts, or the
Year 2000 efforts of third-parties upon which Columbia/HCA and the Company rely,
are not accurately or timely completed. The Company's management consults
regularly with the Columbia/HCA personnel responsible for development of such
contingency plans. The Company, in conjunction with Columbia/HCA, has developed
a contingency planning methodology and will implement contingency plans
throughout 1999.
Information Technology Systems
With respect to the information technology (IT) systems portion of
Columbia/HCA's Year 2000 project, which addresses the inventory, assessment,
remediation, testing and implementation of internally developed software,
Columbia/HCA has identified various software applications that are being
addressed on separate time lines. Columbia/HCA has begun remediating these
software applications and is testing the software applications where remediation
has been completed. Columbia/HCA has also completed the assessment of mission
critical third party software (i.e., that software which is essential for day-
to-day operations) and has developed testing and implementation plans with
separate time lines. Columbia/HCA has completed and placed into production 95%
of software applications and anticipates completing, in all material respects,
remediation, testing and implementation for internally developed and mission
critical third party software by June 1999. Remediation, testing and
implementation of various software applications for certain of the Company's
subsidiaries will be completed in the fourth quarter of 1999. These exceptions
to the June 1999 IT systems goals should not have a material effect on the
Company's readiness. The IT systems portion of Columbia/HCA's Year 2000 project
is currently on schedule in all material respects.
The Company, in participation with Columbia/HCA, has undertaken a program to
inventory, assess and correct, replace or otherwise address impacted vendor-
supplied products (hardware, systems software, business software, and
telecommunication equipment) with respect to Year 2000 compliance. Columbia/HCA
has implemented a program to contact vendors, analyze information provided, and
to remediate, replace or otherwise address IT products that pose a material Year
2000 impact. The Company and Columbia/HCA anticipate completion, in all material
respects, of the IT infrastructure portion of the program by September 30,1999
(revised from an expected completion date of June 30, 1999). With respect to
such revised date, the IT infrastructure portion of Columbia/HCA's Year 2000
project is currently on schedule in all material respects.
The Company's management presently believes that with modifications to
existing software or the installation of upgraded software under the IT
infrastructure portion, the Year 2000 will not pose material operational
problems for the Company's computer systems. However, if such modifications or
upgrades are not accomplished in a timely manner, Year 2000 related failures may
present a material adverse impact on the operations of the Company.
Non-Information Technology Systems and Equipment
With respect to the non-IT infrastructure project, the Company, in
participation with Columbia/HCA has undertaken a program to inventory, assess
and correct, replace or otherwise address impacted vendor products, medical
equipment and other related equipment with embedded chips. The Company, in
participation with Columbia/HCA, has implemented a program to contact vendors,
analyze information provided, and to remediate, replace or otherwise address
devices or equipment that pose a material Year 2000 impact. The Company
anticipates completion, in all material respects, of the non-IT infrastructure
portion of its program by September 30, 1999. The non-IT infrastructure project
is currently on schedule in all material respects.
The Company is prioritizing its non-IT infrastructure efforts by focusing on
equipment and medical devices that will have a direct impact on patient care.
The Company is directing substantial efforts to repair, replace, upgrade or
otherwise address this equipment and these medical devices in order to minimize
risk to patient safety and health. The Company is relying on information that is
being provided to it by equipment and medical device manufacturers and
Columbia/HCA regarding the Year 2000 status of their products. While the Company
is attempting to evaluate information provided by its previous and current
vendors, there can be no assurance that in
17
<PAGE>
all instances accurate information is being provided. The Company also cannot in
all instances guarantee that the repair, replacement or upgrade of all non-IT
infrastructure systems will occur on a timely basis or that such repairs,
replacement or upgrades will avoid all Year 2000 problems.
Third-Party Payers and Intermediaries, and Suppliers
Columbia/HCA and the Company have initiated communications with the
Company's major third party payers and intermediaries, including government
payers and intermediaries. The Company relies on these entities for accurate and
timely reimbursement of claims, often through the use of electronic data
interfaces. Neither the Company nor Columbia/HCA received assurances that these
interfaces will be converted in a timely manner. Testing with payers and
intermediaries will not be completed by June 30, 1999 because the payers and
intermediaries are not ready to test with the Company's systems. Failure of
these third party systems could have a material adverse effect on the Company's
cash flow and results of operations.
Columbia/HCA and the Company have also initiated communications with the
Company's mission critical suppliers and vendors (i.e. those suppliers and
vendors whose products and services are essential for day-to-day operations) to
verify their ability to continue to deliver goods and services through the Year
2000. The Company has not received assurances from all mission critical
suppliers and vendors that they will be able to continue to deliver goods and
services through the Year 2000, but the Company is continuing its efforts to
obtain such assurances. The failure of these third parties could have a material
adverse effect on the business, financial condition, results of operations or
prospects of the Company, and/or the ability of the Company to provide health
care services.
With the assistance of external resources, including Columbia/HCA, the
Company has undertaken the development of contingency plans in the event that
its Year 2000 efforts, or the Year 2000 efforts of third parties upon which
Columbia/HCA and the Company rely, are not accurately or timely completed. The
Company has developed a contingency planning methodology and will implement
contingency plans throughout 1999.
Year 2000 Risks
While the Company is developing contingency plans to address possible
failure scenarios, the Company recognizes that there are "worst case" scenarios
which may develop and are largely outside the Company's or Columbia/HCA's
control. The Company recognizes the risks associated with extended
infrastructure (e.g., power, water and telecommunications) failure, the
interruption of insurance and government program payments to the Company and the
failure of equipment or software that could impact patient safety or health
despite the assurances of third parties. The Company is addressing these and
other failure scenarios in its contingency planning effort and is engaging third
parties in discussions regarding how to manage common failure scenarios, but
neither Columbia/HCA nor the Company can currently estimate the likelihood or
the potential cost of such failures. Currently the Company does not believe that
any reasonably likely worst case scenarios will have a material impact on the
Company's revenues or operations. Those reasonably likely worst case scenarios
include continued expenditures for remediation, continued expenditures for
replacement or upgrade of equipment, continued efforts regarding contingency
planning, increased staffing for the periods immediately preceding and after
January 1, and possible payment delays from the Company's payers.
Costs and Expenses
The Year 2000 project costs incurred by Columbia/HCA will have an impact on
the Computer and Data Processing Services Agreement with the Company. The
Company is not currently able to reasonably estimate the ultimate cost to be
incurred by it for the assessment, remediation, upgrade, replacement and testing
of its impacted non-IT systems. The majority of the costs related to the Year
2000 project (except the cost of new equipment) will be expensed as incurred and
are expected to be funded through operating cash flows.
The successful completion of the project and completion dates for the Year
2000 modifications are based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the continued
availability of certain resources, third party modification plans and other
factors. However, there
18
<PAGE>
can be no guarantees that these estimates will be achieved and actual results
could differ materially from those anticipated. Specific factors that might
cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area and the ability to
locate and correct all relevant computer codes and all medical equipment.
Inflation
The health care industry is labor intensive. Wages and other expenses
increase during periods of inflation and when shortages in marketplaces occur.
In addition, suppliers pass along rising costs to the Company in the form of
higher prices. The Company's ability to pass on these increased costs is limited
due to increasing regulatory and competitive pressures, as discussed above.
Health Care Reform
In recent years, an increasing number of legislative proposals have been
introduced or proposed to Congress and in some state legislatures that would
significantly affect health care systems in the Company's markets. The cost of
certain proposals would be funded in significant part by reduction in payments
by government programs, including Medicare and Medicaid, to health care
providers or taxes levied on hospitals or other providers. While the Company is
unable to predict which, if any, proposals for health care reform will be
adopted, there can be no assurance that proposals adverse to the business of the
Company will not be adopted.
19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (CONTINUED)
Operating Data
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Number of hospitals in operations at:
March 31................................................................................... 23 23
June 30.................................................................................... 23
September 30............................................................................... 23
December 31................................................................................ 23
Licensed hospitals beds at (a):
March 31................................................................................... 2,169 2,136
June 30.................................................................................... 2,113
September 30............................................................................... 2,112
December 31................................................................................ 2,169
Weighted average licensed beds (b):
Quarter:
First.................................................................................... 2,169 2,136
Second................................................................................... 2,128
Third.................................................................................... 2,113
Fourth................................................................................... 2,131
Year....................................................................................... 2,127
Average daily census (c):
Quarter:
First.................................................................................... 863 853
Second................................................................................... 695
Third.................................................................................... 699
Fourth................................................................................... 725
Year....................................................................................... 742
Admissions (d):
Quarter:
First.................................................................................... 18,051 16,842
Second................................................................................... 14,940
Third.................................................................................... 14,832
Fourth................................................................................... 15,655
Year....................................................................................... 62,269
Equivalent Admissions (e):
Quarter:
First.................................................................................... 30,741 28,412
Second................................................................................... 27,175
Third.................................................................................... 26,920
Fourth................................................................................... 27,522
Year....................................................................................... 110,029
Average length of stay (days) (f):
Quarter:
First.................................................................................... 4.3 4.6
Second................................................................................... 4.2
Third.................................................................................... 4.3
Fourth................................................................................... 4.3
Year....................................................................................... 4.4
</TABLE>
20
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (CONTINUED)
Operating Data (Continued)
- -----------------
(a) Licensed beds are those beds for which a facility has been granted
approval to operate from the applicable state licensing agency.
(b) Represents the average number of licensed beds, weighted based on
periods owned.
(c) Represents the average number of patients in the company's hospital
beds each day.
(d) Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to the Company's hospitals and is used by
management and certain investors as a general measure of inpatient
volume.
(e) Equivalent admissions is used by management and certain investors as a
general measure of combined inpatient and outpatient volume. Equivalent
admissions is computed by multiplying admissions (inpatient volume) by
the sum of gross inpatient revenue and gross outpatient revenue and then
dividing the resulting amount by gross inpatient revenue. The equivalent
admissions computation "equates" outpatient revenue to the volume
measure (admissions) used to measure inpatient volume resulting in a
general measure of combined inpatient and outpatient volume.
(f) Represents the average number of days admitted patients stay in the
Company's hospitals. Average length of stay has declined due to the
continuing pressures from managed care and other payers to restrict
admissions and reduce the number of days that are covered by the payers
for certain procedures, and by technological and pharmaceutical
improvements.
21
<PAGE>
Part II. Other Information
- ---------------------------
Item 5: Other Information
(a) Unaudited Pro Forma Financial Statements as of and for the period
ended March 31, 1999
The following Unaudited Pro Forma Condensed Combined Financial
Statements of the Company are based on the historical combined financial
statements, which reflect periods during which the businesses that will comprise
the Company did not operate as a separate, independent company and certain
estimates, assumptions and allocations were made in preparing such financial
statements. Therefore, such historical combined financial statements do not
necessarily reflect the combined results of operations or financial position
that would have existed had the Company been a separate, independent company
throughout the periods presented.
The Unaudited Pro Forma Condensed Combined Statement of Income for the
three months ended March 31, 1999 reflects the results of the Company's
operations as if the Distribution and the divestitures of certain facilities
that the Company intends to divest during 1999 had occurred at the beginning of
1999. The Unaudited Pro Forma Condensed Combined Balance Sheet assumes that the
Distribution and such divestitures had occurred on March 31, 1999.
The Unaudited Pro Forma Condensed Combined Financial Statements should
be read in conjunction with the historical financial statements of the Company
included elsewhere herein and the notes thereto. The pro forma condensed
combined financial information is presented for informational purposes only and
does not purport to reflect the results of operations or financial position of
the Company or the results of operations or financial position that would have
occurred had the Company been operated as a separate, independent company.
22
<PAGE>
LIFEPOINT HOSPITALS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1999
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------- ---------------- ------------
<S> <C> <C> <C>
Revenues.................................................................. $134.2 ($12.9) (a) $121.3
Salaries and benefits..................................................... 57.1 (5.8) (a) 50.6
0.7 (c)
(1.4) (b)
Supplies.................................................................. 16.4 (1.7) (a) 14.8
0.1 (c)
Other operating expenses.................................................. 28.5 (2.8) (a) 26.9
1.2 (c)
Provision for doubtful accounts........................................... 10.3 (2.0) (a) 8.3
Depreciation and amortization............................................. 7.5 (0.8) (a) 6.7
ESOP expense.............................................................. -- 0.7 (b) 0.7
Interest expense allocated from Columbia/HCA.............................. 4.7 (1.6) (a) 6.6
3.5 (d)
Management fees allocated from Columbia/HCA............................... 2.4 (0.8) (a) --
(1.6) (c)
---------- --------------- ---------
126.9 (12.3) 114.6
---------- --------------- ---------
Income from continuing operations before minority interests
and income taxes...................................................... 7.3 (0.6) 6.7
Minority interests in earnings of consolidated entities................... 0.4 -- 0.4
---------- --------------- ---------
Income from continuing operations before income taxes..................... 6.9 (0.6) 6.3
Provision for income taxes................................................ 2.9 (0.2) (e) 2.7
---------- --------------- ---------
Income from continuing operations......................................... $4.0 ($0.4) $3.6
========== =============== =========
Basic and diluted earnings per share (g).................................. $0.13 ($0.01) $0.12
========== =============== =========
Shares used in earnings per share calculations (000s) (g):
Basic................................................................. 29,899 29,899 29,899
Dilutive securities - stock options.............................. 269 269 269
---------- --------------- ---------
Diluted............................................................... 30,168 30,168 30,168
========== =============== =========
</TABLE>
See accompanying notes.
23
<PAGE>
LIFEPOINT HOSPITALS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
March 31, 1999
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
------- -------------- ---------------- ---------------
<S> <C> <C> <C>
Current assets:
Accounts receivable, net................................... $ 48.8 ($6.6) (a) $ 65.0
22.8 (h)
Inventories................................................ 13.9 (2.0) (a) 11.9
Deferred taxes and other current assets.................... 21.3 (0.3) (a) 18.1
(2.9) (h)
-------------- ---------------- ---------------
84.0 11.0 95.0
Property and equipment, at cost............................... 453.2 (30.6) (a) 422.6
Accumulated depreciation...................................... (175.5) 11.5 (a) (164.0)
-------------- ---------------- ---------------
277.7 (19.1) 258.6
Intangible assets, net........................................ 15.1 (0.4) (a) 14.7
Other......................................................... 4.6 (4.2) (a) 10.4
10.0 (f)
-------------- ---------------- ---------------
$ 381.4 ($2.7) $ 378.7
============== ================ ===============
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable........................................... $ 15.2 ($1.3) (a) $ 13.9
Accrued salaries........................................... 11.4 (1.0) (a) 10.4
Other current liabilities.................................. 16.6 (1.5) (a) 15.1
-------------- ---------------- ---------------
43.2 (3.8) 39.4
Intercompany balances payable to Columbia/HCA................. 188.0 (38.8) (a) -
(168.9) (f)
19.7 (h)
Long-term debt................................................ 0.3 260.0 (f) 260.3
Deferred taxes and other liabilities.......................... 22.4 2.8 (a) 25.4
0.2 (h)
Minority interests in equity of consolidated entities......... 4.8 - 4.8
Equity, investments by Columbia/HCA........................... 122.7 10.0 (a) -
(132.7) (f)
Preferred stock, par value $0.01 per share;
10.0 million authorized shares; no shares issued........... - - -
Common stock, par value $0.01 per share;
90.0 million authorized shares; 29.9 million shares
issued and outstanding .................................... - 0.3 (f) 0.3
Capital in excess of par value................................ - 48.5 (f) 48.5
-------------- ---------------- ---------------
$ 381.4 ($2.7) $ 378.7
============== ================ ===============
</TABLE>
See accompanying notes.
24
<PAGE>
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
(a) To eliminate the assets, liabilities and March 31, 1999 quarterly results
of operations for three facilities which the Company's management believes
divestiture during 1999 is probable.
(b) To adjust historical retirement plan expense recorded as a component of
salaries and wages and record the estimated LifePoint Hospitals, Inc.
Retirement Plan (the "ESOP") expense for the quarter ended March 31, 1999.
The ESOP will be established in connection with the Distribution, and the
ESOP will purchase newly issued shares of the Company's common stock equal
to approximately 8.3% of the outstanding shares of the Company. The ESOP
shares will be released from a suspense account and allocated to the
Company's participating employees over an expected 10 year period. The
non-cash ESOP expense will be recognized as the shares are released and
allocated to the participants and will be based upon the fair value of the
shares released.
(c) To adjust for the estimated general and administrative costs of $3.8
million (including $1.8 million in costs already included in the historical
combined statement of income) that would have been incurred if the Company
had managed comparable general and administrative functions and to
eliminate the management fee allocated from Columbia/HCA.
(d) To adjust interest expense to $6.6 million for the quarter ended March 31,
1999. The interest expense adjustment is based on the elimination of all
intercompany amounts payable by the Company to Columbia/HCA ($188.0
million at March 31, 1999) and the assumption of certain indebtedness from
Columbia/HCA in the aggregate amount of approximately $260.6 (including
$0.3 million in other current liabilities), at an assumed average interest
rate of approximately 9.7% and $0.4 million in amortization of the deferred
loan cost.
(e) To adjust income tax provision for the estimated impact of the pro forma
adjustments.
(f) To adjust for the assumption of certain indebtedness from Columbia/HCA in
the aggregate amount of $260.6 million (including $0.3 million in other
current liabilities), record deferred loan costs of $10.0 million and
record the issuance of approximately 29.9 million shares of the Company's
common stock.
(g) Pro forma basic earnings per share was computed based upon approximately
29.9 million shares of the Company's common stock which were distributed to
the stockholders of Columbia/HCA on the date of the Distribution. Pro forma
diluted earnings per share was computed based upon approximately 30.2
million shares which includes approximately 29.9 million shares distributed
to the stockholders of Columbia/HCA and approximately 0.3 million shares of
common stock equivalents.
(h) To adjust for Columbia/HCA's assumption of responsibility for, and
entitlement to, Medicare, Medicaid, and cost-based Blue Cross receivables
and payables relating to cost reporting periods ending on or prior to the
distribution date pursuant to the Distribution Agreement and to adjust for
certain deferred taxes in connection with the Distribution.
25
<PAGE>
(b) Supplemental Quarterly Unaudited Pro Forma Information
Below is the Company's unaudited pro forma information for the
quarters and year ended December 31, 1998. This information reflects the same
estimates, assumptions and allocations as are described in (a) above regarding
the pro forma financial information for the period ended March 31, 1999, except
that the Distribution and the divestitures of certain facilities that the
Company intends to divest during 1999 are assumed to have occurred at the
beginning of 1998 rather than at the beginning of 1999.
LIFEPOINT HOSPITALS, INC.
UNAUDITED PRO FORMA INFORMATION
FOR THE QUARTERS AND YEAR ENDED DECEMBER 31, 1998
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
--------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 116.6 $ 112.2 $ 112.9 $ 108.7 $ 450.4
Salaries and benefits 49.3 49.0 49.0 53.1 200.4
Supplies 14.3 13.2 14.2 14.2 55.9
Other operating expenses 27.1 26.3 25.5 29.1 108.0
Provision for doubtful accounts 8.9 8.2 10.2 8.8 36.1
Depreciation and amortization 5.9 5.7 6.6 6.9 25.1
ESOP expense 0.6 0.6 0.6 0.6 2.4
Interest expense allocated from Columbia/HCA 6.7 6.6 6.7 6.6 26.6
Impairment of long-lived assets (a) - - 1.3 - 1.3
--------------- ------------ ----------- ------------ -----------
112.8 109.6 114.1 119.3 455.8
--------------- ------------ ----------- ------------ -----------
Income (loss) from continuing
operations before minority interests
and income taxes (benefit) 3.8 2.6 (1.2) (10.6) (5.4)
Minority interests in earnings
of consolidated entities 0.6 0.3 0.5 0.5 1.9
--------------- ------------ ----------- ------------ -----------
Income (loss) from continuing
operations before income taxes 3.2 2.3 (1.7) (11.1) (7.3)
Provision for income taxes (benefit) 1.4 0.9 (0.6) (4.6) (2.9)
--------------- ------------ ----------- ------------ -----------
Income (loss) from continuing operations $ 1.8 $ 1.4 ($1.1) ($6.5) ($4.4)
=============== ============ ============ ============= ==========
Basic and diluted earnings (loss) per share (a) $ 0.07 $ 0.04 ($0.03) ($0.23) $ (0.15)
=============== ============ ============ ============= ==========
Shares used in earnings per share calculations (000s)
Basic 29,899 29,899 29,899 29,899 29,899
=============== ============ ============ ============= ==========
Diluted 30,049 30,049 29,899 29,899 29,974
=============== ============ ============ ============= ==========
</TABLE>
(a) During the third quarter of 1998, the Company recorded a $0.8 million after-
tax charge ($0.03 per basic and diluted share) related to the impairment of
certain long-lived assets.
26
<PAGE>
(c) Supplemental Quarterly Unaudited Historical Information
Below are the Company's unaudited condensed combined statements of
operations for the quarters and years ended December 31, 1998 and 1997.
LIFEPOINT HOSPITALS, INC.
UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND YEAR ENDED DECEMBER 31, 1998
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
------------ ----------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C>
Revenues................................................ $ 130.0 $ 124.4 $ 124.7 $ 119.3 $ 498.4
Salaries and benefits................................... 55.0 54.7 54.3 56.8 220.8
Supplies................................................ 16.0 14.6 15.7 15.7 62.0
Other operating expenses................................ 29.3 28.6 27.9 31.4 117.2
Provision for doubtful accounts......................... 9.9 9.4 12.0 10.3 41.6
Depreciation and amortization........................... 6.6 6.4 7.4 7.9 28.3
Interest expense allocated
from Columbia/HCA.................................... 4.6 4.8 4.8 4.9 19.1
Management fees allocated
from Columbia/HCA.................................... 2.3 2.2 2.2 2.2 8.9
Impairment of long-lived assets (a)..................... - - 1.3 24.8 26.1
------------ ----------- ------------ ----------- --------
123.7 120.7 125.6 154.0 524.0
------------ ----------- ------------ ----------- --------
Income (loss) from continuing
operations before minority
interests and income taxes........................... 6.3 3.7 (0.9) (34.7) (25.6)
Minority interests in earnings
of consolidated entities............................. 0.6 0.3 0.5 0.5 1.9
------------ ----------- ------------ ----------- --------
Income (loss) from continuing
operations before income taxes....................... 5.7 3.4 (1.4) (35.2) (27.5)
Provision for income taxes.............................. 2.3 1.4 (0.6) (12.9) (9.8)
------------ ----------- ------------ ----------- --------
Income (loss) from continuing operations................ 3.4 2.0 (0.8) (22.3) (17.7)
Loss from discontinued operations....................... (1.8) (0.5) (1.4) (0.4) (4.1)
------------ ----------- ------------ ----------- --------
Net income (loss).................................... $ 1.6 $ 1.5 ($2.2) ($22.7) ($21.8)
============ =========== ============ =========== ========
Basic and diluted earnings (loss) per share:
Income (loss) from continuing operations (a)......... $ 0.11 $ 0.07 ($0.02) ($0.75) ($0.59)
Loss from discontinued operations.................... (0.06) (0.02) (0.05) (0.01) (0.14)
------------ ----------- ------------ ----------- --------
Net income (loss).................................... $ 0.05 $ 0.05 ($0.07) ($0.76) ($0.73)
============ =========== ============ =========== ========
Shares used in earnings per share calculations (000s):
Basic................................................ 29,899 29,899 29,899 29,899 29,899
============ =========== ============ =========== ========
Diluted.............................................. 30,049 30,049 30,049 30,049 30,049
============ =========== ============ =========== ========
</TABLE>
(a) During the third and fourth quarter of 1998, the Company recorded a $0.8
million after-tax charge ($0.03 per basic and diluted share) and a $15.1 million
after-tax charge ($0.50 per basic and diluted share), respectively, related to
the impairment of certain long-lived assets.
27
<PAGE>
LIFEPOINT HOSPITALS, INC.
UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE QUARTERS AND YEAR ENDED DECEMBER 31, 1997
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
-------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues............................................... $ 130.7 $ 128.5 $ 116.1 $ 112.3 $ 487.6
Salaries and benefits.................................. 47.3 46.8 49.6 52.9 196.6
Supplies............................................... 13.8 13.0 13.8 14.4 55.0
Other operating expenses............................... 26.1 28.0 30.7 34.7 119.5
Provision for doubtful accounts........................ 6.7 7.0 9.2 11.6 34.5
Depreciation and amortization.......................... 6.2 6.9 7.5 6.8 27.4
Interest expense allocated
from Columbia/HCA................................... 3.6 3.8 3.8 4.2 15.4
Management fees allocated
from Columbia/HCA................................... 2.2 2.1 2.0 1.9 8.2
-------------- ------------- ----------- ------------ ------------
105.9 107.6 116.6 126.5 456.6
-------------- ------------- ----------- ------------ ------------
Income (loss) from continuing
operations before minority
interests and income taxes.......................... 24.8 20.9 (0.5) (14.2) 31.0
Minority interests in earnings
of consolidated entities............................ 0.3 0.4 0.6 0.9 2.2
-------------- ------------- ----------- ------------ ------------
Income (loss) from continuing
operations before income taxes...................... 24.5 20.5 (1.1) (15.1) 28.8
Provision for income taxes............................. 10.0 8.3 (0.5) (6.1) 11.7
-------------- ------------- ----------- ------------ ------------
Income (loss) from continuing operations............... 14.5 12.2 (0.6) (9.0) 17.1
Discontinued Operations:
Income (loss) from operations....................... 0.8 1.0 0.8 (3.2) (0.6)
Estimated loss on disposal.......................... - - - (3.4) (3.4)
Accounting change...................................... (0.6) - - - (0.6)
-------------- ------------- ----------- ------------ ------------
Net income (loss)................................... $ 14.7 $ 13.2 $ 0.2 ($15.6) $ 12.5
============== ============= =========== ============ ============
Basic and diluted earnings (loss) per share:
Income (loss) from continuing operations............ $ 0.48 $ 0.41 ($0.02) ($0.30) $ 0.57
Income (loss) from discontinued operations.......... 0.03 0.03 0.02 (0.22) (0.14)
Accounting change................................... (0.02) - - - (0.02)
-------------- ------------- ----------- ------------ ------------
Net income (loss)................................... $ 0.49 $ 0.44 $ - ($0.52) $ 0.41
============== ============= =========== ============ ============
Shares used in earnings per share calculation (000s):
Basic............................................... 29,899 29,899 29,899 29,899 29,899
============== ============= =========== ============ ============
Diluted............................................. 30,138 30,138 30,138 30,138 30,138
============== ============= =========== ============ ============
</TABLE>
28
<PAGE>
Item 6: Exhibits and Reports on Form 8-K
(a) List of Exhibits:
Exhibit Number Description
- -------------- -----------
2.1 Distribution Agreement dated May 11, 1999 by and among
Columbia/HCA Healthcare Corporation, the Company and Triad
Hospitals, Inc.
3.1 Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
4.1 Rights Agreement dated as of May 11, 1999 between the
Company and National City Bank as Rights Agent.
4.2(a) 10 3/4% Senior Subordinated Notes due 2009 Indenture dated
as of May 11, 1999 by and between Healthtrust, Inc. - The
Hospital Company and Citibank N.A. as Trustee.
4.2(b) Form of Note Senior Subordinated Note due 2009.
4.3(a) Senior Subordinated Notes due 2009 Purchase Agreement dated
May 4, 1999 by and among Healthtrust, Inc. - The Hospital
Company, Merrill Lynch & Co, and the Initial Purchasers.
4.3(b) Assumption Agreement dated May 11, 1999 by and between
Healthtrust, Inc. - The Hospital Company and the Company.
4.3(c) Assumption Agreement dated May 11, 1999 by and between the
Company and Lifepoint Hospitals Holdings, Inc.
4.3(d) Guarantor Assumption Agreement dated May 11, 1999.
4.4(a) Registration Rights Agreement dated as of May 11, 1999 by
and among Healthtrust, Inc. - The Hospital Company, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank
Securities, Fleet Securities, Inc., Scotia Capital Markets
and Sun Trust Equitable Securities Corporation.
4.4(b) Assumption Agreement dated May 11, 1999 by and between
Healthtrust, Inc. - The Hospital and the Company.
4.4(c) Assumption Agreement dated May 11, 1999 by and between the
Company and LifePoint Hospitals Holdings, Inc.
4.4(d) Guarantor Assumption Agreement dated May 11, 1999.
10.1 Tax Sharing and Indemnification Agreement dated May 11, 1999
by and among Columbia/HCA Healthcare Corporation, the
Company and Triad Hospitals, Inc.
10.2 Benefits and Employment Matters Agreement dated May 11, 1999
by and among Columbia/HCA Healthcare Corporation, the
Company and Triad Hospitals, Inc.
10.3 Insurance Allocation and Administration Agreement dated May
11, 1999 by and among Columbia/HCA Healthcare Corporation,
the Company and Triad Hospitals, Inc.
10.4 Transitional Services Agreement dated May 11, 1999 by and
between Columbia/HCA Healthcare Corporation and the Company.
10.5 Computer and Data Processing Services Agreement dated May
11, 1999 by and between Columbia Information Systems, Inc.
and the Company.
10.6 Agreement to Share Telecommunications Services dated May 11,
1999 by and between Columbia Information Systems, Inc. and
the Company.
29
<PAGE>
10.7 Year 2000 Professional Services Agreement dated May 11, 1999
by and between CHCA Management Services, L.P. and the
Company.
10.8 Sub-Lease Agreement dated May 11, 1999 by and between
Healthtrust, Inc. - The Hospital Company and the Company.
10.9* LifePoint Hospital, Inc. 1998 Long-Term Incentive Plan.
10.10* LifePoint Hospital, Inc. Executive Stock Purchase Plan.
10.11* LifePoint Hospitals, Inc. Management Stock Purchase Plan.
10.12* LifePoint Hospitals, Inc. Outside Directors Stock and
Incentive Compensation Plan.
10.13 Credit Agreement, dated as of May 11, 1999, among
Healthtrust, Inc. - The Hospital Company, as Borrower, the
Lenders from time to time parties thereto, Fleet National
Bank as Arranger. Fleet National Bank, Deutsche Bank
Securities, Inc. and ScotiaBanc, Inc. as Co-Arrangers,
ScotiaBanc, Inc. as Documentation Agent, Deutsche Bank
Securities Inc. as Syndication Agent, SunTrust Bank,
Nashville, N.A., as Co-Agent and Fleet National Bank as
Administrative Agent.
10.14 Assumption Agreement dated as of May 11, 1999 by and between
Fleet National Bank and the Company.
10.15 Assumption Agreement dated as of May 11, 1999 by and between
Fleet National Bank and LifePoint Hospitals Holdings, Inc.
27 Financial Data Schedule.
(b) Reports on Form 8-K filed during the quarter ended March 31, 1999:
None.
____________________________
*Compensatory plan or arrangement.
30
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LifePoint Hospitals, Inc.
Date: June 11, 1999 /s/Kenneth C. Donahey
---------------------------------------
Kenneth C. Donahey
Senior Vice President & Chief
Financial Officer
31
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
-------------- ------------
2.1 Distribution Agreement dated May 11, 1999 by and
among Columbia/HCA Healthcare Corporation, the
Company and Triad Hospitals, Inc.
3.1 Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
4.1 Rights Agreement dated as of May 11, 1999
between the Company and National City Bank as
Rights Agent.
4.2(a) 10 3/4% Senior Subordinated Notes due 2009
Indenture dated as of May 11, 1999 by and
between Healthtrust, Inc. - The Hospital Company
and Citibank N.A. as Trustee.
4.2(b) Form of Senior Subordinated Note due 2009
4.3(a) Senior Subordinated Notes due 2009 Purchase
Agreement dated May 4, 1999 by and among
Healthtrust, Inc. - The Hospital Company,
Merrill Lynch & Co. and the initial Purchasers.
4.3(b) Assumption Agreement dated May 11, by and
between Healthtrust, Inc. - The Hospital Company
and the Company.
4.3(c) Assumption Agreement dated May 11, 1999 by and
between the Company and LifePoint Hospitals
Holdings, Inc.
4.3(d) Guarantor Assumption Agreement dated May 11,
1999.
4.4(a) Registration Rights Agreement dated as of May
11, 1999 by and among Healthtrust, Inc. - The
Hospital Company, Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Deutsche Bank Securities,
Fleet Securities, Inc. Scotia Capital Markets
and SunTrust Equitable Securities Corporation.
4.4(b) Assumption Agreement dated May 11, 1999 by and
between Healthtrust, Inc. - The Hospital Company
and the Company.
4.4(c) Assumption Agreement dated May 11, 1999 by and
between the Company and LifePoint Hospitals
Holdings, Inc.
4.4(d) Guarantor Assumption Agreement dated May 11,
1999.
10.1 Tax Sharing and Indemnification Agreement dated
May 11, 1999 by and among Columbia/HCA
Healthcare Corporation, the Company and Triad
Hospitals, Inc.
<PAGE>
10.2 Benefits and Employment Matters Agreement dated
May 11, 1999 by and among Columbia/HCA Healthcare
Corporation, the Company and Triad Hospitals, Inc.
10.3 Insurance Allocation and Administration Agreement
dated May 11, 1999 by and among Columbia/HCA
Healthcare Corporation, the Company and Triad
Hospitals, Inc.
10.4 Transitional Services Agreement dated May 11, 1999 by
and between Columbia/HCA Healthcare Corporation and
the Company.
10.5 Computer and Data Processing Services Agreement dated
May 11, 1999 by and between Columbia Information
Systems, Inc. and the Company.
10.6 Agreement to Share Telecommunications Services dated
May 11, 1999 by and between Columbia Information
Systems, Inc. and the Company.
10.7 Year 2000 Professional Services Agreement dated May
11, 1999 by and between CHCA Management Services, L.P.
and the Company.
10.8 Sub-Lease Agreement dated May 11, 1999 by and between
Healthtrust, Inc. - The Hospital Company and tje
Company.
10.9* LifePoint Hospitals, Inc. 1998 Long-Term Incentive
Plan.
10.10* LifePoint Hospitals, Inc. Executive Stock Purchase
Plan.
10.11* LifePoint Hospitals, Inc. Management Stock Purchase
Plan.
10.12* LifePoint Hospitals, Inc. Outside Directors Stock and
Incentive Compensation Plan.
10.13 Credit Agreement dated as of May 11, 1999, among
Healthtrust, Inc. - The Hospital Company, as Borrower,
the Lenders from time to time parties thereto, Fleet
National Bank as Arranger, Fleet National Bank,
Deutsche Bank Securities, Inc. and ScotiaBanc. Inc. as
Co-Arrangers, ScotiaBanc, Inc. as Documentation Agent,
Deutsche Bank Securities Inc. as Syndication Agent,
SunTrust Bank, Nashville, N.A. as Co-Agent and Fleet
National Bank as Administrative Agent.
10.14 Assumption Agreement dated as of May 11, 1999 by and
between and Fleet National Bank and the Company.
10.15 Assumption Agreement dated as of May 11, 1999 and
between and Fleet National Bank and LifePoint
Hospitals Holdings, Inc.
27 Financial Data Schedule.
- ----------------------------
* Compensatory plan or arrangement
<PAGE>
EXHIBIT 2.1
Distribution Agreement
Dated as of May 11, 1999
By and Among
Columbia/HCA Healthcare Corporation,
LifePoint Hospitals, Inc.
and
Triad Hospitals, Inc.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article I Definitions........................................................................ 1
Section 1.1. Definitions................................................................... 1
Article II Pre-Distribution Transactions; Certain Covenants................................... 10
Section 2.1. Restructuring Transactions.................................................... 10
Section 2.2. Consents...................................................................... 10
Section 2.3. Transfer and Assignment of Certain Licenses and Permits....................... 11
Section 2.4. Transfer and Assignment of Certain Business Agreements........................ 11
Section 2.5. Transfers Not Effected Prior to the Distribution Date; Transfers Deemed
Effective as of the Distribution Date......................................... 12
Section 2.6. Securities Matters............................................................ 13
Section 2.7. Conduct Prior to the Distribution Date........................................ 13
Section 2.8. Resignations.................................................................. 13
Section 2.9. Election of Officers.......................................................... 14
Section 2.10 Other Agreements.............................................................. 14
Article III The Distribution................................................................... 14
Section 3.1. Conditions Precedent to the Distribution...................................... 14
Section 3.2. No Constraint................................................................. 15
Section 3.3. The Distribution.............................................................. 16
Section 3.4. Fractional Shares............................................................. 16
Article IV Covenants.......................................................................... 17
Section 4.1. Further Assurances............................................................ 17
Section 4.2. Certain Intellectual Property Matters......................................... 17
Section 4.3. Assumption and Satisfaction of Liabilities.................................... 18
Section 4.4. Removal of Certain Guarantees................................................. 18
Section 4.5. No Representations or Warranties; Consents.................................... 19
Section 4.6. Limitation on Solicitation of Employees....................................... 21
Section 4.7. LifePoint Registration Statement.............................................. 21
Section 4.8. Triad Registration Statement.................................................. 23
Section 4.9. Certain Real Estate Matters................................................... 24
Section 4.10. Personal Property............................................................. 25
Article V Indemnification.................................................................... 26
Section 5.1. Indemnification by Columbia/HCA............................................... 26
Section 5.2. Indemnification by LifePoint.................................................. 27
Section 5.3. Indemnification by Triad...................................................... 27
Section 5.4. Limitations on Indemnification Obligations.................................... 28
Section 5.5. Procedures Regarding Indemnification.......................................... 29
Section 5.6. Indemnification Payments...................................................... 31
Section 5.7. Cooperation of the Parties with Respect to Actions and Third Party Claims..... 31
Section 5.8. Contribution.................................................................. 32
Section 5.9. Survival of Indemnities; Exclusive Remedy..................................... 33
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Article VI Ancillary Agreements......................................................................... 33
Section 6.1. Generally............................................................................... 33
Article VII Accounting Matters........................................................................... 33
Section 7.1. Settlement of Intercompany Accounts..................................................... 33
Section 7.2. Allocation of Prepaid Items and Reserves................................................ 34
Section 7.3. Financial Accounting Treatment of Assets Transferred and Liabilities Assumed............ 34
Section 7.4. Other Accounting Matters................................................................ 35
Article VIII Indemnification and Other Matters Relating To Government Programs............................ 35
Section 8.1. Indemnification and Other Matters Relating to Pre-Distribution Period Cost Reports...... 35
Section 8.2. Matters Relating to Post-Distribution Period Cost Reports............................... 38
Section 8.3. Cooperation on Reimbursement Matters.................................................... 38
Section 8.4. Limitation.............................................................................. 39
Article IX Corporate Records and Information............................................................ 39
Section 9.1. Provision, Transfer and Delivery of Applicable Corporate Records........................ 39
Section 9.2. Access to Information................................................................... 40
Section 9.3. Confidentiality......................................................................... 40
Section 9.4. Litigation Cooperation.................................................................. 41
Section 9.5. Retention of Records.................................................................... 42
Section 9.6. Privileged Matters...................................................................... 42
Section 9.7. Certain Matters......................................................................... 44
Article X Interest On Payments......................................................................... 45
Section 10.1. Interest on Payments.................................................................... 45
Article XI Miscellaneous................................................................................ 45
Section 11.1. Allocation of Costs and Expenses........................................................ 45
Section 11.2. Termination; Amendment.................................................................. 46
Section 11.3. Disputes................................................................................ 46
Section 11.4. Consent to Jurisdiction................................................................. 47
Section 11.5. Waiver of Jury Trial.................................................................... 47
Section 11.6. Notices................................................................................. 48
Section 11.7. Entire Agreement........................................................................ 49
Section 11.8. Assignment.............................................................................. 50
Section 11.9. Survival of Agreements and Covenants.................................................... 50
Section 11.10. No Third Party Beneficiaries............................................................ 50
Section 11.11. Waiver.................................................................................. 50
Section 11.12. Severability............................................................................ 50
Section 11.13. Governing Law........................................................................... 50
Section 11.14. Counterparts............................................................................ 51
Section 11.15. Headings................................................................................ 51
</TABLE>
-ii-
<PAGE>
Distribution Agreement
Distribution Agreement (this "Agreement") dated as of May 11, 1999 by
and among Columbia/HCA Healthcare Corporation, a Delaware corporation (together
with its successors and permitted assigns, "Columbia/HCA"), LifePoint Hospitals,
Inc., a Delaware corporation (together with its successors and permitted
assigns, "LifePoint"), and Triad Hospitals, Inc., a Delaware corporation
(together with its successors and permitted assigns, "Triad").
W i t n e s s e t h:
--- - - - - - - - -
Whereas, the Board of Directors of Columbia/HCA has determined that it
is in the best interests of Columbia/HCA and its stockholders (i) to separate
certain of the businesses of Columbia/HCA and its Subsidiaries from the other
businesses conducted by Columbia/HCA and its Subsidiaries by transferring
certain businesses to each of LifePoint and Triad, (ii) to distribute on a pro
rata basis to the holders of Columbia/HCA Common Stock (as hereinafter defined)
all of the outstanding shares of LifePoint Common Stock (as hereinafter defined)
and Triad Common Stock (as hereinafter defined) owned by Columbia/HCA (which, as
of the Distribution Date (as hereinafter defined), will constitute 100% of the
issued and outstanding shares of LifePoint Common Stock and Triad Common Stock),
and (iii) to effect the other transactions contemplated by this Agreement; and
Whereas, the parties have determined that it is necessary and
desirable to set forth in this Agreement the principal corporate transactions
required to effect the Distribution (as hereinafter defined) and to set forth
other agreements that will govern certain other matters following such
Distribution;
Now, Therefore, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used herein, the following terms have
-----------
the following meanings:
"Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or arbitration tribunal,
whether at law or in equity.
"Affiliate" means, with respect to a specified person, any person that
directly or indirectly controls, is controlled by or is under common control
with the
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specified person. A person shall be deemed to control another person if such
first person has the power to direct or cause the direction of the management
and policies of such other person, whether through ownership of voting
securities, by contract or otherwise.
"Ancillary Agreements" means all of the agreements identified on
Exhibit A hereto.
- ---------
"Assets" means all properties, rights, contracts, leases and claims,
of every kind and description, wherever located, whether tangible or intangible,
and whether real, personal or mixed.
"Benefits Agreement" means the Benefits and Employment Matters
Agreement by and among Columbia/HCA, LifePoint and Triad, entered into on or
before the Distribution Date, as amended from time to time.
"Books and Records" means all books, records, manuals, agreements and
other materials (in any form or medium), including, without limitation, all
mortgages, licenses, indentures, contracts, financial data, customer lists,
marketing materials and studies, advertising materials, price lists,
correspondence, distribution lists, supplier lists, production data, sales and
promotional materials and records, purchasing materials and records, personnel
records, manufacturing and quality control records and procedures, blue prints,
research and development files, records, data and laboratory books, account
records, sales order files, litigation files, computer files, microfiche, tape
recordings, photographs, patient and medical records, and Medicare cost report
files and workpapers.
"Code" means the Internal Revenue Code of 1986, as amended.
"Columbia/HCA Assets" means the Assets of Columbia/HCA and its
Subsidiaries, after giving effect to the Restructuring Transactions and the
Distribution. Any positive recovery which results from resolution of a
proceeding or claim which is an Indemnified Matter shall be deemed to be a
Columbia/HCA Asset.
"Columbia/HCA Common Stock" means the outstanding shares of common
stock, $0.01 par value per share, and nonvoting common stock, $0.01 par value
per share, of Columbia/HCA.
"Columbia/HCA Group" means Columbia/HCA and its Subsidiaries, after
giving effect to the Restructuring Transactions and the Distribution.
"Columbia/HCA Group Business" means the business now or formerly
conducted by Columbia/HCA and its present and former Subsidiaries, but excluding
(i) the LifePoint Group Business and (ii) the Triad Group Business.
"Columbia/HCA Group Records" is defined in Section 9.1(a) below.
--------------
"Columbia/HCA Indemnitees" means (i) Columbia/HCA and, after giving
effect to the Restructuring Transactions and the Distribution, each of its
Affiliates, and (ii) each of the directors, officers, employees and agents of
the entities described in the
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immediately preceding clause (i) and each of the heirs, executors, successors
and assigns of any of such directors, officers, employees and agents.
"Columbia/HCA Liabilities" means (i) Liabilities, whether arising
before, on or after the Distribution Date, incurred in connection with the
conduct or operation of the Columbia/HCA Group Business, or ownership or use of
the Columbia/HCA Assets; (ii) Liabilities arising from any claim against
LifePoint, Triad, or any of their Affiliates, which claim is based upon facts
and circumstances occurring prior to the Distribution Date and is covered by an
insurance policy maintained by Columbia/HCA and listed on Exhibit H hereto,
---------
without regard to deductible amounts, coinsurance amounts or policy limits, and
(iii) Liabilities arising from any worker's compensation claim against
LifePoint, Triad, or any of their Affiliates if the injury or condition giving
rise to the claim was incurred on or before the Distribution Date.
"Commission" means the Securities and Exchange Commission.
"Compliance Agreement" means an agreement setting forth the agreement
of the party executing such agreement to comply with applicable Laws and to take
specified actions intended to permit such compliance to be monitored.
"Consents" is defined in Section 2.2 below.
-----------
"Conveyancing and Assumption Instruments" shall mean, collectively,
the various agreements, instruments and other documents heretofore entered into
and to be entered into to effect the transfer of Assets and the assumption of
Liabilities in the manner contemplated by this Agreement, or otherwise arising
out of or relating to the transactions contemplated by this Agreement, which
shall be in such form as the parties agree.
"Cost Reports" is defined in Section 8.1(a) below.
--------------
"Disputes" is defined in Section 11.3(a) below.
---------------
"Distribution" means the LifePoint Distribution and the Triad
Distribution, collectively.
"Distribution Agent" means National City Bank, in its capacity as
distribution agent.
"Distribution Date" means the date on which the Distribution shall be
effective, as determined by the Board of Directors of Columbia/HCA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Hospital" is defined in Section 5.1(d) below.
--------------
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"Exclusion Order" is defined in Section 5.1(d) below.
--------------
"Facilities" is defined in Section 8.1 below.
-----------
"Funded Debt" means indebtedness for money borrowed.
"Government Investigations" is defined in Section 5.1 below.
-----------
"Governmental Authority" means any federal, state, local, foreign or
international government, agency, bureau, board, commission, court, department,
official, or other regulatory, administrative or governmental authority.
"Group" means any of the Columbia/HCA Group, the LifePoint Group or
the Triad Group, as the context requires.
"HCFA" means the United States Health Care Financing Administration.
"Indemnified Matters" is defined in Section 5.1 below.
-----------
"Indemnifying Party" is defined in Section 5.4(a) below.
--------------
"Indemnitee" is defined in Section 5.4(a) below.
--------------
"Information Statement" means the information statement to be sent in
connection with the Distribution to holders of record of Columbia/HCA Common
Stock at the close of business on the Record Date.
"Insurance Allocation and Administration Agreement" means the
Insurance Allocation and Administration Agreement by and among Columbia/HCA,
LifePoint and Triad, entered into on or before the Distribution Date, as amended
from time to time.
"Insurance Proceeds" means, with respect to any insured party, those
monies, net of any applicable premium adjustment, retrospectively-rated premium,
deductible, retention or cost of reserve paid or held by or for the benefit of
such insured party, which are either: (i) received by an insured party from an
insurance carrier or (ii) paid by an insurance carrier on behalf of an insured
party.
"IRS" means the Internal Revenue Service.
"Law" means all laws, statutes and ordinances and all regulations,
rules and other pronouncements of Governmental Authorities having the effect of
law of the United States, any foreign country or any foreign or domestic state,
province, commonwealth, city, country, municipality, territory, protectorate,
possession or similar instrumentality or any Governmental Authority thereof.
"Liabilities" means any and all claims, debts, liabilities and
obligations, absolute or contingent, matured or not matured, liquidated or
unliquidated, accrued or
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unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including, without limitation, those debts, liabilities
and obligations arising under this Agreement, under any law, rule, regulation,
action, order, injunction or decree of any governmental entity or under any
award of any arbitrator of any kind, and those arising under any contract,
commitment or undertaking.
"Liens" means any mortgages, pledges, liens, security interests,
easements, rights of way, restrictions, covenants, encumbrances, encroachments,
or charges of any kind.
"LifePoint Assets" means all Assets reflected as Assets of LifePoint
on the LifePoint Balance Sheet and all other Assets that are determined by
Columbia/HCA in its sole discretion to be associated primarily or exclusively
with the LifePoint Group Business.
"LifePoint Balance Sheet" means the most recent consolidated balance
sheet of LifePoint included in the LifePoint Form 10.
"LifePoint By-laws" means the By-laws of LifePoint in the form
attached as Exhibit B hereto.
---------
"LifePoint Certificate" means the certificate of incorporation of
LifePoint in the form attached as Exhibit C hereto.
---------
"LifePoint Common Stock" means the outstanding shares of common stock,
$0.01 par value per share, of LifePoint.
"LifePoint Distribution" means the distribution on the Distribution
Date of all outstanding shares of LifePoint Common Stock owned by Columbia/HCA
to the holders of Columbia/HCA Common Stock at the close of business on the
Record Date.
"LifePoint Form 10" means the registration statement filed on Form 10
pursuant to the Exchange Act (File No. 0-29818), which was declared effective by
the Commission on April 27, 1999, as such registration statement was amended
through the effective date.
"LifePoint Group" means LifePoint and its Subsidiaries, as constituted
upon completion of the Restructuring Transactions.
"LifePoint Group Business" means the business conducted at the
hospitals and other healthcare facilities which constitute the operations of
LifePoint and its Subsidiaries as of the Distribution Date, as described in the
LifePoint Form 10, including the business conducted at such hospitals and other
healthcare facilities prior to the Distribution Date.
"LifePoint Group Records" is defined in Section 9.1(b) below.
--------------
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"LifePoint Indemnitees" means (i) LifePoint and, after giving effect
to the Restructuring Transactions and the Distribution, each of its Affiliates,
and (ii) each of the directors, officers, employees and agents of the entities
described in the immediately preceding clause (i) and each of the heirs,
executors, successors and assigns of any of such directors, officers, employees
and agents.
"LifePoint Liabilities" means (i) Liabilities of LifePoint or, after
giving effect to the Restructuring Transactions and the Distribution, any of its
Subsidiaries, whether arising before, on or after the Distribution Date,
including all Liabilities incurred in connection with the conduct or operation
of any LifePoint Group Business, the ownership or use of any of the LifePoint
Assets, or the establishment or maintenance of, or contributions to, any
employee benefit plan (as defined in Section 3(3) of ERISA) for the benefit of
persons employed by any LifePoint Group Business, (ii) Liabilities arising in
connection with any transfer or attempted transfer of any Asset to the LifePoint
Group, including, without limitation, Liabilities arising in connection with the
failure to obtain any Consent or to comply with any requirement of Law, and
(iii) all Liabilities reflected as liabilities or obligations on the LifePoint
Balance Sheet; provided, however, that the following Liabilities are not
LifePoint Liabilities: (1) Liabilities arising from any claim based upon facts
and circumstances occurring prior to the Distribution Date and covered by an
insurance policy maintained by Columbia/HCA and listed on Exhibit D hereto,
without regard to deductible amounts, coinsurance amounts or policy limits, (2)
Liabilities arising from any worker's compensation claim if the injury or
condition giving rise to the claim was incurred on or before the Distribution
Date, and (3) Liabilities that are Columbia/HCA Liabilities or Triad
Liabilities.
"LifePoint Option" means options to purchase shares of LifePoint
Common Stock granted to certain officers of Columbia/HCA on or prior to the
Distribution Date.
"LifePoint Option Shares" means the shares of LifePoint Common Stock
issuable upon exercise of the LifePoint Option.
"LifePoint Permitted Exceptions" means (1) Liens for taxes, water,
sewer and other service or use charges and fees, and other State, local or
municipal charges and assessments, not yet due and payable as of the
Distribution Date, (2) Liens for any indebtedness shown on the LifePoint Balance
Sheet and Liens for any contractual or other obligation to be retained by any of
the LifePoint Group following the Distribution Date, (3) standard printed
exceptions customarily set forth in ALTA title reports or title policies as in
use in the jurisdiction in which the real property is located, (4) equity, joint
venture or other similar interests of others identified in Exhibit E in any of
---------
the hospitals and related medical facilities and professional office buildings
set forth on Exhibit E, (5) easements, encroachments, covenants, restrictions,
---------
rights of way, defects, irregularities or encumbrances on title which do not
materially impair the use of such real property for the purpose for which it is
used as of the Distribution Date, (6) zoning and other municipal ordinances
which are not violated in any material respect by existing improvements and the
present use made of the premises, (7) any other Liens or title defects or
irregularities
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<PAGE>
which do not, in the aggregate, materially and adversely affect
the LifePoint Group Business (taken as a whole), and (8) Liens identified on
Exhibit E.
- ---------
"LifePoint Real Property" means the real property set forth on Exhibit
-------
E, relating to the hospitals and related medical facilities and professional
- -
office buildings of the LifePoint Group.
"LifePoint Registration Statement" means a registration statement
under the Securities Act, on such form as may be appropriate thereunder, to
effect the registration of the LifePoint Option Shares and the resale thereof.
"Listing" means the listing of the LifePoint Common Stock and the
Triad Common Stock on NASDAQ.
"Losses" means, with respect to any matter for which a person is
entitled to indemnification pursuant to Article V hereof (including any
Indemnified Matter), any and all losses, liabilities, damages, settlements,
claims, fines, penalties, costs and expenses (including reasonable attorneys'
fees, but not including time spent by employees of such person) actually
incurred by such person arising from such matter, but excluding consequential
damages.
"Marks" is defined in Section 4.2(a) below.
--------------
"Monthly Statement" is defined in Section 8.1(f) below.
--------------
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"OIG" means the Office of Inspector General.
"Post-Distribution Periods" is defined in Section 8.2(a) below.
--------------
"Pre-Distribution Periods" is defined in Section 8.1(a) below.
--------------
"Privilege" is defined in Section 9.6(a) below.
--------------
"Privileged Information" is defined in Section 9.6(c) below.
--------------
"Reconciling Payment" is defined in Section 8.1(f) below.
--------------
"Record Date" means such date as is designated by Columbia/HCA's Board
of Directors as the record date for determining the stockholders of Columbia/HCA
entitled to receive the Distribution.
"Restructuring Transactions" means (i) the series of transactions, the
form and sequence of which shall be directed by Columbia/HCA in its sole
discretion, undertaken for the purpose of (a) assigning, transferring and
conveying to LifePoint (or to the appropriate member of the LifePoint Group)
the LifePoint Assets, (b) effecting the
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assumption by LifePoint (or by the appropriate member of the LifePoint Group) of
the LifePoint Liabilities, (c) assigning, transferring and conveying to Triad
(or to the appropriate member of the Triad Group) the Triad Assets, and (d)
effecting the assumption by Triad (or by the appropriate member of the Triad
Group) of the Triad Liabilities, and shall also mean (ii) any transaction
undertaken at the direction or with the consent of Columbia/HCA for the purpose
of confirming the right, title and interest of Columbia/HCA to the Columbia/HCA
Assets and the responsibility of Columbia/HCA for the Columbia/HCA Liabilities.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Social Security Act" means the Social Security Act, as amended.
"Subsidiary" means, with respect to any entity, (i) any corporation in
which such entity, directly or indirectly, owns or controls, at the time of
determination, at least a majority in interest of the outstanding voting stock
(having by the terms thereof voting power under ordinary circumstances to elect
a majority of the directors of such corporation, irrespective of whether or not
stock of any other class or classes of such corporation shall have or might have
voting power by reason of the occurrence of a contingency); or (ii) any non-
corporate entity in which such entity either (a) directly or indirectly, at the
time of determination, has at least a majority ownership interest, or (b) at the
date of determination, is a general partner or an entity performing similar
functions (for example, manager of a limited liability company or a trustee of a
trust).
"Tax" has the meaning set forth in the Tax Agreement.
"Tax Agreement" means the Tax Sharing and Indemnification Agreement by
and among Columbia/HCA, LifePoint and Triad, entered into on or before the
Distribution Date, as amended from time to time.
"Third Party Claim" is defined in Section 5.5(a) below.
--------------
"Triad Assets" means all Assets reflected as Assets of Triad on the
Triad Balance Sheet and all other Assets that are determined by Columbia/HCA in
its sole discretion to be associated primarily or exclusively with the Triad
Group Business.
"Triad Balance Sheet" means the most recent consolidated balance sheet
of Triad included in the Triad Form 10.
"Triad By-laws" means the By-laws of Triad in the form attached as
Exhibit F hereto.
- ---------
"Triad Certificate" means the certificate of incorporation of Triad in
the form attached as Exhibit G hereto.
---------
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<PAGE>
"Triad Common Stock" means the outstanding shares of common stock,
$0.01 par value per share, of Triad.
"Triad Distribution" means the distribution on the Distribution Date
of all outstanding shares of Triad Common Stock owned by Columbia/HCA to the
holders of Columbia/HCA Common Stock at the close of business on the Record
Date.
"Triad Form 10" means the registration statement filed on Form 10
pursuant to the Exchange Act (File No. 0-29816), which was declared effective by
the Commission on April 27, 1999, as such registration statement was amended
through the effective date.
"Triad Group" means Triad and its Subsidiaries, as constituted upon
completion of the Restructuring Transactions.
"Triad Group Business" means the business conducted at the hospitals
and other healthcare facilities which constitute the operations of Triad and its
Subsidiaries as of the Distribution Date, as described in the Triad Form 10,
including the business conducted at such hospitals and other healthcare
facilities prior to the Distribution Date.
"Triad Group Records" is defined in Section 9.1(c) below.
--------------
"Triad Indemnitees" means (i) Triad and, after giving effect to the
Restructuring Transactions and the Distribution, each of its Affiliates, and
(ii) each of the directors, officers, employees and agents of the entities
described in the immediately preceding clause (i) and each of the heirs,
executors, successors and assigns of any of such directors, officers, employees
and agents.
"Triad Liabilities" means (i) Liabilities of Triad or, after giving
effect to the Restructuring Transactions and the Distribution, any of its
Subsidiaries, whether arising before, on or after the Distribution Date,
including all Liabilities incurred in connection with the conduct or operation
of any Triad Group Business, the ownership or use of any of the Triad Assets, or
the establishment or maintenance of, or contributions to, any employee benefit
plan (as defined in Section 3(3) of ERISA) for the benefit of persons employed
by any Triad Group Business, (ii) Liabilities arising in connection with any
transfer or attempted transfer of any Asset to the Triad Group, including,
without limitation, Liabilities arising in connection with the failure to obtain
any Consent or to comply with any requirement of Law, and (iii) all Liabilities
reflected as liabilities or obligations on the Triad Balance Sheet; provided,
however, that the following Liabilities are not Triad Liabilities: (1)
Liabilities arising from any claim based upon facts and circumstances occurring
prior to the Distribution Date and covered by an insurance policy maintained by
Columbia/HCA and listed on Exhibit D hereto, without regard to deductible
---------
amounts, coinsurance amounts or policy limits, (2) Liabilities arising from any
worker's compensation claim if the injury or condition giving rise to the claim
was incurred on or before the Distribution Date, and (3) Liabilities that are
Columbia/HCA Liabilities or LifePoint Liabilities.
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"Triad Option" means options to purchase shares of Triad Common Stock
granted to certain officers of Columbia/HCA on or prior to the Distribution
Date.
"Triad Option Shares" means the shares of Triad Common Stock issuable
upon exercise of the Triad Option.
"Triad Permitted Exceptions" means (1) Liens for taxes, water, sewer
and other service or use charges and fees, and other State, local or municipal
charges and assessments, not yet due and payable as of the Distribution Date,
(2) Liens for any indebtedness shown on the Triad Balance Sheet and Liens for
any contractual or other obligation to be retained by any of the Triad Group
following the Distribution Date, (3) standard printed exceptions customarily set
forth in ALTA title reports or title policies as in use in the jurisdiction in
which the real property is located, (4) equity, joint venture or other similar
interests of others identified in Exhibit H in any of the hospitals and related
medical facilities and professional office buildings set forth on Exhibit H, (5)
---------
easements, encroachments, covenants, restrictions, rights of way, defects,
irregularities or encumbrances on title which do not materially impair the use
of such real property for the purpose for which it is used as of the
Distribution Date, (6) zoning and other municipal ordinances which are not
violated in any material respect by existing improvements and the present use
made of the premises, (7) any other Liens or title defects or irregularities
which do not, in the aggregate, materially and adversely affect the Triad Group
Business (taken as a whole), and (8) Liens identified on Exhibit H.
"Triad Real Property" means the real property set forth on Exhibit H,
---------
relating to the hospitals and related medical facilities and professional office
buildings of the Triad Group.
"Triad Registration Statement" means a registration statement under
the Securities Act, on such form as may be appropriate thereunder, to effect the
registration of the Triad Option Shares and the resale thereof.
ARTICLE II
PRE-DISTRIBUTION TRANSACTIONS; CERTAIN COVENANTS
Section 2.1. Restructuring Transactions. Each of Columbia/HCA,
--------------------------
LifePoint and Triad shall take all necessary action to cause, effect and
consummate the Restructuring Transactions. In connection with the Restructuring
Transactions, the parties shall execute or cause to be executed by the
appropriate entities the Conveyancing and Assumption Instruments. Any transfers
of capital stock shall be effected by means of delivery of stock certificates
and executed stock powers and notation on the stock record books of the
corporation or other legal entities involved and, to the extent required by
applicable law, by notation on public registries.
Section 2.2. Consents. The parties hereto shall cooperate and shall
--------
use their reasonable efforts to obtain any third-party consents or approvals
that are required to
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consummate the Restructuring Transactions, the Distribution and the other
transactions contemplated hereby (the "Consents").
Section 2.3. Transfer and Assignment of Certain Licenses and Permits.
-------------------------------------------------------
(a) Licenses and Permits Relating to the LifePoint Group
----------------------------------------------------
Business. On or prior to the Distribution Date, or as soon as reasonably
--------
practicable thereafter, each of Columbia/HCA and Triad shall take all
necessary action to duly and validly transfer, or cause to be duly and
validly transferred, to the appropriate member of the LifePoint Group all
transferable licenses, permits and authorizations issued by any
Governmental Authority, if any, that relate primarily or exclusively (as
determined by Columbia/HCA in its sole discretion) to the LifePoint Group
Business but which are held in the name of Columbia/HCA or Triad, or any of
their respective Subsidiaries, employees, officers, directors, stockholders
or agents.
(b) Licenses and Permits Relating to the Triad Group
------------------------------------------------
Business. On or prior to the Distribution Date, or as soon as reasonably
--------
practicable thereafter, each of Columbia/HCA and LifePoint shall take all
necessary action to duly and validly transfer, or cause to be duly and
validly transferred, to the appropriate member of the Triad Group all
transferable licenses, permits and authorizations issued by any
Governmental Authority, if any, that relate primarily or exclusively (as
determined by Columbia/HCA in its sole discretion) to the Triad Group
Business but which are held in the name of Columbia/HCA or LifePoint, or
any of their respective Subsidiaries, employees, officers, directors,
stockholders or agents.
Section 2.4. Transfer and Assignment of Certain Business Agreements.
------------------------------------------------------
(a) Transfer and Assignment of LifePoint Group Business
---------------------------------------------------
Agreements. On or prior to the Distribution Date, or as soon as reasonably
----------
practicable thereafter, and subject to the limitations set forth in this
Section 2.4, each of Columbia/HCA and Triad shall take all necessary action
-----------
to assign, transfer and convey, or cause to be assigned, transferred and
conveyed, to the appropriate member of the LifePoint Group all of its (or
any of its Subsidiaries') right, title and interest in and to any and all
agreements, if any, that relate primarily or exclusively (as determined by
Columbia/HCA in its sole discretion) to the LifePoint Group Business or any
member of the LifePoint Group.
(b) Transfer and Assignment of Triad Group Business
-----------------------------------------------
Agreements. On or prior to the Distribution Date, or as soon as reasonably
----------
practicable thereafter, and subject to the limitations set forth in this
Section 2.4, each of Columbia/HCA and LifePoint shall take all necessary
-----------
action to assign, transfer and convey, or cause to be assigned, transferred
and conveyed, to the appropriate member of the Triad Group all of its (or
any of its Subsidiaries') right, title and interest in and to any and all
agreements, if any, that relate primarily or
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exclusively (as determined by Columbia/HCA in its sole discretion) to the
Triad Group Business or any member of the Triad Group.
(c) Joint Agreements. Subject to the provisions of this Section
---------------- -------
2.4, any agreement to which any party hereto (or, after giving effect to
---
the Restructuring Transactions and the Distribution, any of such party's
Subsidiaries) is a party that inures to the benefit of more than one of the
Columbia/HCA Group Business, the LifePoint Group Business and the Triad
Group Business shall be assigned in part, on or prior to the Distribution
Date or as soon as reasonably practicable thereafter, as directed by
Columbia/HCA in its sole discretion with the intention that each Group
shall continue to possess the rights and benefits, and be subject to the
obligations, inuring to its business under such agreement.
(d) Obligations of Assignees. The assignee of any agreement
------------------------
assigned, in whole or in part, pursuant to this Section 2.4 shall assume
-----------
and agree to pay, perform and fully discharge all obligations of the
assignor under such agreement (whether such obligations arose or were
incurred prior to, on or subsequent to the Distribution Date and
irrespective of whether such obligations have been asserted as of the
Distribution Date); provided, however, that each assignor shall promptly
upon request from an assignee reimburse such assignee for any payments made
by such assignee pursuant to an assigned agreement which were due prior to
the Distribution Date, but not timely paid by the assignor. In the case of
a partial assignment under Section 2.4(c) above, such assignee shall assume
--------------
and agree to pay, perform and discharge the related portion of such
obligations as determined in accordance with the terms of the relevant
agreement, where determinable on the face thereof, and otherwise as
directed by Columbia/HCA in its sole discretion in connection with such
partial assignment.
Section 2.5. Transfers Not Effected Prior to the Distribution Date;
------------------------------------------------------
Transfers Deemed Effective as of the Distribution Date. To the extent that any
- ------------------------------------------------------
transfers contemplated by this Article II shall not have been consummated on or
----------
prior to the Distribution Date, each party hereto shall cooperate (and shall
cause each of its Subsidiaries to cooperate) to effect such transfers as
promptly following the Distribution Date as shall be practicable. Nothing herein
shall be deemed to require any party to, or constitute an agreement to, transfer
any Assets or assume any Liabilities which would require the Consent of a third
party which Consent had not been obtained or which otherwise by its terms or by
operation of Law cannot be transferred or assumed. If any such transfer of
Assets or Liabilities has not been consummated, or if an attempted transfer of
any Asset would be ineffective or would adversely affect the rights of any party
hereto so that such party would not receive all rights to such Asset, from and
after the Distribution Date the party required to transfer such Asset shall hold
such Asset in trust for the use and benefit of the party entitled thereto (at
the expense of the party entitled thereto) or retain such Liability for the
account of the party by whom such Liability is to be assumed pursuant hereto, as
the case may be, and take such other action as may be reasonably requested by
the party to whom such Asset is to be transferred, or by whom such Liability is
to be assumed, as the case may be, in order to place such party, insofar as is
reasonably possible, in the same position as would have existed had such
-12-
<PAGE>
Asset or Liability been transferred or assumed as contemplated hereby. As and
when any such Asset or Liability becomes transferable or assumable, such
transfer shall be effected forthwith. As of the Distribution Date, each party
hereto (or, as applicable, such Subsidiary of such party) shall be deemed to
have acquired (or, as applicable, retained) complete and sole beneficial
ownership over all the Assets, together with all rights, powers and privileges
incident thereto, and shall be deemed to have assumed in accordance with the
terms of this Agreement all the Liabilities, and all duties, obligations and
responsibilities incident thereto, which such party (or, after giving effect to
the Restructuring Transactions and the Distribution, any Subsidiary of such
party) is entitled to acquire or required to assume pursuant to the terms of
this Agreement.
Section 2.6. Securities Matters. (a) LifePoint shall cooperate with
------------------
Columbia/HCA and Triad to prepare, and Columbia/HCA shall cause to be
mailed to the holders of Columbia/HCA Common Stock at the close of business
on the Record Date, for receipt by such holders prior to the Distribution
Date, the Information Statement. Columbia/HCA and LifePoint shall cooperate
in preparing and filing with the Commission any registration statements
which it is necessary or advisable to file prior to the Distribution Date
in respect of any employee benefit or other plan involving securities of
LifePoint contemplated by the Benefits Agreement.
(b) Triad shall cooperate with Columbia/HCA and LifePoint to
prepare, and Columbia/HCA shall cause to be mailed to the holders of
Columbia/HCA Common Stock at the close of business on the Record Date, for
receipt by such holders prior to the Distribution Date, the Information
Statement. Columbia/HCA and Triad shall cooperate in preparing and filing
with the Commission any registration statements which it is necessary or
advisable to file prior to the Distribution Date in respect of any employee
benefit or other plan involving securities of Triad contemplated by the
Benefits Agreement.
Section 2.7. Conduct Prior to the Distribution Date. Prior to the
--------------------------------------
Distribution Date, the businesses of the LifePoint Group and the Triad Group
shall be operated for the sole benefit of Columbia/HCA.
Section 2.8. Resignations.
------------
(a) Subject to Section 2.8(d) below, Columbia/HCA shall
--------------
cause all of its employees and all of the employees of its Subsidiaries to
resign, effective as of 11:59 p.m. on the Distribution Date, from all
positions as officers or directors of any Subsidiary of LifePoint in which
they serve, and LifePoint shall cause all of its employees and all of the
employees of its Subsidiaries to resign, effective as of 11:59 p.m. on the
Distribution Date, from all positions as officers or directors of any
Subsidiary of Columbia/HCA in which they serve.
(b) Subject to Section 2.8(d) below, Columbia/HCA shall
--------------
cause all of its employees and all of the employees of its Subsidiaries to
resign, effective as of 11:59 p.m. on the Distribution Date, from all
positions as officers
-13-
<PAGE>
or directors of any Subsidiary of Triad in which they serve, and Triad
shall cause all of its employees and all of the employees of its
Subsidiaries to resign, effective as of 11:59 p.m. on the Distribution
Date, from all positions as officers or directors of any Subsidiary of
Columbia/HCA in which they serve.
(c) Subject to Section 2.8(d) below, LifePoint shall cause all
--------------
of its employees and all of the employees of its Subsidiaries to resign,
effective as of 11:59 p.m. on the Distribution Date, from all positions as
officers or directors of any Subsidiary of Triad in which they serve, and
Triad shall cause all of its employees and all of the employees of its
Subsidiaries to resign, effective as of 11:59 p.m. on the Distribution
Date, from all positions as officers or directors of any Subsidiary of
LifePoint in which they serve.
(d) No person shall be required by any party hereto to resign
from any position or office with another party hereto if such person has
been appointed by the Board of Directors of the relevant entity to hold
such position or office following the Distribution.
Section 2.9. Election of Officers. On or prior to the Distribution
--------------------
Date, each of Columbia/HCA, LifePoint and Triad shall, as applicable, take all
actions necessary and desirable so that, as of the Distribution Date, the
executive officers of LifePoint and Triad will be as set forth in the LifePoint
Form 10 or the Triad Form 10, as the case may be.
Section 2.10. Other Agreements. On or prior to the Distribution Date,
----------------
or (in the case of agreements other than the Ancillary Agreements) as soon as
reasonably practicable thereafter, each of Columbia/HCA, LifePoint and Triad
shall take all necessary action to execute and deliver, or cause to be executed
and delivered, (a) the Ancillary Agreements, and (b) any other agreements in
respect of the Restructuring Transactions and the Distribution as are necessary
or appropriate in connection with the transactions contemplated hereby and
thereby.
ARTICLE III
THE DISTRIBUTION
Section 3.1. Conditions Precedent to the Distribution. The
----------------------------------------
Distribution shall be subject to, in the sole discretion of Columbia/HCA, the
fulfillment or waiver of each of the following conditions:
(a) the Board of Directors of Columbia/HCA shall have
declared the Distribution, established the Record Date and the Distribution
Date and any appropriate procedures in connection with the Distribution to
the extent not provided for herein;
(b) any necessary regulatory approvals shall have been
received;
-14-
<PAGE>
(c) the LifePoint Form 10 and the Triad Form 10 each shall
have become effective under the Exchange Act and no stop order shall have
been entered, and no proceeding for that purpose shall have been initiated
or threatened by the Commission with respect thereto;
(d) all necessary permits, registrations and consents
required under the securities or blue sky laws of states or other political
subdivisions of the United States of America in connection with the
transactions contemplated by this Agreement shall have been received or
become effective;
(e) Columbia/HCA shall have elected or caused the election
of the Board of Directors of LifePoint, as named in the LifePoint Form 10,
and the LifePoint Certificate and the LifePoint By-laws shall be in effect;
(f) Columbia/HCA shall have elected or caused the election
of the Board of Directors of Triad, as named in the Triad Form 10, and the
Triad Certificate and the Triad By-laws shall be in effect;
(g) each of the LifePoint Common Stock and the Triad Common
Stock shall have been approved for listing on NASDAQ, subject to official
notice of issuance;
(h) each of the Ancillary Agreements shall have been
executed and delivered by the parties thereto and shall be in full force
and effect;
(i) Columbia/HCA shall have received a private letter
ruling from the IRS (in form and substance satisfactory to Columbia/HCA)
regarding the federal income tax treatment of the Restructuring
Transactions and the Distribution, and in respect of such other matters as
Columbia/HCA shall have deemed appropriate or desirable;
(j) the Restructuring Transactions shall have been
effected; and
(k) consummation of the Distribution and the other
transactions contemplated hereby shall not be prohibited by Law and no
Governmental Authority of competent jurisdiction shall have enacted,
issued, promulgated or entered, or shall have threatened to enact, issue,
promulgate or enter, any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or
permanent) which materially restricts, prevents or prohibits consummation
of such transactions.
Section 3.2. No Constraint. Notwithstanding the provisions of Section
------------- -------
3.1 above, the fulfillment or waiver of any or all of the conditions precedent
- ---
to the Distribution set forth therein shall not:
(a) create any obligation on the part of Columbia/HCA to
effect the Distribution;
-15-
<PAGE>
(b) in any way limit Columbia/HCA's right and power under
Section 11.2 below to terminate this Agreement and to abandon the
------------
Distribution; or
(c) alter the consequences of any such termination under
Section 11.2 below from those specified therein.
------------
Section 3.3. The Distribution. On or before the Distribution Date,
----------------
subject to satisfaction or waiver of the conditions set forth in this Agreement,
Columbia/HCA shall deliver to the Distribution Agent certificates representing
all of the then outstanding shares of LifePoint Common Stock and Triad Common
Stock owned by Columbia/HCA (which, as of the Distribution Date, will constitute
100% of the issued and outstanding shares of LifePoint Common Stock and Triad
Common Stock), endorsed in blank, and shall instruct the Distribution Agent to
distribute to each holder of record of Columbia/HCA Common Stock at the close of
business on the Record Date certificates representing one share of LifePoint
Common Stock and one share of Triad Common Stock for every nineteen shares of
Columbia/HCA Common Stock so held. LifePoint agrees to provide all certificates
for shares of LifePoint Common Stock that the Distribution Agent shall require
to effect the LifePoint Distribution, and Triad agrees to provide all
certificates for shares of Triad Common Stock that the Distribution Agent shall
require in order to effect the Triad Distribution.
Section 3.4. Fractional Shares. Notwithstanding anything herein to
-----------------
the contrary, no fractional shares of LifePoint Common Stock or Triad Common
Stock shall be issued in connection with the Distribution, and any such
fractional share interests to which a stockholder would otherwise be entitled
will not entitle such stockholder to vote or to any rights of a stockholder of
LifePoint or Triad, as the case may be. In lieu of any such fractional shares,
each stockholder who, but for the provisions of this Section 3.4, would be
-----------
entitled to receive a fractional share of LifePoint Common Stock or Triad Common
Stock pursuant to the LifePoint Distribution or the Triad Distribution, or both,
shall be paid cash, without any interest thereon, as hereinafter provided.
Columbia/HCA shall instruct the Distribution Agent to determine the number of
whole shares and fractional shares of LifePoint Common Stock and Triad Common
Stock allocable to each stockholder, to aggregate all such fractional shares
into whole shares, to sell the whole shares obtained thereby in the open market
at the then prevailing prices on behalf of stockholders who otherwise would be
entitled to receive fractional share interests and to distribute to each such
stockholder his, her or its ratable share of the total proceeds of such sale,
after making appropriate deductions of the amount required for federal income
tax withholding purposes and after deducting any applicable transfer taxes. All
brokers' fees and commissions incurred in connection with such sales shall be
paid by Columbia/HCA. Solely for purposes of computing fractional shares
pursuant to this Section 3.4, the beneficial owner of shares of LifePoint Common
-----------
Stock or Triad Common Stock held of record in the name of a nominee will be
treated as the holder of record of such shares.
-16-
<PAGE>
ARTICLE IV
COVENANTS
Section 4.1. Further Assurances. From and after the Distribution
------------------
Date, each of the parties hereto will execute and deliver, and cause its
Subsidiaries to execute and deliver, such further instruments and documents and
take such other actions as any other party hereto may reasonably request in
order to carry out the transactions contemplated by this Agreement or by any of
the Ancillary Agreements. Without limitation of the foregoing, each of the
parties hereto will take, or cause to be taken, all actions, and do, or cause to
be done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements or otherwise to consummate and make effective
the transactions contemplated by this Agreement or by any of the Ancillary
Agreements, including, without limitation, executing, and causing its
Subsidiaries to execute, such other instruments and documents as may be
reasonably required to assign, transfer, convey and vest in the proper party
ownership of its respective Assets or to effect the assumption by the proper
party of its respective Liabilities, using its reasonable efforts to obtain any
Consents, and making any filings and applications and taking all such further
reasonable actions as shall be necessary or desirable in order to consummate the
transactions contemplated by this Agreement or by the Ancillary Agreements.
Section 4.2. Certain Intellectual Property Matters.
-------------------------------------
(a) Except as otherwise specifically set forth elsewhere
herein, from and after the Distribution Date, no party hereto, directly or
indirectly, shall use (or permit any of its Subsidiaries to use) any name
or any other trademark, service mark or trade name (collectively, the
"Marks") owned and used by any other party hereto (or, after giving effect
to the Restructuring Transactions and the Distribution, any Subsidiary of
any other party hereto) or any trade name, service mark or trademark likely
to cause confusion with any such Mark, except (i) pursuant to a license
agreement entered into in connection with the transactions contemplated
hereby or (ii) for such Marks or portions thereof which, as used, are
descriptive, generic or are not likely to cause confusion.
(b) From and after the Distribution Date, each party hereto
(and each of their respective Subsidiaries) shall have the right to use
existing brochures, packaging, labeling, containers, linens, supplies,
advertising materials and any similar materials bearing any Mark, which
such party (and any such Subsidiary) does not have to right to use pursuant
to Section 4.2 (a) above, until the earlier of (i) one year after the
-----------
Distribution Date and (ii) the date existing stocks of such material are
exhausted. Each party hereto shall (and shall cause each of its
Subsidiaries to) comply with all applicable laws or regulations in any use
of packaging or labeling containing the Marks.
(c) Each party hereto agrees to use its reasonable efforts
to (and to cause each of its Subsidiaries to) cease using the Marks of any
other party (or, after giving effect to the Restructuring Transactions and
the Distribution, any
-17-
<PAGE>
Subsidiary of any other party hereto) on buildings, cars, trucks and other
fixed assets as soon as possible but in any event within a period not to
exceed one year after the Distribution Date.
(d) From and after the Distribution Date, no party hereto shall
represent or permit to be represented to any third person that it (or any
of its Subsidiaries) has a business affiliation with any other party hereto
(or, after giving effect to the Restructuring Transactions and the
Distribution, any Subsidiary of any other party hereto), except as
expressly permitted by this Section 4.2 or by any of the Ancillary
-----------
Agreements.
Section 4.3. Assumption and Satisfaction of Liabilities. Except as
------------------------------------------
otherwise specifically set forth in any Ancillary Agreement, from and after the
Distribution Date:
(a) Columbia/HCA shall take all necessary action to assume,
pay, perform and discharge, or cause to be assumed, paid, performed and
discharged, all Columbia/HCA Liabilities in accordance with their terms,
when determinable, and otherwise as determined in accordance with the
practice of the parties prior to the Distribution;
(b) LifePoint shall take all necessary action to assume, pay,
perform and discharge, or cause to be assumed, paid, performed and
discharged, all LifePoint Liabilities in accordance with their terms, when
determinable, and otherwise as determined in accordance with the practice
of the parties prior to the Distribution; and
(c) Triad shall take all necessary action to assume, pay,
perform and discharge, or cause to be assumed, paid, performed and
discharged, all Triad Liabilities in accordance with their terms, when
determinable, and otherwise as determined in accordance with the practice
of the parties prior to the Distribution.
Section 4.4. Removal of Certain Guarantees.
-----------------------------
(a) Removal of Columbia/HCA as Guarantor of LifePoint
-------------------------------------------------
Liabilities and Triad Liabilities. Except as otherwise contemplated by the
---------------------------------
Restructuring Transactions or as specified in any Ancillary Agreement or on
Exhibit I hereto, each of Columbia/HCA, LifePoint and Triad shall use its
---------
reasonable efforts to have, on or prior to the Distribution Date, or as
soon as practicable thereafter, Columbia/HCA (and, after giving effect to
the Restructuring Transactions and the Distribution, any Subsidiary of
Columbia/HCA) removed as a guarantor of, or obligor under or for, any
LifePoint Group Liability or Triad Group Liability, as the case may be,
including, without limitation, in respect of any agreement (or part
thereof) assigned to LifePoint or Triad (or, after giving effect to the
Restructuring Transactions and the Distribution, any of their respective
Subsidiaries) pursuant to Section 2.4 above.
-----------
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<PAGE>
(b) Removal of LifePoint as Guarantor of Columbia/HCA
-------------------------------------------------
Liabilities and Triad Liabilities. Except as otherwise contemplated by the
---------------------------------
Restructuring Transactions or as specified in any Ancillary Agreement or on
Exhibit I hereto, each of Columbia/HCA, LifePoint and Triad shall use its
---------
reasonable efforts to have, on or prior to the Distribution Date, or as
soon as practicable thereafter, LifePoint (and, after giving effect to the
Restructuring Transactions and the Distribution, any Subsidiary of
LifePoint) removed as a guarantor of, or obligor under or for, any
Columbia/HCA Group Liability or Triad Group Liability, as the case may be,
including, without limitation, in respect of any agreement (or part
thereof) assigned to Columbia/HCA or Triad (or, after giving effect to the
Restructuring Transactions and the Distribution, any of their respective
Subsidiaries) pursuant to Section 2.4 above.
-----------
(c) Removal of Triad as Guarantor of Columbia/HCA Liabilities
---------------------------------------------------------
and LifePoint Liabilities. Except as otherwise contemplated by the
-------------------------
Restructuring Transactions or as specified in any Ancillary Agreement or on
Exhibit I hereto, each of Columbia/HCA, LifePoint and Triad shall use its
---------
reasonable efforts to have, on or prior to the Distribution Date, or as
soon as practicable thereafter, Triad (and, after giving effect to the
Restructuring Transactions and the Distribution, any Subsidiary of Triad)
removed as a guarantor of, or obligor under or for, any Columbia/HCA Group
Liability or LifePoint Group Liability, as the case may be, including,
without limitation, in respect of any agreement (or part thereof) assigned
to Columbia/HCA or LifePoint (or, after giving effect to the Restructuring
Transactions and the Distribution, any of their respective Subsidiaries)
pursuant to Section 2.4 above.
-----------
(d) Indemnification Relating to Guarantees. If (x) Columbia/HCA,
--------------------------------------
LifePoint or Triad, or any of their respective Subsidiaries, as the case
may be, cannot be removed as a guarantor or obligor as set forth in Section
-------
4.4(a), (b) or (c) above or (y) Liabilities arise from and after the
------ - - -
Distribution Date but before a guarantor or obligor with reference to any
such Liability is removed pursuant to Section 4.4(a), (b) or (c) above,
-------------- - -
then such guarantor or obligor shall be indemnified and held harmless for
all Liabilities incurred by it in its capacity as guarantor or obligor by
(i) Columbia/HCA with respect to any Columbia/HCA Liabilities, (ii)
LifePoint with respect to any LifePoint Liabilities, and (iii) Triad with
respect to any Triad Liabilities.
Section 4.5. No Representations or Warranties; Consents.
------------------------------------------
(a) General. Each of the parties hereto understands and agrees
-------
that no party hereto, or to any other agreement or document contemplated by
this Agreement (including the Ancillary Agreements and Conveyancing and
Assumption Instruments, and any agreements or documents contemplated
thereby), is making any representation or warranty whatsoever, including,
without limitation, any representation or warranty:
-19-
<PAGE>
(i) as to the value or freedom from encumbrance of, or any
other matter concerning, any Assets of such party; or
(ii) as to the legal sufficiency to convey title to any
Asset.
Each of the parties hereto confirms that it is not relying on any
representation or warranty made by any other party hereto or any other
person in connection with its execution and delivery of this Agreement.
(b) Disclaimer of Merchantability or Fitness of Assets. Each
--------------------------------------------------
party hereto understands and agrees that there are no warranties, express
or implied, as to the merchantability or fitness of any of the Assets
either transferred to or retained by the Columbia/HCA Group, the LifePoint
Group or the Triad Group, as the case may be, pursuant to the Restructuring
Transactions and the other terms and provisions of this Agreement, any
Ancillary Agreement, any Conveyancing and Assumption Instrument or any
other agreement or document, and all such Assets which are so transferred
will be transferred on an "as is, where is" basis, and the party to which
any such Assets are transferred hereunder, or which retains Assets
hereunder, shall bear the economic and legal risk that any conveyances of
such Assets shall prove to be insufficient or that the title of such party
or any other member of its respective Group to any such Assets shall be
other than good and marketable and free from encumbrances.
(c) Acknowledgment of Disclosure and Waiver. Each of LifePoint
---------------------------------------
and Triad acknowledges, for itself and on behalf of each of its
Subsidiaries, that:
(i) Columbia/HCA has disclosed, and LifePoint and Triad
have knowledge of, all matters pertaining to the Assets to be conveyed
to the LifePoint Group or the Triad Group pursuant to the
Restructuring Transactions or otherwise pursuant to this Agreement to
the same extent that Columbia/HCA or any of its Affiliates has
knowledge of such matters; and
(ii) such knowledge constitutes notice and disclosure of
such matters.
Each of LifePoint and Triad waives, to the fullest extent permitted by Law,
for itself and for each of its Subsidiaries, any and all claims or causes
of action which any of them may have arising out of such matters or the
failure of any Conveyancing and Assumption Instrument to describe or refer
to, or provide notice of, any such matters.
(d) No Representations or Warranties Regarding Consents. Each of
---------------------------------------------------
the parties hereto understands and agrees that no party hereto, or to any
other agreement or document contemplated by this Agreement (including the
Ancillary Agreements and Conveyancing and Assumption Instruments, and any
-20-
<PAGE>
agreement or document contemplated thereby) is making any representation or
warranty whatsoever that the obtaining of any Consents, the execution and
delivery of any amendatory agreements and the making of any filings or
applications contemplated by this Agreement will satisfy the provisions of
any or all applicable agreements or the requirements of any or all
applicable Laws. Each of the parties hereto further agrees and understands
that the party to which any Assets are transferred as contemplated by the
Restructuring Transactions or this Agreement shall bear the economic and
legal risk that any Consents are not obtained or that any requirements of
Laws are not complied with.
Section 4.6. Limitation on Solicitation of Employees. Each of
---------------------------------------
Columbia/HCA, LifePoint and Triad agrees, for itself and, after giving effect to
the Restructuring Transactions and the Distribution, its Subsidiaries and
Affiliates, that it shall not directly or indirectly, or in connection with any
other person, firm or entity approach, counsel, or induce any employee of any
other party hereto or, after giving effect to the Restructuring Transactions and
the Distribution, any of such other party's Subsidiaries or Affiliates, to leave
his or her employment at any time prior to the second anniversary of the
Distribution Date without the prior written consent of such other party.
Section 4.7. LifePoint Registration Statement.
--------------------------------
(a) Registration. Subject to this Section 4.7, LifePoint
------------ -----------
will cause to be filed within 120 days after the Distribution Date the
LifePoint Registration Statement, and LifePoint agrees to effect no later
than 210 days after the Distribution Date (i) the registration and/or
qualification with, or the approval of, any governmental authority under
the Securities Act and any applicable state securities laws of the
LifePoint Option and the LifePoint Option Shares and the resale thereof and
(ii) the listing of the LifePoint Option Shares on NASDAQ, in each case as
may be required to permit the exercise of the LifePoint Option and the sale
or other disposition of the LifePoint Option Shares. LifePoint may, upon
written notice to Columbia/HCA, defer filing the LifePoint Registration
Statement, and may withhold efforts to cause the LifePoint Registration
Statement to become effective, for a reasonable period of time, but not in
excess of 60 days, if LifePoint has made a good faith determination that
such registration would require the disclosure of material information
which LifePoint has a bona fide business purpose for preserving as
confidential or that LifePoint is unable to comply with SEC requirements.
(b) Effectiveness. LifePoint shall keep effective and
-------------
maintain the LifePoint Registration Statement and any other registration,
qualification or listing of the LifePoint Option Shares required pursuant
to this Section 4.7, and shall from time to time amend or supplement the
-----------
LifePoint Registration Statement and the prospectus used in connection
therewith to the extent necessary in order to comply with the Securities
Act and applicable state securities laws, until the date that (i) the
LifePoint Option has been exercised in its entirety and (ii) the LifePoint
Option Shares either (x) have been sold or (y) may be sold without being
registered under Section 5 of the Securities Act or in reliance upon an
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<PAGE>
exemption therefrom. If, after the LifePoint Registration Statement becomes
effective, LifePoint advises the holders of the LifePoint Option and the
LifePoint Option Shares that LifePoint considers it appropriate for the
LifePoint Registration Statement to be amended, such holders shall suspend
any further exercises of the LifePoint Option and any sales of the
LifePoint Option Shares until LifePoint advises them that the LifePoint
Registration Statement has been amended, provided, that LifePoint shall use
file such amendment and cause it to become effective as expeditiously as
possible under the circumstances and in any event within 60 days of the
date that such notice is given to the holders.
(c) Expenses. All expenses incident to the obligations of
--------
LifePoint under Sections 4.7(a) and 4.7(b) hereof (including, without
-------------- ------
limitation, registration fees, printing or document reproduction expenses,
and fees and expenses of its counsel and accountants) shall be borne by
LifePoint, and all other expenses incident to the disposition by each
holder of the LifePoint Option Shares held by him or her (including,
without limitation, fees and expenses of his or her counsel and all
underwriting discounts, if any, brokerage commissions and similar fees)
shall be borne by such holder.
(d) Information. Columbia/HCA agrees to cause each holder of the
-----------
LifePoint Option to furnish to LifePoint such information as LifePoint may
from time to time reasonably request in connection with the LifePoint
Registration Statement and related prospectus, any amendment or supplement
thereto or any other filings required by this Section 4.7, and, for so long
-----------
as the registration, qualification, approval or listing remains effective,
promptly after the sale or any other disposition by him or her of LifePoint
Option Shares, to give LifePoint written notice of same.
(e) Indemnification under this Section 4.7. LifePoint agrees to
--------------------------------------
indemnify and hold harmless, to the extent permitted by law, the holders of
the LifePoint Option and hold them harmless at all times after the date
hereof from and against and in respect of any and all liabilities, losses,
damages, settlements, claims, costs or expenses, including, without
limitation, attorneys' fees, under the Securities Act, state securities
laws, common law or otherwise, arising out of or due to (A) any untrue
statement or alleged untrue statement of a material fact contained in the
LifePoint Registration Statement or related prospectus relating to the
registration or qualification of the LifePoint Option Shares, or (B) any
omission or alleged omission to state in the LifePoint Registration
Statement or related prospectus a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such liabilities, losses, damages, settlements, claims, costs or expenses
arise out of or are due to any untrue statement of a material fact
contained in, or omission of a material fact from, information furnished in
writing to LifePoint by the holders expressly for use in the LifePoint
Registration Statement or related prospectus. If the offering pursuant to
this Section 4.7 is made through underwriters, LifePoint agrees to enter
-----------
into an underwriting agreement in customary form with such underwriters
-22-
<PAGE>
and to indemnify such underwriters to the same extent as provided above
with respect to the indemnification of the holders. The procedures to be
followed in connection with the rights of indemnification provided in this
Section 4.7(e) are set forth in Article V hereof.
-------------- ---------
Section 4.8. Triad Registration Statement.
----------------------------
(a) Registration. Subject to this Section 4.8, Triad
------------ -----------
will cause to be filed within 120 days after the Distribution Date the
Triad Registration Statement, and Triad agrees to effect no later than 210
days after the Distribution Date (i) the registration and/or qualification
with, or the approval of, any governmental authority under the Securities
Act and any applicable state securities laws of the Triad Option and the
Triad Option Shares and the resale thereof and (ii) the listing of the
Triad Option Shares on NASDAQ, in each case as may be required to permit
the exercise of the Triad Option and the sale or other disposition of the
Triad Option Shares. Triad may, upon written notice to Columbia/HCA, defer
filing the Triad Registration Statement, and may withhold efforts to cause
the Triad Registration Statement to become effective, for a reasonable
period of time, but not in excess of 60 days, if Triad has made a good
faith determination that such registration would require the disclosure of
material information which Triad has a bona fide business purpose for
preserving as confidential or that Triad is unable to comply with SEC
requirements.
(b) Effectiveness. Triad shall keep effective and
-------------
maintain the Triad Registration Statement and any other registration,
qualification or listing of the Triad Option Shares required pursuant to
this Section 4.8, and shall from time to time amend or supplement the Triad
-----------
Registration Statement and the prospectus used in connection therewith to
the extent necessary in order to comply with the Securities Act and
applicable state securities laws, until the date that (i) the Triad Option
has been exercised in its entirety and (ii) the Triad Option Shares either
(x) have been sold or (y) may be sold without being registered under
Section 5 of the Securities Act or in reliance upon an exemption therefrom.
---------
If, after the Triad Registration Statement becomes effective, Triad advises
the holders of the Triad Option and the Triad Option Shares that Triad
considers it appropriate for the Triad Registration Statement to be
amended, such holders shall suspend any further exercises of the Triad
Option and any sales of the Triad Option Shares until Triad advises them
that the Triad Registration Statement has been amended, provided, that
Triad shall use file such amendment and cause it to become effective as
expeditiously as possible under the circumstances and in any event within
60 days of the date that such notice is given to the holders.
(c) Expenses. All expenses incident to the obligations
--------
of Triad under Sections 4.8(a) and 4.8(b) hereof (including, without
-------------- ------
limitation, registration fees, printing or document reproduction expenses,
and fees and expenses of its counsel and accountants) shall be borne by
Triad, and all other expenses incident to the disposition by each holder of
the Triad Option Shares held by him or her (including, without limitation,
fees and expenses of his or her counsel and all
-23-
<PAGE>
underwriting discounts, if any, brokerage commissions and similar fees)
shall be borne by such holder.
(d) Information. Columbia/HCA agrees to cause each holder
-----------
of the Triad Option to furnish to Triad such information as Triad may from
time to time reasonably request in connection with the Triad Registration
Statement and related prospectus, any amendment or supplement thereto or
any other filings required by this Section 4.8, and, for so long as the
-----------
registration, qualification, approval or listing remains effective,
promptly after the sale or any other disposition by him or her of Triad
Option Shares, to give Triad written notice of same.
(e) Indemnification under this Section 4.8. Triad agrees to
--------------------------------------
indemnify and hold harmless, to the extent permitted by law, the holders of
the Triad Option and hold them harmless at all times after the date hereof
from and against and in respect of any and all liabilities, losses,
damages, settlements, claims, costs or expenses, including, without
limitation, attorneys' fees, under the Securities Act, state securities
laws, common law or otherwise, arising out of or due to (A) any untrue
statement or alleged untrue statement of a material fact contained in the
Triad Registration Statement or related prospectus relating to the
registration or qualification of the Triad Option Shares, or (B) any
omission or alleged omission to state in the Triad Registration Statement
or related prospectus a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except insofar as such
liabilities, losses, damages, settlements, claims, costs or expenses arise
out of or are due to any untrue statement of a material fact contained in,
or omission of a material fact from, information furnished in writing to
Triad by the holders expressly for use in the Triad Registration Statement
or related prospectus. If the offering pursuant to this Section 4.8 is made
-----------
through underwriters, Triad agrees to enter into an underwriting agreement
in customary form with such underwriters and to indemnify such underwriters
to the same extent as provided above with respect to the indemnification of
the holders. The procedures to be followed in connection with the rights of
indemnification provided in this Section 4.8(e) are set forth in Article V
---------
hereof.
Section 4.9. Certain Real Estate Matters
---------------------------
Columbia/HCA shall, to the fullest extent permitted by law,
indemnify and hold harmless each of the LifePoint Indemnitees from and
against any and all Losses which are actually incurred by the LifePoint
Indemnitees within one year after the Distribution Date and which Losses
arise from (i) the failure of the LifePoint Group to have, on the
Distribution Date, good indefeasible fee title to, or a valid leasehold
interest in, as applicable, the LifePoint Real Property free and clear of
any and all Liens on and as of the Distribution Date except LifePoint
Permitted Exceptions, (ii) any matter (not constituting a LifePoint
Permitted Exception) that would be reflected on a current survey of the
LifePoint Real Property as of the Distribution Date, which materially and
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<PAGE>
adversely affects the LifePoint Group Business (taken as a whole), and
(iii) an incorrect legal description of the LifePoint Real Property as of
the Distribution Date that materially and adversely affects the LifePoint
Group Business (taken as a whole). Columbia/HCA shall, to the fullest
extent permitted by law, indemnify and hold harmless each of the Triad
Indemnitees from and against any and all Losses which are actually incurred
by the Triad Indemnitees within one year after the Distribution Date and
which Losses arise from (i) the failure of the Triad Group to have, on the
Distribution Date, good indefeasible fee title to, or a valid leasehold
interest in, as applicable, the Triad Real Property free and clear of any
and all Liens on and as of the Distribution Date except Triad Permitted
Exceptions, (ii) any matter (not constituting a Triad Permitted Exception)
that would be reflected on a current survey of the Triad Real Property as
of the Distribtion Date, which materially and adversely affects the Triad
Group Business (taken as a whole), and (iii) an incorrect legal description
of the Triad Real Property as of the Distribution Date that materially and
adversely affects the Triad Group Business (taken as a whole).
Section 4.10. Personal Property.
------------------
Columbia/HCA shall, to the fullest extent permitted by law,
indemnify and hold harmless each of the LifePoint Indemnitees from and
against any and all Losses which are actually incurred by the LifePoint
Indemnitees within one year after the Distribution Date and which Losses
arise from the failure of Columbia/HCA to transfer, or cause to be
transferred, its right, title and interest to the personal property
reflected on the LifePoint Balance Sheet to LifePoint free and clear of any
and all Liens which secure Funded Debt existing on and as of the
Distribution Date except (i) changes in inventory and accounts receivable,
or other personal property disposed of, in the ordinary course of business,
(ii) as disclosed on the LifePoint Balance Sheet (or in the notes thereto)
and (iii) Liens securing Funded Debt which do not, in the aggregate,
constitute a material adverse change from the financial condition of
LifePoint reflected on the LifePoint Balance Sheet. Columbia/HCA shall, to
the fullest extent permitted by law, indemnify and hold harmless each of
the Triad Indemnitees from and against any and all Losses which are
actually incurred by the Triad Indemnitees within one year after the
Distribution Date and which Losses arise from the failure of Columbia/HCA
to transfer, or cause to be transferred, its right, title and interest to
the personal property reflected on the Triad Balance Sheet to Triad free
and clear of any and all Liens which secure Funded Debt existing on and as
of the Distribution Date except (i) changes in inventory and accounts
receivable, or other personal property disposed of, in the ordinary course
of business, (ii) as disclosed on the Triad Balance Sheet (or in the notes
thereto) and (iii) Liens securing Funded Debt which do not, in the
aggregate, constitute a material adverse change from the financial
condition of Triad reflected on the Triad Balance Sheet.
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<PAGE>
ARTICLE V
INDEMNIFICATION
Section 5.1. Indemnification by Columbia/HCA.
-------------------------------
(a) Except as otherwise specifically set forth in any
provision of this Agreement or of any Ancillary Agreement, Columbia/HCA
shall, to the fullest extent permitted by law, indemnify and hold harmless
each of the LifePoint Indemnitees and the Triad Indemnitees from and
against any and all Losses which are actually incurred by the LifePoint
Indemnitees and the Triad Indemnitees, respectively, and which arise from
(i) the Columbia/HCA Liabilities, (ii) the breach by Columbia/HCA or, after
giving effect to the Restructuring Transactions and the Distribution, any
of its Subsidiaries, of any contractual obligation arising under this
Agreement, any of the Ancillary Agreements, or any of the Conveyancing and
Assumption Instruments, or (iii) the Indemnified Matters; provided,
however, that the indemnification provided for in this Section 5.1(a) shall
-------------
exclude, and Columbia/HCA shall have no responsibility for, Losses arising
out of or relating to acts, practices or omissions engaged in after the
Distribution Date by LifePoint or Triad or any of their respective
Subsidiaries or Affiliates.
(b) For purposes of the indemnification specified in Section
-------
5.1(a) hereof, "Indemnified Matters" means (x) proceedings commenced by the
------
United States Department of Justice and other federal and state
governmental authorities (the "Government Investigations") of certain acts,
practices or omissions alleged to have been engaged in by Columbia/HCA and
its Subsidiaries and Affiliates prior to the Distribution Date with respect
to Medicare, Medicaid, Medi-Cal and Champus patients regarding (i)
allegedly improper coding, including, but not limited to, diagnosis related
group ("DRG") coding (commonly referred to as "upcoding") relating to bills
submitted for medical services, (ii) allegedly improper outpatient
laboratory billing (e.g., unbundling of services, medically unnecessary
tests), (iii) inclusion of allegedly improper items in cost reports
submitted as a basis for reimbursement under Medicare, Medicaid, Medi-Cal
and similar government programs for all cost reports relating to periods
ending on or prior to the Distribution Date (it being understood that the
scope of this clause (iii) includes any stub period from the date of filing
of any such cost report to the Distribution Date), (iv) arrangements with
physicians and other parties that allegedly violate certain federal and
state laws governing referral relationships, including fraud and abuse,
anti-kickback and "Stark" laws, (v) allegedly improper acquisitions of home
health care agencies and allegedly excessive billing for home health care
services, and (vi) other allegedly improper billing and coding practices
with respect to government programs; (y) proceedings commenced and claims
asserted by private parties and described in Columbia/HCA's Annual Report
on Form 10-K for the Fiscal Year ended
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<PAGE>
December 31, 1998 (other than proceedings and claims generically described
in such Form 10-K as matters arising in the ordinary course of business,
except to the extent that any such proceeding or claim is covered by an
insurance policy maintained by Columbia/HCA and listed on Exhibit D
hereto), and (z) proceedings commenced and claims asserted, whether before
or after the Distribution Date, by Governmental Authorities and private
parties arising from acts, practices or omissions engaged in prior to the
Distribution Date and relating to the subjects of the proceedings referred
to in clauses (x) and (y) above or otherwise relating to any violation or
alleged violation of a federal or state law which gives rise to a claim of
fraud in the billing for and/or delivery of healthcare services.
(c) It is agreed by the parties hereto that any positive
recovery which results from resolution of a proceeding or claim which is an
Indemnified Matter for the purposes of the indemnification specified in
Section 5.1(a) hereof shall be for the sole benefit of Columbia/HCA.
--------------
(d) Notwithstanding the definition of "Losses" herein, to
the extent that, solely as a result of an Indemnified Matter, any hospital
owned and operated by, or leased and operated by, LifePoint or Triad as of
the date of issuance of an Exclusion Order (as defined herein) is
permanently excluded from participation in the Medicare and Medicaid
programs by a final and nonappealable order issued by HCFA or by the OIG
(an "Exclusion Order"), then Columbia/HCA shall make a cash payment to
LifePoint or Triad, as the case may be, in respect of each hospital so
excluded (each, an "Excluded Hospital") in an amount , if positive, equal
to (x) five multiplied by the Excluded Hospital's 1998 EBITDA as set forth
on Annex A hereto less (y) the net proceeds of the sale or other
disposition of such Excluded Hospital. Such payment shall be made by
Columbia/HCA within 30 days following the date of the sale or other
disposition of the Excluded Hospital.
Section 5.2. Indemnification by LifePoint. Except as otherwise
----------------------------
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, LifePoint shall, to the fullest extent permitted by law, indemnify
and hold harmless the Columbia/HCA Indemnitees and the Triad Indemnitees from
and against any and all Losses of the Columbia/HCA Indemnitees and the Triad
Indemnitees, respectively, arising out of, by reason of or otherwise in
connection with either (a) the LifePoint Liabilities or (b) the breach by
LifePoint or, after giving effect to the Restructuring Transactions and the
Distribution, any of its Subsidiaries, of any contractual obligation arising
under this Agreement, any of the Ancillary Agreements, or any of the
Conveyancing and Assumption Instruments.
Section 5.3. Indemnification by Triad. Except as otherwise
------------------------
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Triad shall, to the fullest extent permitted by law, indemnify and
hold harmless the Columbia/HCA Indemnitees and the LifePoint Indemnitees from
and against any and all Losses of the Columbia/HCA Indemnitees and the LifePoint
Indemnitees, respectively, arising out of,
-27-
<PAGE>
by reason of or otherwise in connection with either (a) the Triad Liabilities or
(b) the breach by Triad or, after giving effect to the Restructuring
Transactions and the Distribution, any of its Subsidiaries, of any contractual
obligation arising under this Agreement, any of the Ancillary Agreements, or any
of the Conveyancing and Assumption Instruments.
Section 5.4. Limitations on Indemnification Obligations.
------------------------------------------
(a) Reductions for Insurance Proceeds and Other
-------------------------------------------
Recoveries. The amount that any party (an "Indemnifying Party") is or may
----------
be required to pay to any person (an "Indemnitee") pursuant to Section 5.1,
-----------
Section 5.2 or Section 5.3 above, as applicable, shall be reduced
----------- -----------
(retroactively or prospectively)---by any Insurance Proceeds, other amounts
actually recovered from third parties, or amounts recovered pursuant to any
Ancillary Agreement, by or on behalf of such Indemnitee in respect of the
related Losses. Each of the parties agrees that it shall use its best
efforts to collect any such Insurance Proceeds or other amounts to which it
or any of its Subsidiaries may be entitled. The existence of a claim by an
Indemnitee for insurance or against a third party in respect of any Loss
shall not delay any payment pursuant to the indemnification provisions
contained herein and otherwise determined to be due and owing by an
Indemnifying Party; rather, the Indemnifying Party shall make payment in
full of such amount so determined to be due and owing by it against an
assignment by the Indemnitee to the Indemnifying Party of the entire claim
of the Indemnitee for such insurance or against such third party. No
insurer or any other third party shall be (i) entitled to a benefit it
would not be entitled to receive in the absence of the foregoing
indemnification provisions, (ii) relieved of the responsibility to pay any
claims for which it is obligated, or (iii) entitled to any subrogation
rights with respect to any obligation arising under the foregoing
indemnification provisions. If an Indemnitee shall have received the
payment required by this Agreement from an Indemnifying Party in respect of
any Loss and shall subsequently actually receive Insurance Proceeds or
other amounts in respect of such Loss, then such Indemnitee shall hold such
Insurance Proceeds or other amounts in trust for the benefit of such
Indemnifying Party and promptly shall pay to such Indemnifying Party a sum
equal to the amount of such Insurance Proceeds or other amounts actually
received, up to the aggregate amount of any payments received from such
Indemnifying Party pursuant to this Agreement in respect of such Loss.
(b) Adjustments for Taxes. The amount of any Loss shall
---------------------
be: (i) increased (retroactively or prospectively) to take into account any
net Tax cost actually incurred by an Indemnitee arising from any payments
received from the Indemnifying Party (grossed up for such increase); and
(ii) reduced (retroactively or prospectively) to take into account any net
Tax benefit actually realized by an Indemnitee arising from the incurrence
or payment of any such Loss. In computing the amount of such Tax cost or
Tax benefit, an Indemnitee shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising
from the receipt or accrual of any payment with respect to any such Loss or
the incurrence or payment of any such Loss. If
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<PAGE>
an Indemnitee shall have received or accrued the payment required by this
Agreement from an Indemnifying Party and shall subsequently actually
realize any net Tax benefit arising from the incurrence or payment of such
Loss, then such Indemnitee promptly shall pay to such Indemnifying Party a
sum equal to the amount of such net Tax benefit, up to the aggregate amount
of any payments received from such Indemnifying Party pursuant to this
Agreement in respect of such Loss.
(c) Reductions for Subsequent Recoveries or Other
---------------------------------------------
Events. In addition to any adjustments required pursuant to Section 5.4(a)
------ -------------
or Section 5.4(b) above, if the amount of any Loss shall, at any time
-------------
subsequent to any indemnification payment made by an Indemnifying Party
pursuant to this Article V, be reduced by recovery, settlement or
---------
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by Indemnitee to the
Indemnifying Party, up to the aggregate amount of any payments received
from such Indemnifying Party pursuant to this Article V in respect of such
---------
Loss.
(d) Assignment of Claims for Contribution and/or
--------------------------------------------
Indemnification. Upon the request of an Indemnifying Party, an Indemnitee
---------------
shall assign to the Indemnifying Party any and all claims of such
Indemnitee for contribution and/or indemnification against any party (other
than another Indemnitee) arising out of the claim for which indemnity is
sought.
Section 5.5. Procedures Regarding Indemnification.
------------------------------------
(a) Notice of Third Party Claims. If a claim or demand is
----------------------------
made against an Indemnitee by any person who is not a party hereto or a
Subsidiary of a party hereto (a "Third Party Claim") as to which such
Indemnitee is entitled to indemnification pursuant to this Agreement, such
Indemnitee shall notify the Indemnifying Party in writing, and in
reasonable detail, of the Third Party Claim promptly (and in any event
within fifteen business days) after receipt by such Indemnitee of written
notice of the Third Party Claim; provided, however, that failure to give
such notification shall not affect the Indemnitee's right to
indemnification hereunder except to the extent the Indemnifying Party shall
have been actually prejudiced as a result of such failure (except that the
Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnitee failed to give such notice). Thereafter, the
Indemnitee shall deliver to the Indemnifying Party, promptly (and in any
event within five business days) after the Indemnitee's receipt thereof,
copies of all notices and documents (including court papers) received by
the Indemnitee relating to the Third Party Claim.
(b) Legal Defense of Third Party Claims. If a Third Party
-----------------------------------
Claim is made against an Indemnitee, the Indemnifying Party shall be
entitled to participate in the defense thereof and, if it so chooses, to
assume the defense thereof with counsel selected by the Indemnifying Party.
Should the
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<PAGE>
Indemnifying Party so elect to assume the defense of a Third Party
Claim, the Indemnifying Party shall, within 30 days of its receipt of
notice of such Third Party Claim from Indemnitee (or sooner if the nature
of the Third Party Claim so requires), notify the Indemnitee of its intent
to do so, and the Indemnifying Party shall thereafter not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, that such
Indemnitee shall have the right to employ counsel to represent such
Indemnitee if, in the judgment of the Indemnifying Party, a conflict of
interest between such Indemnitee and such Indemnifying Party exists in
respect of such claims which would make representation of both such parties
by one counsel inappropriate, and in such event the fees and expenses of
such separate counsel shall be paid by such Indemnifying Party. If the
Indemnifying Party assumes such defense, the Indemnitee shall have the
right to participate in the defense thereof and to employ counsel, subject
to the proviso of the preceding sentence, at its own expense, separate from
the counsel employed by the Indemnifying Party, it being understood that
the Indemnifying Party shall control such defense. The Indemnifying Party
shall be liable for the fees and expenses of counsel employed by the
Indemnitee for any period during which the Indemnifying Party has failed to
assume the defense thereof (other than during any period during which the
Indemnitee shall have failed to have given notice of the Third Party Claim
as required above). If the Indemnifying Party so elects to assume the
defense of any Third Party Claim, the Indemnifying Party shall have the
right to settle such action or claim on such terms as it deems appropriate,
and all of the Indemnitees shall fully and completely cooperate with the
Indemnifying Party in the defense of such action or claim and shall provide
the Indemnifying Party with access (including access to employees of the
Indemnitees) and copying rights during normal business hours to all
records, books, contracts, instruments, computer data and other information
in the possession of the Indemnitees which is reasonably required in
connection with the defense of such action or claim. It is understood and
agreed that wherever in this Section 5. 5 reference is made to the payment
-------------
of fees and expenses of counsel for the Indemnitee by the Indemnifying
Party, the Indemnifying Party shall not, in connection with any Third Party
Claim or any group of separate but substantially similar Third Party Claims
arising out of the same general allegations, be liable for the fees and
expenses of more than one separate firm of attorneys at any time for all
Indemnitees.
(c) Settlement of Third Party Claims. Except as
--------------------------------
otherwise provided in this Section 5.5 or as otherwise specifically
-----------
provided in any Ancillary Agreement, unless and until the Indemnifying
Party has failed to assume the defense of any Third Party Claim within
thirty days of its receipt of notice of such Third Party Claim from
Indemnitee (or sooner if the nature of the Third Party Claim so requires),
then in no event will the Indemnitee admit any liability with respect to,
or settle, compromise or discharge, any Third Party Claim without the
Indemnifying Party's prior written consent; provided, however, that the
Indemnitee shall have the right to settle, compromise or discharge such
Third Party Claim without the consent of the Indemnifying Party if the
Indemnitee releases the Indemnifying Party from its indemnification
obligation hereunder
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<PAGE>
with respect to such Third Party Claim and such settlement, compromise or
discharge would not otherwise adversely affect the Indemnifying Party. If,
upon expiration of 30 days from the date that the Indemnifying Party
receives notice of a Third Party Claim from Indemnitee, the Indemnifying
Party has not notified the Indemnitee of its election to assume the defense
of such Third Party Claim, then in no event shall the Indemnitee settle,
compromise or discharge such Third Party Claim without providing prior
written notice to the Indemnifying Party, and the Indemnifying Party shall
then have the option within fifteen days following receipt of such notice
to:
(A) approve and agree to pay the settlement;
(B) approve the amount of the settlement, reserving the
right to contest the Indemnitee's right to indemnity pursuant to
this Agreement; or
(C) disapprove the settlement and assume in writing all
past and future responsibility for such Third Party Claim
(including all of Indemnitee's prior expenditures in connection
therewith, and the Indemnifying Party shall furnish reasonable
assurance that it will discharge such responsibility).
(d) Other Claims. Any claim on account of a Loss which does not
------------
result from a Third Party Claim shall be asserted by written notice given
by the Indemnitee to the applicable Indemnifying Party. Such Indemnifying
Party shall have a period of fifteen days after the receipt of such notice
within which to respond thereto. If such Indemnifying Party does not
respond within such fifteen-day period, or if such Indemnifying Party
rejects such claim in whole or in part, then such Indemnitee shall be free
to pursue such remedies as may be available to it under this Agreement.
Section 5.6. Indemnification Payments. Amounts for which payment is
------------------------
required to be made by any party pursuant to this Article V shall be reflected
---------
on the Monthly Statements to be prepared by each of LifePoint and Triad pursuant
to Section 8.1(f) hereof, as and when bills are received or loss, liability,
--------------
claim, damage or expense is incurred or recovery is made. Such amounts shall be
adjusted to reflect addition or deduction of any Reconciling Payment required to
be made pursuant to Section 8.1(f) and such payments shall be made at the times
--------------
and in the manner provided in Section 8.1(f).
--------------
Section 5.7. Cooperation of the Parties with Respect to Actions and
------------------------------------------------------
Third Party Claims.
- ------------------
(a) Identification of Party in Interest. Any party to this
-----------------------------------
Agreement that has responsibility for an Action or Third Party Claim shall
identify itself as the true party in interest with respect to such Action
or Third Party Claim and shall use its reasonable efforts to obtain the
dismissal of any other party to this Agreement from such Action or Third
Party Claim.
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<PAGE>
(b) Disputes Regarding Responsibility for Actions and Third
-------------------------------------------------------
Party Claims. If there is uncertainty or disagreement concerning which
------------
party to this Agreement has responsibility for any Action or Third Party
Claim, the following procedure shall be followed in an effort to reach
agreement concerning responsibility for such Action or Third Party Claim:
(i) The parties in disagreement over the responsibility
for an Action or Third Party Claim shall exchange brief written
statements setting forth their position concerning which party has
responsibility for the Action or Third Party Claim in accordance with
the provisions of this Article V. These statements shall be exchanged
---------
within ten days of a party putting another party on written notice
that such other party is or may be responsible for the Action or Third
Party Claim.
(ii) If, within ten days of the exchange of the written
statement of each party's position, agreement is not reached on
responsibility for the Action or Third Party Claim, the General
Counsel for each of the parties in disagreement over responsibility
for the Action or Third Party Claim shall meet (which meeting may be
by telephone or in person) to attempt to reach agreement on
responsibility for the Action or Third Party Claim.
(c) Effect of Failure to Follow Procedure. Failure to follow
-------------------------------------
the procedure set forth in Section 5.7(b) above shall not affect the rights
--------------
and responsibilities of the parties as established by the other provisions
of this Article V.
---------
(d) Exchange of Information. In connection with the handling of
-----------------------
current or future Actions or Third Party Claims, the parties may determine
that it is in their mutual interest to exchange privileged or confidential
information. If so, the parties agree to discuss whether it is in their
mutual interest to enter into a joint defense agreement or information
exchange agreement to maintain the confidentiality of their communications
and to permit them to maintain the confidentiality of proprietary
information or information that is otherwise confidential or subject to an
applicable privilege, including, but not limited to, the attorney-client,
work product, executive, deliberative process, or self-evaluation
privileges.
Section 5.8. Contribution. To the extent that any indemnification
------------
provided for under Section 5.1, Section 5.2 or Section 5.3 above is unavailable
----------- ----------- -----------
to an Indemnitee or is insufficient in respect of any Loss of such Indemnitee,
then the Indemnifying Party under such Section, in lieu of indemnifying such
Indemnitee in respect of such Loss, shall contribute to the amount paid or
payable by such Indemnitee as a result of such Loss (a) in such proportion as is
appropriate to reflect the relative value of the business owned or held by the
Indemnifying Party immediately after giving effect to the Distribution, on the
one hand, and the value of the business owned or held by the Indemnitee
immediately after giving effect to the Distribution, on the other hand, or
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(b) if the allocation provided by clause (a) above is not permitted by
applicable Law, in such proportion as is appropriate to reflect not only the
relative sizes of the parties referred to in clause (a) above but also the
relative fault of the Indemnifying Party, on the one hand, and of the
Indemnitee, on the other hand, in connection with the action, inaction,
statements or omissions that resulted in such Loss as well as any other relevant
equitable considerations.
Section 5.9. Survival of Indemnities; Exclusive Remedy. The
-----------------------------------------
indemnification obligations of Columbia/HCA, LifePoint and Triad under this
Article V shall survive the sale or other transfer by any of them of any Assets
- ---------
or businesses or the assignment by any of them of any Liabilities, with respect
to any Loss by any Indemnitee related to such Assets, businesses or Liabilities;
provided, however, that the indemnification obligations set forth herein shall
be terminated to the extent that any Indemnitee seeks indemnification in respect
of a matter in which the procedures regarding indemnification set forth in this
Article V (including the provision of Section 5.5 above requiring that an
- --------- -----------
Indemnifying Party be given the opportunity to assume and control the defense of
any Third Party Claim) shall not have been followed. The indemnification
provided for in this Article V shall be the exclusive remedy in any action
---------
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party.
ARTICLE VI
ANCILLARY AGREEMENTS
Section 6.1. Generally. Except as provided in Section 5.4 above
--------- -----------
relating to adjustment of indemnification amounts for insurance proceeds and net
Tax benefits or detriments, all matters relating to the subject matter of each
Ancillary Agreement shall be governed exclusively by such Ancillary Agreement,
and the provisions of such Ancillary Agreement shall govern in the event of any
inconsistency with this Agreement.
ARTICLE VII
ACCOUNTING MATTERS
Section 7.1. Settlement of Intercompany Accounts.
-----------------------------------
(a) Settlement of Intercompany Accounts Between LifePoint Group
-----------------------------------------------------------
and Columbia/HCA Group. All intercompany receivables, payables and loans
----------------------
(other than receivables, payables and loans otherwise specifically provided
for in any of the Ancillary Agreements or hereunder), including, without
limitation, in respect of any cash balances, any cash balances representing
deposited checks or drafts for which only a provisional credit has been
allowed or any cash held in any centralized cash management system, between
the LifePoint Group, on the one hand, and the Columbia/HCA Group, on the
other hand, shall,
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<PAGE>
as of the close of business on the Distribution Date, be settled,
capitalized or converted into ordinary trade accounts, in each case as may
be agreed in writing prior to the Distribution Date by duly authorized
representatives of the Columbia/HCA Group and the LifePoint Group.
(b) Settlement of Intercompany Accounts Between Triad Group and
-----------------------------------------------------------
Columbia/HCA Group. All intercompany receivables, payables and loans (other
------------------
than receivables, payables and loans otherwise specifically provided for in
any of the Ancillary Agreements or hereunder), including, without
limitation, in respect of any cash balances, any cash balances representing
deposited checks or drafts for which only a provisional credit has been
allowed or any cash held in any centralized cash management system, between
the Triad Group, on the one hand, and the Columbia/HCA Group, on the other
hand, shall, as of the close of business on the Distribution Date, be
settled, capitalized or converted into ordinary trade accounts, in each
case as may be agreed in writing prior to the Distribution Date by duly
authorized representatives of the Columbia/HCA Group and the Triad Group.
(c) Settlement of Intercompany Accounts Between LifePoint Group
-----------------------------------------------------------
and Triad Group. All intercompany receivables, payables and loans (other
---------------
than receivables, payables and loans otherwise specifically provided for in
any of the Ancillary Agreements or hereunder), including, without
limitation, in respect of any cash balances, any cash balances representing
deposited checks or drafts for which only a provisional credit has been
allowed or any cash held in any centralized cash management system, between
the LifePoint Group, on the one hand, and the Triad Group, on the other
hand, shall, as of the close of business on the Distribution Date, be
settled, capitalized or converted into ordinary trade accounts, in each
case as may be agreed in writing prior to the Distribution Date by duly
authorized representatives of the LifePoint Group and the Triad Group.
Section 7.2. Allocation of Prepaid Items and Reserves. All prepaid
----------------------------------------
items and reserves that have been maintained by Columbia/HCA on a consolidated
basis but that relate in part to Assets or Liabilities of the LifePoint Group or
the Triad Group shall be allocated among the Columbia/HCA Group, the LifePoint
Group and the Triad Group in such manner as shall be determined by Columbia/HCA
in its sole discretion.
Section 7.3. Financial Accounting Treatment of Assets Transferred and
--------------------------------------------------------
Liabilities Assumed. Solely for financial accounting purposes, any transfer of
- -------------------
Assets of the Columbia/HCA Group to the LifePoint Group or the Triad Group
pursuant to this Agreement shall constitute contributions by Columbia/HCA to the
capital of LifePoint or Triad, as the case may be, and any assumption by the
LifePoint Group or the Triad Group of Liabilities of the Columbia/HCA Group
pursuant to this Agreement, net of Assets received, shall be treated as a
distribution by LifePoint or Triad, as the case may be, to Columbia/HCA.
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<PAGE>
Section 7.4. Other Accounting Matters. Exhibit J hereto sets forth
------------------------ ---------
the agreement of Columbia/HCA, LifePoint and Triad as to the payment of and
financial responsibility for certain matters.
ARTICLE VIII
INDEMNIFICATION AND OTHER MATTERS
RELATING TO GOVERNMENT PROGRAMS
Section 8.1. Indemnification and Other Matters Relating to Pre-
--------------------------------------------------
Distribution Period Cost Reports.
- --------------------------------
(a) Each of LifePoint and Triad shall be responsible for filing
Medicare provider, Medicaid provider, Medi-Cal provider, Champus/Tricare
provider, and cost-based Blue Cross provider cost reports ("Cost Reports")
in respect of its respective hospitals and other health care facilities
("Facilities") relating to periods ending on or prior to the Distribution
Date ("Pre-Distribution Periods"). Columbia/HCA shall indemnify and hold
harmless each of LifePoint and Triad for all payments which it or any
member of its Group is required to make in respect of Cost Report payables
relating to Pre-Distribution Periods, and each of LifePoint and Triad shall
indemnify and hold harmless Columbia/HCA for and pay over to Columbia/HCA
any amount received by it or any member of its Group in respect of Cost
Report receivables relating to Pre-Distribution Periods. The first payment
due to be made hereunder to and from Columbia/HCA, on the one hand, and to
and from each of LifePoint and Triad, on the other hand, shall be
determined in respect of the period between the Distribution Date and May
31, 1999, and payments due to be made hereunder shall thereafter be
determined and paid on a monthly basis, all as provided in Section 8.1(f)
--------------
below. Each of LifePoint, Triad and Columbia/HCA will account for the
arrangement provided for in this Section 8.1(a) in a manner intended to
reflect the retention of all operating income statement impacts arising
from Pre-Distribution Cost Reports by Columbia/HCA.
(b) Columbia/HCA shall retain all rights to Medicare, Medicaid,
Medi-Cal, Champus/Tricare, and cost-based Blue Cross reimbursement for all
appeal issues relating to Pre-Distribution Periods. Columbia/HCA shall have
sole discretion to initiate and pursue any individual and group appeal
issue for Cost Reports relating to Pre-Distribution Periods; however,
Columbia/HCA, LifePoint and Triad will cooperate in discussing new appeal
issues. Each of LifePoint and Triad agrees to indemnify and hold harmless
Columbia/HCA for and pay over to Columbia/HCA any payment received by it or
any member of its Group in respect of appeal issues relating to Pre-
Distribution Periods. Such payment over to Columbia/HCA shall be made
within 30 days of the receipt of such payment by LifePoint or Triad, as the
case may be.
(c) Each of LifePoint and Triad shall appoint Columbia/HCA as
the third party representative for all hearings on group and individual
appeal
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<PAGE>
issues relating to Pre-Distribution Periods. Each of LifePoint and Triad
acknowledges that all correspondence (such as audit adjustments, Notices of
Program Reimbursement, etc.) relating to such appeal issues will be
forwarded within seven business days of receipt to the Columbia/HCA
Director of Appeals or to such other representative of Columbia/HCA as may
be specified in writing by Columbia/HCA. Each of LifePoint and Triad
further agrees that if failure to forward such documentation on a timely
basis results in loss of an appeal issue, then LifePoint and/or Triad, as
the case may be, shall indemnify and hold harmless Columbia/HCA for and pay
over to Columbia/HCA an amount reasonably determined by Columbia/HCA to
represent the amount of lost reimbursement resulting from such loss of an
appeal issue.
(d) Prior to the preparation of the Cost Reports relating to
Pre-Distribution Periods, each of LifePoint and Triad shall obtain
information and data from Columbia/HCA on appeal issues that are to be
included in such Cost Reports. Any portion of such Cost Reports relating to
such appeal issues shall be prepared on a basis consistent with directions
from Columbia/HCA. Drafts of all Cost Reports relating to Pre-Distribution
Periods shall be submitted by LifePoint and Triad to Columbia/HCA for
review and approval before such Cost Reports are filed with the Medicare,
Medicaid, Medi-Cal, Champus/Tricare and cost-based Blue Cross fiscal
intermediaries, and no Cost Report relating to a Pre-Distribution Period
shall be filed by LifePoint or Triad prior to approval of such Cost Report
by Columbia/HCA. The parties agree that, with respect to any Cost Report
related to a Pre-Distribution Period which is due to be filed after June
30, 1999, a draft shall be furnished to Columbia/HCA for its review not
less than 30 days prior to the date that such Cost Report is due to be
filed, and Columbia/HCA shall provide its comments on such draft within 14
days of its receipt of the draft. Each of LifePoint and Triad shall be
responsible for the completion of the Columbia/HCA Home Office Workpaper
set applicable to Home Office Cost Statements relating to Pre-Distribution
Periods and shall submit such workpaper set to the Columbia/HCA Assistant
Vice President of Home Office or to such other representative of
Columbia/HCA as may be specified by Columbia/HCA. Each of LifePoint and
Triad agrees that it will not file or cause to be filed any amended Cost
Report relating to a Pre-Distribution Period without the prior written
consent of Columbia/HCA, and further agrees that it will file any amendment
to a Cost Report relating to a Pre-Distribution Period which it is
requested to file by Columbia/HCA. Each of LifePoint and Triad agrees to
provide Columbia/HCA with monthly status reports in a form reasonably
requested by Columbia/HCA setting forth a description of all activity in
respect of Cost Reports relating to Pre-Distribution Periods together with
copies of all related documentation received by it or any of its Facilities
(except to the extent that such documentation has previously been provided
to Columbia/HCA).
(e) Notwithstanding the provisions of Section 9.1 below, all
-----------
information, documents and records relating to Medicare, Medicaid, Medi-
Cal, Champus/Tricare and cost-based Blue Cross receivables and payables
which relate to Pre-Distribution Periods shall be the property of
Columbia/HCA. Each
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<PAGE>
of LifePoint and Triad agrees to take all necessary action, at its expense,
to transfer or cause to be transferred to Columbia/HCA, as soon as
practicable following the Distribution Date, all of such materials in its
possession. Prior to the transfer of such information, documents and
records to Columbia/HCA, each of LifePoint and Triad may make copies of
such materials for its own use, but shall not deliver copies of such
materials to any other party, including, without limitation, any consultant
or any potential buyer of a Facility, without the prior written consent of
Columbia/HCA.
(f) For any period (initially, the period between the
Distribution Date and May 31, 1999, and thereafter, each calendar month) in
which the amount of payments in respect of Cost Reports relating to Pre-
Distribution Periods received by LifePoint or Triad exceeds the aggregate
amount of payments made by it, then LifePoint or Triad shall be obligated
pursuant to Section 8.1(a) above to make a cash payment to Columbia/HCA
--------------
equal to the difference between the aggregate amount of payments received
by it and the aggregate amount of payments made by it, and for any calendar
month in which the amount of payments in respect of Cost Reports relating
to Pre-Distribution Periods made by LifePoint or Triad exceeds the
aggregate amount of payments received by it, then Columbia/HCA shall be
obligated pursuant to Section 8.1(a) above to make a cash payment to
-------
LifePoint or Triad equal to the difference between the aggregate amount of
payments made by LifePoint or Triad and the aggregate amount of payments
received by LifePoint or Triad (in either case, a "Reconciling Payment").
Within 20 days of the end of each calendar month, each of LifePoint and
Triad shall provide to Columbia/HCA a statement (the "Monthly Statement")
summarizing all payments made by it, and all payments received by it,
during such month in respect of Cost Reports relating to Pre-Distribution
Periods, and setting forth the amount of the Reconciling Payment to be made
by it to Columbia/HCA or by Columbia/HCA to it, as the case may be. The
Monthly Statements prepared by LifePoint and Triad shall also reflect any
payments to be made by LifePoint or Triad to Columbia/HCA, or by
Columbia/HCA to LifePoint or Triad, pursuant to the provisions of Article V
hereof. If Columbia/HCA does not provide notice of disagreement within 15
days following its receipt of a Monthly Statement, the Monthly Statement
shall become final and binding, and the party obligated to make the
Reconciling Payment provided for therein, and any other payment provided
for therein, shall make such payment within 10 days of the date that the
Monthly Statement becomes final and binding. A notice of disagreement with
the Monthly Statement shall provide reasonable detail of the nature of the
disagreement. During the 15 day period following receipt of a notice of
disagreement, Columbia/HCA and LifePoint or Triad, as the case may be,
shall attempt to resolve any differences they may have with respect to any
matters specified in the notice of disagreement. If at the end of such 15
day period the parties have reached agreement with respect to the matters
identified in the notice of disagreement, the Monthly Statement (as
adjusted to reflect such agreement) shall be final and binding, and the
party obligated to make the Reconciling Payment provided for therein, and
any other payment provided for therein, shall make such payment within 10
days of the date that the Monthly
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<PAGE>
Statement becomes final and binding. If at the end of such 15 day period
the parties have not reached agreement with respect to the matters
identified in the notice of disagreement, then (i) any Reconciling Payment
or other payment (or portion thereof) which would be required to be made by
any party under the Monthly Statement if the disputed matter or matters
were resolved in its favor shall be made and (ii) resolution of the
disputed matter or matters shall be governed by the applicable provisions
of Article XI hereof.
Section 8.2. Matters Relating to Post-Distribution Period Cost
-------------------------------------------------
Reports.
- -------
(a) Each of Columbia/HCA, LifePoint and Triad shall be
responsible for filing Medicare provider, Medicaid provider, Medi-Cal
provider, Champus/Tricare provider, and cost-based Blue Cross provider Cost
Reports in respect of its Facilities relating to periods ending after the
Distribution Date ("Post-Distribution Periods"), and each shall be entitled
to, or be responsible for, any receivables or payables in respect of Cost
Reports relating to Post-Distribution Periods.
(b) Each of Columbia/HCA, LifePoint and Triad shall be
responsible for its own separate and distinct Medicare, Medicaid, Medi-Cal,
Champus/Tricare and cost-based Blue Cross appeal functions (including,
without limitation, the protection of appeal rights and the filing of
appeal requests) relating to any Post-Distribution Period; provided,
however, that if Medicare, Medicaid, Medi-Cal, Champus/Tricare and/or cost-
based Blue Cross group appeal cases can be or are required to be
consolidated for Cost Reports relating to Post-Distribution Periods, each
of Columbia/HCA, LifePoint and Triad agree to share the legal fees and
expert witness fees on a pro rata basis based upon the amount of the
reimbursement in dispute for the appeal cases for each party. Each party
shall bear its own internal costs as related to such appeal. The decision
to consolidate the cases shall be made through the mutual agreement of the
parties affected by the appeal, and where cases are consolidated, such
parties shall mutually agree as to the management of the appeal cases
(including, without limitation, approval of position papers, attorneys to
be used, expert witnesses and venue).
Section 8.3. Cooperation on Reimbursement Matters.
------------------------------------
(a) Each of LifePoint and Triad shall be responsible for
furnishing, in a form reasonably requested by Columbia/HCA, all
documentation required as part of the Medicare, Medicaid, Medi-Cal,
Champus/Tricare and cost-based Blue Cross audits of Cost Reports relating
to Pre-Distribution Periods and each agrees to assist in whatever way
reasonably requested by Columbia/HCA in connection with resolutions of
issues and disputes in connection with Medicare, Medicaid, Medi-Cal,
Champus/Tricare and cost-based Blue Cross programs, including, without
limitation, by providing witnesses and by causing the appropriate hospital
financial officer to attend all exit conferences.
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<PAGE>
(b) Each of LifePoint and Triad shall notify Columbia/HCA of all
audits or other proceedings with respect to reimbursement through the
Medicare, Medicaid, Medi-Cal, Champus/Tricare and cost-based Blue Cross
programs for Cost Reports relating to Pre-Distribution Periods. Such notice
shall be given within 48 hours after LifePoint's or Triad's corporate
office is notified of the scheduling of such audit or proceeding.
Columbia/HCA shall also be provided with all correspondence relating to
such proceedings (such as proposed audit adjustments) within seven business
days of receipt. No action shall be taken by LifePoint or Triad with regard
to such audits or other proceedings (except for the provision of requested
documentation at the Facility level) without the prior written consent of
Columbia/HCA.
Section 8.4. Limitation. The obligations of Columbia/HCA pursuant to
----------
Section 8.1(a) above to indemnify LifePoint and Triad for payments which they
- --------------
are required to make in respect of one or more Cost Reports relating to Pre-
Distribution Periods shall be terminated in the event that LifePoint or Triad,
as the case may be, fails to comply in all material respects with the procedures
regarding such Cost Reports, appeal issues, cooperation and related matters set
forth in this Article VIII.
ARTICLE IX
CORPORATE RECORDS AND INFORMATION
Section 9.1. Provision, Transfer and Delivery of Applicable Corporate
-------------------------------------------------------
Records. Except as otherwise provided herein or in any Ancillary Agreement:
- -------
(a) Provision, Transfer and Delivery of Columbia/HCA Group
------------------------------------------------------
Records. Each of LifePoint and Triad shall take all necessary action to
-------
transfer, or cause to be transferred, as soon as practicable following the
Distribution Date (at Columbia/HCA's expense) to Columbia/HCA, the Books
and Records in its or its Subsidiaries' possession that relate primarily to
the Columbia/HCA Group Business or are necessary to operate the
Columbia/HCA Group Business (collectively, the "Columbia/HCA Group
Records"), except to the extent such items are already in the possession of
the Columbia/HCA Group. The Columbia/HCA Group Records shall be the
property of Columbia/HCA, but shall be available pursuant to Section 9.2
-----------
below to each of LifePoint and Triad for review and copying.
(b) Provision, Transfer and Delivery of LifePoint Group Records.
-----------------------------------------------------------
Columbia/HCA and Triad shall take all necessary action to transfer, or
cause to be transferred, as soon as practicable following the Distribution
Date (at LifePoint's expense) to LifePoint, the Books and Records in its or
its Subsidiaries' possession that relate primarily to the LifePoint Group
Business or are necessary to operate the LifePoint Group Business
(collectively, the "LifePoint Group Records"), except to the extent such
items are already in the possession of the LifePoint Group. The LifePoint
Group Records shall be the
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<PAGE>
property of LifePoint, but shall be available pursuant to Section 9.2 below
-----------
to each of Columbia/HCA and Triad for review and copying.
(c) Provision, Transfer and Delivery of Triad Group Records.
-------------------------------------------------------
Each of Columbia/HCA and LifePoint shall take all necessary action to
transfer, or cause to be transferred, as soon as practicable following the
Distribution Date (at Triad's expense) to Triad, the Books and Records in
its or its Subsidiaries' possession that relate primarily to the Triad
Group Business or are necessary to operate the Triad Group Business
(collectively, the "Triad Group Records"), except to the extent such items
are already in the possession of the Triad Group. The Triad Group Records
shall be the property of Triad, but shall be available pursuant to Section
-------
9.2 below to each of Columbia/HCA and LifePoint for review and copying.
---
Section 9.2. Access to Information. From and after the Distribution
---------------------
Date, each of Columbia/HCA, LifePoint and Triad shall afford one another
(including each party's accountants, counsel and other designated
representatives) reasonable access (including using reasonable efforts to give
access to persons or firms possessing information) and copying rights during
normal business hours to all records, books, contracts, instruments, computer
data and other data and information in its possession relating to its business
and affairs, insofar as such access is reasonably required, including, without
limitation, for audit, accounting and litigation purposes. Any copying expense
shall be borne by the party requesting such copying. Notwithstanding the
foregoing, no party shall have the right to access any patient information or
medical records to the extent that such access, in the reasonable judgment of
the party requested to provide such access, would not be permitted by applicable
Law or otherwise would violate obligations related to patient confidentiality.
Section 9.3. Confidentiality.
---------------
(a) General Restriction on Disclosure. Each of Columbia/HCA,
---------------------------------
LifePoint and Triad shall take all necessary action to hold, and shall
cause its (and its respective Subsidiaries') consultants, advisors and
other representatives to hold, in strict confidence all information
concerning each other party hereto and such other party's Subsidiaries in
its possession, custody or control to the extent such information either:
(i) relates to the period up to the Distribution Date;
(ii) is obtained pursuant to Section 9.2 above;
-----------
(iii) relates to any Ancillary Agreement; or
(iv) is obtained in the course of performing services for
the other party pursuant to any Ancillary Agreement,
and each party hereto shall (and shall cause each of its respective
Subsidiaries to) refrain from otherwise releasing or disclosing such
information to any other
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<PAGE>
person, except for such person's auditors, attorneys, financial advisors,
bankers and other consultants and advisors, without the prior written
consent of the other affected party or parties.
(b) Exceptions to Confidential Treatment. Notwithstanding
------------------------------------
Section 9.3(a) above, no party hereto shall be prohibited from using or
--------------
permitting the use of and no party shall be required to hold in confidence
any information to the extent that (i) such information has been or is in
the public domain through no fault of such party, (ii) such information was
used or held for use in such party's business (and in no other party's
business) prior to the Distribution Date, (iii) such information is, after
the Distribution Date, lawfully acquired by such party from sources other
than a party hereto or a Subsidiary of a party hereto, (iv) this Agreement,
any Ancillary Agreement or any other agreement entered into pursuant hereto
permits the use or disclosure of such information by such party, or (v)
such information is necessary for such party to investigate, evaluate,
defend or prosecute any claim or Action involving any other party hereto.
To the extent that a party hereto (or any of its Subsidiaries or, to the
knowledge of such party or Subsidiary, any current or former employee of
such party or Subsidiary) is requested (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand
or similar process) to disclose any information required to be kept
confidential pursuant to this Section 9.3, such party agrees to take all
-----------
necessary action to maintain, or cause to be maintained (or in respect of a
current or former employee, to take all reasonable action as is necessary
to cause such employee to maintain), the confidentiality of such
information and to provide prompt notice to any of (i) Columbia/HCA, if
such information relates to the Columbia/HCA Group Business or to the
Columbia/HCA Liabilities or the Indemnified Matters, (ii) LifePoint, if
such information relates to the LifePoint Group Business or to the
LifePoint Liabilities, or (iii) Triad, if such information relates to the
Triad Group Business or to the Triad Liabilities, so that the party or
parties to which the information pertains may seek an appropriate
protective order or waive the notifying party's compliance with this
Section 9.3(b). If, in the absence of a protective order or the receipt of
--------------
a waiver hereunder, the person which has received such a request is,
nonetheless, in the reasonable written opinion of counsel, legally required
to disclose such information, such person may disclose such information,
and no party shall be liable pursuant to this Section 9.3(b); provided,
--------------
that such person furnishes only that portion of the information which such
person is advised by counsel to disclose and exercises its reasonable
efforts to obtain assurance that confidential treatment will be accorded to
the disclosed portion of the information. Notwithstanding the foregoing,
each party will be permitted to disclose confidential information in any
proceeding in which such party is in an adversarial position to any other
party to this Agreement.
Section 9.4. Litigation Cooperation. Each of Columbia/HCA, LifePoint
----------------------
and Triad shall use its best efforts to make available to one another, upon
written request of a party hereto, its Group's officers, directors, employees
and agents as witnesses to the extent that such persons may reasonably be
required in connection with any legal,
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<PAGE>
legislative, administrative or other proceedings arising out of the business of
such requesting party prior to the Distribution Date in which the requesting
party may from time to time be involved. In the event that any party provides
witnesses pursuant to this Section 9.4, it shall be entitled to reimbursement
-----------
from the requesting party for all reasonably incurred out-of-pocket costs and
expenses, but not including internal time charges.
Section 9.5. Retention of Records. Except when a longer period is
--------------------
required by Law or is specifically provided for herein or in any Ancillary
Agreement, each party hereto shall take all necessary action to keep, or cause
to be kept, in its original form, for a period of at least fifteen years
following the Distribution Date, all material information (including, without
limitation, all material Books and Records) relating to such party's Group and
its operations prior to the Distribution Date; provided, however, that any party
hereto may offer in writing to deliver to the other parties all or a portion of
such information as it relates to the offering party's Group and, if such offer
is accepted in writing within 90 days after receipt thereof, the offering party
shall promptly arrange for the delivery of such information (or copies thereof)
to each accepting party (at the expense of such accepting party). If such offer
is not so accepted, the offered information may be destroyed or otherwise
disposed of by the offering party at any time thereafter; provided, however,
that no information shall be destroyed or disposed of prior to the date that
Columbia/HCA shall notify LifePoint and Triad that the Government Investigations
have been concluded. With regard to patient records, each party hereto shall
maintain the patient records held at each of its Facilities (or delivered to it
pursuant hereto) relating to periods prior to the Distribution Date in
accordance with applicable Law (including, if applicable, 42 U.S.C. Section 1395
(V)(I)(i)), and requirements of relevant insurance carriers, and in a manner
consistent with its maintenance of patient records generated at its Facilities
after the Distribution Date. Each party acknowledges that as a result of
operating the Facilities it will gain access to patient and other information
which is subject to rules and regulations regarding confidentiality, and agrees
to abide by such rules and regulations with regard to such confidential
information.
Section 9.6. Privileged Matters.
------------------
(a) Privileged Information. Each of the parties hereto shall
----------------------
reasonable action as is necessary to maintain, preserve, protect and
assert, or cause to be maintained, preserved, protected and asserted, all
privileges, including, without limitation, all privileges arising under or
relating to the attorney-client relationship (including, but not limited
to, the attorney-client and attorney work product privileges), that relate
directly or indirectly to the business of any other Group for any period
prior to the Distribution Date ("Privilege" or "Privileges"). Columbia/HCA
shall be entitled in perpetuity to require the assertion or to decide
whether to consent to the waiver of any and all Privileges which relate
primarily to the Columbia/HCA Liabilities or the Indemnified Matters;
LifePoint shall be entitled in perpetuity to require the assertion or to
decide whether to consent to the waiver of all Privileges which relate
primarily to the LifePoint Liabilities; and Triad shall be entitled in
perpetuity to require the assertion or to decide whether to consent to the
waiver of all Privileges which
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<PAGE>
relate primarily to the Triad Liabilities. Each of the parties hereto shall
use the same degree of care as it would use with respect to its own
Privileges, so as not to waive, or permit to be waived, any such Privilege
that could be asserted under applicable Law without the prior written
consent of the other party or parties having the right to assert or waive
such Privilege pursuant to this Section 9.6(a).
--------------
(b) Shared Privileges.
-----------------
(i) The parties hereto agree that they shall have a
shared Privilege, with equal right to assert or waive, subject to the
restrictions in this Section 9.6(b)(i), with respect to all Privileges
-----------------
not allocated pursuant to the terms of Section 9.6(a) above. All
--------------
Privileges relating to any claims, proceedings, litigation, disputes,
or other matters which involve two or more of Columbia/HCA, LifePoint
or Triad and in respect of which two or more of such parties retain
any responsibility or liability under this Agreement, shall be subject
to a shared Privilege among them.
(ii) No party hereto may waive any Privilege which could
be asserted under any applicable law, and in which any other party
hereto has a shared Privilege, without the consent of the other party,
except to the extent reasonably required in connection with any
litigation with third-parties or as provided in Section 9.6(c) below.
--------------
Consent shall be in writing, or shall be deemed to be granted unless
written objection is made within twenty days after notice upon the
other party requesting such consent.
(iii) If a dispute arises between or among the parties
hereto or their respective Subsidiaries regarding whether a Privilege
should be waived to protect or advance the interest of any party, each
party agrees that it shall negotiate in good faith, shall endeavor to
minimize any prejudice to the rights of the other parties, and shall
not unreasonably withhold consent to any request for waiver by another
party. Each party hereto specifically agrees that it will not withhold
consent to waiver for any purpose except to protect its own legitimate
interests.
(c) Compelled Disclosure. To the extent that a party hereto (or
--------------------
any of its Subsidiaries or, to the knowledge of such party or Subsidiary,
any current or former employee of such party or Subsidiary) is requested
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any
information under circumstances in which any Privilege would be available
("Privileged Information"), such party agrees to take all necessary action
to assert, or cause to be asserted (or in respect of a current or former
employee, to take all reasonable action as is necessary to cause such
employee to assert), such Privilege in good faith and to provide prompt
notice to any of (i) Columbia/HCA, if such Privileged Information relates
to the Columbia/HCA Liabilities or the
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<PAGE>
Indemnified Matters, (ii) LifePoint, if such Privileged Information relates
to the LifePoint Liabilities, or (iii) Triad, if such Privileged
Information relates to the Triad Liabilities, so that the party or parties
to which the Privileged Information pertains may seek an appropriate
protective order or waive the notifying party's compliance with this
Section 9.6(c). If, in the absence of a protective order or the receipt of
--------------
a waiver hereunder, the person which has received such a request is,
nonetheless, in the reasonable written opinion of counsel, legally required
to disclose such Privileged Information or else stand liable for contempt
or suffer other censure or penalty, such person may disclose such
Privileged Information, and no party shall be liable pursuant to this
Section 9.6(c); provided, that such person furnishes only that portion of
--------------
the Privileged Information which such person is advised by counsel to
disclose and (ii) exercises its reasonable efforts to obtain assurance that
confidential treatment will be accorded to the disclosed portion of the
Privileged Information. Notwithstanding the foregoing, each party will be
permitted to disclose Privileged Information in any proceeding in which
such party is in an adversarial position to any other party to this
Agreement.
(d) No Waiver. The parties hereto agree that the transfer of
---------
any Books and Records or other information between the Columbia/HCA Group,
the LifePoint Group, or the Triad Group shall be made in reliance on the
agreements of Columbia/HCA, LifePoint and Triad, as set forth in Section
-------
9.3 above and this Section 9.6, to maintain the confidentiality of
--- -----------
confidential information and to assert and maintain all applicable
Privileges. The Books and Records being transferred pursuant to Section 9.1
-----------
above, the access to information being granted pursuant to Section 9.2
-----------
above, the agreement to provide witnesses and individuals pursuant to
Section 9.4 above and the transfer of Privileged Information to any party
-----------
hereto (or any of its Subsidiaries) pursuant to this Agreement shall not be
deemed a waiver of any Privilege that has been or may be asserted under
this Section 9.6 or otherwise. Nothing in this Agreement shall operate to
-----------
reduce, minimize or condition the rights granted to each party in, or the
obligations imposed upon each party by, this Section 9.6.
-----------
Section 9.7. Certain Matters. Notwithstanding any other provision
---------------
set forth in this Article IX or elsewhere herein, each of LifePoint and Triad
----------
acknowledges the existence of the Government Investigations and of the
proceedings and claims which constitute the Indemnified Matters, and each
acknowledges that Columbia/HCA may need access to information regarding the
LifePoint Group Business and the Triad Group Business for purposes of responding
to the Government Investigations and the Indemnified Matters. Each of LifePoint
and Triad agrees to provide all information which is requested by Columbia/HCA
in connection with the Government Investigations and the Indemnified Matters,
and that such information may be disclosed by Columbia/HCA to the
representatives of the Governmental Authorities who are conducting the
Government Investigations and otherwise may be disclosed as deemed to be
appropriate by Columbia/HCA in connection with the Indemnified Matters. Each of
LifePoint and Triad further agrees to provide representatives of the
Governmental Authorities who are conducting the Government Investigations with
direct, full and complete access to all of the LifePoint Group Records (in the
case of LifePoint) and the
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<PAGE>
Triad Group Records (in the case of Triad) as well as the right to make copies
of such records, and to permit representatives of such Governmental Authorities
to remove original records upon reasonable notice and the substitution of copies
for any records to be removed. Each of LifePoint and Triad also agrees to permit
employees to speak with the representatives of such Governmental Authorities.
Each of LifePoint and Triad agrees that, in connection with the Government
Investigations, it will participate with Columbia/HCA in negotiating one or more
Compliance Agreements.
ARTICLE X
INTEREST ON PAYMENTS
Section 10.1. Interest on Payments. Except as otherwise expressly
--------------------
provided in this Agreement, all payments by one party to the other under this
Agreement shall be paid, by wire transfer of immediately available funds to an
account in the United States designated by the recipient, within 30 days after
receipt of an invoice or other written request for payment setting forth the
specific amount due and a description of the basis therefor in reasonable
detail. Any amount remaining unpaid beyond its due date, including disputed
amounts that are ultimately determined to be payable, shall bear interest during
the period that such amount remains unpaid (computed on the basis of a 360-day
year of twelve 30-day months) at a fluctuating rate per annum equal to the prime
commercial lending rate publicly announced by The Chase Manhattan Bank or any
successor thereto at its principal office (or any alternative rate substituted
therefor by such bank).
ARTICLE XI
MISCELLANEOUS
Section 11.1. Allocation of Costs and Expenses. Except as otherwise set
--------------------------------
forth in this Agreement or any Ancillary Agreement, all costs and expenses
incurred on or prior to the Distribution Date (whether or not paid on or prior
to the Distribution Date) in connection with the Restructuring Transactions, the
Distribution and the other transactions contemplated hereby, including, but not
limited to, (i) the preparation, printing and filing of the LifePoint Form 10
and the Triad Form 10, (ii) the Listing of the LifePoint Common Stock and the
Triad Common Stock, (iii) the preparation and negotiation of all of the
documentation related to the Restructuring Transactions, the Distribution and
the other transactions contemplated hereby, (iv) the preparation, printing and
mailing of the Information Statement, (v) the preparation and filing of the
private letter ruling request submission by Columbia/HCA to the IRS, and (vi)
the engagement of Goldman, Sachs & Co. as financial advisor to Columbia/HCA in
connection with Restructuring Transactions, the Distribution and the other
transactions contemplated hereby, shall be charged to and paid by Columbia/HCA;
provided, however, that each of LifePoint and Triad shall be solely responsible
and liable for any fees, costs or other expenses that it separately and directly
incurs in connection with any of the Restructuring Transactions, the
Distribution or any of the other transactions contemplated by this
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<PAGE>
Agreement or any of the Ancillary Agreements. Except as otherwise set forth in
this Agreement or any Ancillary Agreement, each party shall bear its own costs
and expenses incurred after the Distribution Date. Any amount or expense to be
paid or reimbursed by any party hereto to any other party hereto shall be so
paid or reimbursed promptly after the existence and amount of such obligation is
determined and demand therefor is made.
Section 11.2. Termination; Amendment. This Agreement may be
----------------------
terminated and the Distribution may be amended, modified or abandoned at any
time prior to the consummation of the Distribution by and in the sole discretion
of Columbia/HCA without the approval of LifePoint or Triad. In the event of such
termination, amendment, modification or abandonment, no party hereto shall have
any Liability of any kind to any other party or any other person. After the
Distribution Date, this Agreement may not be terminated, amended or modified
except by an agreement in writing signed by all of the parties hereto; provided,
however, that only the signatures of Columbia/HCA and LifePoint shall be
required to amend or modify this Agreement in a manner which affects only the
rights and obligations hereunder as between Columbia/HCA and LifePoint, and only
the signatures of Columbia/HCA and Triad shall be required to amend or modify
this Agreement in a manner which affects only the rights and obligations
hereunder as between Columbia/HCA and Triad.
Section 11.3. Disputes.
--------
(a) Resolution of any and all disputes arising from or in
connection with this Agreement, any Ancillary Agreement, any
Conveyancing and Assumption Instrument or any transaction contemplated
hereby or thereby, whether based on contract, tort, statute or
otherwise, including, but not limited to, disputes in connection with
claims by third parties (collectively, "Disputes"), shall be resolved
in accordance with this Section 11.3; provided, however, that a party
------------
may, without prejudice to the provisions of this Section 11.3, file a
------------
complaint for statute of limitations reasons, or to seek a preliminary
injunction or other provisional relief, if in its sole judgment such
action is necessary to avoid irreparable damage or to preserve the
status quo. Despite such action the parties shall continue to
participate in good faith in the procedures specified in this Section
-------
11.3. All applicable statutes of limitations and defenses based upon
----
the passage of time shall be tolled while the procedures set forth in
this Section 11.3 are pending. The parties shall take such action, if
------------
participate in good faith in the procedures specified in this Section
11.3. All applicable statutes of limitations and defenses based upon
the passage of time shall be tolled while the procedures set forth in
this Section 11.3 are pending. The parties shall take such action, if
------------
any, as is required to effectuate such tolling.
(b) The parties shall use all reasonable efforts to amicably
resolve any Dispute through direct discussions, and each party agrees that
its senior management will respond promptly to notice of any such Dispute.
Any party hereto may give another party written notice of any Dispute,
which notice shall include a statement of the position of the party giving
such notice and a summary of arguments supporting that position. Within 30
days after such written notice is received, one or more members of the
senior management of each of the parties involved in the Dispute shall meet
in Nashville, Tennessee to
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<PAGE>
attempt in good faith to resolve the Dispute. All reasonable requests for
information made by one party to the other will be honored.
(c) If the Dispute has not been resolved by negotiation pursuant
to Section 11.3(b) above within 90 days of delivery of the first written
---------------
notice, or if the senior management of the parties to the Dispute have
failed to meet within 45 days after the date of delivery of such notice,
then within 15 days thereafter, the chief executive officer of each of the
parties involved in the Dispute shall meet in Nashville, Tennessee to
attempt in good faith to resolve the Dispute.
(d) If the Dispute has not been resolved by negotiation pursuant
to Section 11.3(b) or (c) above within 120 days of delivery of the first
--------------- ---
written notice, or if the chief executive officers of such parties have
failed to meet when required pursuant to Section 11.3(c) above, then each
---------------
party to the Dispute shall retain and thereafter may pursue all rights and
remedies it may have at law or in equity in respect of such Dispute,
including, without limitation, commencing any Action permitted by Law or,
if the parties mutually shall agree, submitting such matter to be settled
by arbitration.
Section 11.4. Consent to Jurisdiction. Columbia/HCA, LifePoint and
-----------------------
Triad each hereby expressly (a) submits and consents in advance to the
jurisdiction of any Tennessee State Court sitting in Nashville, Tennessee or the
United States District Court for the Middle District of Tennessee with respect
to any Actions arising out of or relating to this Agreement, (b) waives any
objection which it may have based upon lack of personal jurisdiction, improper
venue or forum non conveniens, (c) agrees that all claims with respect to such
Actions may be heard and determined in any Tennessee State Court sitting in
Nashville, Tennessee or the United States District Court for the Middle District
of Tennessee, (d) agrees not to commence any Action relating to this Agreement
other than in a Tennessee State Court sitting in Nashville, Tennessee or the
United States District Court for the Middle District of Tennessee, and (e)
agrees that a final judgment in any such Action shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
Section 11.5. Waiver of Jury Trial. EACH OF COLUMBIA/HCA, LIFEPOINT
--------------------
AND TRIAD ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND
HAS
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<PAGE>
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER
VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.5.
------------
Section 11.6. Notices. All notices or other communications required
-------
or permitted under this Agreement shall be in writing and sufficient if sent by
registered or certified mail, postage prepaid, addressed as provided below; or
delivered personally, by private courier or fax, and followed by such mailing:
If to Columbia/HCA, to
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2015
Attention: Mr. Milton Johnson
Vice President and Controller
with a copy to:
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2075
Attention: Robert A. Waterman, Esq.
Senior Vice President and General Counsel
If to LifePoint, to
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6276
Attention: Mr. Scott L. Mercy
Chairman and Chief Executive Officer
with a copy to:
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6272
Attention: William F. Carpenter III, Esq.
Senior Vice President and General Counsel
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<PAGE>
If to Triad, to
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972) 663-3945
Attention: Mr. James D. Shelton
Chairman and Chief Executive Officer
with a copy to:
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972) 701-9604
Attention: Donald P. Fay, Esq.
Executive Vice President and General Counsel
In each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
Any party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
Section 11.7. Entire Agreement. This Agreement, together with the
----------------
Ancillary Agreements and the exhibits and other documents delivered pursuant
hereto, sets forth the entire agreement and understanding of the parties hereto
in respect of the transactions contemplated hereby, and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof. No party hereto has relied upon any oral or written statement,
representation, warranty, covenant, condition, understanding or agreement made
by any other party or any representative, agent or employee thereof, except for
those expressly set forth in this Agreement or in the exhibits or other
documents delivered pursuant hereto. Nothing herein is intended to diminish any
of the rights or obligations of any of the parties pursuant to the Tax
Agreement, the Insurance Allocation and Administration Agreement, the Employee
Benefits Agreement, any of the other Ancillary Agreements or any Conveyancing
and Assumption Instrument.
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<PAGE>
Section 11.8. Assignment. This Agreement shall inure to the benefit
----------
of, and be binding upon, the parties hereto and their respective successors,
heirs, executors, administrators, legal representatives and permitted assigns;
provided, however, that no assignment of any rights or delegation of any
obligations provided for herein shall be made by any party hereto without the
express prior written consent of each other party hereto; provided, further,
that only the signatures of Columbia/HCA and LifePoint shall be required to
effect an assignment in a manner which affects only the rights and obligations
hereunder as between Columbia/HCA and LifePoint, and only the signatures of
Columbia/HCA and Triad shall be required to effect an assignment in a manner
which affects only the rights and obligations hereunder as between Columbia/HCA
and Triad. Notwithstanding the foregoing, the indemnification by Columbia/HCA of
the LifePoint Indemnitees and the Triad Indemnitees in respect of the
Indemnified Matters provided for herein and the indemnification of LifePoint and
Triad in respect of Pre-Distribution Cost Reports shall not be assignable, and
no party shall request that Columbia/HCA consent to any such assignment.
Section 11.9. Survival of Agreements and Covenants. Except as
------------------------------------
otherwise expressly provided herein, all agreements and covenants of the parties
hereto which are contained in this Agreement, together with the exhibits and
other documents delivered pursuant hereto, shall survive the Distribution and
remain operative and in full force and effect, regardless of any investigation
heretofore or hereafter made by or on behalf of any of the parties hereto.
Section 11.10. No Third Party Beneficiaries. Except as provided in
----------------------------
Article V above (relating to Indemnitees), this Agreement is solely for the
- ---------
benefit of the parties hereto, and should not be construed to confer upon any
other person any remedy, claim, liability, right of reimbursement, claim of
action or other right.
Section 11.11. Waiver. No delay or omission by any party hereto to
------
exercise any right or power under this Agreement or pursuant to applicable law
shall impair such right or power or be construed as a waiver thereof. A waiver
by any party hereto of any of the covenants to be performed by any other party
or any breach shall not be construed to be a waiver of any succeeding breach or
of any other covenant. All rights and remedies conferred under this Agreement or
by any other instrument or law shall be cumulative and may be exercised
singularly or concurrently. The failure by either party to enforce any term
shall not be deemed to be a waiver of future enforcement of that or any other
term of this Agreement.
Section 11.12. Severability. In the event that any provision hereof
------------
is prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 11.13. Governing Law. This Agreement shall be deemed to be
-------------
made in and in all respects shall be interpreted, construed and governed by and
in
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<PAGE>
accordance with the law of the State of Delaware without regard to the conflict
of law principles thereof.
Section 11.14. Counterparts. This Agreement may be executed in any
------------
number of separate counterparts, each of which shall be deemed to be an
original, but which together shall constitute one and the same instrument.
Section 11.15. Headings. The section headings contained in this
--------
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, each party hereto has duly executed this
Agreement, or has caused this Agreement to be duly executed, as of the date
first above written.
Columbia/HCA Healthcare Corporation
By:/s/ Thomas F. Frist, Jr.
-----------------------------------------
Thomas F. Frist, Jr., M.D.
Chairman and Chief Executive Officer
LifePoint Hospitals, Inc.
By:/s/ Scott L. Mercy
----------------------------------------
Scott L. Mercy
Chairman and Chief Executive Officer
Triad Hospitals, Inc.
By:/s/ James D. Shelton
---------------------------------------
James D. Shelton
Chairman and Chief Executive Officer
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<PAGE>
List of Exhibits
Exhibit Description
------- -----------
Exhibit A Ancillary Agreements
Exhibit B LifePoint By-laws
Exhibit C LifePoint Certificate of Incorporation
Exhibit D Columbia/HCA Insurance Coverages
Exhibit E LifePoint Properties
Exhibit F Triad By-laws
Exhibit G Triad Certificate of Incorporation
Exhibit H Triad Properties
Exhibit I Certain Guarantees
Exhibit J Certain Accounting Matters
Annex A 1998 EBITDA by Hospital
A-1
<PAGE>
EXHIBIT 3.1
================================================================================
CERTIFICATE OF INCORPORATION
OF
LIFEPOINT HOSPITALS, INC.
______________
DELAWARE
================================================================================
<PAGE>
Certificate of Incorporation
of
Lifepoint Hospitals, Inc.
FIRST: The name of the Corporation is LifePoint Hospitals, Inc.
SECOND: The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is One Hundred Million
(100,000,000) shares, divided into two classes of which Ten Million (10,000,000)
shares, par value $.01 per share, shall be designated Preferred Stock, and
Ninety Million (90,000,000) shares, par value $.01 per share, shall be
designated Common Stock.
A. Preferred Stock
1. Issuance. The Board of Directors is expressly authorized,
--------
subject to limitations prescribed by law, to provide for the issuance of
shares of Preferred Stock in one or more series, to establish the number of
shares to be included in each such series, and to fix the designations,
powers, preferences, and rights of the shares of each such series, and any
qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but
not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of at least 80% of the voting power of all of the then
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class,
without a separate vote of the holders of the Preferred Stock, unless a
vote of any such holders is required pursuant to the terms of any such
series of Preferred Stock.
2. Series A Junior Participating Preferred Stock.
---------------------------------------------
Section 1. Designation and Amount. Ninety Thousand (90,000)
----------------------
shares of the Preferred Stock of the Corporation shall be designated
as "Series A Junior Participating Preferred Stock," par value $.01
per share (the "Series A Preferred Stock"). The number of shares of
such series of Preferred Stock may be increased or decreased by
resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of such series of
Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants
-1-
<PAGE>
or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $10 or
(b) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
Section 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided, however, that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10 per
share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
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<PAGE>
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
-------------
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in a resolution or
resolutions adopted by the Board of Directors providing for the
issuance of a series of Preferred Stock or any similar stock (a
"Certificate of Designation"), or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Corporation entitled to vote generally
in the election of directors shall vote together as a single class on
all matters submitted to a vote of stockholders of the Corporation.
(C) Except as otherwise provided herein, or by law, holders of
Series A Preferred Stock shall have no special voting rights and their
consent shall not be
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<PAGE>
required (except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 of paragraph A of this Article Fourth are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably on
the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock; provided, however, that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the
Corporation ranking junior (both as to dividends and upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares
of stock ranking on a parity with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
-----------------
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock
-4-
<PAGE>
subject to the conditions and restrictions on issuance set forth
herein or in any Certificate of Designation providing for the issuance
of a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall
have received $1,000 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment; provided, however, that the holders of
shares of Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to
the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock, in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
--------------------------
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence with
respect to the
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exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
-------------
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
----
respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's Preferred
Stock.
Section 10. Amendment. This Certificate of Incorporation shall
---------
not be amended in any manner which would materially alter or change
the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Series
A Preferred Stock, voting together as a single class.
B. Common Stock.
Section 1. Dividends. Subject to the preferential rights, if
---------
any, of the holders of any series of Preferred Stock then outstanding,
the holders of the Common Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, dividends payable either in cash, in
property or in shares of Common Stock or other securities of the
Corporation.
Section 2. Voting Rights. Subject to the rights, if any, of
-------------
the holders of any series of Preferred Stock then outstanding, and
except as otherwise required by law, the holders of the Common Stock
shall exclusively possess all voting power, and at every annual or
special meeting of stockholders of the Corporation, each holder of
Common Stock shall be entitled to one vote, in person or by proxy, for
each share of Common Stock standing in such holder's name on the books
of the Corporation.
Section 3. Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the holders of the Common Stock shall be
entitled to share ratably in all assets of the Corporation available
for distribution to its stockholders, subject to the preferential
rights, if any, of the holders of any series of Preferred Stock then
outstanding.
FIFTH: The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The Board of Directors may
exercise all such authority and powers of the Corporation and do all such lawful
acts and things as are not by statute or this Certificate of Incorporation
directed or required to be exercised or done by the stockholders.
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A. Number of Directors. The number of directors of the Corporation
(exclusive of directors to be elected by the holders of one or more series
of the Preferred Stock of the Corporation which may be outstanding, voting
separately as a series or class) shall be fixed from time to time by action
of not less than a majority of the members of the Board of Directors then
in office, but in no event shall such number of directors of the
Corporation be less than three nor more than fifteen.
B. Classes. The directors, other than those who may be elected by
the holders of any series of Preferred Stock under specified circumstances,
shall be divided with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as reasonably
possible, with the term of office of the first class to expire at the 2000
annual meeting of stockholders, the term of office of the second class to
expire at the 2001 annual meeting of stockholders and the term of office of
the third class to expire at the 2002 annual meeting of stockholders. At
each annual meeting of stockholders, commencing with the 2000 annual
meeting, (i) directors shall be elected to succeed those directors whose
terms expire for a term of office to expire at the third succeeding annual
meeting of stockholders after their election, and (ii) if authorized by a
resolution of the Board of Directors, directors may be elected to fill any
vacancy in the Board of Directors, regardless of how such vacancy was
created. Directors need not be stockholders. All directors shall hold
office until the expiration of the term for which elected and until their
successors are elected, except in the case of the death, resignation,
disqualification or removal of any director.
C. Stockholder Nomination of Director Candidates and Introduction of
Business. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting
of the stockholders of the Corporation shall be given in the manner
provided in the By-Laws of the Corporation.
D. Vacancies. Subject to the rights, if any, of the holders of any
series of Preferred Stock then outstanding, and unless the Board of
Directors otherwise determines, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, disqualification or
removal may be filled only by a majority vote of the directors then in
office, though less than a quorum, and directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which
the term of office of the class to which they have been elected expires or,
in the case of newly created directorships, shall hold office until such
time as determined by the directors electing such new director (in a manner
consistent with paragraph B of this Article Fifth). No decrease in the
number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
E. Removal. Subject to the rights, if any, of the holders of any
series of Preferred Stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time, but only for
cause and only by the affirmative vote of the holders of at least 80% of
the voting power of all of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors,
voting together as a single class.
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SIXTH: Subject to the rights, if any, of the holders of any series of
Preferred Stock then outstanding, no action required to be taken or which may be
taken at any annual or special meeting of the stockholders of the Corporation
may be taken without a meeting, and the power of the stockholders to consent in
writing, without a meeting, to the taking of any action, including (without
limitation) the power of stockholders to adopt or amend the By-Laws of the
Corporation by written consent, is hereby specifically denied.
SEVENTH: Subject to the rights, if any, of the holders of any series of
Preferred Stock then outstanding, special meetings of the stockholders of the
Corporation may be called only by (a) the Chairman of the Board of Directors, if
one shall have been elected or (b) the Chief Executive Officer of the
Corporation, and, in addition, a special meeting shall be called by the Chairman
of the Board or the Chief Executive Officer at the request in writing of a
majority of the Board of Directors. The ability of the stockholders to call a
special meeting is hereby specifically denied.
EIGHTH: In furtherance and not in limitation of the powers conferred upon
it by the laws of the State of Delaware, the Board of Directors shall have the
power to adopt, amend, alter or repeal the By-Laws of the Corporation. The
Corporation's By-Laws may also be adopted, amended, altered or repealed by the
stockholders at any annual or special meeting by the affirmative vote of the
holders of at least 80% of the voting power of all shares of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class.
NINTH: Elections of directors need not be by written ballot unless the By-
Laws of the Corporation shall otherwise provide.
TENTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is hereafter amended to permit
further elimination or limitation of the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law as so
amended. Any repeal or modification of this Article Tenth shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
ELEVENTH: [DELETED.]
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TWELFTH:
A. As used in this Article Twelfth, the following terms shall have
the meanings set forth below:
"Business Combination" shall mean (a) any merger or consolidation of
the Corporation or a Subsidiary with a Related Person, (b) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition other than in the
ordinary course of business to or with a Related Person of any assets of
the Corporation or a Subsidiary having an aggregate fair market value of
$25,000,000 or more, (c) the issuance or transfer by the Corporation of any
shares of Voting Stock or securities convertible into or exercisable for
such shares (other than by way of pro rata distribution to all
stockholders) to a Related Person, (d) any recapitalization, merger or
consolidation that would have the effect of increasing the voting power of
a Related Person, (e) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or a Subsidiary proposed,
directly or indirectly, by or on behalf of a Related Person, (f) any merger
or consolidation of the Corporation with another Person proposed, directly
or indirectly, by or on behalf of a Related Person unless the entity
surviving or resulting from such merger or consolidation has a provision in
its certificate or articles of incorporation, charter or similar governing
instrument which is substantially identical to this Article Twelfth or (g)
any agreement, contract or other arrangement or understanding providing,
directly or indirectly, for any of the transactions described in clauses
(a) through (f) above.
"Related Person" shall mean any individual, partnership, corporation,
trust or other Person which, together with its "affiliates" and
"associates," as defined in Rule 12b-2 under the Exchange Act as in effect
on April 23, 1999, and together with any other individual, partnership,
corporation, trust or other Person with which it or they have any
agreement, contract or other arrangement or understanding with respect to
acquiring, holding, voting or disposing of Voting Stock, "beneficially
owns" (within the meaning of Rule 13d-3 under the Exchange Act on said
date) an aggregate of 10% or more of the outstanding Voting Stock. A
Related Person, its affiliates and associates and all such other
individuals, partnerships, corporations and other Persons with whom it or
they have any such agreement, contract or other arrangement or
understanding, shall be deemed a single Related Person for purposes of this
Article Twelfth; provided, however, that the members of the Board of
Directors of the Corporation shall not be deemed to be associates or
otherwise to constitute a Related Person solely by reason of their board
membership. A person who is a Related Person as of (i) the time any
definitive agreement relating to a Business Combination is entered into,
(ii) the record date for the determination of stockholders entitled to
notice of and to vote on a Business Combination or (iii) immediately prior
to the consummation of a Business Combination, shall be deemed a Related
Person for purposes of this Article Twelfth.
"Continuing Director" shall mean any member of the Board of Directors
of the Corporation who is not an "affiliate" or "associate" of the Related
Person and was a member of the Board of Directors prior to the time that
such Related Person became a Related Person, and any successor of a
Continuing Director who is unaffiliated with such
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<PAGE>
Related Person and is recommended to succeed a Continuing Director by a
majority of the Continuing Directors.
"Person" shall mean any individual, firm, corporation or other entity.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation in which such Person, directly or indirectly, owns or controls,
at the time of determination, at least a majority in interest of the
outstanding voting stock (having by the terms thereof voting power under
ordinary circumstances to elect a majority of the directors of such
corporation, irrespective of whether or not stock of any other class or
classes of such corporation shall have or might have voting power by reason
of the occurrence of a contingency); or (ii) any non-corporate entity in
which such Person either (a) directly or indirectly, at the time of
determination, has at least a majority ownership interest, or (b) at the
date of determination, is a general partner or an entity performing similar
functions (for example, manager of a limited liability company or a trustee
of a trust).
"Voting Stock" shall mean any shares of the Corporation entitled to
vote generally in the election of directors.
"Entire Board of Directors" shall mean the total number of directors
which the Corporation would have if there were no vacancies.
"Market Value" shall mean the average of the high- and low-quoted
sales price on the date in question (or, if there is no reported sale on
such date, on the last preceding date on which any reported sale occurred)
of a share on the Composite Tape for the New York Stock Exchange Listed
Stocks, or, if the shares are not listed or admitted to trading on such
exchange, on the principal United States securities exchange registered
under the Exchange Act on which the shares are listed or admitted to
trading, or, if the shares are not listed or admitted to trading on any
such exchange, the mean between the closing high-bid and low-asked
quotations with respect to a share on such date as quoted on the National
Association of Securities Dealers Automated Quotations System, or similar
system then in use, or, if no such quotations are available, the fair
market value on such date of a share as at least 66 2/3% of the Continuing
Directors shall determine.
B. In addition to any other vote required by this Certificate of
Incorporation or the Delaware General Corporation Law, the affirmative vote
of the holders of not less than 85% of the outstanding Voting Stock held by
stockholders other than a Related Person by or with whom or on whose
behalf, directly or indirectly, a Business Combination is proposed, voting
as a single class, shall be required for the approval or authorization of
such Business Combination; provided, however, that the 85% voting
requirement shall not be applicable and such Business Combination may be
approved by the vote required by law or by any other provision of this
Certificate of Incorporation if either:
1. The Business Combination is approved by the Board of Directors
of the Corporation by the affirmative vote of at least 66 2/3% of the
Continuing Directors, or
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2. All of the following conditions are satisfied:
(A) The aggregate amount of cash and the fair market value of
the property, securities or other consideration to be received per
share of capital stock of the Corporation in the Business Combination
by the holders of capital stock of the Corporation, other than the
Related Person involved in the Business Combination, shall not be less
than the highest of (i) the highest per share price (including
brokerage commissions, soliciting dealers' fees, and dealer-management
compensation, and with appropriate adjustments for recapitalizations,
stock splits, stock dividends and like transactions and distributions)
paid by such Related Person in acquiring any of its holdings of such
class or series of capital stock, (ii) the highest per share Market
Value of such class or series of capital stock within the twelve-month
period immediately preceding the date the proposal for such Business
Combination was first publicly announced or (iii) the book value per
share of such class or series of capital stock, determined in
accordance with generally accepted accounting principles, as of the
last day of the month immediately preceding the date the proposal for
such Business Combination was first publicly announced;
(B) The consideration to be received in such Business
Combination by holders of capital stock other than the Related Person
involved shall, except to the extent that a stockholder agrees
otherwise as to all or part of the shares which he or she owns, be in
the same form and of the same kind as the consideration paid by the
Related Person in acquiring capital stock already owned by it;
provided, however, that if the Related Person has paid for capital
stock with varying forms of consideration, the form of consideration
for shares of capital stock acquired in the Business Combination by
the Related Person shall either be cash or the form used to acquire
the largest number of shares of capital stock previously acquired by
it; and
(C) A proxy statement responsive to the requirements of the
Exchange Act and regulations promulgated thereunder, whether or not
the Corporation is then subject to such requirements, shall be mailed
to the stockholders of the Corporation for the purpose of soliciting
stockholder approval of such Business Combination and shall contain at
the front thereof, in a prominent place, (i) any recommendations as to
the advisability (or inadvisability) of the Business Combination which
the Continuing Directors may choose to state and (ii) the opinion of a
reputable investment banking firm selected by the Continuing Directors
as to the fairness of the terms of such Business Combination, from a
financial point of view, to the stockholders (other than the Related
Person) of the Corporation.
C. A Related Person shall be deemed for purposes of this Article
Twelfth to have acquired a share of the Corporation at the time when such
Related Person became the beneficial owner thereof (as such term is defined
in paragraph A of this Article Twelfth). With respect to shares owned by
affiliates, associates and other Persons whose ownership is attributed to a
Related Person, if the price paid by such Related Person for such shares is
not determinable, the price so paid shall be deemed to be the higher of (i)
the price paid
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upon acquisition thereof by the affiliate, associate or other Person or
(ii) the Market Value of the shares in question at the time when the
Related Person became the beneficial owner thereof.
For purposes of this Article Twelfth, in the event of a Business
Combination upon consummation of which the Corporation would be the
surviving corporation or would continue to exist (unless it is provided,
contemplated or intended that as part of such Business Combination a plan
of liquidation or dissolution of the Corporation will be effected), the
term "other consideration to be received" in paragraph B.2.(A) of this
Article Twelfth shall include (without limitation) common stock or other
capital stock of the Corporation retained by stockholders of the
Corporation (other than Related Persons who are parties to such Business
Combination).
Nothing contained in this Article Twelfth shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
D. Notwithstanding any other provision of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that a lesser percentage may be permitted by law), any amendment,
addition, alteration, change or repeal of this Article Twelfth, or any
other amendment of this Certificate of Incorporation or the By-Laws of the
Corporation inconsistent with or modifying or permitting circumvention of
this Article Twelfth, must first be proposed by the Board of Directors of
the Corporation, upon the affirmative vote of at least 66 2/3% of the
directors then in office at a duly constituted meeting of the Board of
Directors called for such purpose, and thereafter approved by the
affirmative vote of the holders of not less than 85% of the then
outstanding Voting Stock held by stockholders other than a Related Person
by or with whom or on whose behalf, directly or indirectly, a Business
Combination is proposed, voting as a single class; provided, however, that
this paragraph shall not apply to, and such 85% vote shall not be required
for, any such amendment, addition, alteration, change or repeal recommended
to stockholders of the Corporation by the affirmative vote of not less than
66 2/3% of the Continuing Directors. For the purposes of this paragraph D
only, if at the time when any such amendment, addition, alteration, change
or repeal is under consideration there is no proposed Business Combination,
the term "Continuing Directors" shall mean the Entire Board of Directors.
THIRTEENTH: The Board of Directors, each committee of the Board of
Directors and each individual director, in discharging their respective duties
under applicable law and this Certificate of Incorporation and in determining
what they each believe to be in the best interests of the Corporation and its
stockholders, may consider the effects, both short-term and long-term, of any
action or proposed action taken or to be taken by the Corporation, the Board of
Directors or any committee of the Board of Directors on the interests of (i) the
employees, associates, associated physicians, distributors, patients or other
customers, suppliers or creditors of the Corporation and its subsidiaries and
(ii) the communities in which the Corporation and its subsidiaries own or lease
property or conduct business, all to the extent that the Board of Directors, any
committee of the Board of Directors or any individual director deems pertinent
under the circumstances (including the possibility that the interests of the
Corporation may best be served by the continued independence of the
Corporation); provided, however, that the
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provisions of this Article Thirteenth shall not limit in any way the right of
the Board of Directors to consider any other lawful factors in making its
determinations, including, without limitation, the effects, both short-term and
long-term, of any action or proposed action on the Corporation or its
stockholders directly; and provided, further, that this Article Thirteenth shall
be deemed solely to grant discretionary authority to the Board of Directors,
each committee of the Board of Directors and each individual director and shall
not be deemed to provide to any specific constituency any right to be
considered.
FOURTEENTH: Each person who was or is made a party or is threatened
to be made a party to or is involved (including, without limitation, as a
witness) in an actual or threatened action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (hereinafter an "Indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
such a director, officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the full extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), or by other
applicable law as then in effect, against all expense, liability and loss
(including attorneys' fees, judgments, fines, excise taxes under the Employee
Retirement Income Security Act of 1974, as amended from time to time ("ERISA"),
penalties and amounts to be paid in settlement) actually and reasonably incurred
or suffered by such Indemnitee in connection therewith.
A. Procedure. Any indemnification under this Article Fourteenth
(unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification
of the Indemnitee is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, as the same exists or hereafter may be amended (but, in
the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said
law permitted the Corporation to provide prior to such amendment). Such
determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding (the "Disinterested Directors"), or (b) if such
a quorum of Disinterested Directors is not obtainable, or, even if
obtainable, a quorum of Disinterested Directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders.
B. Advances For Expenses. Costs, charges and expenses (including
attorneys' fees) incurred by a director or officer of the Corporation in
defending a civil or criminal action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director
or officer to repay all amounts so advanced in the event that it shall
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ultimately be determined that such director or officer is not entitled to
be indemnified by the Corporation as authorized in this Article Fourteenth.
Such costs, charges and expenses incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the majority of the
Disinterested Directors deems appropriate. The majority of the
Disinterested Directors may, in the manner set forth above, and upon
approval of such Indemnitee, authorize the Corporation's counsel to
represent such person, in any action, suit or proceeding, whether or not
the Corporation is a party to such action, suit or proceeding.
C. Procedure for Indemnification. Any indemnification or advance
of costs, charges and expenses under this Article Fourteenth, shall be made
promptly, and in any event within 60 days upon the written request of the
Indemnitee. The right to indemnification or advances as granted by this
Article Fourteenth, shall be enforceable by the Indemnitee in any court of
competent jurisdiction, if the Corporation denies such request, in whole or
in part, or if no disposition thereof is made within 60 days. Such
Indemnitee's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in
any such action shall also be indemnified by the Corporation. It shall be
a defense to any such action (other than an action brought to enforce a
claim for the advance of costs, charges and expenses under this Article
Fourteenth, where the required undertaking, if any, has been received by
the Corporation) that the Indemnitee has not met the standard of conduct
set forth in the Delaware General Corporation Law, as the same exists or
hereafter may be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment), but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the Indemnitee is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
that said law permitted the Corporation to provide prior to such
amendment), nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create
a presumption that the Indemnitee has not met the applicable standard of
conduct.
D. Other Rights; Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by this Article
Fourteenth shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of expenses may be entitled
under any law, by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding office or while employed
by or acting as agent for the Corporation, and shall continue as to a
person who has ceased to be a director, officer, employee or agent, and
shall inure to the benefit of the estate, heirs, executors
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and administrators of such person. All rights to indemnification under this
Article Fourteenth, shall be deemed to be a contract between the
Corporation and each director, officer, employee or agent of the
Corporation who serves or served in such capacity at any time while this
Article Fourteenth, is in effect. Any repeal or modification of this
Article Fourteenth, or any repeal or modification of relevant provisions of
the Delaware General Corporation Law or any other applicable laws shall not
in any way diminish any rights to indemnification of such director,
officer, employee or agent or the obligations of the Corporation arising
hereunder with respect to any action, suit or proceeding arising out of, or
relating to, any actions, transactions or facts occurring prior to the
final adoption of such modification or repeal. For the purposes of this
Article Fourteenth, references to "the Corporation" include all constituent
corporations absorbed in a consolidation or merger as well as the resulting
or surviving corporation, so that any person who is or was a director,
officer, employee or agent of such a constituent corporation or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same position under
the provisions of this Article Fourteenth, with respect to the resulting or
surviving corporation, as he would if he or she had served the resulting or
surviving corporation in the same capacity.
E. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him or her and
incurred by him or her or on his or her behalf in any such capacity, or
arising out of his or her status as such, whether or not the Corporation
would have the power to indemnify him or her against such liability under
the provisions of this Article Fourteenth; provided, however, that such
insurance is available on acceptable terms, which determination shall be
made by a vote of a majority of the Board of Directors.
F. Savings Clause. If this Article Fourteenth, or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each person
entitled to indemnification under paragraph A of this Article Fourteenth,
as to all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes, penalties and amounts to be paid in
settlement) actually and reasonably incurred or suffered by such person and
for which indemnification is available to such person pursuant to this
Article Fourteenth, to the full extent permitted by any applicable portion
of this Article Fourteenth, that shall not have been invalidated and to the
full extent permitted by applicable law.
FIFTEENTH: In furtherance and not in limitation of the powers conferred by
law or in this Certificate of Incorporation, the Board of Directors (and any
committee of the Board of Directors) is expressly authorized, to the extent
permitted by law, to take such action or actions as the Board of Directors or
such committee may determine to be reasonably necessary or desirable to (A)
encourage any person to enter into negotiations with the Board of Directors and
management of the Corporation with respect to any transaction which may result
in a change in control of the Corporation which is proposed or initiated by such
person or (B) contest or oppose
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any such transaction which the Board of Directors or such committee determines
to be unfair, abusive or otherwise undesirable with respect to the Corporation
and its business, assets or properties or the stockholders of the Corporation,
including, without limitation, the adoption of such plans or the issuance of
such rights, options, capital stock, notes, debentures or other evidences of
indebtedness or other securities of the Corporation, which rights, options,
capital stock, notes, debentures, evidences of indebtedness and other securities
(i) may be exchangeable for or convertible into cash or other securities on such
terms and conditions as may be determined by the Board of Directors or such
committee and (ii) may provide for the treatment of any holder or class of
holders thereof designated by the Board of Directors or any such committee in
respect of the terms, conditions, provisions and rights of such securities which
is different from, and unequal to, the terms, conditions, provisions and rights
applicable to all other holders thereof.
SIXTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, and to add
or adopt new provisions, in the manner now or hereafter prescribed by statute,
and all rights conferred upon stockholders herein are granted subject to this
reservation. In addition to any affirmative vote required by applicable law or
any other provision of this Certificate of Incorporation or specified in any
agreement, and in addition to any voting rights granted to or held by the
holders of any series of Preferred Stock, the affirmative vote of the holders of
not less than 80% of the voting power of all securities of the Corporation
entitled to vote generally in the election of directors shall be required to
amend, alter, change or repeal, or to add or adopt any provisions inconsistent
with, Articles Fifth, Sixth, Seventh, Eighth, Tenth, Eleventh, Thirteenth,
Fourteenth, Fifteenth and Sixteenth of this Certificate of Incorporation.
SEVENTEENTH: The name and mailing address of the incorporator is William
F. Carpenter III, LifePoint Hospitals, Inc., 4525 Harding Road, Nashville,
Tennessee 37205.
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EXHIBIT 3.2
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BY-LAWS
OF
LifePoint Hospitals, Inc.
______________
DELAWARE
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<PAGE>
Article I
Offices
Section 1. Registered Office.
The registered office of the Corporation shall be within the State of
Delaware in the City of Wilmington, County of New Castle.
Section 2. Other Offices.
The Corporation may also have an office or offices other than said
registered office at such place or places, either within or without the State of
Delaware, as the Board of Directors shall from time to time determine or the
business of the Corporation may require.
Article II
Meetings of Stockholders
Section 1. Place of Meetings.
All meetings of the stockholders for the election of directors or for
any other purpose shall be held at any such place, either within or without the
State of Delaware, as shall be designated from time to time by the Board of
Directors and stated in the notice of meeting or in a duly executed waiver
thereof.
Section 2. Annual Meeting.
The annual meeting of stockholders shall be held at such date and time
as shall be designated from time to time by the Board of Directors and stated in
the notice of meeting or in a duly executed waiver thereof. At such annual
meeting, the stockholders shall elect, by a plurality vote, members of a Board
of Directors and transact such other business as may properly be brought before
the meeting.
Section 3. Special Meetings.
Special meetings of the stockholders of the Corporation may be called
only by (a) the Chairman of the Board of Directors, if one shall have been
elected or (b) the Chief Executive Officer of the Corporation, and, in addition,
a special meeting shall be called by the Chairman of the Board or the Chief
Executive Officer at the request in writing of a majority of the Board of
Directors. The ability of the stockholders to call a special meeting is hereby
specifically denied.
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Section 4. Notice of Meetings.
Except as otherwise expressly required by statute, written notice of
each annual and special meeting of stockholders stating the date, place and hour
of the meeting, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given to each stockholder of record
entitled to vote thereat not less than ten nor more than sixty days before the
date of the meeting. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice. Notice shall be given
personally or by mail and, if by mail, shall be sent in a postage prepaid
envelope, addressed to the stockholder at the address appearing on the records
of the Corporation. Notice by mail shall be deemed given at the time when the
same shall be deposited in the United States mail, postage prepaid. Notice of
any such meeting need not be given to any person who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting, except when he or she shall attend for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, an annual or special meeting of
stockholders need be specified in any written waiver of notice.
Section 5. List of Stockholders.
The officer who has charge of the stock ledger of the Corporation
shall prepare and make, at least ten days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city, town or village where the meeting is to be held,
which place shall be specified in the notice of meeting, or, if not specified,
at the place where the meeting is to be held. The list shall be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.
Section 6. Quorum.
The holders of a majority of the voting power of the issued and
outstanding stock of the Corporation entitled to vote thereat, present in person
or represented by proxy, shall constitute a quorum for the transaction of
business at all meetings of stockholders, except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented by proxy at any meeting of stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented by proxy. At such adjourned meeting at which a quorum shall be
present or represented by proxy, any business may be transacted which might have
been transacted at the meeting as originally called. If the adjournment is for
more than thirty days, or, if
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after adjournment a new record date is set, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Section 7. Organization.
At each meeting of stockholders, the Chairman of the Board, if one
shall have been elected, or, in his or her absence or if one shall not have been
elected, the Chief Executive Officer, shall act as chairman of the meeting. The
Secretary or, in his or her absence or inability to act, the person whom the
chairman of the meeting shall appoint secretary of the meeting, shall act as
secretary of the meeting and keep the minutes thereof.
Section 8. Order of Business.
The order of business at all meetings of the stockholders shall be as
determined by the chairman of the meeting,
Section 9. Voting.
Except as otherwise provided by statute or the Certificate of
Incorporation, each stockholder of the Corporation shall be entitled at each
meeting of stockholders to one vote for each share of capital stock of the
Corporation standing in his or her name on the record of stockholders of the
Corporation:
(a) on the date fixed pursuant to the provisions of Section 7 of
Article V of these By-Laws as the record date for the determination of the
stockholders who shall be entitled to notice of and to vote at such
meeting; or
(b) if no such record date shall have been so fixed, then at the
close of business on the day next preceding the day on which notice thereof
shall be given.
Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him or her by a proxy signed by such
stockholder or his or her attorney-in-fact, but no proxy shall be voted after
three years from its date, unless the proxy provides for a longer period. Any
such proxy shall be delivered to the secretary of the meeting at or prior to the
time designated in the order of business for so delivering such proxies. Any
copy, facsimile telecommunication or other reliable reproduction of the writing
or transmission created pursuant to this paragraph may be substituted or used in
lieu of the original writing or transmission for any and all purposes for which
the original writing or transmission could be used; provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.
When a quorum is present at any meeting, the vote of the holders of a
majority of the voting power of the issued and outstanding stock of the
Corporation entitled to vote thereon, present in person or represented by proxy,
shall decide any question brought before such meeting, unless the question is
one upon which by express provision of statute or of the Certificate of
Incorporation or of these By-Laws, a different
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vote is required, in which case such express provision shall, govern and control
the decision of such question. Unless required by statute, or determined by the
chairman of the meeting to be advisable, the vote on any question need not be by
ballot. On a vote by ballot, each ballot shall be signed by the stockholder
voting, or by his or her proxy, and shall state the number of shares voted.
Section 10. Inspectors.
The Board of Directors shall, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof and make a written report thereof. If any of the inspectors
so appointed shall fail to appear or shall be unable to act, the chairman of the
meeting shall appoint one or more inspectors. Each inspector, before entering
upon the discharge of his or her duties, shall take and sign an oath faithfully
to execute the duties of inspector at such meeting with strict impartiality and
according to the best of his or her ability. The inspectors shall ascertain the
number of shares of capital stock of the Corporation outstanding and the voting
power of each, determine the number of shares represented at the meeting and the
validity of proxies and ballots, count all votes and ballots, determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors and certify their determination of
the number of shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors. No
director or candidate for the office of director shall act as an inspector of an
election of directors, or assist an inspector in the performance of such duties.
Inspectors need not be stockholders.
Section 11. Nominations and Stockholder Business.
Nominations of persons for election to the Board of Directors and the
proposal of business to be transacted by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice with
respect to such meeting, (b) by or at the direction of the Board of Directors or
(c) by any stockholder of record of the Corporation who was a stockholder of
record at the time of the giving of the notice provided for in this Section 11
who is entitled to vote at the meeting and who has complied with the notice
procedures set forth in this Section 11.
For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to this Section 11, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation, such business must be a proper matter for stockholder action under
the Delaware General Corporation Law and, if the stockholder, or the beneficial
owner on whose behalf any such proposal or nomination is made, solicits or
participates in the solicitation of proxies in support of such proposal or
nomination, the stockholder must have timely indicated such stockholder's, or
such beneficial owner's, intention to do so as hereinafter provided. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than 90 days prior to
the first anniversary of the preceding year's annual meeting of stockholders;
provided, however, that if the date
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of the annual meeting is advanced more than 30 days prior to or delayed more
than 60 days after such anniversary date, notice by the stockholder to be timely
must be so delivered not later than the close of business on the later of the
90th day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person as would be required to be disclosed in solicitations of
proxies for the election of such nominees as directors pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and such person's written consent to serve as a director if elected; (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of such business, the reasons for conducting such business at
the meeting and any material interest in such business of such stockholder and
the beneficial owner, if any, on whose behalf the proposal is made; (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner, (ii) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner, and
(iii) whether either such stockholder or beneficial owner intends to solicit or
participate in the solicitation of proxies in favor of such proposal or nominee
or nominees.
Notwithstanding anything in this Section 11 to the contrary, in the
event that the number of directors to be elected to the Board of Directors is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by the
Corporation at least 100 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this section shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (a)
by or at the direction of the Board of Directors or (b) by any stockholder of
record of the Corporation who is a stockholder of record at the time of giving
of notice provided for in this Section 11 who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section
11. Nominations by stockholders of persons for election to the Board of
Directors may be made at such a special meeting of stockholders if the
stockholder's notice required by this Section 11 shall be delivered to the
Secretary at the principal executive offices of the Corporation not later than
the close of business on the later of the 90th day prior to such special meeting
or the 10th day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
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Only persons nominated in accordance with the procedures set forth in
this section shall be eligible to serve as directors and only such business
shall be conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in this Section
11. The officer of the Corporation or other person presiding over the meeting
shall have the power and the duty to determine whether a nomination or any
business proposed to be brought before the meeting has been made in compliance
with the procedures set forth in this Section 11 and, if any proposed nomination
or business is not in compliance with this Section 11, to declare that such
defective proposed business or nomination shall not be presented for stockholder
action at the meeting and shall be disregarded.
For purposes of this section, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Exchange Act.
Notwithstanding the foregoing provisions of this section, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to matters set forth
in this Section 11. Nothing in this Section 11 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 12. Adjournments.
Any meeting of stockholders may be adjourned from time to time,
whether or not a quorum is present, by the affirmative vote of a majority of the
votes present and entitled to be cast at the meeting, or by the officer of the
Corporation presiding over the meeting, or by the Board of Directors.
Article III
Board of Directors
Section 1. Place of Meetings.
Meetings of the Board of Directors shall be held at such place or
places, within or without the State of Delaware, as the Board of Directors may
from time to time determine or as shall be specified in the notice of any such
meeting.
Section 2. Annual Meeting.
The Board of Directors shall meet for the purpose of organization, the
election of officers and the transaction of other business, as soon as
practicable after each annual meeting of stockholders, on the same day and at
the same place where such annual meeting shall be held. Notice of such meeting
need not be given. In the event such annual meeting is not so held, the annual
meeting of the Board of Directors may be held
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at such other time or place (within or without the State of Delaware) as shall
be specified in a notice thereof given as hereinafter provided in Section 5 of
this Article III.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at such time
and place as the Board of Directors may fix. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting is to be held,
then the meeting which would otherwise be held on that day shall be held at the
same hour on the next succeeding business day (unless the Chairman of the Board
determines otherwise). Notice of regular meetings of the Board of Directors
need not be given except as otherwise required by statute or these By-Laws.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be called by the
Chairman of the Board, if one shall have been elected, by two or more directors
of the Corporation or by the Chief Executive Officer.
Section 5. Notice of Meetings.
Notice of each special meeting of the Board of Directors (and of each
regular meeting for which notice shall be required) shall be given by the
Secretary as hereinafter provided in this Section 5, in which notice shall be
stated the time and place of the meeting. Except as otherwise required by these
By-Laws, such notice need not state the purposes of such meeting. Notice of
each such meeting shall be sent to each director, addressed to such director at
his or her residence or usual place of business, by telegraph, cable, telex,
telecopier or other similar means, or be delivered to him or her personally or
be given to him or her by telephone or other similar means, at least two hours
before the time at which such meeting is to be held. Notice of any such meeting
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of notice or who shall attend such meeting, except when
he or she shall attend for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any such meeting need be specified in any written waiver of notice.
Section 6. Quorum and Manner of Acting.
A majority of the entire Board of Directors shall constitute a quorum
for the transaction of business at any meeting of the Board of Directors, and,
except as otherwise expressly required by statute, the Certificate of
Incorporation or these By-Laws, the act of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum at any meeting of the Board of Directors,
a majority of the directors present thereat may adjourn such meeting to another
time and place. Notice of the time and place of any such adjourned meeting
shall be given to all of the directors unless such time and place were announced
at the meeting at which the adjournment was taken, in which case such notice
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shall only be given to the directors who were not present thereat. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called. The
directors shall act only as a Board and the individual directors shall have no
power as such.
Section 7. Organization.
At each meeting of the Board of Directors, the Chairman of the Board,
if one shall have been elected, or, in the absence of the Chairman of the Board
or if one shall not have been elected, another director chosen by a majority of
the directors present, shall act as chairman of the meeting and preside thereat.
The Secretary or, in his or her absence or if one shall not have been elected,
any person appointed by the chairman of the meeting, shall act as secretary of
the meeting and keep the minutes thereof.
Section 8. Resignations.
Any director of the Corporation may resign at any time by giving
written notice of his or her resignation to the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon its
receipt by the Corporation. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 9. Compensation.
The Board of Directors shall have authority to fix the compensation,
including fees and reimbursement of expenses, of directors for services to the
Corporation in any capacity.
Section 10. Committees.
The Board of Directors may, by resolution passed by a majority of the
entire Board of Directors, designate one or more committees, including an
executive committee, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In addition, in the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or she or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
Except to the extent restricted by statute or the Certificate of
Incorporation, each such committee, to the extent provided in the resolution
creating it, shall have and may exercise all the powers and authority of the
Board of Directors. Each such committee shall serve at the pleasure of the
Board of Directors and have such name as may be determined from time to time by
resolution adopted by the Board of Directors. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors.
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Section 11. Action By Consent.
Unless restricted by the Certificate of Incorporation, any action
required or permitted to be taken by the Board of Directors or any committee
thereof may be taken without a meeting if all members of the Board of Directors
or such committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of the proceedings of the Board
of Directors or such committee, as the case may be.
Section 12. Telephonic Meetings.
Any one or more members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or such committee
by means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other.
Participation by such means shall constitute presence in person at a meeting.
Section 13. Mandatory Retirement Policy for Directors.
No person shall be nominated to a term of office on the Board of
Directors who has attained the age of 70 or more before the first day of the
proposed term of office.
Article IV
Officers
Section 1. Number and Qualifications.
The officers of the Corporation shall be elected by the Board of
Directors and shall include the Chairman of the Board, the Chief Executive
Officer, the President, one or more Vice Presidents (including Senior or
Executive Vice Presidents or other classifications of Vice Presidents), the
Secretary and the Treasurer. If the Board of Directors wishes, it may also
elect other officers (including one or more Assistant Treasurers and one or more
Assistant Secretaries) as may be necessary or desirable for the business of the
Corporation. Any two or more offices may be held by the same person, and no
officer except the Chairman of the Board need be a director. Each officer shall
hold office until his or her successor shall have been duly elected and shall
have qualified, or until his or her death, or until he or she shall have
resigned or have been removed or disqualified, as hereinafter provided in these
By-Laws.
Section 2. Resignation and Removal.
Any officer of the Corporation may resign at any time by giving
written notice of his or her resignation to the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon
receipt by the Corporation. Unless otherwise
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specified therein, the acceptance of any such resignation shall not be necessary
to make it effective.
Any officer of the Corporation may be removed, either with or without
cause, at any time, by the Board of Directors at any meeting thereof.
Section 3. Vacancies.
The Board of Directors may fill any vacancy occurring in any office
for any reason and may, in its discretion, leave unfilled for such period as it
may determine any offices other than those of President, Treasurer and
Secretary. Each successor shall hold office for the unexpired term of his
predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
Section 4. Chairman of the Board.
The Chairman of the Board shall be elected from among the members of
the Board. If present, he or she shall preside at all meetings of the Board of
Directors and stockholders. He or she shall advise and counsel with the Chief
Executive Officer, and in his or her absence with other executives of the
Corporation, and shall perform such other duties as may from time to time be
assigned to him or her by the Board of Directors.
Section 5. Chief Executive Officer.
The Chief Executive Officer shall, subject to the Board of Directors,
have general executive charge, management, and control of the properties and
operations of the Corporation in the ordinary course of its business, with all
such powers with respect to such properties and operations as may be reasonably
incident to such responsibilities. If the Board of Directors has not elected a
Chairman or in the absence or inability to act of the Chairman of the Board, the
Chief Executive Officer shall exercise all of the powers and discharge all of
the duties of the Chairman of the Board.
Section 6. President.
The President shall perform all such duties as from time to time may
be assigned to him or her by the Board of Directors, the Chairman of the Board
or the Chief Executive Officer. At the request of the Chief Executive Officer
or in his or her absence or in the event of his or her inability or refusal to
act, the President shall perform the duties of the Chief Executive Officer, and,
when so acting, shall have the powers of and be subject to the restrictions
placed upon the Chief Executive Officer.
Section 7. Vice President.
Each Vice President shall perform all such duties as from time to time
may be assigned to him or her by the Board of Directors, the Chairman of the
Board, the Chief Executive Officer or the President. At the request of the
President or in his or her absence or in the event of his or her inability or
refusal to act, the Vice President, or if there shall be more than one, the Vice
Presidents in the order determined by the Board of
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Directors (or if there be no such determination, then the Vice Presidents in the
order of their election), shall perform the duties of the President, and, when
so acting, shall have the powers of and be subject to the restrictions placed
upon the President.
Section 8. Treasurer.
The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;
(c) deposit all moneys and other valuables to the credit of the
Corporation in such depositaries as may be designated by the Board of
Directors or pursuant to its direction;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds, taking proper vouchers therefor;
(f) render to the Board of Directors, whenever the Board of Directors
may require, an account of the financial condition of the Corporation; and
(g) in general, perform all duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him
or her by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President.
Section 9. Secretary.
The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board of Directors and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all certificates for shares of the Corporation
(unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all
other documents to be executed on behalf of the Corporation under its seal;
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(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly
kept and filed; and
(e) in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
or her by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President.
In the absence of the Secretary at any meeting of the Board of
Directors, a committee of the Board of Directors or the stockholders, the
person presiding at the meeting shall designate a temporary secretary to keep a
record of the meeting.
Section 10. Assistant Treasurer.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the Treasurer or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties as from time to time may be assigned by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer, the President
or the Treasurer.
Section 11. Assistant Secretary.
The Assistant Secretary, or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Secretary and shall
perform such other duties as from time to time may be assigned by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer, the President
or the Secretary.
Section 12. Officers' Bonds or Other Security.
If required by the Board of Directors, any officer of the Corporation
shall give a bond or other security for the faithful performance of his or her
duties, in such amount and with such surety as the Board of Directors may
require.
Section 13. Compensation.
The compensation of the officers of the Corporation for their services
as such officers shall be fixed from time to time by the Board of Directors. An
officer of the Corporation shall not be prevented from receiving compensation by
reason of the fact that he or she is also a director of the Corporation.
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<PAGE>
Article V
Stock Certificates and Their Transfer
Section 1. Stock Certificates.
Every holder of stock in the Corporation shall be entitled to have a
certificate signed by, or in the name of the Corporation by, the Chairman of the
Board, the Chief Executive Officer, the President or a Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Corporation, certifying the number of shares owned by him or her in the
Corporation. If the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock; provided that, except as
otherwise provided in Section 202 of the Delaware General Corporation Law, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the Corporation shall issue to represent such class or
series of stock, a statement that the Corporation will furnish without charge to
each stockholder who so requests the designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
or rights.
Section 2. Facsimile Signatures.
Any or all of the signatures on a certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he, she or it were such
officer, transfer agent or registrar at the date of issue.
SECTION 3. Lost Certificates.
The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen, or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his or
her legal representative, to give the Corporation a bond in such sum as it may
direct sufficient to indemnify it against any claim that may be made against the
Corporation on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
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<PAGE>
Section 4. Transfers of Stock.
Upon surrender to the Corporation or the transfer agent of a
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record a transaction upon its records;
provided, however, that the Corporation shall be entitled to recognize and
enforce any lawful restriction on transfer.
Section 5. Transfer Agents and Registrars.
The Board of Directors may appoint, or authorize any officer or
officers to appoint, one or more transfer agents and one or more registrars.
Section 6. Regulations.
The Board of Directors may make such additional rules and regulations,
not inconsistent with these By-Laws, as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of stock of the
Corporation.
Section 7. Fixing The Record Date.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may, in its discretion, fix a new record date for
the adjourned meeting.
Section 8. Registered Stockholders.
The Corporation shall be entitled to recognize the exclusive right of
a person registered on its records as the owner of shares of stock to receive
dividends and to vote as such owner, shall be entitled to hold liable for calls
and assessments a person registered on its records as the owner of shares of
stock, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares of stock on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
Section 9. Legends.
The Board of Directors shall have the power and authority to provide
that certificates representing shares of stock bear such legends as the Board of
Directors
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<PAGE>
deems appropriate to assure that the Corporation does not become liable for
violations of Federal or state securities laws or other applicable law.
Article VI
General Provisions
Section 1. Dividends.
Subject to the provisions of applicable law and the Certificate of
Incorporation, dividends upon the shares of capital stock of the Corporation may
be declared by the Board of Directors at any regular or special meeting of the
Board of Directors. Dividends may be paid in cash, in property or in shares of
stock of the Corporation, unless otherwise provided by statute or the
Certificate of Incorporation.
Section 2. Reserves.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors may, from time to time, in its absolute discretion, think proper as
a reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors may think conducive to the interests of the
Corporation. The Board of Directors may modify or abolish any such reserve in
the manner in which it was created.
Section 3. Seal.
The seal of the Corporation shall be in such form as shall be approved
by the Board of Directors.
Section 4. Fiscal Year.
The fiscal year of the Corporation shall end on December 31 of each
year; provided, however, that such fiscal year may be changed by resolution of
the Board of Directors.
Section 5. Checks, Notes, Drafts, Etc.
All checks, notes, drafts or other orders for the payment of money of
the Corporation shall be signed, endorsed or accepted in the name of the
Corporation by such officer, officers, person or persons as from time to time
may be designated by the Board of Directors or by an officer or officers
authorized by the Board of Directors to make such designation.
Section 6. Execution of Contracts, Deeds, Etc.
The Board of Directors may authorize any officer or officers, agent or
agents, in the name and on behalf of the Corporation to enter into or execute
and deliver
-15-
<PAGE>
all deeds, bonds, mortgages, contracts and other obligations or instruments, and
such authority may be general or confined to specific instances. The attestation
to such execution by the Secretary of the Corporation shall not be necessary to
constitute such deed, bond, mortgage, contract or other instrument a valid and
binding obligation against the Corporation unless the resolutions, if any, of
the Board of Directors authorizing such execution expressly state that such
attestation is necessary.
SECTION 7. VOTING OF STOCK IN OTHER CORPORATIONS.
Unless otherwise provided by resolution of the Board of Directors, the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President, from time to time may (or may appoint one or more attorneys or agents
to) cast the votes which the Corporation may be entitled to cast as a
shareholder or otherwise in another corporation, any of whose shares or
securities may be held by the Corporation, at meetings of the holders of the
shares or other securities of such other corporation. In the event one or more
attorneys or agents are appointed, the Chairman of the Board, the Chief
Executive Officer or the President may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent. The
Chairman of the Board, the Chief Executive Officer or the President may, or may
instruct the attorneys or agents appointed to, execute or cause to be executed
in the name and on behalf of the Corporation and under its seal or otherwise,
such written proxies, consents, waivers or other instruments as may be necessary
or proper in the circumstances.
Section 8. Severability.
Any determination that any provision of these By-Laws is for any
reason inapplicable, illegal or ineffective shall not affect or invalidate any
other provision of these By-Laws.
Section 9. Certificate of Incorporation.
All references in these By-Laws to the Certificate of Incorporation
shall be deemed to refer to the Certificate of Incorporation of the Corporation,
as amended and in effect from time to time.
Article VII
Amendments
Section 1. By the Board of Directors.
If the Certificate of Incorporation so provides, these By-Laws may be
altered, amended or repealed or new By-Laws may be adopted by the affirmative
vote of a majority of the directors present at any regular or special meeting of
the Board of Directors at which a quorum is present.
-16-
<PAGE>
Section 2. By the Stockholders.
These By-Laws, including this Section 2 of this Article VII, may be
altered, amended or repealed or new By-Laws may be adopted by the affirmative
vote of the holders of at least 80% of the voting power of all shares of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
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<PAGE>
EXHIBIT 4.1
------------------------------------------------------
LIFEPOINT HOSPITALS, INC.
and
NATIONAL CITY BANK
as Rights Agent
____________
Rights Agreement
Dated as of May 11, 1999
------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Section 1. Certain Definitions................................................................................. 1
Section 2. Appointment of Rights Agent......................................................................... 4
Section 3. Issue of Right Certificates......................................................................... 5
Section 4. Form of Right Certificates.......................................................................... 6
Section 5. Countersignature and Registration................................................................... 6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates........................................................................... 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....................................... 8
Section 8. Cancellation and Destruction of Right Certificates.................................................. 8
Section 9. Availability of Preferred Shares.................................................................... 9
Section 10. Preferred Shares Record Date........................................................................ 9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.................................. 10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.......................................... 16
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................................ 16
Section 14. Fractional Rights and Fractional Shares............................................................. 17
Section 15. Rights of Action.................................................................................... 18
Section 16. Agreement of Right Holders.......................................................................... 19
Section 17. Right Certificate Holder Not Deemed a Stockholder................................................... 19
Section 18. Concerning the Rights Agent......................................................................... 19
Section 19. Merger or Consolidation or Change of Name of Rights Agent........................................... 20
Section 20. Duties of Rights Agent.............................................................................. 20
Section 21. Change of Rights Agent.............................................................................. 22
Section 22. Issuance of New Right Certificates.................................................................. 23
Section 23. Redemption.......................................................................................... 23
Section 24. Exchange............................................................................................ 24
Section 25. Notice of Certain Events............................................................................ 25
Section 26. Notices............................................................................................. 26
Section 27. Supplements and Amendments.......................................................................... 26
Section 28. Successors.......................................................................................... 27
Section 29. Benefits of this Rights Agreement................................................................... 27
Section 30. Severability........................................................................................ 27
Section 31. Governing Law....................................................................................... 27
Section 32. Counterparts........................................................................................ 27
Section 33. Descriptive Headings................................................................................ 27
</TABLE>
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Preferred Shares
<PAGE>
Rights Agreement
Rights Agreement, dated as of May 11, 1999, by and between LifePoint
Hospitals, Inc., a Delaware corporation (the "Company"), and National City Bank
(the "Rights Agent").
The Board of Directors of the Company has authorized and directed the
issuance of one preferred share purchase right (a "Right") for each Common Share
to be issued in the distribution of Common Shares effective May 11, 1999 (the
"Record Date"), as such distribution is described in the Company's Registration
Statement on Form 10 (File No. 0-29818), dated April 27, 1999 (the "Spin-Off").
Each Right represents the right to purchase one one-thousandth of a Preferred
Share, upon the terms and subject to the conditions herein set forth. The Board
of Directors of the Company has further authorized and directed the issuance of
one Right with respect to each Common Share that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date and the Expiration Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights Agreement, the
-------------------
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the Common Shares then outstanding, but shall not include (i) the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan, (ii) any Person who or which becomes the
Beneficial Owner of 15% or more of the Common Shares then outstanding as the
result of a reduction in the outstanding Common Shares resulting from
acquisition of Common Shares by the Company approved by the Board of Directors,
unless and until such Person becomes the Beneficial Owner of any additional
Common Shares, other than pursuant to a stock dividend or stock split, (iii) any
Person who or which the Board of Directors of the Company determines, in good
faith, became an Acquiring Person inadvertently, if such Person divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an Acquiring Person or (iv) any Person who or which the Board
of Directors of the Company determines, prior to the time such Person would
otherwise be an Acquiring Person, should be exempted from the definition of
Acquiring Person, provided that the Board of Directors may make such exemption
subject to such conditions, if any, which the Board may determine.
Notwithstanding anything in this paragraph (a) to the contrary, neither
Columbia/HCA Healthcare Corporation nor any of its affiliates shall be deemed to
be an Acquiring Person as a result of its ownership of Common Shares prior to
the Spin-Off.
<PAGE>
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
-------- -------
Beneficial Owner of, or to Beneficially Own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
-------- -------
deemed the Beneficial Owner of, or to Beneficially Own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to Beneficially Own hereunder.
(d) A determination, approval, consent or other action of the "Board
of Directors" shall require approval or consent of a majority of the Board
of Directors of the Company.
2
<PAGE>
(e) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 p.m., New
York City time, on such date, provided, however, that, if such date is not a
Business Day, it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
(g) "Common Shares" shall mean the shares of common stock, par value
$.01 per share, of the Company, except that "Common Shares" when used with
reference to any Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(h) "Company" shall have the meaning set forth in the preamble
hereof.
(i) "Current per share market price" shall have the meaning set forth
in Section 11(d) hereof.
(j) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(k) "Equivalent preferred shares" shall have the meaning set forth in
Section 11(b) hereof.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934.
(m) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(n) "Expiration Date" shall mean the Close of Business on May 7,
2009.
(o) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.
(p) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(q) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the Company's Certificate of
Incorporation.
3
<PAGE>
(r) "Purchase Price" shall initially be $35 for each one one-
thousandth of a Preferred Share purchasable pursuant to the exercise of a Right,
and shall be subject to adjustment from time to time as provided in Section 11
or 13 hereof.
(s) "Record Date" shall have the meaning set forth in the second
paragraph hereof.
(t) "Redemption Date" shall mean the time at which the Rights are
redeemed as provided in Section 23 hereof.
(u) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(v) "Right" shall have the meaning set forth in the second paragraph
hereof.
(w) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(x) "Rights Agent" shall have the meaning set forth in the preamble
hereof.
(y) "Security" shall have the meaning set forth in Section 11(d)(i)
hereof.
(aa) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, by a filing under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become such
or such earlier date as a majority of the Board shall become aware of the
existence of an Acquiring Person.
(bb) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned or otherwise controlled, directly or
indirectly, by such Person.
(cc) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
---------------------------
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
4
<PAGE>
Section 3. Issue of Right Certificates. (a) Until the earlier of the Close
---------------------------
of Business on the tenth day (or such other date as the Board of Directors of
the Company shall determine) after (i) the Stock Acquisition Date or (ii) the
date of the commencement by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares for or pursuant to the terms of
any such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming an Acquiring Person (including any such date which is after
the date of this Rights Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit A hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) The Company will make available, as promptly as practicable
following the Record Date, a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit B hereto, to any holder of Rights who may so
request from time to time prior to the Expiration Date. With respect to
certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates and the
registered holders of the Common Shares shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier of the
Redemption Date or the Expiration Date), the surrender for transfer of any
certificate for Common Shares in respect of which Rights have been issued shall
also constitute the transfer of the Rights associated with such Common Shares.
(c) Rights shall be issued in respect of all Common Shares which are
issued (whether originally issued or from the Company's treasury) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Expiration Date. Certificates representing such Common Shares shall
bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between LifePoint
Hospitals, Inc. (the "Company") and the Rights Agent thereunder (the
"Rights Agreement"), the terms of which are hereby incorporated herein
by
5
<PAGE>
reference and a copy of which is on file at the principal offices
of the Company. Under certain circumstances, as set forth in the
Rights Agreement, such rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, rights issued to any person who becomes an Acquiring Person
(as defined in the rights agreement), including such rights held by a
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
--------------------------
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit A hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Rights Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
automated quotation system on which the Rights may from time to time be listed,
or to conform to usage. Subject to the provisions of Sections 11 and 22 hereof,
the Right Certificates shall entitle the holders thereof to purchase such number
of one one-thousandths of a Preferred Share as shall be set forth therein at the
price per one one-thousandth of a Preferred Share set forth therein, but the
number of one one-thousandths of a Preferred Share and the Purchase Price shall
be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The Right Certificates
---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the Rights
Agent, either manually or by facsimile signature, and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such
6
<PAGE>
Right Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though the
Person who signed such Right Certificates had not ceased to be such officer of
the Company; and any Right Certificate may be signed on behalf of the Company by
any Person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate although
at the date of the execution of this Rights Agreement any such Person was not
such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
- ---------------------------------------------------------------------
(a) Subject to the provisions of Section 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates
entitling the registered holder to purchase a like number of one one-thousandths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
7
<PAGE>
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein), in whole or in
part, at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-thousandth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Expiration Date, (ii) the Redemption Date or (iii) the time
at which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests or (B) requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent of the Preferred Shares
with such depositary agent) and the Company hereby directs such depositary agent
to comply with such request; (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof; (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder; and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 14
hereof.
Section 8. Cancellation and Destruction of Right Certificates. All Right
--------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as
8
<PAGE>
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Right
Certificates, and, in such case, shall deliver a certificate of destruction
thereof to the Company.
Section 9. Availability of Preferred Shares.
--------------------------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with Section 7. The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all securities delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(b) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
(c) The Company will use its best efforts to ensure that any
securities issued pursuant hereto are issued in compliance with all applicable
laws.
Section 10. Preferred Shares Record Date. Each Person in whose name any
----------------------------
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
- -------- -------
which the Preferred Shares transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any
9
<PAGE>
rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
-----------------------------------------------------------
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
- ------
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
-------- -------
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Rights Agreement, in the event
any Person becomes an Acquiring Person, each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Rights Agreement and in lieu of Preferred Shares, such number of
Common Shares as shall equal the result obtained by (A) multiplying the then-
current Purchase Price by the number of one one-thousandths of a Preferred Share
for which a Right is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event. In the event that any Person shall become an Acquiring Person and
the Rights shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be afforded by the
Rights.
Notwithstanding anything in this Agreement to the contrary, from and after
the occurrence of such event, any Rights that are or were acquired or
Beneficially Owned by any Acquiring Person (or any Associate or Affiliate of
such Acquiring Person) shall be
10
<PAGE>
void and any holder of such Rights shall thereafter have no right to exercise
such Rights under any provision of this Rights Agreement. No Right Certificate
shall be issued pursuant to Section 3 that represents Rights Beneficially Owned
by an Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof; no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person whose Rights would be void pursuant to the preceding
sentence shall be cancelled.
(iii) If there shall not be sufficient Common Shares issued but
not outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exercise of the Rights. If the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute, for each Common Share
that would otherwise be issuable upon exercise of a Right, a number of Preferred
Shares or fraction thereof (or a security with substantially similar rights,
privileges, preferences, voting power and economic rights) such that the current
per share market price of one Preferred Share (or such other security)
multiplied by such number or fraction is equal to the current per share market
price of one Common Share as of the date of issuance of such Preferred Shares or
fraction thereof (or other security).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
-------- -------
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
11
<PAGE>
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
-------- -------
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
immediately prior to such date; provided, however, that in the event that the
-------- -------
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the
12
<PAGE>
closing bid and asked prices, regular way, in either case, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the NASDAQ or such other system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors of the Company. If on any such date no such market maker is making
a market in the Security, the fair value of the Security on such date as
determined in good faith by the Board of Directors of the Company shall be used.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section 11(d)(i). If
the Preferred Shares are not publicly traded, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined pursuant
to Section 11(d)(i) (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof),
multiplied by one thousand. If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, "current per share market
price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one-millionth of a
Preferred Share or one ten-thousandth of any other share or security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If, as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to
13
<PAGE>
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained in
Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10
and 13 with respect to the Preferred Shares shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest one
millionth of a Preferred Share) obtained by (A) multiplying (x) the number of
one one-thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (B) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights in substitution for any
adjustment in the number of one one-thousandths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one millionth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed
14
<PAGE>
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a Preferred Share issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one one-
thousandths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that, it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-thousandths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying
15
<PAGE>
the number of one one-thousandths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (B) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
Common Share outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) if a Distribution Date has
occurred, mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power. In the event, directly or indirectly, at any time after a Person has
- -----
become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that
(i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then-current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Rights Agreement and in lieu of Preferred
Shares, such number of Common Shares of such other Person (including the Company
as successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer;
16
<PAGE>
(ii) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this Rights
Agreement;
(iii) the term "Company" shall thereafter be deemed to refer
to such issuer; and
(iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights.
The Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case, as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such
17
<PAGE>
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided that such agreement shall provide that the holders of
--------
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as Beneficial Owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-thousandth of a Preferred Share, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For the purposes of
this Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holder of the Right Certificates at the time such Rights are exercised as herein
provided an amount of cash equal to the same fraction of the current market
value of a whole Common Share. For the purpose of this Section 14(c), the
current market value of a Common Share (as defined pursuant to Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as expressly provided above).
Section 15. Rights of Action. All rights of action in respect of this
----------------
Rights Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
18
<PAGE>
Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Rights Agreement
and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Rights Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
-------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
---------------------------
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Rights Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss,
19
<PAGE>
liability or expense incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this Rights
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Rights Agreement in reliance upon
any Right Certificate or certificate for the Preferred Shares or Common Shares
or for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Rights Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided that such corporation would be eligible for
--------
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Rights Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Rights Agreement upon the following terms
and
20
<PAGE>
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
21
<PAGE>
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30-days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30-days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who or which shall, with such notice, submit such holder's Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by
22
<PAGE>
such a court, shall be a corporation organized and doing business under the laws
of the United States or of the State of New York (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of New York, in good standing, having an office
in the State of New York, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
or Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
----------------------------------
the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board of Directors of the Company to reflect
any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company may,
----------
at its option, at any time prior to the Distribution Date, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock combination,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights by the Board of Directors of the Company may be made
effective at such time, on such basis and with such conditions as the Board of
Directors of the Company, in its sole discretion, may establish. Notwithstanding
anything to the contrary in this Agreement, the Rights shall not be exercisable
after the first occurrence of the event described in Section 11(a)(ii) until
such time as the Company's right of redemption hereunder has expired. The
Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the current market price at the time of redemption) or any other form
of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights
23
<PAGE>
will terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price. The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to give, or any
-------- -------
defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors of the Company
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
--------
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any adjustment in the number of Rights
pursuant to Section 11(i) (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of
the Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have
24
<PAGE>
become void pursuant to the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exchange
of a Right, a number of Preferred Shares or fraction thereof (or a security with
substantially similar rights, privileges, preferences, voting power and economic
rights) such that the current per share market price of one Preferred Share (or
other such security) multiplied by such number or fraction is equal to the
current per share market price of one Common Share as of the date of issuance of
such Preferred Shares or fraction thereof (or other such security).
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (d), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company, at any
------------------------
time after the Distribution Date, shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification,
25
<PAGE>
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this Rights
-------
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
LifePoint Hospitals, Inc.
4525 Harding Road
Nashville, Tennessee 37205
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
National City Bank
Corporate Trust Administration
629 Euclid Avenue--Room 635
Cleveland, OH 44114
Notices or demands authorized by this Rights Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Board of Directors of the
--------------------------
Company may from time to time supplement or amend this Rights Agreement without
the approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any other
provisions with
26
<PAGE>
respect to the Rights which the Board of Directors of the Company may deem
necessary or desirable, any such supplement or amendment to be evidenced by a
writing signed by the Company and the Rights Agent, provided, however, after the
Distribution Date, this Rights Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights (other than
an Acquiring Person or Affiliate or Associate thereof).
Section 28. Successors. All the covenants and provisions of this Rights
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
---------------------------------
Agreement shall be construed to give to any Person, other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 30. Severability. If any term, provision, covenant or
------------
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Rights Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-----------------------------
Name: William F. Carpenter III
Title: Senior Vice President, General
Counsel and Secretary
NATIONAL CITY BANK
By: /s/ David B. Davis
------------------
Name: David B. Davis
Title: Vice President
28
<PAGE>
Exhibit A
---------
Form of Right Certificate
Certificate No. R-
_________ Rights
NOT EXERCISABLE AFTER MAY 7, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
LifePoint Hospitals, Inc.
This certifies that __________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of May 11, 1999 (the "Rights Agreement"), between LifePoint
Hospitals, Inc., a Delaware corporation (the "Company"), and National City Bank
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m., New York time, on May 7, 2009 at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one one-thousandth of
a fully paid non-assessable share of Series A Junior Participating Preferred
Stock of the Company, par value $.01 per share (the "Preferred Shares"), at a
purchase price of $35 per one one-thousandth of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths of a Preferred Share
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of _________, based
on the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-thousandths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
A-1
<PAGE>
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged, in whole or in
part, for Preferred Shares or shares of the Company's Common Stock, par value
$.01 per share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
A-2
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of _______ __, 1999.
LIFEPOINT HOSPITALS, INC.
By:_______________________
Name:
Title:
COUNTERSIGNED:
By:_________________________
Name:
Title:
A-3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
___________________________________________
hereby sells, assigns and transfers unto________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________________
Signature _________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Certificate
-----------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). After due
inquiry and to the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof.
Dated:____________________________
Signature _________________________
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
A-4
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To: _____________________
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security
or other identifying number:____________________________________________________
_____________________________________________
(Please print name and address)
_____________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:____________________________________________________
__________________________________________
(Please print name and address)
__________________________________________
Dated:________________________________
Signature_____________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-5
<PAGE>
Certificate
-----------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). After due
inquiry and to the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof.
Dated:________________________________
Signature_____________________________
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
A-6
<PAGE>
Exhibit B
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On May 11, 1999, the Board of Directors of LifePoint Hospitals, Inc.
(the "Company") authorized and declared the issuance of one preferred share
purchase right (a "Right") for each share of common stock, par value $.01 per
share (the "Common Shares"), of the Company to be issued in the distribution of
Common Shares effective May 11, 1999 (the "Record Date"), as such distribution
is described in the Registration Statement on Form 10 (File No. 0-29818) dated
April 27, 1999 (the "Spin-Off"). Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock of the Company, par value $.01 per share (the
"Preferred Shares"), at a price of $35 per one one-thousandth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and National City Bank as Rights Agent (the "Rights Agent").
Distribution Date; Exercisability
- ---------------------------------
Initially, the Rights will be attached to all Common Share
certificates and no separate Rights certificates will be issued. Separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
earlier to occur of the tenth day (or such other date as the Board of Directors
of the Company shall determine) after (i) a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding Common Shares or (ii) the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares
(the earlier of such dates being the "Distribution Date").
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), (i) the Rights will be
transferred with and only with the Common Shares, (ii) new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on May 7, 2009 (the "Expiration Date"), unless the Expiration
Date is extended or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
B-1
<PAGE>
Flip-In
- -------
If a person or group becomes an Acquiring Person, each holder of a Right
will thereafter have the right to receive, upon exercise, Common Shares (or, in
certain circumstances, Preferred Shares or other similar securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the existence of an Acquiring
Person, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
For example, at an exercise price of $50.00 per Right, each Right not owned
by an Acquiring Person following an event set forth in the preceding paragraph
would entitle its holder to purchase $100.00 worth of Common Shares (or other
consideration, as noted above) for $50.00. Assuming a value of $25.00 per
Common Share at such time, the holder of each valid Right would be entitled to
purchase four Common Shares for $50.00.
Flip-Over
- ---------
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any person or
group becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right.
Exchange
- --------
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-thousandth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Redemption
- ----------
At any time prior to the Distribution Date, the Board of Directors of
the Company may redeem the Rights, in whole but not in part, at a price of $.01
per Right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of
Directors, in its sole discretion, may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the
B-2
<PAGE>
Redemption Price. The Rights are not exercisable after the first occurrence of
"flip-in" event (described above) until such time as the Company's right of
redemption has expired.
Amendment
- ---------
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, except that after
the Distribution Date no such amendment may adversely affect the interests of
the holders of the Rights (other than the Acquiring Person).
Adjustment
- ----------
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are subject to
adjustment under certain circumstances.
Preferred Stock
- ---------------
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
Rights of Holders
- -----------------
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Further Information
- -------------------
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 10 dated
April 27, 1999. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
B-3
<PAGE>
EXHIBIT 4.2(a)
HEALTHTRUST, INC.--THE
HOSPITAL COMPANY
10 3/4% SENIOR SUBORDINATED NOTES DUE 2009
INDENTURE
Dated as of May 11, 1999
CITIBANK N.A.
as Trustee
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1) 7.1
(a)(2) 7.1
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.1
(b)(i), (ii) 7.1
(c) N.A.
311 (a) 7.11
(b) 7.11
(iii)(c) N.A.
312 (a) 2.5
(b) 12.3
(c) 12.3
313 (a) 7.6
(b)(2) 7.7
(c) 7.6; 12.2
(d) 7.6
314 (a) 4.3; 12.2
(b) N.A.
(c)(1) 12.4
(c)(2) 12.4
(c)(3) N.A.
(d) N.A.
(e) 12.5
(f) N.A.
315 (a) 7.1
(b) 7.5; 12.2
(c) 7.1
(d) 7.1
(e) 6.11
316 (a)(last sentence) 2.9
(a)(1)(A) 6.5
(a)(1)(B) 6.4
(a)(2) N.A.
<PAGE>
(b) 6.7
(c) 2.12
317 (a)(1) 6.8
(a)(2) 6.9
(b) 2.4
318 (a) 12.1
(b) N.A.
(c) 12.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE DEFINITIONS AND INCORPORATION BY REFERENCE 5
Section Definitions. 5
-----------
Section Other Definitions. 25
-----------------
Section Terms of TIA. 26
------------
Section Rules of Construction. 27
---------------------
ARTICLE THE NOTES 27
Section Form and Dating. 27
---------------
Section Execution and Authentication. 28
----------------------------
Section Registrar and Paying Agent. 29
--------------------------
Section Paying Agent to Hold Money in Trust. 29
-----------------------------------
Section Holder Lists. 30
------------
Section Transfer and Exchange. 30
---------------------
Section Replacement Notes 42
-----------------
Section Outstanding Notes. 42
-----------------
Section Treasury Notes. 43
--------------
Section Temporary Notes 43
---------------
Section Cancellation. 43
------------
Section Defaulted Interest. 44
------------------
Section CUSIP Numbers. 44
-------------
ARTICLE REDEMPTION 44
Section Notice of Redemption to Trustee. 44
-------------------------------
Section Selection of Notes to Be Redeemed. 45
---------------------------------
Section Notice of Redemption to Holders. 45
-------------------------------
Section Effect of Notice of Redemption. 46
------------------------------
Section Deposit of Redemption Price. 46
---------------------------
Section Notes Redeemed in Part. 46
----------------------
Section Optional Redemption. 46
-------------------
Section Mandatory Redemption. 47
---------------------
ARTICLE COVENANTS 48
Section Payment of Notes. 48
----------------
Section Maintenance of Office or Agency. 49
-------------------------------
Section Reports. 49
-------
Section Compliance Certificate. 50
----------------------
Section Taxes. 50
-----
Section Stay, Extension and Usury Laws. 50
------------------------------
Section Limitation on Restricted Payments. 51
---------------------------------
Section Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. 56
----------------------------------------------
Section Limitation on Indebtedness. 57
--------------------------
<PAGE>
ii
Page
Section Limitation on Sale of Assets 58
----------------------------
Section Limitation on Transactions with Affiliates. 61
------------------------------------------
Section Limitation on Liens. 61
-------------------
Section Limitation on Other Senior Subordinated
Indebtedness. 62
------------
Section Corporate Existence. 62
-------------------
Section Purchase of Notes upon Change in Control. 63
----------------------------------------
Section Subsidiary Guarantees 65
---------------------
Section Limitation on Issuances and Sales of Capital
Stock of Restricted Subsidiaries. 65
--------------------------------
Section Limitation on Guarantees of Indebtedness by
Restricted Subsidiaries. 66
-----------------------
Section Assumption of Indenture by LifePoint and Holdings. 67
--------------------------------------------------
Section Limitations on Healthtrust. 67
--------------------------
Section Limitations on LifePoint. 68
------------------------
Section Transition Agreements. 68
---------------------
Section Further Assurances. 68
------------------
ARTICLE SUCCESSORS 69
Section Consolidation, Merger and Sale of Assets. 69
----------------------------------------
Section Successor Person Substituted. 71
----------------------------
ARTICLE DEFAULTS AND REMEDIES 71
Section Events of Default. 71
-----------------
Section Acceleration. 73
------------
Section Other Remedies. 74
--------------
Section Waiver of Past Defaults. 74
-----------------------
Section Control by Majority. 74
-------------------
Section Limitation on Suits. 75
-------------------
Section Rights of Holders of Notes to Receive Payment. 75
---------------------------------------------
Section Collection Suit by Trustee. 75
--------------------------
Section Trustee May File Proofs of Claim. 76
--------------------------------
Section Priorities. 76
----------
Section Undertaking for Costs. 77
---------------------
ARTICLE TRUSTEE 77
Section Duties of Trustee. 77
-----------------
Section Rights of Trustee. 78
-----------------
Section Individual Rights of Trustee. 79
----------------------------
Section Trustee's Disclaimer. 79
--------------------
Section Notice of Defaults. 80
------------------
Section Reports by Trustee to Holders of the Notes. 80
------------------------------------------
Section Compensation and Indemnity. 80
--------------------------
Section Replacement of Trustee. 81
----------------------
Section Successor Trustee by Merger, etc. 82
--------------------------------
Section Eligibility; Disqualification. 82
-----------------------------
Section Preferential Collection of Claims Against Holdings. 82
---------------------------------------------------
<PAGE>
iii
Page
Section Trustee's Application for Instructions from the Company 83
-------------------------------------------------------
ARTICLE DEFEASANCE AND COVENANT DEFEASANCE; DISCHARGE 83
Section Option to Effect Defeasance or Covenant Defeasance. 83
---------------------------------------------------
Section Defeasance and Discharge. 83
------------------------
Section Covenant Defeasance. 84
-------------------
Section Conditions to Defeasance or Covenant Defeasance. 84
-----------------------------------------------
Section Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions. 86
------------------------------------------------
Section Repayment to Holdings. 87
---------------------
Section Reinstatement. 87
-------------
Section Discharge. 87
---------
ARTICLE AMENDMENT, SUPPLEMENT AND WAIVER 88
Section Without Consent of Holders of Notes. 88
-----------------------------------
Section With Consent of Holders of Notes. 89
--------------------------------
Section Revocation and Effect of Consents. 91
---------------------------------
Section Notation on or Exchange of Notes. 91
--------------------------------
Section Trustee to Sign Amendments, etc. 91
-------------------------------
ARTICLE SUBORDINATION 91
Section Agreement to Subordinate. 91
------------------------
Section Liquidation; Dissolution; Bankruptcy. 92
------------------------------------
Section Default on Designated Senior Indebtedness. 92
-----------------------------------------
Section Acceleration of Securities. 94
--------------------------
Section When Distribution Must Be Paid Over. 94
-----------------------------------
Section Notice by the Company 94
---------------------
Section Subrogation. 94
-----------
Section Relative Rights. 95
---------------
Section Subordination May Not Be Impaired by the Company 95
------------------------------------------------
Section Distribution or Notice to Representative. 96
----------------------------------------
Section Rights of Trustee and Paying Agent. 96
----------------------------------
Section Authorization to Effect Subordination. 96
-------------------------------------
Section Amendments. 97
----------
ARTICLE NOTE GUARANTEES 97
Section Guarantee. 97
---------
Section Subordination of Note Guarantee. 98
-------------------------------
Section Limitation on Guarantor Liability. 98
---------------------------------
Section Execution and Delivery of Note Guarantee. 99
----------------------------------------
Section Releases Following Sale of Assets or Capital Stock. 99
--------------------------------------------------
ARTICLE MISCELLANEOUS 100
Section Trust Indenture Act Controls. 100
----------------------------
Section Notices. 100
-------
Section Communication by Holders of Notes with Other
--------------------------------------------
Holders of Notes. 101
----------------
<PAGE>
iv
Page
Section Certificate and Opinion as to Conditions Precedent. 102
--------------------------------------------------
Section Statements Required in Certificate or Opinion. 102
---------------------------------------------
Section Rules by Trustee and Agents. 102
---------------------------
Section No Personal Liability of Directors, Officers, Employees
-------------------------------------------------------
and Stockholders. 103
----------------
Section Governing Law. 103
-------------
Section No Adverse Interpretation of Other Agreements. 103
---------------------------------------------
Section Successors. 103
----------
Section Severability. 103
------------
Section Counterpart Originals; Acceptance by Trustee. 103
--------------------------------------------
Section Table of Contents, Headings, etc. 104
--------------------------------
EXHIBITS:
Exhibit A Form of Note
Exhibit B Form of Certificate of Transfer
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Certificate from Acquiring Institutional Accredited Investor
Exhibit E Form of Note Guarantee
Exhibit F Form of Supplemental Indenture
Exhibit G Form of First Supplemental Indenture
Exhibit H Form of Second Supplemental Indenture
Exhibit I Form of Third Supplemental Indenture
Exhibit J Form of Fourth Supplemental Indenture
<PAGE>
Page
INDENTURE dated as of May 11, 1999 by and between Healthtrust, Inc.--
The Hospital Company, a Delaware corporation (the "Company"), and Citibank N.A.,
a national banking association, duly organized and validly existing under the
laws of the United States of America, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Notes:
1. ARTICLE
DEFINITIONS AND INCORPORATION BY REFERENCE
1.1 Section Definitions.
-----------
"144A Global Note" means a global note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold in reliance on Rule 144A.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at
the time such Person becomes a Restricted Subsidiary or (b) assumed in
connection with the acquisition of assets constituting substantially all the
assets of such Person, any division or line of business of such Person or any
other properties or assets of such Person other than in the ordinary course of
business from such Person. Acquired Indebtedness shall be deemed to be incurred
on the date of the related acquisition of assets from any Person or the date the
acquired Person becomes a Restricted Subsidiary.
"Additional Interest" means all additional interest, if any, then
owing pursuant to Section 2.5 of the Registration Rights Agreement.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any other Person that
owns, directly or indirectly, 10% or more of such specified Person's Capital
Stock or (c) any executive officer or director of any such specified Person or
other Person. For the purposes of this definition, "control," when used with
respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
<PAGE>
2
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way or merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer"),
directly or indirectly, in one of a series of related transactions, of (a) any
Capital Stock of any Restricted Subsidiary, (b) all or substantially all of the
properties and assets of any division or line of business of Holdings or any
Restricted Subsidiary, or (c) any other properties or assets of Holdings or any
Restricted Subsidiary other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" shall not include any
transfer of properties or assets (i) that is governed by the provisions of
Section 5.1, (ii) between or among Holdings and Restricted Subsidiaries in
accordance with the terms hereof, (iii) a Hospital Swap, (iv) with an aggregate
Fair Market Value of less than $1,000,000, (v) long-term leases, in effect on
the Issuance Date, of Hospitals to another Person, (vi) long-term leases of
Hospitals to another Person; provided that the aggregate book value of the
properties subject to such leases at any one time outstanding does not exceed
15% of the Total Assets of Holdings at the time any such lease is entered into,
(vii) that are obsolete, damaged or worn out equipment or inventory that is no
longer useful in the conduct of Holdings' or its Subsidiaries' business and that
is disposed of in the ordinary course of business, (viii) that constitutes a
sale or other disposition of accounts receivable in the ordinary course of
business (including for purposes of financing) for cash and in an amount at
least equal to the Fair Market Value of such accounts receivable, or (ix) that
is made the subject of an Investment consummated in compliance with Section 4.7.
"Attributable Debt" of any Person in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of such Person as lessee for net rental payments (excluding all
amounts required to be paid on account of maintenance and repairs, insurance,
taxes, assessments, water, utilities and similar charges to the extent included
in such rental payments) during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Average Life" means, as of the date of determination with respect to
any Indebtedness, the quotient obtained by dividing (a) the sum of the products
of (i) the number of years from the date of determination to the date or dates
of each successive scheduled principal payment (including, without limitation,
any sinking fund requirements) of such Indebtedness multiplied by (ii) the
amount of each such principal payment by (b) the sum of all such principal
payments.
<PAGE>
3
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law relating to
the bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or change
in any such law.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as such term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition.
"Board of Directors" means, with respect to any Person, the board of
directors of such Person, or any duly authorized committee of such board.
"Broker-Dealer" means any broker or dealer registered with the
Commission under the Exchange Act.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, partnership interests, participation, rights in or other equivalents
(however designated) of such Person's capital stock, and any rights (other than
debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock, whether now outstanding
or issued after the date hereof.
"Capitalized Lease Obligation" means, with respect to any Person, any
obligation of such Person under a lease of (or other agreement conveying the
right to use) any property (whether real, personal or mixed) that is required to
be classified and accounted for as a capital lease obligation under GAAP, and,
for the purpose hereof, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means (a) any evidence of Indebtedness with a
maturity of one year or less issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (b) certificates of deposit or acceptances with a
maturity of one year or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus and undivided
profits of not less than $500,000,000; and (c) commercial paper with a maturity
of one year or less issued by a corporation that is not an Affiliate of Holdings
and is organized under the laws of any state of the United States or the
District of Columbia and rated at least A-1 by S&P or any successor rating
agency or at least P-1 by Moody's or any successor rating agency; (d) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (a) and (b) above; (e) demand and time deposits
with a domestic commercial bank that is
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4
a member of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $500,000,000; and (f) investments in funds
investing solely in investments of the types described in clauses (a) through
(e) above.
"Change in Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the total
outstanding Voting Stock of LifePoint or Holdings; provided that if (i)
LifePoint is the "beneficial owner" of more than 35% of the total outstanding
Voting Stock of Holdings or (ii) the ESOP is the "beneficial owner" of more than
35% of the total outstanding Voting Stock of LifePoint, either of those events
by itself shall not constitute a Change in Control under this clause (a); (b)
LifePoint or Holdings consolidates with, or merges with or into, another Person
or conveys, transfers, leases or otherwise disposes of all or substantially all
of its assets to any Person, or any Person consolidates with, or merges with or
into, LifePoint or Holdings, in any such event pursuant to a transaction in
which the outstanding Voting Stock of LifePoint or Holdings is converted into or
exchanged for cash, securities or other property, other than any such
transaction (i) where the outstanding Voting Stock of LifePoint or Holdings is
not converted or exchanged at all (except to the extent necessary to reflect a
change in the jurisdiction of incorporation of LifePoint or Holdings) or is
converted into or exchanged for (A) Voting Stock (other than Redeemable Capital
Stock) of the surviving or transferee corporation and/or (B) cash, securities
and other property (other than Capital Stock of the surviving or transferee
corporation) in an amount that could be paid by Holdings as a Restricted Payment
as described under, or is otherwise not prohibited by, Section 4.7 and (ii)
immediately after such transaction, no "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total outstanding Voting Stock of the surviving or transferee
corporation; (c) during any consecutive two year period, individuals who at the
beginning of such period constituted the Board of Directors of LifePoint or
Holdings (together with any new directors whose election to such Board of
Directors, or whose nomination for election by the stockholders of LifePoint or
Holdings, was approved by a vote of 66-2/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of LifePoint or
Holdings then in office; or (d) LifePoint or Holdings is liquidated or dissolved
or adopts a plan of liquidation or dissolution other than, in the case of
Holdings, in a transaction which complies with the provisions described under
Section 5.1; or (e) for as long as a holding company ownership structure is
maintained over Holdings, LifePoint or a company 100% of the Capital Stock of
which is owned directly by LifePoint ceases to own at least a majority of the
total outstanding Voting Stock and Capital Stock of Holdings. Notwithstanding
anything to the
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5
contrary in the foregoing, the consummation of the Spin-Off Distribution shall
not be deemed to constitute a Change in Control within the meaning of this
definition.
"Closing" means the original issuance of Notes on the date of this
Indenture.
"Columbia/HCA" means Columbia/HCA Healthcare Corporation, a Delaware
corporation.
"Company" shall have the meaning assigned to such term in the
preamble.
"Commission" means the Securities and Exchange Commission.
"Consolidated Adjusted Net Income" means, for any period, the
Consolidated Adjusted Net Income (or loss) of Holdings and all Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted by
excluding, without duplication, (a) any net after-tax extraordinary gains or
losses (less all fees and expenses relating thereto), (b) any net after-tax
gains or losses (less all fees and expenses relating thereto) attributable to
asset dispositions other than in the ordinary course of business, (c) the
portion of net income (or loss) of any Person (other than Holdings or a
Restricted Subsidiary), including Unrestricted Subsidiaries, in which Holdings
or any Restricted Subsidiary has an ownership interest, except to the extent of
the amount of dividends or other distributions actually paid to Holdings or any
Restricted Subsidiary in cash dividends or distributions during such period, (d)
for purposes of Section 4.7, the net income (or loss) of any Person combined
with Holdings or any Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination, (e) the net income
of any Restricted Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary is not at the
date of determination permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Restricted
Subsidiary or its stockholders, except to the extent of the amount of cash
dividends or other distributions actually paid to Holdings or a Restricted
Subsidiary not subject to such restriction by such Restricted Subsidiary during
such period and (f) for purposes of calculating Consolidated Adjusted Net Income
under Section 4.7 any net income (or loss) from any Restricted Subsidiary while
it was an Unrestricted Subsidiary at any time during such period other than any
amounts actually received from such Restricted Subsidiary during such period.
"Consolidated Fixed Charge Coverage Ratio" of Holdings means, for any
period, the ratio of (a) the sum of Consolidated Adjusted Net Income and, to the
extent deducted in computing Consolidated Adjusted Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-Cash
Charges, less all non-cash items increasing Consolidated Adjusted Net Income, in
each case, for such period to (b) the sum of (i) Consolidated Interest Expense
and (ii) cash dividend payments on Preferred Stock of Holdings or any Restricted
Subsidiary and non-cash dividends due on Preferred Stock of any Restricted
Subsidiary for such period.
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6
"Consolidated Income Tax Expense" means, for any period, the provision
for federal, state, local and foreign income taxes of Holdings and all
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without
duplication, the sum of (a) the interest expense of Holdings and its Restricted
Subsidiaries for such period, including, without limitation, (i) amortization of
debt discount, (ii) the net cost (benefit) of Interest Rate Agreements
(including amortization of discounts), (iii) the interest portion of any
deferred payment obligation, (iv) commissions, discounts, and other fees and
charges owed with respect to letters of credit and bankers acceptance financing
and similar transactions, and (v) amortization of debt issuance costs, plus (b)
the interest component of Capitalized Lease Obligations of Holdings and its
Restricted Subsidiaries during such period, plus (c) the interest of Holdings
and its Restricted Subsidiaries that was capitalized during such period, plus
(d) interest on Indebtedness of another Person that is guaranteed by Holdings or
any Restricted Subsidiary or secured by a Lien on assets of Holdings or a
Restricted Subsidiary, to the extent such interest is actually paid by Holdings
or such Restricted Subsidiary, in each case as determined on a consolidated
basis in accordance with GAAP; provided that (x) the Consolidated Interest
Expense attributable to interest on any Indebtedness computed on a pro forma
basis and bearing a floating interest rate shall be computed as if the rate in
effect on the date of computation had been the applicable rate for the entire
period, and (y) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
computed on a pro forma basis shall be computed based upon the average daily
balance of such Indebtedness during the applicable period; provided, further,
that, notwithstanding the foregoing, the interest rate with respect to any
Indebtedness covered by any Interest Rate Agreement shall be deemed to be the
effective interest rate with respect to such Indebtedness after taking into
account such Interest Rate Agreement.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of Holdings and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of Holdings ending prior to the taking of any action for the
purpose of which the determination is being made, as (a) the aggregate paid-in
capital relating to such Capital Stock plus (b) any retained earnings or earned
surplus less (i) any accumulated deficit and (ii) any amounts attributable to
Redeemable Capital Stock.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization, depletion and other non-cash expenses (including,
without limitation, non-cash ESOP expenses) of Holdings and any Restricted
Subsidiary reducing Consolidated Adjusted Net Income for such period, determined
on a consolidated basis in accordance with GAAP (excluding any such non-cash
charge that requires an accrual of or reserve for cash charges for any future
period).
"Currency Agreements" means any spot or forward foreign exchange
agreements and currency swap, currency option or other similar financial
agreements or arrangements
<PAGE>
7
entered into by Holdings or any of its Restricted Subsidiaries in the ordinary
course of business and designated to protect against or manage exposure to
fluctuations in foreign currency exchange rates.
"Corporate Trust Office" of the Trustee shall be at the address of the
Trustee specified in Section 12.2 or such other address as to which the Trustee
may give notice to the Company.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Default" means any event that is, or after notice or the passage of
time or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.6, in the form of
Exhibit A hereto except that such Note shall not bear the Global Note Legend and
shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Indebtedness" means:
(a) all Senior Indebtedness under the Senior Credit Agreement; and
(b) any other Senior Indebtedness which, at the time of determination,
has an aggregate principal amount outstanding of at least $20,000,000 and
that has been specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness" of Holdings.
"Disinterested Director" means, with respect to any transaction or
series of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors under the Indenture, a member of
the Board of Directors who does not have any material direct of indirect
financial interest in or with respect to such transaction or series of
transactions.
"ESOP" means the LifePoint Hospitals, Inc. Retirement Savings Plan.
"ESOP Loans" means loans to the ESOP by Holdings or guarantees by
Holdings of loans to the ESOP by a third party lender, in either case in
connection with the purchase as promptly as practicable of shares of LifePoint
common stock by the ESOP.
<PAGE>
8
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in exchange for the Initial
Notes in the Exchange Offer pursuant to Section 2.6(f) hereof or, with respect
to Initial Notes issued under this Indenture subsequent to the date of this
Indenture pursuant to Section 2.2 hereof, the exchange offer contemplated by the
registration rights agreement relating thereto substantially identical to the
Registration Rights Agreement.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair Market Value shall be determined
by the Board of Directors of Holdings in good faith.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the date of determination.
"Global Note Legend" means the legend set forth in Section 2.6(g)(ii)
which is required to be placed on all Global Notes issued under this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.1, 2.6(b)(iv), 2.6(d)(ii)
or 2.6(f).
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means, as applied to any obligation, (a) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn by letters of credit.
"Guarantor" means each Restricted Subsidiary that executes and
delivers its supplemental indenture to the Indenture and any Restricted
Subsidiary that incurs a Guarantee;
<PAGE>
9
provided that upon the release and discharge of any Person from its Note
Guarantee in accordance with this Indenture, such Person shall cease to be a
Guarantor.
"Guarantor Senior Indebtedness" of a Guarantor means Indebtedness of
such Guarantor consisting of:
(a) a guarantee of any Senior Indebtedness under the Senior Credit
Agreement or any other Senior Indebtedness; and
(b) the principal of, premium, if any, and interest on all other
Indebtedness of such a Guarantor (other than the Note Guarantee issued
by such Guarantor), whether outstanding on the date of this Indenture or
thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same
or pursuant to which the same is outstanding expressly provides that
such Indebtedness shall not be senior in right of payment to such Note
Guarantee.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness" of a
Guarantor shall not include:
(i) Indebtedness evidenced by the Note Guarantee of such Guarantor;
(ii) Indebtedness of such Guarantor that is expressly subordinated in
right of payment to any Guarantor Senior Indebtedness of such Guarantor;
(iii) Indebtedness of such Guarantor that by operation of law is
subordinate to any general unsecured obligations of such Guarantor;
(iv) Indebtedness of such Guarantor to the extent incurred in violation
of any covenant of the Indenture;
(v) any liability for federal, state or local taxes or other taxes, owed
or owing by such Guarantor;
(vi) accounts payable or other liabilities owed or owing by such
Guarantor to trade creditors (including guarantees thereof or
instruments evidencing such liabilities);
(vii) amounts owed by such Guarantor for compensation to employees or
for services rendered to such Guarantor;
(viii) Indebtedness of such Guarantor to any Affiliate of Holdings;
(ix) Capital Stock of such Guarantor; and
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10
(x) Indebtedness which when incurred and without respect to any election
under Section 1111(b) of Title 11 of the United States Code is without
recourse to such Guarantor or any Subsidiary.
"Healthtrust" means Healthtrust, Inc.--The Hospital Company, a
Delaware corporation.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means LifePoint Hospitals Holdings, Inc., a Delaware
corporation, and any and all successors thereto.
"Hospital" means a hospital, outpatient clinic, long-term care
facility, medical office building or other facility or business that is used or
useful in or related to the provision of healthcare services.
"Hospital Swap" means an exchange of assets and, to the extent
necessary to equalize the value of the assets being exchanged, cash by Holdings
or a Restricted Subsidiary for one or more Hospitals and/or one or more Related
Businesses or for 100% of the Capital Stock of any Person owning or operating
one or more Hospitals and/or one or more Related Businesses, provided that cash
does not exceed 20% of the sum of the amount of the cash and the Fair Market
Value of the Capital Stock or assets received or given by Holdings or a
Restricted Subsidiary in such transaction.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all liabilities of such Person for borrowed money (including overdrafts) or
for the deferred purchase price of property or services, excluding any trade
payables and other accrued current liabilities incurred in the ordinary course
of business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit and
acceptances issued under letter of credit facilities, acceptance facilities or
other similar facilities, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) indebtedness of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even if the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), but excluding trade
payables arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such Person, (e) all obligations of such Person under or in
respect of Interest Rate Agreements or Currency Agreements, (f) all indebtedness
referred to in (but not excluded from) the preceding clauses of other Persons
and all dividends of other Persons, the payment of which is secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien or with respect to property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness (the amount of such obligation being deemed to be the lesser of the
value of such property or asset or the amount of the obligation so secured), (g)
all guarantees by such Person of
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11
Indebtedness referred to in this definition or any other Person, (h) all
Redeemable Capital Stock of such Person valued at the greater of its voluntary
or involuntary maximum fixed repurchase price plus accrued and unpaid dividends
and (i) all Attributable Debt of such Person. For purposes hereof, the "maximum
fixed repurchase price" of any Redeemable Capital Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
the Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Redeemable Capital Stock, such Fair Market Value shall be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Financial Advisor" means a reputable accounting,
appraisal or investment banking firm that, in the reasonable good faith judgment
of the Board of Directors of Holdings, is qualified to perform the task for
which such firm has been engaged and is independent with respect to Holdings.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Notes" means, collectively, (i) the 10 3/4% Senior
Subordinated Notes due 2009 of the Company issued on the date of this Indenture
and (ii) one or more series of 10 3/4% Senior Subordinated Notes due 2009 that
are issued subsequent to the date of this Indenture pursuant to Section 2.2, in
each case for so long as such securities constitute "restricted securities" as
such term is defined in Rule 144(a)(3) under the Securities Act; provided that
the Trustee shall be entitled to request and conclusively rely on an Opinion of
Counsel with respect to whether any Note constitutes such a restricted security.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Interest Rate Agreements" means any interest rate protection
agreements and other types of interest rate hedging agreements (including,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements) designed to protect against or manage exposure to fluctuations in
interest rates.
"Investments" means, with respect to any Person, any direct or
indirect advance, loan, guarantee or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase, acquisition or ownership by such Person of any Capital Stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued or
owned by, any other Person and all other items that would be classified as
investments on a balance sheet prepared in accordance with GAAP. In addition,
the portion (proportionate to Holdings' or a Restricted
<PAGE>
12
Subsidiary's equity interest in each Subsidiary) of the Fair Market Value of the
net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary shall be deemed to be an
"Investment" made by Holdings in such Unrestricted Subsidiary at such time. Upon
a redesignation of such Subsidiary as a Restricted Subsidiary, Holdings shall be
deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (a) Holdings' (or one of
its Subsidiaries') "Investment" in such Subsidiary at the time of such
redesignation less (b) the portion (proportionate to Holdings' (or one of its
Subsidiaries) equity interest in such Subsidiary) of the Fair Market Value of
the net assets of such Subsidiary at the time of such redesignation.
"Investment" shall exclude extensions of trade credit on commercially reasonable
terms in accordance with normal trade practices.
"Issuance Date" means the date on which the Notes are originally
issued under this Indenture after giving effect to the Spin-Off Transactions.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by Holdings and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), security interest, hypothecation, assignment for security, claim, or
preference of priority or other encumbrance upon or with respect to any property
of any kind, real or personal, movable or immovable, now owned or hereafter
acquired. A Person shall be deemed to own subject to a Lien any property which
such Person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement having substantially the same economic effect as the foregoing.
"LifePoint" means LifePoint Hospitals, Inc., a Delaware corporation.
"Material Subsidiary" of a Person means any Restricted Subsidiary that
would be a significant subsidiary of such person, as defined in rule 1-02 of
Regulation S-X promulgated by the Commission.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable provided in such Note or in this
Indenture, whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, call for redemption of purchase or otherwise.
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13
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed for, cash or Cash Equivalents (except to the
extent that such obligations are financed or sold with recourse to Holdings or
any Restricted Subsidiary), net of (a) brokerage commissions and other fees and
expenses (including, without limitation, fees and expenses of legal counsel and
investment banks, recording fees, transfer fees and appraiser fees) related to
such Asset Sale, (b) provisions for all taxes payable as a result of such Asset
Sale, (c) payments made to retire Indebtedness where payment of such
Indebtedness is secured by the assets or properties which are the subject of
such Asset Sale or where such Indebtedness must by its terms, or as required by
applicable law, be repaid out of the proceeds of such Asset Sale, (d) amounts
required to be paid to any Person (other than Holdings or any Restricted
Subsidiary) owning a beneficial interest in or having a Lien on the assets
subject to the Asset Sale, (e) all distributions and other payments required to
be made to non-majority interest holders in Subsidiaries or Permitted Joint
Ventures as a result of such Asset Sale and (f) appropriate amounts to be
provided by Holdings or any Restricted Subsidiary, as the case may be, as a
reserve required in accordance with GAAP against any liabilities associated with
such Asset Sale and retained by Holdings or any Restricted Subsidiary, as the
case may be, after such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an Officers' Certificate delivered to the
Trustee.
"Note Guarantee" means any guarantee of the obligations of Holdings
under this Indenture and the Notes by any Restricted Subsidiary in accordance
with the provisions of this Indenture.
"Notes" means, collectively, the Initial Notes and the Unrestricted
Notes, treated as a single class of securities, as amended or supplemented from
time to time in accordance with the terms hereof, that are issued pursuant to
the terms of this Indenture.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Executive or Senior Vice
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice
President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the Chief Executive
Officer, the Chief Financial Officer or the principal accounting officer of the
Company, that meets the requirements of Section 12.5.
<PAGE>
14
"Opinion of Counsel" means an opinion from legal counsel that meets
the requirements of Section 12.5. The counsel may be an employee of or counsel
to the Company, any Subsidiary of the Company or the Trustee.
"Pari Passu Indebtedness" means (a) with respect to the Notes,
Indebtedness that ranks pari passu in right of payment to the Notes and (b) with
respect to any Note Guarantee, Indebtedness that ranks pari passu in right of
payment to such Note Guarantee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Permitted Indebtedness" means any of the following:
(a) Indebtedness of Holdings or any Restricted Subsidiary under the Senior
Credit Agreement in an aggregate principal amount at any one time
outstanding not to exceed $210,000,000 less the aggregate amount of all
repayments of the principal amount of any term loans under the Senior
Credit Agreement or a permanent reduction of the commitments with respect
to any revolving credit indebtedness under the Senior Credit Agreement in
either case made in accordance with Section 4.10.
(b) Indebtedness of Holdings pursuant to the Notes or of any Restricted
Subsidiary pursuant to a Note Guarantee;
(c) Indebtedness (other than Indebtedness referred to in paragraphs (a) and
(b) of this definition) of Holdings or any Restricted Subsidiary
outstanding on the date hereof and immediately following consummation of
the Spin-Off Transactions in an amount not to exceed $2,000,000;
(d) Indebtedness of Holdings owing to any Restricted Subsidiary; provided
that any disposition, pledge or transfer of any such Indebtedness to a
Person (other than a disposition, pledge or transfer to Holdings or another
Restricted Subsidiary) shall be deemed to be an incurrence of such
Indebtedness by Holdings not permitted by this paragraph (d);
(e) Indebtedness of a Restricted Subsidiary owing to Holdings or to another
Restricted Subsidiary; provided that any disposition, pledge or transfer of
any such Indebtedness to a Person (other than a disposition, pledge or
transfer to Holdings or a Restricted Subsidiary) shall be deemed to be an
incurrence of such Indebtedness by such Restricted Subsidiary not permitted
by this paragraph (e);
(f) guarantees of any Restricted Subsidiary made in accordance with the
provisions of Sections 4.13 or 4.18;
<PAGE>
15
(g) obligations of Holdings or any Guarantor entered into in the ordinary
course of business (i) pursuant to Interest Rate Agreements designed to
protect Holdings or any Restricted Subsidiary against fluctuations in
interest rates in respect of Indebtedness of Holdings or any Restricted
Subsidiary, which obligations do not exceed the aggregate principal amount
of such Indebtedness and (ii) pursuant to Currency Agreements entered into
by Holdings or any of its Restricted Subsidiaries in respect of its (x)
assets or (y) obligations, as the case may be, denominated in a foreign
currency;
(h) Indebtedness of Holdings or any Guarantor in respect of Purchase Money
Obligations and Capitalized Lease Obligations of Holdings or any Guarantor
in an aggregate amount which does not exceed $17,500,000 at any one time
outstanding;
(i) Indebtedness of Holdings or any Guarantor consisting of guarantees,
indemnities, hold backs or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets,
including, without limitation, shares of Capital Stock of Restricted
Subsidiaries, or contingent payment obligations incurred in connection with
the acquisition of assets which are contingent on the performance of the
assets acquired, other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such assets of shares of Capital
Stock of such Restricted Subsidiary for the purpose of financing such
acquisition, provided that the maximum allowable liability in respect of
all such Indebtedness shall at no time exceed the gross proceeds actually
received by Holdings and its Restricted Subsidiaries;
(j) Indebtedness of Holdings or any Guarantor represented by (i) letters of
credit for the account of Holdings or any Restricted Subsidiary or (ii)
other obligations to reimburse third parties pursuant to any surety bond or
other similar arrangements, which letters of credit or other obligations,
as the case may be, are intended to provide security for workers'
compensation claims, payment obligations in connection with self-insurance
or other similar requirements in the ordinary course of business;
(k) any renewals, extensions, substitutions, refinancing or replacements
(each, for purposes of this paragraph, a "refinancing") of any Indebtedness
incurred pursuant to the first paragraph of Section 4.9 or referred to in
paragraphs (b) or (c) of this definition, including any successive
refinancings, so long as (i) any such new indebtedness shall be in a
principal amount that does not exceed the principal amount so refinanced,
plus the lesser of the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined as necessary
to accomplish such refinancing, (ii) in the case of any refinancing by
Holdings of Pari Passu Indebtedness or Subordinated Indebtedness, such new
Indebtedness is made pari passu with or subordinate to the Notes at least
to the same extent as the Indebtedness being refinanced, (iii) in the case
of any refinancing by any Guarantor of Pari Passu Indebtedness or
Subordinated Indebtedness, such new Indebtedness is made pari passu with or
<PAGE>
16
subordinate to the Note Guarantee of such Guarantor at least to the same
extent as the Indebtedness being refinanced, (iv) such new Indebtedness has
an Average Life no shorter than the Average Life of the Indebtedness being
refinanced and final Stated Maturity of principal no earlier than the final
Stated Maturity of principal of the Indebtedness being refinanced and (v)
Indebtedness of Holdings or a Guarantor may only be refinanced with
Indebtedness of Holdings or a Guarantor, as the case may be;
(l) payments to or by Holdings to fund the payment of or payment by
LifePoint of dividends, loans, distributions or annual contributions
calculated in accordance with the requirements of Section 415 of the
Internal Revenue Code to the ESOP in amounts equal to amounts expended by
LifePoint or Holdings to repurchase shares of its Capital Stock from
deceased or retired employees in accordance with the terms of the ESOP as
in effect on the date of the Indenture and from employees whose employment
with Holdings or any of its Subsidiaries has terminated for any reason, in
each case contemplated by this paragraph (l) only to the extent mandatorily
required by the ESOP as in effect on the date of the Indenture, the
Internal Revenue Code or ERISA; and, provided, further, that in each such
case Holdings or LifePoint has deferred making any cash payments in respect
of such repurchase obligations to the maximum extent possible under the
ESOP as in effect on the date of the Indenture or as modified from time to
time to comply with law;
(m) Physician Support Obligations incurred by Holdings or any Restricted
Subsidiary; and
(n) Indebtedness of Holdings or any Guarantor not otherwise permitted by
the foregoing paragraphs (a) through (m) in an aggregate principal amount
not in excess of $30,000,000 at any one time outstanding.
"Permitted Investments" means any of the following:
(a) Investments in Cash Equivalents;
(b) Investments in Holdings or any Restricted Subsidiary;
(c) intercompany Indebtedness to the extent permitted under paragraphs (d)
or (e) of the definition of "Permitted Indebtedness;"
(d) Investments in an amount not to exceed $5,000,000 at any one time
outstanding;
(e) Investments by Holdings or any Restricted Subsidiary in another Person,
if as a result of such investment (i) such other Person becomes a
Restricted Subsidiary or (ii) such other Person is merged or consolidated
with or into, or transfers or conveys all or substantially all of its
assets to, Holdings or a Restricted Subsidiary;
<PAGE>
17
(f) Investments acquired in the Spin-Off Transactions;
(g) bonds, notes, debentures and other securities received as consideration
for Assets Sales to the extent permitted under Section 4.10;
(h) any Investment in a Person engaged principally in a Related Business
prior to such investment if (i) Holdings would, at the time of such
Investment and after giving pro forma effect thereto as if such Investment
had been made at the beginning of the most recently ended four full fiscal
quarter periods for which consolidated financial statements are available
immediately preceding the date of such Investment, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Fixed Charge Coverage Ratio test set forth in the first
paragraph under Section 4.9 and (ii) the aggregate amount (including cash
and the book value of property other than cash, as determined by the Board
of Directors of Holdings) of all Investments made pursuant to this
paragraph (h) by Holdings and its Restricted Subsidiaries (determined as of
the time made) does not exceed in the aggregate 15% of the Total Assets of
Holdings at the time the investment is made; provided that Investments of
up to $20,000,000 shall be permitted under this paragraph (h) without
regard to the requirement of clause (i) of this paragraph (h);
(i) Physician Support Obligations made by Holdings or any Restricted
Subsidiary;
(j) in the event Holdings or a Restricted Subsidiary shall establish a
Subsidiary for the purpose of insuring the healthcare businesses or
facilities owned or operated by Holdings, any Subsidiary, any Permitted
Joint Venture or any physician employed by or on the medical staff of any
such business or facility (the "Insurance Subsidiary"), Investments in an
amount which do not exceed the minimum amount of capital required under the
laws of the jurisdiction in which the Insurance Subsidiary is formed, and
any Investment by such Insurance Subsidiary which is a legal investment for
an insurance company under the laws of the jurisdiction in which the
Insurance Subsidiary is formed and made in the ordinary course of business
and rated in one of the four highest rating categories;
(k) Investments made in connection with Hospital Swaps;
(l) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and workers' compensation, performance and
other similar deposits made in the ordinary course of business;
(m) loans and advances to officers, directors and employees made in the
ordinary course of business not to exceed $13,000,000 in the aggregate at
any one time outstanding;
<PAGE>
18
(n) Interest Rate Agreements and Currency Agreements permitted under
Section 4.9;
(o) Investments represented by accounts receivable created or acquired in
the ordinary course of business;
(p) Investments existing on the Issuance Date and any renewal or
replacement thereof on terms and conditions no less favorable than that
being renewed or replaced;
(q) any Investment to the extent that the consideration therefor is
Qualified Capital Stock;
(r) shares of Capital Stock or other securities received in settlement of
debts owed to Holdings or any Restricted Subsidiary as a result of
foreclosure, perfection or enforcement of any Lien or indebtedness or in
connection with any good faith settlement of a bankruptcy proceeding;
(s) the ESOP Loans; or
(t) Investments in connection with Bartow Memorial Hospital through the
date of commencement of operations thereof.
(u) "Permitted Joint Venture" means, with respect to any Person, (a) any
corporation, association, limited liability company or other business
entity (other than a partnership) of which 50% or more of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or
trustees thereof and 50% or more of the total equity interests is at the
time of determination owned or controlled, directly or indirectly, by such
Person or one or more of the Restricted Subsidiaries of that person or a
combination thereof and (b) any partnership of which 50% or more of the
general or limited partnership interests are owned or controlled, directly
or indirectly, by such Person or one or more of the Restricted Subsidiaries
of that Person or a combination thereof, and which in the case of each of
clauses (a) and (b) is engaged in a Related Business.
(v) "Permitted Liens" means (a) Liens existing on the Issue Date; (b) Liens
now or hereafter securing any Interest Rate Agreements of Holdings or any
Restricted Subsidiary; (c) Liens securing any Indebtedness incurred under
paragraph (k) of the definition of "Permitted Indebtedness," the proceeds
of which are used to refinance Indebtedness of Holdings or any Restricted
Subsidiary; provided that such Liens extend to or cover only the assets
currently securing the Indebtedness being refinanced; (d) Liens securing
Acquired Indebtedness incurred by Holdings and any Restricted Subsidiary
and permitted under Section 4.9, provided that such Liens attach solely to
the assets acquired; (e) Liens securing Indebtedness owing to Holdings or a
Restricted Subsidiary; (f) Liens
<PAGE>
19
securing Purchase Money Obligations incurred in accordance with the
Indenture; (g) Liens for taxes, assessments or governmental charges or
claims either (i) not delinquent or (ii) contested in good faith by
appropriate proceedings and as to which Holdings or its Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP; (h) statutory Liens of landlords and Liens or
carriers, warehousemen, mechanics, suppliers, materialmen, repairment and
other Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such reserved
or other appropriate provision, if any, as shall be required by GAAP shall
have been made in respect thereof; (i) Liens incurred or deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations; (j) judgment Liens not giving rise to an
Event of Default so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (k) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering
in any material respect with the conduct of the business of Holdings or any
of its Restricted Subsidiaries; or (l) any interest or title of a lessor in
assets or Property subject to Capitalized Lease Obligations or an operating
lease of Holdings or any Restricted Subsidiary.
(w) "Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
(x) "Physician Support Obligation" means a loan to or on behalf of, or a
guarantee of indebtedness of, a physician or healthcare professional
providing service to patients in the service area of a Hospital or other
health care facility operated by Holdings or any of its Restricted
Subsidiaries made or given by Holdings or any Subsidiary of Holdings (a) in
the ordinary course of its business and (b) pursuant to a written agreement
having a period not to exceed five years.
(y) "Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock whether now outstanding, or
issued after the Issuance Date, and including, without limitation, all
classes and series of preferred or preference stock of such Person.
(z) "Private Placement Legend" means the legend set forth in Section
2.6(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
<PAGE>
20
(aa) "Public Equity Offering" means an offer and sale of common stock
(which is Qualified Capital Stock) of LifePoint or Holdings made on a
primary basis by LifePoint or Holdings pursuant to a registration statement
that has been declared effective by the Commission pursuant to the
Securities Act (other than a registration statement on Form S-8 or
otherwise relating to equity securities issuable under any employee benefit
plan of LifePoint or Holdings).
(bb) "Purchase Money Obligations" means any Indebtedness of Holdings or any
Restricted Subsidiary incurred to finance the acquisition or construction
of any property or business (including Indebtedness incurred within 90 days
following such acquisition or construction), including Indebtedness of a
Person existing at the time such Person becomes a Subsidiary or assumed by
Holdings or a Subsidiary in connection with the acquisition of assets from
such person; provided, however, that any Lien on such Indebtedness shall
not extend to any property other than the property so acquired or
constructed.
(cc) "Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Capital Stock.
(dd) "Qualified Equity Offering" means (a) any Public Equity Offering or
(b) an offering of Qualified Capital Stock of LifePoint or Holdings to non-
Affiliates with gross proceeds to LifePoint or Holdings in excess of
$35,000,000.
(ee) "QIB" means a "qualified institutional buyer" as defined in Rule 144A.
(ff) "Redeemable Capital Stock" means any class of Capital Stock that,
either by its terms, by the terms of any securities into which it is
convertible or exchangeable or by contract or otherwise, is, or upon the
happening of an event or passage of time would be, required to be redeemed
(whether by sinking fund or otherwise) prior to the date that is 91 days
after the final Stated Maturity of the notes or is redeemable at the option
of the holder thereof at any time prior to such date, or is convertible
into or exchangeable for debt securities at any time prior to such date
(unless it is convertible or exchangeable solely at the option of
Holdings).
(gg) "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company
and the other parties named on the signature pages thereof, as such
agreement may be amended, modified or supplemented from time to time, and,
with respect to Initial Notes issued under this Indenture subsequent to the
date of this Indenture pursuant to Section 2.2, the registration rights
agreement relating thereto relating thereto substantially identical to the
Registration Rights Agreement.
<PAGE>
21
(hh) "Related Business" means a healthcare business affiliated or
associated with a Hospital or any business related or ancillary to the
provision of healthcare services or information or the investment in, or
the management, leasing or operation of, a Hospital.
(ii) "Responsible Officer," when used with respect to the Trustee, means
any officer within the global agency and trust services department of the
Trustee (or any successor group of the Trustee) or any other officer of the
Trustee customarily performing functions similar to those performed by any
of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
(jj) "Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
(kk) "Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
(ll) "Restricted Investment" means any Investment other than a Permitted
Investment.
(mm) "Restricted Subsidiary" means any Subsidiary other than an
Unrestricted Subsidiary.
(nn) "Rule 144" means Rule 144 promulgated under the Securities Act.
(oo) "Rule 144A" means Rule 144A promulgated under the Securities Act.
(pp) "Rule 903" means Rule 903 promulgated under the Securities Act.
(qq) "Rule 904" means Rule 904 promulgated the Securities Act.
(rr) "S&P" means Standard and Poor's Ratings Group, a division of McGraw-
Hill, Inc. and its successors.
(ss) "Sale and Leaseback Transaction" means any transaction or series of
related transactions pursuant to which Holdings or a Restricted Subsidiary
sells or transfers any property or assets in connection with the leasing of
such property or asset to the seller or transferor.
(tt) "Securities Act" means the Securities Act of 1933, as amended.
<PAGE>
22
(uu) "Senior Credit Agreement" means the credit agreement, dated as of May
11, 1999, among Healthtrust, the lenders parties thereto, Scotiabanc Inc.,
as documentation agent, Deutsche Bank AG, New York and/or Cayman Island
Branches, as syndication agent, SunTrust Bank, as co-agent, Fleet National
Bank, as arranger and as administrative agent and the co-arrangers parties
thereto, as such agreement may be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise modified from
time to time.
(vv) "Senior Indebtedness" means:
(ww) all obligations of Holdings, now or hereafter existing, under or in
respect of the Senior Credit Agreement, whether for principal, premium, if
any, interest (including interest accruing after the filing of, or which
would have accrued but for the filing of, a petition by or against Holdings
under Bankruptcy Law, whether or not such interest is allowed as a claim
after such filing in any proceeding under such law) and other amounts due
in connection therewith (including any fees, premiums, expenses and
indemnities); and
(xx) the principal of, premium, if any, and interest on all other
Indebtedness of Holdings (other than the Notes), whether outstanding on the
date of this Indenture or thereafter created, incurred or assumed, unless,
in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to
the Notes.
Notwithstanding the foregoing, "Senior Indebtedness" shall not
include:
(i) Indebtedness evidenced by the Notes;
(ii) Indebtedness of Holdings that is expressly subordinated in right of
payment to any Senior Indebtedness of Holdings or the Notes;
(iii) Indebtedness of Holdings that by operation of law is subordinate to
any general unsecured obligations of Holdings,
(iv) Indebtedness of Holdings to the extent incurred in violation of any
covenant prohibiting the incurrence of Indebtedness under this Indenture;
(v) any liability for federal, state or local taxes or other taxes, owed or
owing by Holdings;
(vi) accounts payable or other liabilities owed or owing by Holdings to
trade creditors (including guarantees thereof or instruments evidencing
such liabilities);
<PAGE>
23
(vii) amounts owed by Holdings for compensation to employees or for
services rendered to Holdings;
(viii) Indebtedness of Holdings to any Subsidiary or any other Affiliate of
Holdings;
(ix) Capital Stock of Holdings; and
(x) Indebtedness which when incurred and without respect to any election
under Section 1111(b) of Title 11 of the United States Code is without
recourse to Holdings or any Restricted Subsidiary.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Spin-Off-Distribution" means the distribution to holders of
Columbia/HCA stock of all of the outstanding shares of LifePoint.
"Spin-Off Transactions" means the transactions described in the
Offering Memorandum, dated May 4, 1999, relating to the Notes under the caption
"The Distribution."
"Stated Maturity" means, when used with respect to any note or any
installment of interest thereon, the date specified in such note as the fixed
date on which the principal of such note or such installment of interest is due
and payable, and, when used with respect to any other Indebtedness, means the
date specified in the instrument governing such indebtedness as the fixed date
on which the principal of such indebtedness or any installment of interest
thereon is due and payable.
"Subordinated Indebtedness" means Indebtedness of Holdings or a
Guarantor that is expressly subordinated in right of payment to the Notes or the
Note Guarantee of such Guarantor, as the case may be.
"Subsidiary" means any Person a majority of the equity ownership or
Voting Stock of which is at the time owned, directly or indirectly, by Holdings
or by one or more other Subsidiaries. For purposes of this definition, any
directors' qualifying shares shall be disregarded in determining the ownership
of a Subsidiary.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA, except as provided in Section 9.3 hereof.
"Total Assets" of Holdings means the total consolidated assets of
Holdings and its Restricted Subsidiaries as shown on the most recent balance
sheet of Holdings.
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24
"Transition Agreements" means the collective reference to the (a)
distribution agreement among Columbia/HCA, LifePoint and Triad; (b) tax sharing
and indemnification agreement among Columbia/HCA, LifePoint and Triad; (c)
benefits and employment matters agreement among Columbia/HCA, LifePoint and
Triad; (d) insurance allocation and administration agreement among Columbia/HCA,
LifePoint and Triad; (e) computer and data processing services agreement between
Columbia Information Systems, Inc. ("CIS") and LifePoint; (f) subleases between
certain subsidiaries of Columbia/HCA and LifePoint relating to LifePoint's
principal executive offices; (g) transitional services agreement between
Columbia/HCA and LifePoint; (h) agreement to share telecommunications services
between CIS and LifePoint; and (i) agreements between Columbia/HCA and LifePoint
relating to the provision of account collection services and relating to
LifePoint's participation in a group purchasing organization with Columbia/HCA,
in the case of clauses (a), (b), (c), (d), (e), (f), (g) and (h) above, in
substantially the forms filed with the Commission as exhibits to the Form 10
Registration Statement of LifePoint, and in the case of clause (i) above,
substantially as described in the Form 10 Registration Statement of LifePoint,
and in the case of all agreements listed in clauses (a) through (i) above, as
such agreements may be amended from time to time so long as such amendments are
not materially adverse to the interests of the Holders of the Notes.
"Triad" means Triad Hospitals, Inc., a Delaware corporation.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent Global Note in the form
of Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not and are not required to
bear the Private Placement Legend.
"Unrestricted Definitive Notes" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Notes" means one or more Unrestricted Global Notes
and/or Unrestricted Definitive Notes, including, without limitation, the
Exchange Notes.
"Unrestricted Subsidiary" means (a) any Subsidiary that at the time of
determination shall be an Unrestricted Subsidiary (as designated by the Board of
Directors of Holdings, as provided below) and (b) any Subsidiary of any
Unrestricted Subsidiary; provided, however, that in no event shall any Guarantor
be an Unrestricted Subsidiary. The Board of Directors of Holdings may designate
any Subsidiary (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary so long as (i) neither Holdings nor any Restricted
Subsidiary is directly or indirectly liable for any Indebtedness of such
Subsidiary, (ii) no default with respect to any Indebtedness of such Subsidiary
would permit (upon notice, lapse
<PAGE>
25
of time or otherwise) any holder of any other Indebtedness of Holdings or any
Restricted Subsidiary, except any nonrecourse guarantee given solely to support
the pledge by Holdings or a Restricted Subsidiary of the Capital Stock of an
Unrestricted Subsidiary, to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity and (iii) any Investment in such Subsidiary made as a result of
designating such Subsidiary an Unrestricted Subsidiary will not violate the
provisions of Section 4.19. Any such designation by the Board of Directors of
Holdings shall be evidenced to the Trustee by filing a board resolution with the
Trustee giving effect to such designation. The Board of Directors of Holdings
may designate any Unrestricted Subsidiary as a Restricted Subsidiary if
immediately after giving effect to such designation, there would be no Default
or Event of Default under this Indenture and Holdings could incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.9.
"U.S. Government Obligations" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have voting power by reason of
the happening of any contingency).
Section 1.2 Other Definitions.
------------------
Defined
Term in Section
- ---- -------------
"Authentication Order" 2.2
"Bartow Sub" 4.23
<PAGE>
26
"Change in Control Offer" 4.15
"Change in Control Payment" 4.15
"Change in Control Purchase Price" 4.15
"Change in Control Purchase Date" 4.15
"Covenant Defeasance" 8.3
"Defeasance" 8.2
"Dodge Sub" 4.23
"DTC" 2.3
"Event of Default" 6.1
"Excess Proceeds Offer" 4.15
"Excess Proceeds Payment" 4.15
"Excess Proceeds Payment Date" 4.15
"First Supplemental Indenture" 4.20
"incur" 4.9
"Non-Payment Default" 10.3
"Paying Agent" 2.3
"Payment Blockage Period 10.3
"Payment Default" 10.3
"Permitted Junior Securities" 10.2
"Registrar" 2.3
"Replacement Assets" 4.10
"Restricted Payments" 4.7
"Second Supplemental Indenture" 4.20
"Subsequent Series Notes" 2.2
"Surviving Entity" 5.1
"Third Supplemental Indenture" 4.16
Section 1.3 Terms of TIA.
------------
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
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27
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
Section 1.4 Rules of Construction.
----------------------
Unless the context otherwise requires: (i) a term has the meaning assigned
to it; (ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP; (iii) "or" is not exclusive; (iv) words in the
singular include the plural, and in the plural include the singular; (v)
provisions apply to successive events and transactions; (vi) references to
sections of or rules under the Securities Act shall be deemed to include
substitute, replacement of successor sections or rules adopted by the Commission
from time to time; and (vii) unless the context otherwise requires, any
reference to an "Article," a "Section" or an "Exhibit" refers to an Article, a
Section or an Exhibit, as the case may be, of this Indenture.
ARTICLE 2.
THE NOTES
Section 2.1 Form and Dating.
---------------
(a) General. The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture, and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(a) Global Notes. Notes issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes
issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the
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28
Global Note Legend thereon and without the "Schedule of Exchanges of Interests
in the Global Note" attached thereto). Each Global Note shall represent such of
the outstanding Notes as shall be specified therein and each shall provide that
it shall represent the aggregate principal amount of outstanding Notes from time
to time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
written instructions given by the Holder thereof as required by Section 2.6.
Section 2.2 Execution and Authentication.
----------------------------
An Officer shall sign the Notes for the Company by manual or facsimile
signature. If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid or obligatory until authenticated by the
manual or facsimile signature of the Trustee. The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer (an "Authentication Order"), authenticate (a) Initial Notes for original
issue up to a maximum aggregate principal amount of $150,000,000, (b)
Unrestricted Notes from time to time only (i) in exchange for a like principal
amount of Initial Notes or (ii) in an aggregate principal amount of not more
than the excess of $150,000,000 over the sum of the aggregate principal amount
of (A) Initial Notes then outstanding and (B) Unrestricted Notes issued in
accordance with (b)(i) above and (c) additional series of Notes which may be
offered subsequent to the Issuance Date (the "Subsequent Series Notes") in
aggregate principal amount not to exceed $35,000,000. The aggregate principal
amount of Notes outstanding at any time may not exceed $185,000,000 except as
provided in Section 2.7. No Subsequent Series Notes may be authenticated in an
aggregate principal amount of less than $25,000,000. All Notes issued on the
Issuance date and all Subsequent Series Notes shall be identical in all respects
other than issue dates, the date from which interest accrues and any changes
relating thereto.
In the event that the Company shall issue and the Trustee shall
authenticate any Subsequent Series Notes pursuant to this Section 2.2, the
Company shall use its reasonable best efforts to obtain the same "CUSIP" number
for such Subsequent Series Notes as is printed on the Notes outstanding at such
time; provided, however, that if any Subsequent Series Notes are determined,
pursuant to an Opinion of Counsel of the Company to be a different class of
security than the Notes outstanding at such time for federal income tax
purposes, the Issuer may obtain a "CUSIP" number for such Notes that is
different than the "CUSIP" number printed on the Subsequent Series Notes then
outstanding. Notwithstanding the foregoing, all Notes issued and outstanding
under this Indenture shall vote and consent together on all matters as one class
and no series of Notes will have the right to vote or consent as a separate
class on any matter.
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29
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may not be geographically able to do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.
Section 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
promptly notify the Trustee in writing of the name and address of any Agent not
a party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee and the Trustee accepts its
appointment to act as the Registrar and Paying Agent and to act as Custodian
with respect to the Global Notes.
The Company shall, prior to each interest record date, notify the
Paying Agent of any wire transfer instructions for payments that it receives
from Holders.
Section 2.4 Paying Agent to Hold Money in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Additional Interest, if any, or interest on the Notes, and will
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy
or reorganization proceedings relating to the Company, the Trustee shall serve
as Paying Agent for the Notes.
<PAGE>
30
Section 2.5 Holder Lists.
------------
The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of all Holders
and shall otherwise comply with TIA (S) 312(a). If the Trustee is not the
Registrar, the Company shall furnish to the Trustee at least seven Business Days
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of the Holders of Notes and the
Company shall otherwise comply with TIA (S) 312(a).
Section 2.6 Transfer and Exchange.
---------------------
(a) Transfer and Exchange of Global Notes. A Global Note may not be transferred
as a whole except by the Depositary to a nominee of the Depositary, by a nominee
of the Depositary to the Depositary or to another nominee of the Depositary, or
by the Depositary or any such nominee to a successor Depositary or a nominee of
such successor Depositary. Global Notes will not be exchanged by the Company for
Definitive Notes unless (i) the Company delivers to the Trustee in writing
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary; (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee (provided that there shall be no continuing
Default or Event of Default); or (iii) an Event of Default shall have occurred
and be continuing with respect to the Notes and the Trustee has received a
request from DTC or any Holder to issue Definitive Notes. Upon the occurrence of
any of the preceding events in (i), (ii) or (iii) above, Definitive Notes shall
be issued in such names as the Depositary shall instruct the Trustee in writing.
Global Notes also may be exchanged or replaced, in whole or in part, as provided
in Sections 2.7 and 2.10. Every Note authenticated and delivered in exchange
for, or in lieu of, a Global Note or any portion thereof, pursuant to this
Section 2.6 or Section 2.7 or 2.10, shall be authenticated and delivered in the
form of, and shall be, a Global Note. A Global Note may not be exchanged for
another Note other than as provided in this Section 2.6(a); however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.6(b) or (f).
(b) Transfer and Exchange of Beneficial Interests in Global Notes. The transfer
and exchange of beneficial interests in the Global Notes shall be effected
through the Depositary, in accordance with the provisions of this Indenture and
the Applicable Procedures. Beneficial interests in the Restricted Global Notes
shall be subject to restrictions on transfer comparable to those set forth
herein to the extent required by the Securities Act. Transfers of beneficial
interests in the Global Notes also shall require compliance with either
subparagraph (i) or (ii) below, as applicable, as well as one or more of the
other following subparagraphs, as applicable:
<PAGE>
31
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Restricted
Global Note in accordance with the transfer restrictions set forth in the
Private Placement Legend. Beneficial interests in any Unrestricted Global Note
may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect the
transfers described in this Section 2.6(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes.
In connection with all transfers and exchanges of beneficial interests in any
Global Note that is not subject to Section 2.6(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar (1) a written order from
a Participant or an Indirect Participant given to the Depositary in accordance
with the Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given in
accordance with the Applicable Procedures containing information regarding the
Participant account to be credited with such increase. Upon consummation of the
Exchange Offer by Holdings in accordance with Section 2.6(f), the requirements
of this Section 2.6(b)(ii) shall be deemed to have been satisfied upon receipt
by the Registrar of the instructions contained in the Letter of Transmittal
delivered by the holder of such beneficial interests in the Restricted Global
Notes. Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the Notes
or otherwise applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section 2.6(h).
(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A
beneficial interest in any Restricted Global Note may be transferred to a Person
who takes delivery thereof in the form of a beneficial interest in another
Restricted Global Note if the transfer complies with the requirements of Section
2.6(b)(ii) and the Registrar receives the following:
if the transferee will take delivery in the form of a beneficial
interest in a 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B, including the certifications in
item (1) thereof;
(i) Transfer and Exchange of Beneficial Interests in a Restricted Global Note
for Beneficial Interests in an Unrestricted Global Note. A beneficial interest
in any Restricted Global Note may be exchanged by any holder thereof for a
beneficial interest in an Unrestricted Global Note or transferred to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.6(b)(ii) and:
<PAGE>
32
(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration Statement
in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit C, including the certifications in item
(1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form
of Exhibit B, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and execute and, upon receipt of an Authentication Order in
accordance with Section 2.2, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
<PAGE>
33
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(a) Transfer and Exchange of Beneficial Interests in Global Notes for Definitive
Notes. A beneficial interest in a Global Note may not be exchanged for a
Definitive Note except under the circumstances described in Section 2.6(a). A
beneficial interest in a Global Note may not be transferred to a Person who
takes delivery thereof in the form of a Definitive Note except under the
circumstances described in Section 2.6(a) hereof.
(b) Transfer and Exchange of Definitive Notes for Beneficial Interests in Global
Notes.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C,
including the certifications in item (2)(a) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B, including the
certifications in item (3)(a) thereof;
(D) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (C) above, a certificate to the
effect set forth in Exhibit B, including the certifications,
certificates and Opinion of Counsel required by item (3)(d) thereof,
if applicable;
(E) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B, including the certifications in item (3)(b)
thereof; or
<PAGE>
34
(F) if such Restricted Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, and increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, and in the case
of clause (B) above, the 144A Global Note.
(i) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or transfer
such Restricted Definitive Note to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of
a transfer, certifies in the applicable Letter of Transmittal that it
is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of
Exhibit C, including the certifications in item (1)(b) thereof;
or
(2) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof
in the form of a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
<PAGE>
35
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.6(d)(ii), the Trustee shall cancel the Restricted Definitive
Notes and increase or cause to be increased the aggregate principal amount
of the Unrestricted Global Note.
(i) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of an Unrestricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or transfer
such Definitive Note to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note at any time. Upon
receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause to
be increased the aggregate principal amount of one of the Unrestricted
Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.2, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(a) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request
by a Holder of Definitive Notes and such Holder's compliance with the provisions
of this Section 2.6(e), the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the
requesting Holder shall present or surrender to the Registrar the Definitive
Notes duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by its attorney,
duly authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable, required
pursuant to the following provisions of this Section 2.6(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
<PAGE>
36
(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit
B, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from
the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B,
including the certifications, certificates and Opinion of Counsel
required by item (3)(d) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of
a transfer, certifies in the applicable Letter of Transmittal that it
is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for `n Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof
in the form of an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act
<PAGE>
37
and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(i) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a
transfer, the Registrar shall register the Unrestricted Definitive
Notes pursuant to the instructions from the Holder thereof.
(b) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance
with the Registration Rights Agreement, the Company shall issue and execute
and, upon receipt of an Authentication Order in accordance with Section
2.2, the Trustee shall authenticate (i) one or more Unrestricted Global
Notes in an aggregate principal amount equal to the principal amount of the
beneficial interests in the Restricted Global Notes tendered for acceptance
by Persons that certify in the applicable Letters of Transmittal that (x)
they are not broker-dealers, (y) they are not participating in a
distribution of the Exchange Notes and (z) they are not affiliates (as
defined in Rule 144) of the Company, and accepted for exchange in the
Exchange Offer and (ii) Definitive Notes in an aggregate principal amount
equal to the principal amount of the Restricted Definitive Notes accepted
for exchange in the Exchange Offer. Concurrently with the issuance of such
Notes, the Trustee shall cause the aggregate principal amount of the
applicable Restricted Global Notes to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted
Definitive Notes in the appropriate principal amount.
(c) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
<PAGE>
38
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), (2) AGREES THAT
IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER
PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR ANY
SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF (OR OF ANY PREDECESSOR OF THE SECURITY) OR THE LAST DAY ON WHICH
LIFEPOINT HOSPITALS HOLDINGS, INC. (THE "COMPANY") OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY
AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE
"RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
OF THE SECURITIES ACT, (E) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (F) TO AN IAI THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF
<PAGE>
39
AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT OR (G) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL
GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND, AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM
BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
(A) Notwithstanding the foregoing, any Global Note or Definitive Note
issued pursuant to subparagraph (b)(iv), (d)(ii), (d)(iii), (e)(ii),
(e)(iii) or (f) of this Section 2.6 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
(iii) THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER
ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS
HEREON AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
(b) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11. At any
time prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note or for Definitive Notes,
the principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made
<PAGE>
40
on such Global Note by the Trustee or by the Depositary at the direction of the
Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(c) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Notes and Definitive
Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration
of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.6, 4.10, 4.15 and 9.5).
(iii) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the
legal, valid and binding obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer or
exchange.
(iv) The Registrar shall not be required (A) to register the transfer of or
to exchange any Notes during a period beginning at the opening of business
15 days before the day of any mailing of notice of redemption of Notes for
redemption under Section 3.2 and ending at the close of business on the day
of such mailing, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part or (c) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest
payment date.
(v) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for
the purpose of receiving payment of principal of and interest on such Notes
and for all other purposes, and none of the Trustee, any Agent or the
Company shall be affected by notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.2.
<PAGE>
41
(vii) All certifications, certificates and Opinions of Counsel required to
be submitted to the Registrar pursuant to this Section 2.6 to effect a
registration of transfer or exchange may be submitted by facsimile.
(viii) Each Holder of a Note agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange
or assignment of such Holder's Note in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine or inquire as
to compliance with any restrictions on transfer imposed under this Indenture or
under applicable law with respect to any transfer of any interest in any Note
(including any transfers between or among Depositary Participants or beneficial
owners of interests in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by the terms of, this Indenture, and
to examine the same to determine reasonable compliance as to form with the
express requirements hereof, provided that the Trustee shall have no obligation
to investigate or confirm the accuracy or correctness thereof.
Section 2.7 Replacement Notes
-----------------
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and execute and the Trustee, upon
receipt of an Authentication Order, shall authenticate a replacement Note if the
Trustee's requirements are met. An indemnity bond must be supplied by the Holder
that is sufficient in the judgment of the Trustee and the Company to protect The
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional and binding obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
Section 2.8 Outstanding Notes.
-----------------
The Notes outstanding at any time are all the Notes authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof and those described in this
Section as not outstanding. Except as set forth in Section 2.9, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note; however, Notes held by the Company or a Subsidiary of the Company
shall not be deemed to be outstanding for purposes of Section 3.7(b).
<PAGE>
42
If a Note is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof and indemnification satisfactory
to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.1, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate of any thereof) holds, on a redemption date or maturity
date, money sufficient to pay Notes payable on that date, then on and after that
date such Notes shall be deemed to be no longer outstanding and shall cease to
accrue interest.
Section 2.9 Treasury Notes.
--------------
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such written direction, waiver or
consent, only Notes that a Responsible Officer of the Trustee actually knows are
so owned shall be so disregarded.
Section 2.10 Temporary Notes.
---------------
The Company may prepare and execute and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Notes. Temporary Notes shall
be substantially in the form of permanent Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. The Company may prepare and execute and the Trustee,
upon receipt of an Authentication Order, shall authenticate permanent Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 2.11 Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
the Notes in accordance with its customary procedures (subject to the record
retention requirement of the Exchange Act). The Company may not issue new Notes
to replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
<PAGE>
43
Section 2.12 Defaulted Interest.
-------------------
If the Company defaults in a payment of interest on the Notes, such
interest shall cease to be payable to the Holders on the relevant record date
and the Company shall instead pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.1. The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Note and the date of the proposed payment. The Company shall fix or cause
to be fixed each such special record date and payment date, provided that no
such special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
Section 2.13 CUSIP Numbers.
-------------
The Company, in issuing the Notes, may use "CUSIP" numbers (if then
generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE 3
REDEMPTION
Section 3.1 Notice of Redemption to Trustee.
-------------------------------
<PAGE>
44
If Holdings elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.7, it shall furnish to the Trustee, at least 30 days but
not more than 90 days before the redemption date, an Officers' Certificate
setting forth (i) the clause of this Indenture pursuant to which the redemption
shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
Section 3.2 Selection of Notes to Be Redeemed.
---------------------------------
If less than all of the Notes are to be redeemed at any time pursuant
to Section 3.7, the Trustee shall select the Notes to be redeemed among the
Holders of the Notes in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not so listed, on a pro rata basis, by lot or by such method as the
Trustee shall deem appropriate. In the event of partial redemption by lot
pursuant to Section 3.7, the particular Notes to be redeemed shall be selected,
unless otherwise provided herein, not less than 30 nor more than 60 days prior
to the redemption date by the Trustee from the outstanding Notes not previously
called for redemption.
The Trustee shall promptly notify Holdings in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3 Notice of Redemption to Holders.
-------------------------------
If Holdings elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.7, at least 30 days but not more than 60 days before the
redemption date, Holdings shall mail or cause to be mailed, by first class mail,
a notice of redemption to each Holder whose Notes are to be redeemed at its
registered address. The notice shall identify the Notes to be redeemed
(including "CUSIP" number(s)) and shall state: (i) the redemption date; (ii) the
redemption price; (iii) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note; (iv) the name and address of the Paying Agent; (v) that Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption
price; (vi) that, unless Holdings defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date; (vii) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and (viii) that no representation is made as to the correctness or accuracy of
the "CUSIP" number, if any, listed in such notice or printed on the Notes.
<PAGE>
45
At Holdings' request, the Trustee shall give the notice of redemption
in Holdings' name and at its expense; provided, however, that Holdings shall
have delivered to the Trustee, at least 60 days prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
Section 3.4 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.3 or
3.8, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.5 Deposit of Redemption Price.
---------------------------
No later than 10:00 a.m., New York City time, on the redemption date, the
Company shall deposit with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Paying Agent shall promptly return to the Company any money deposited
with the Paying Agent by the Company in excess of the amounts necessary to pay
the redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.1.
Section 3.6 Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is redeemed in part, Holdings shall
issue and execute and, upon Holdings' written request, the Trustee shall
authenticate for the Holder at the expense of Holdings a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
Section 3.7 Optional Redemption.
--------------------
(a) Except as set forth in paragraph (b) of this Section 3.7, Holdings shall
not have the option to redeem the Notes pursuant to this Section 3.7 prior to
May 15, 2004. On or after May 15, 2004, the Notes will be subject to redemption
at any time at the option of
<PAGE>
46
Holdings, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest, if any, and Additional
Interest thereon, if any, to the applicable redemption date, if redeemed during
the twelve-month period beginning on May 15, of the years indicated below
(subject to the right of Holders of record on relevant record dates to receive
interest due on an interest payment date):
Year Redemption Price
- ---- ----------------
2004 105.375%
2005 103.583%
2006 101.792%
2007 and thereafter 100.000%
(a) Notwithstanding the provisions of paragraph (a) of this Section 3.7, at any
time and from time to time prior to May 15, 2002, Holdings may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Notes
originally issued hereunder within 60 days of one or more Qualified Equity
Offerings with the net proceeds of such offering at a redemption price of
110.75% of the principal amount thereof, plus accrued and unpaid interest and
Additional Interest thereon, if any, to the redemption date (subject to the
right of Holders of record on relevant record dates to receive interest due on
an interest payment date); provided that, after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the Notes
plus 65% of the aggregate principal amount of any Notes issued pursuant to a
supplemental indenture remains outstanding (excluding Notes held by Holdings and
its Subsidiaries).
(b) Any redemption pursuant to this Section 3.7 shall be made pursuant to the
provisions of Section 3.1 through 3.6.
Section 3.8 Mandatory Redemption.
---------------------
(a) Except as set forth in Sections 4.10, 4.15 and paragraph (b) of this Section
3.8, the Company shall not be required to make mandatory redemption payments
with respect to the Notes.
(b) The Notes will be redeemed by the Company, in whole but not in part, on the
date that is five Business Days following the date the Notes are originally
issued, at a redemption price of 101% of the principal amount thereof, plus
accrued and unpaid interest to the redemption date, if (i) the Spin-Off
Transactions have not been consummated and (ii)
<PAGE>
47
Holdings has not executed and delivered a supplemental indenture assuming all
the debt issued under this Indenture, in each case, by the date that is five
Business Days following the date the Notes are originally issued. Notice of the
mandatory redemption will be mailed to each Holder of the Notes not less than
one Business Day prior to the redemption date. Such notice shall identify the
Notes to be redeemed (including "CUSIP" number(s)) and state (i) the redemption
date, (ii) the redemption price, (iii) the name and address of the Paying Agent,
(iv) that Notes called for redemption must be surrendered to the Paying Agent to
collect the redemption price, (v) that, unless the Company defaults in making
such redemption payment, interest on the Notes shall cease to accrue on and
after the redemption date and (vi) the paragraph of the Notes pursuant to which
the Notes are to be redeemed.
ARTICLE 4
COVENANTS
Section 4.1 Payment of Notes.
----------------
The Company shall pay or cause to be paid the principal of, premium,
if any, Additional Interest, if any, and interest on the Notes on the dates and
in the manner provided in the Notes. Principal, premium, if any, and interest
shall be considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due
date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. At the option of the Company interest may be paid by check
mailed to the address of the Holder as such address appears on the securities
register. The Company shall pay all Additional Interest, if any, in the same
manner on the dates and in the amounts set forth in the Registration Rights
Agreement.
<PAGE>
48
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Additional Interest (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3.
Section 4.3 Reports.
--------
(a) For as long as the Notes are outstanding, Holdings will file on a timely
basis with the Commission, to the extent such filings are accepted by the
Commission and whether or not Holdings has a class of securities registered
under the Exchange Act, the annual reports, quarterly reports and other
documents that Holdings would be required to file pursuant to Section 13 or
15(d) of the Exchange Act if it were subject thereto. Holdings will also be
required (i) to file with the Trustee, and mail to each Holder of Notes, without
cost to such Holder, copies of such reports and documents within 15 days after
the date on which Holdings files such reports and documents with the Commission
or the date on which Holdings would be required to file such reports and
documents if Holdings were so required, and (ii) if filing such reports and
documents with the Commission is not accepted by the Commission or is prohibited
under the Exchange Act, to supply at Holdings' cost copies of such reports and
documents to any prospective Holder of Notes promptly upon written request.
<PAGE>
49
(b) In addition, for so long as any Restricted Global Notes or Restricted
Definitive Notes remain outstanding, Holdings and the Guarantors shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
(c) Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including Holdings' compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
Section 4.4 Compliance Certificate.
-----------------------
(a) The Company and each Guarantor (to the extent that such Guarantor is so
required under the TIA) shall deliver to the Trustee, within 120 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred and be continuing, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto) and that
to his or her knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal of or interest, if any, on the
Notes is prohibited or if such event has occurred, a description of the event
and what action the Company is taking or proposes to take with respect thereto.
(b) The Company shall, so long as any of the Notes are outstanding, deliver to
the Trustee as soon as possible and in any event within ten days, forthwith upon
the Company becoming aware of any Default or Event of Default that has occurred
and is continuing, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
Section 4.5 Taxes.
-----
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.6 Stay, Extension and Usury Laws.
------------------------------
<PAGE>
50
The Company and each of the Guarantors covenants (to the extent
permitted by applicable law) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
Section 4.7 Limitation on Restricted Payments.
---------------------------------
(a) Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, take any of the following actions:
(i) declare or pay any dividend on, or make any distribution to direct or
indirect holders of, any shares of the Capital Stock of Holdings,
including, without limitation, any payment in connection with any merger or
consolidation involving Holdings or any Restricted Subsidiary which is not
a wholly owned Restricted Subsidiary (other than dividends or distributions
payable solely in (A) shares of Qualified Capital Stock of Holdings or (B)
options, warrants or other rights to acquire such shares of Qualified
Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value, directly or
indirectly, any shares of Capital Stock of Holdings or any Affiliate of
Holdings, including, without limitation, in connection with any merger or
consolidation involving Holdings (other than any Capital Stock owned by
Holdings or any wholly owned Restricted Subsidiary) or any direct or
indirect parent of Holdings or any options, warrants or other rights to
acquire such shares of Capital Stock;
(iii) declare or pay any dividend, or make any distribution to holders of,
any shares of Capital Stock of any Restricted Subsidiary (other than to
Holdings or any of its wholly owned Restricted Subsidiaries or to all
holders of Capital Stock of such Restricted Subsidiary on a pro rata
basis);
(iv) make any principal payment on, or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Indebtedness of
Holdings or any Guarantor or any guarantee of the Notes; or
(v) make any Investment (other than any Permitted Investment) in any Person
<PAGE>
51
(such payments or other actions described in (but not excluded from) clauses (i)
through (v) are collectively referred to as "Restricted Payments"), unless at
the time of, and immediately after giving effect to, the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than cash, being
the Fair Market Value of the asset to be transferred), (1) no Default or Event
of Default shall have occurred and be continuing, (2) after giving pro forma
effect to such Restricted Payment as if it had been made at the beginning of the
applicable four-quarter period, Holdings could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.9 and (3) the aggregate amount of all Restricted Payments declared or made
after the date of this Indenture shall not exceed the sum of:
(A) 50% of the Consolidated Adjusted Net Income of Holdings (or, if such
Consolidated Adjusted Net Income shall be a loss, less 100% of such loss)
accrued on a cumulative basis during the period beginning on the first day
of Holdings' first fiscal quarter after the date of this Indenture and
ending on the last day of Holdings' last fiscal quarter ending prior to the
date of such proposed Restricted Payment, plus
(B) 100% of the aggregate net cash proceeds received after the date of this
Indenture by Holdings as a contribution to its common equity capital or
from the issuance or sale (other than to any Restricted Subsidiary) of
shares of Qualified Capital Stock of Holdings (including upon the exercise
of options, warrants or rights) or warrants, options or rights to purchase
shares of Qualified Capital Stock of Holdings, plus
(C) the aggregate net cash proceeds received after the date of this
Indenture by Holdings from the issuance or sale (other than to any
Restricted Subsidiary) of debt securities or Redeemable Capital Stock that
have been converted into or exchanged for Qualified Capital Stock of
Holdings, to the extent such securities were originally sold for cash,
together with the aggregate net cash proceeds received by Holdings at the
time of such conversion or exchange, plus
(D) to the extent that any Investment constituting a Restricted Payment
that was made after the date of this Indenture is sold or is otherwise
liquidated or repaid, an amount (to the extent not included in Consolidated
Adjusted Net Income) equal to the lesser of (x) the cash proceeds with
respect to such Investment (less the cost of the disposition of such
Investment and net of taxes) and (y) the initial amount of such Investment,
plus
(E) an amount equal to the sum of (x) the net reduction in Investments in
Unrestricted Subsidiaries resulting from cash dividends, repayments of
loans or advances or other transfers of assets, in each case to Holdings or
any Restricted Subsidiary from Unrestricted Subsidiaries, plus (y) the
portion (proportionate to Holdings' equity interest in such Subsidiary) of
the Fair Market Value of the net assets of an Unrestricted Subsidiary at
the time such Unrestricted Subsidiary is designated a Restricted
Subsidiary, in each case since the first day of Holdings' first fiscal
quarter after the date of this Indenture; provided, however, that the
foregoing sum shall not exceed, in the case of any
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52
Unrestricted Subsidiary, the amount of Investments previously made (and
treated as a Restricted Payment) by Holdings or any Restricted Subsidiary
in such Unrestricted Subsidiary; provided, further, however, that no amount
will be included under this clause (E) to the extent it is already included
in Consolidated Net Income of Holdings in clause (A) above; plus
(F) other Restricted Payments in an aggregate amount not to exceed
$10,000,000.
(b) Notwithstanding paragraph (a) above, Holdings and its Restricted
Subsidiaries may take the following actions so long as (with respect to clauses
(ii), (iii), (iv), (v), (vi) and (xii) below) at the time of and after giving
effect thereto no Default or Event of Default shall have occurred and be
continuing:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration the payment of such
dividend would have complied with the provisions of paragraph (a) above;
(ii) the purchase, redemption or other acquisition or retirement for value
of any shares of Capital Stock of Holdings in exchange for, or out of the
net cash proceeds of a substantially concurrent issuance and sale (other
than to a Restricted Subsidiary) of, shares of Qualified Capital Stock of
Holdings;
(iii) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Restricted Subsidiary) of, shares of Qualified
Capital Stock of Holdings;
(iv) the purchase of any Subordinated Indebtedness at a purchase price no
greater than 101% of the principal amount thereof in the event of a Change
in Control in accordance with provisions similar to Section 4.15; provided
that prior to such purchase Holdings has made the Change in Control Offer
as provided in Section 4.15 with respect to the Notes and has purchased all
Notes validly tendered for payment in connection with such Change in
Control Offer;
(v) the purchase of any Subordinated Indebtedness from Net Cash Proceeds to
the extent permitted by Section 4.10; provided, however, that such purchase
will be excluded in subsequent calculations in the amount of Restricted
Payments;
(vi) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness (other than
Redeemable Capital Stock) in exchange for, or out of the Net Cash Proceeds
of a substantially concurrent incurrence (other than to a Restricted
Subsidiary) of, new Subordinated Indebtedness so long as (x) the principal
amount of such new Subordinated Indebtedness does not exceed
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53
the principal amount (or, if such Subordinated Indebtedness being
refinanced provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration thereof, such lesser
amount as of the date of determination) of the Indebtedness being so
purchased, redeemed, defeased, acquired or retired, plus the lesser of the
amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness as refinanced or the
amount of any premium reasonably determined as necessary to accomplish such
refinancing, plus, in either case, the amount of reasonable expenses of
Holdings incurred in connection with such refinancing, and (y) such new
Subordinated Indebtedness is pari passu or subordinated, as applicable, to
the Notes to the same extent as such Indebtedness so purchased, redeemed,
defeased, acquired or retired and (z) such new Indebtedness has an Average
Life longer than the Average Life of the Notes and a final Stated Maturity
of principal later than the final Stated Maturity of principal of the
Notes;
(vii) payments to LifePoint to pay its operating and administrative
expenses incurred in the ordinary course of business, including, without
limitation, payroll expenses, directors' fees, legal and audit expenses,
Commission compliance expenses and corporate franchise and other taxes, in
an amount not to exceed $2,500,000 in any fiscal year; provided that any
such payments permitted to be made under this clause (vii) shall be treated
as expense items in the consolidated financial statements of Holdings;
(viii) payments to LifePoint to pay expenses incurred under the corporate
integrity program referenced in the distribution agreement;
(ix) payments to LifePoint to pay expenses incurred under the Transition
Agreements;
(x) payments by Holdings to LifePoint or the ESOP, or directly by Holdings,
to be used to repurchase, redeem, acquire or retire for value any Capital
Stock of LifePoint pursuant to any stockholder's agreement, management
equity subscription plan or agreement, stock option plan or agreement or
employee benefit plan as may be adopted by LifePoint or Holdings from time
to time in an aggregate amount not to exceed $2,000,000 in any fiscal year;
provided that any payments permitted pursuant to this clause (x) which are
not made in any fiscal year may be carried over and made in the next fiscal
year;
(xi) payments to LifePoint pursuant to the tax sharing agreement between
LifePoint, Holdings and its Subsidiaries, as the same may be amended from
time to time, to the extent required for LifePoint to pay any federal,
state or local income taxes, but only to the extent that such income taxes
are attributable to the income of Holdings and its Subsidiaries; and
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54
(xii) the redemption, repurchase, acquisition or retirement of equity
interests in any Restricted Subsidiary or any Permitted Joint Venture of
Holdings or a Restricted Subsidiary; provided that if Holdings or any
Restricted Subsidiary incurs Indebtedness in connection with such
redemption, repurchase, acquisition or retirement, after giving effect to
such incurrence and such redemption, repurchase, acquisition or retirement,
Holdings could incur $1.00 of additional Indebtedness pursuant to the first
paragraph of Section 4.9.
The actions described in clauses (i), (ii), (iii), (x) (to the extent
not related to the ESOP) and (xii) of this paragraph (b) shall be Restricted
Payments that shall be permitted to be taken in accordance with this paragraph
(b) but shall reduce the amount that would otherwise be available for Restricted
Payments under clause (3) of paragraph (a) above and the actions described in
all other clauses of this paragraph (b) (including without limitation clause (x)
to the extent related to the ESOP) shall be Restricted Payments that shall be
permitted to be taken in accordance with this paragraph (b), but shall not
reduce the amount that would otherwise be available for Restricted Payments
under clause (3) of paragraph (a).
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55
The amount of all Restricted Payments (other than cash) shall be the
Fair Market Value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by Holdings or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair
Market Value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors of Holdings whose determination with respect
thereto shall be conclusive. If Holdings or a Restricted Subsidiary makes a
Restricted Payment which, at the time of the making of such Restricted Payment
would in the good faith determination of Holdings be permitted under the
provisions of the Indenture, such Restricted Payment shall be deemed to have
been made in compliance with the Indenture notwithstanding any subsequent
adjustments made in good faith to Holdings' financial statements affecting
Consolidated Adjusted Net Income of Holdings for any period.
Section 4.8 Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------
Affecting Restricted Subsidiaries.
- ---------------------------------
Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause to suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make
any other distributions on or in respect of its Capital Stock or other ownership
interest, or any other interest or participation in or measured by, its profits
to Holdings or any other Restricted Subsidiary, (b) pay any Indebtedness owed to
Holdings or any other Restricted Subsidiary, (c) make loans or advances to
Holdings or any other Restricted Subsidiary, (d) transfer any of its properties
or assets to Holdings or any other Restricted Subsidiary or (e) guarantee any
Indebtedness of Holdings or any other Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) customary provisions restricting subletting or assignment of any lease or
assignment of any other contract to which Holdings or any Restricted Subsidiary
is a party or to which any of their respective properties or assets are subject,
(iii) any agreement or other instrument of a Person acquired by Holdings or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, so long as the
agreement containing such restriction does not violate any other provision of
the Indenture, (iv) encumbrances and restrictions in effect on the Issuance
Date, including, without limitation, pursuant to the Senior Credit Facility and
its related documentation, (v) any encumbrance or restriction contained in
contracts for sales of assets permitted by Section 4.10 with respect to the
assets to be sold pursuant to such contract, (vi) in the case of paragraph (d)
above, restrictions contained in security agreements or mortgages securing
Indebtedness of a Restricted Subsidiary permitted under the Indenture to the
extent such restrictions restrict the transfer of the property subject to such
security agreements or mortgages and (vii) any encumbrance or restriction
existing under any agreement that extends, renews, refinances or replaces the
agreements containing the encumbrances or restrictions in the foregoing clauses
(iii) and (iv); provided that the terms and conditions of any such encumbrances
or restrictions are not materially more restrictive than those under or pursuant
to the agreement so extended, renewed, refinanced or replaced.
<PAGE>
56
Section 4.9 Limitation on Indebtedness.
--------------------------
Holdings will not, and will not permit any Restricted Subsidiary to,
create, issue, assume, guarantee or in any manner become directly or indirectly
liable for the payment of, or otherwise incur (collectively, "incur"), any
Indebtedness (including any Acquired Indebtedness), other than Permitted
Indebtedness; provided, however, that, so long as no Default or Event of Default
has occurred and is continuing, Holdings or any Guarantor may incur Indebtedness
(including Acquired Indebtedness) if at the time of such incurrence the
Consolidated Fixed Charge Coverage Ratio of Holdings for the four full fiscal
quarters immediately preceding the incurrence of such Indebtedness for which
consolidated financial statements are available, taken as one period (and after
giving pro forma effect to (i) the incurrence of such Indebtedness and (if
applicable) the application of the net proceeds therefrom, including to
refinance other Indebtedness, as if such Indebtedness was incurred, and the
application of such proceeds occurred, on the first day of such four-quarter
period, (ii) the incurrence, repayment or retirement of any other Indebtedness
by Holdings and its Restricted Subsidiaries since the first day of such
four-quarter period as if such Indebtedness was incurred, repaid or retired on
the first day of such four-quarter period (except that, in making such
computation, the amount of Indebtedness under any revolving credit facility
shall be computed based upon the average daily balance of such Indebtedness
during such four-quarter period) and (iii) the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business (including, without limitation, a Hospital)
acquired or disposed of by Holdings or its Restricted Subsidiaries, as the case
may be, since the first day of such four-quarter period, as if such acquisition
or disposition occurred on the first day of such four-quarter period), would
have been at least equal to 2.0 to 1.0, if such Indebtedness is incurred on or
prior to December 31, 1999 or 2.25 to 1.0, if such Indebtedness is incurred
thereafter. Whenever pro forma effect is to be given to an acquisition or
disposition pursuant to clause (iii) above, such pro forma calculation shall be
determined in accordance with Article 11 of Regulation S-X under the Securities
Act.
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For purposes of determining compliance with this Section 4.9, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories described in paragraphs (a) through (n) of the definition of
Permitted Indebtedness as of the date of incurrence thereof or is entitled to be
incurred pursuant to the first paragraph of this covenant as of the date of
incurrence thereof, Holdings may, in its sole discretion, classify or reclassify
such item of Indebtedness in any manner that complies with this Section 4.9.
Accrual of interest, the accretion of accreted value and the payment of interest
in the form of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this Section 4.9 and the payment of dividends on
Redeemable Capital Stock in the form of additional shares of the same class of
Redeemable Capital Stock will not be deemed an issuance of Redeemable Capital
Stock.
Section 4.10 Limitation on Sale of Assets.
----------------------------
(a) Holdings will not, and will not permit any Restricted Subsidiary to, engage
in any Asset Sale unless (i) the consideration received by Holdings or such
Restricted Subsidiary at the time of such Asset Sale is not less than the Fair
Market Value of the assets sold and (ii), at least 75% of such consideration
consists of cash or Cash Equivalents or Replacement Assets. The amount of any
(A) Indebtedness (other than Subordinated Indebtedness) of Holdings or a
Restricted Subsidiary that is actually assumed by the transferee in such Asset
Sale and from which Holdings and the Restricted Subsidiaries are fully released
shall be deemed to be cash for purposes of determining the percentage of cash
consideration received by Holdings or the Restricted Subsidiaries and (B) notes,
securities or other similar obligations received by Holdings or any Restricted
Subsidiary from such transferee that are converted, sold or exchanged within 30
days of the related Asset Sale by Holdings or the Restricted Subsidiaries into
cash shall be deemed to be cash, in an amount equal to the net cash proceeds
realized upon such conversion, sale or exchange, for purposes of determining the
percentage of cash consideration received by Holdings or the Restricted
Subsidiaries. Notwithstanding the foregoing, the 75% limitation referred to in
clause (ii) will not apply to any Asset Sale in which the cash or Cash
Equivalents portion of the consideration received therefrom, determined in
accordance with the foregoing provision, is equal to or greater than what the
after-tax proceeds would have been had such Asset Sale complied with the
aforementioned 75% limitation.
(b) If Holdings or any Restricted Subsidiary engages in an Asset Sale, Holdings
may use the Net Cash Proceeds thereof, within 12 months after such Asset Sale,
to (i) permanently repay or prepay any then outstanding Senior Indebtedness of
Holdings or any Restricted Subsidiary (and to correspondingly reduce commitments
with respect thereto) or (ii) invest (or enter into a legally binding agreement
to invest) in other properties or assets to replace the properties or assets
that were the subject of the Asset Sale or in properties and assets that will be
used in businesses of Holdings or its Restricted Subsidiaries, as the case may
be, existing at the time such assets are sold, or in any Related Business or in
Capital Stock of a Person, the principal portion of whose assets consist of such
property or assets (provided that Holdings or such Restricted Subsidiary shall
acquire at least the same percentage of equity and voting interest in such
Person as Holdings or such Restricted Subsidiary held with respect to the assets
disposed of in such Asset Sale) ("Replacement Assets"). Pending the final
application of any such Net
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58
Cash Proceeds, Holdings may temporarily reduce Senior Indebtedness or otherwise
invest such Net Proceeds in any manner that is not prohibited by this Indenture.
If any such legally binding agreement to invest such Net Cash Proceeds is
terminated, then Holdings may, within 90 days of such termination or within 12
months of such Asset Sale, whichever is later, invest such Net Cash Proceeds as
provided in clause (i) or (ii) (without regard to the parenthetical contained in
such clause (ii) above). The amount of such Net Cash Proceeds not so used as set
forth above in this paragraph (b) constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $7,500,000, Holdings
shall, within 30 Business Days, make an offer to purchase (an "Excess Proceeds
Offer") from all Holders of Notes, on a pro rata basis, in accordance with the
procedures set forth below, the maximum principal amount (expressed as an
integral multiple of $1,000) of Notes that may be purchased with the Excess
Proceeds. The offer price as to each Note shall be payable in cash in an amount
equal to 100% of the principal amount of such Note plus accrued interest, if
any, to the date such Excess Proceeds Offer is consummated ("Excess Proceeds
Payment"). To the extent that the aggregate principal amount of Notes tendered
pursuant to an Excess Proceeds Offer is less than the Excess Proceeds, Holdings
may use such deficiency for any lawful purposes not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Excess Proceeds, Notes to be purchased
will be selected on a pro rata basis. Notwithstanding the foregoing, if Holdings
is required to commence an Excess Proceeds Offer at any time when securities of
Holdings ranking pari passu in right of payment with the Notes are outstanding
and the terms of such securities provide that a similar offer must be made with
respect to such other securities, then the Excess Proceeds Offer for the Notes
shall be made concurrently with such other offers and securities of each issue
will be accepted on a pro rata basis in proportion to the aggregate principal
amount of securities of each issue which the holders thereof elect to have
purchased. Any Excess Proceeds Offer will be made only to the extent permitted
under, and subject to prior compliance with, the terms of agreements governing
Senior Indebtedness. Upon completion of such Excess Proceeds Offer, the amount
of Excess Proceeds shall be reset to zero.
(d) Upon the commencement of an Excess Proceeds Offer, Holdings shall send, by
first class mail, a notice to the Trustee and to each Holder at its registered
address. The notice shall contain all instructions and materials necessary to
enable such Holder to tender Notes pursuant to the Excess Proceeds Offer. Any
Excess Proceeds Offer shall be made to all Holders. The notice, which shall
govern the terms of the Excess Proceeds Offer, shall state: (1) that the Excess
Proceeds Offer is being made pursuant to this Section 4.10; (2) the Excess
Proceeds Offer amount, the Excess Proceeds Payment and the date on which Notes
tendered and accepted for payment shall be purchased, which date shall be at
least 30 days and no later than 60 days from the date such notice is mailed (the
"Excess Proceeds Payment Date"); (3) that any Note not tendered or accepted for
payment shall continue to accrete or accrue interest; (4) that, unless Holdings
defaults in making such payment, any Note accepted for payment pursuant to the
Excess Proceeds Offer shall cease to accrete or accrue interest after the Excess
Proceeds Payment Date; (5) that Holders electing to have a Note purchased
pursuant to the Excess Proceeds Offer may only elect to have all of such Note
purchased and may not elect to have only
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59
a portion of such Note purchased; (6) that Holders electing to have a Note
purchased pursuant to any Excess Proceeds Offer shall be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, or transfer by book-entry transfer, to Holdings,
a depositary, if appointed by Holdings, or the Paying Agent at the address
specified in the notice at least three days before the Excess Proceeds Payment
Date; (7) that Holders shall be entitled to withdraw their election if Holdings,
the depositary or the Paying Agent, as the case may be, receives, not later than
the Excess Proceeds Payment Date, a notice setting forth the name of the Holder,
the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased; (8) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Excess Proceeds Offer amount, Holdings shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by Holdings so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and (9) that Holders whose
Notes were purchased only in part shall be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer). Holdings shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of an Asset Sale.
(e) On the Excess Proceeds Payment Date, Holdings shall, to the extent lawful:
(1) accept for payment all Notes or portions thereof properly tendered pursuant
to the Excess Proceeds Offer; (2) deposit with the Paying Agent an amount equal
to the Excess Proceeds Payment in respect of all Notes or portions thereof so
tendered; and (3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being repurchased by Holdings. Holdings
shall publicly announce the results of the Excess Proceeds Offer on the Excess
Proceeds Payment Date.
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(f) The Paying Agent shall promptly mail to each Holder of Notes so tendered the
Excess Proceeds Payment for such Notes, and the Trustee shall promptly
authenticate pursuant to an Authentication Order and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unrepurchased portion of the Notes surrendered, if any; provided that
each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. However, if the Excess Proceeds Payment Date is on or after an
interest record date and on or before the related interest payment date, any
accrued and unpaid interest shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Excess
Proceeds Offer.
Section 4.11 Limitation on Transactions with Affiliates.
------------------------------------------
Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into or make, amend or permit to exist any
contract, agreement, understanding, loan advance, guarantee or other transaction
or series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with, or for the
benefit of, any Affiliate of Holdings or any Restricted Subsidiary (other than
Holdings or a Restricted Subsidiary) (collectively, "Interested Persons"),
unless (i) such transaction or series of transactions are on terms that are no
less favorable to Holdings or such Restricted Subsidiary, as the case may be,
than would have been able to be obtained at the time for a comparable
transaction in arm's-length dealings with third parties that are not Interested
Persons, (ii) with respect to any transaction or series of related transactions
involving aggregate consideration equal to or greater than $2,000,000 in the
aggregate, Holdings has delivered an Officers' Certificate to the Trustee
certifying that such transaction or series of transactions complies with clause
(i) above and such transaction or series of related transactions shall have been
approved by the Board of Directors of Holdings (including a majority of the
Disinterested Directors of Holdings) and (iii) with respect to any transaction
or series of related transactions involving aggregate consideration equal to or
greater than $10,000,000, Holdings has obtained a written opinion from an
Independent Financial Advisor certifying that such transaction or series of
related transactions is fair to Holdings or its Restricted Subsidiary, as the
case may be, from a financial point of view; provided, however, that this
Section 4.11 will not restrict (1) reasonable and customary directors' fees,
indemnification and similar arrangements, consulting fees, employee salaries,
bonuses or employment agreements, compensation or employee benefit arrangements
and incentive arrangements with any officer, director or employee of Holdings or
a Restricted Subsidiary entered into in the ordinary course of business, (2) any
transactions made in compliance with Section 4.7 hereof, (3) loans and advances
to officers, directors and employees of Holdings or any Restricted Subsidiary in
the ordinary course of business in accordance with the past practices of
Holdings or any Restricted Subsidiary not to exceed $13,000,000 in the aggregate
outstanding at any time, (4) the Spin-Off Transactions and (5) any transactions
made in accordance with and pursuant to the Transition Agreements.
Section 4.12 Limitation on Liens.
-------------------
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61
(a) Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Pari Passu Indebtedness or Subordinated Indebtedness of Holdings on or
with respect to any of its property or assets including any shares of stock or
Indebtedness of any Restricted Subsidiary, whether owned on the date of this
Indenture or thereafter acquired, or any income, profits or proceeds therefrom,
or assign or otherwise convey any right to receive income thereon, other than
Permitted Liens, unless (i) in the case of any Lien securing Pari Passu
Indebtedness of Holdings, the Notes are secured by a Lien on such property,
assets or proceeds that is senior in priority to or pari passu with such Lien
and (ii) in the case of any Lien securing Subordinated Indebtedness of Holdings,
the Notes are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Lien.
(b) Holdings will not permit any Guarantor to, directly or indirectly, create,
incur, assume or suffer to exist any Lien securing Pari Passu Indebtedness or
Subordinated Indebtedness of such Guarantor or with respect to such Restricted
Subsidiary's properties or assets, including any shares of stock or Indebtedness
of any Subsidiary or such Guarantor, whether owned at the date of this Indenture
or thereafter acquired, or any income, profits or proceeds therefrom, or assign
or otherwise convey any right to receive income thereon, unless (i) in the case
of any Lien securing Pari Passu Indebtedness of the Guarantor, the Note
Guarantee of such Guarantor is secured by a Lien or such property, assets or
proceeds that is senior in priority to or pari passu with such Lien and (ii) in
the case of any Lien securing Subordinated Indebtedness of such Guarantor, the
Note Guarantee of such Guarantor is secured by a Lien on such property, assets
or proceeds that is senior in priority to such Lien.
Section 4.13 Limitation on Other Senior Subordinated Indebtedness.
----------------------------------------------------
Neither Holdings nor any Guarantor will incur, create, assume,
guarantee or in any other manner become directly or indirectly liable with
respect to or responsible for, or permit to remain outstanding, any
Indebtedness, other than the Notes, that is subordinate or junior in right of
payment to any Senior Indebtedness (or, in the case of any Guarantor, Senior
Guarantor Indebtedness) unless such Indebtedness is also pari passu with, or
subordinate in right of payment to, the Notes or the Note Guarantee of such
Guarantor, as applicable, pursuant to subordination provisions substantially
similar to those contained in this Indenture.
Section 4.14 Corporate Existence.
-------------------
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62
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (a) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (b) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
Section 4.15 Purchase of Notes upon Change in Control.
----------------------------------------
If a Change in Control shall occur at any time, then each Holder of
Notes will have the right to require that Holdings purchase such Holder's Notes,
in whole or in part in integral multiples of $1,000, at a purchase price (the
"Change in Control Purchase Price") in cash in an amount ("Change in Control
Payment") equal to 101% of the principal amount thereof, plus accrued interest,
if any, to the date of purchase (the "Change in Control Purchase Date"),
pursuant to the offer described below (the "Change in Control Offer") and the
other procedures set forth below.
Within 30 days following any Change in Control, Holdings shall notify
the Trustee thereof and give written notice of such Change in Control to each
Holder of Notes by first-class mail, postage prepaid, at the address of such
Holder appearing in the security register, describing the transaction or
transactions that constitute the Change in Control and stating, among other
things, (i) the Change in Control Purchase Price and the Change in Control
Purchase Date, which shall be a Business Day no earlier than 30 days nor more
than 60 days from the case such notice is mailed, or such later date as is
necessary to comply with requirements under the Exchange Act or any applicable
securities laws or regulations; (ii) that any Note not tendered will continue to
accrue interest; (iii) that, unless Holdings defaults in the payment of the
Change in Control Purchase Price, any Notes accepted for payment pursuant to the
Change in Control Offer shall cease to accrue interest after the Change in
Control Purchase Date; and (iv) certain procedures that a Holder of Notes must
follow to accept a Change in Control Offer or to withdraw such acceptance.
On the Change in Control Purchase Date, Holdings will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change in Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change in Control Purchase Price in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by
Holdings. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change in Control Purchase Price for such Notes, and the Trustee
will promptly authenticate and mail (or cause to
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be transferred by book entry) to each Holder a new Note equal in principal
amount in a principal amount of $1,000 or an integral multiple thereof. Prior to
complying with the provisions of this Section 4.15, but in any event within 90
days following the Change in Control, Holdings will either repay all outstanding
Senior Indebtedness or obtain the requisite consents, if any, under all
agreements governing Senior Indebtedness to permit the repurchase of Notes
required by this Section 4.15. Holdings will publicly announce the results of
the Change in Control Offer on or as soon as practicable after the Change of
Control Purchase Date. Holdings shall not be required to make a Change in
Control Offer upon a Change in Control if a third party makes the Change in
Control Offer in the manner, at the time and otherwise in compliance with the
requirements applicable to a Change in Control Offer made by Holdings and
purchases all Notes validly tendered and not withdrawn under such Change in
Control Offer.
The Change in Control provisions described above will be applicable
whether or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change in Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require Holdings to
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
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The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change in Control Payment for such Notes, and the Trustee shall
promptly authenticate pursuant to an Authentication Order and mail (or cause to
be transferred by book entry) to each Holder a new Note equal in principal
amount to any unrepurchased portion of the Notes surrendered, if any; provided
that each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. However, if the Change in Control Purchase Date is on or after
an interest record date and on or before the related interest payment date, any
accrued and unpaid interest shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Change in
Control Offer.
Section 4.16 Subsidiary Guarantees.
---------------------
Subject to the last sentence of this Section 4.16, Holdings shall
cause each of its domestic Restricted Subsidiaries, including any domestic
Restricted Subsidiary which becomes a Restricted Subsidiary after the date that
Holdings becomes an obligor under the Notes and this Indenture, to become a
Guarantor under this Indenture and shall cause each such domestic Restricted
Subsidiary to (a) execute and deliver to the Trustee a supplemental indenture in
form reasonably satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of Holdings' obligations under
the Notes and this Indenture on the terms set forth in this Indenture and (b)
deliver to the Trustee an Opinion of Counsel that such supplemental indenture
has been duly authorized, executed and delivered by such Restricted Subsidiary
and constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary, subject to normal exceptions. Thereafter, such Restricted
Subsidiary shall be a Guarantor for all purposes of this Indenture.
Notwithstanding the foregoing, following the contribution by Holdings of certain
assets to its direct, wholly-owned subsidiary, Triad Holdings II, LLC and the
contribution by Triad Holdings II, LLC of certain of its assets to its direct,
wholly-owned subsidiary, Triad Holdings III, Inc. and immediately prior to the
Spin-Off Distribution, Holdings shall cause each of its domestic Restricted
Subsidiaries to become a Guarantor by causing such domestic Restricted
Subsidiaries to execute and deliver the Third Supplemental Indenture (the "Third
Supplemental Indenture") in the form of Exhibit I and shall cause such
Restricted Subsidiaries to execute and deliver a notation of their respective
Note Guarantee substantially in the form of Exhibit E.
Section 4.17 Limitation on Issuances and Sales of Capital Stock
--------------------------------------------------
of Restricted Subsidiaries.
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Holdings (a) will not permit any Restricted Subsidiary to issue any
Capital Stock (other than to Holdings or a wholly owned Restricted Subsidiary)
and (b) will not permit any Person (other than Holdings or a wholly owned
Restricted Subsidiary) to own any Capital Stock of any Restricted Subsidiary;
provided, however, that this Section 4.17 shall not prohibit (i) the issuance or
any sale, transfer, lease, conveyance, or other disposition of all, but not less
than all, of the issued and outstanding Capital Stock of any Restricted
Subsidiary owned by Holdings or any of its Restricted Subsidiaries in compliance
with the other provisions of this Indenture, so long as the Net Cash Proceeds,
if any, from such sale, transfer. lease, conveyance or other disposition is
applied in accordance with Section 4.10, (ii) the ownership by other Persons of
Qualified Capital Stock issued prior to the time such Restricted Subsidiary
became a Subsidiary of Holdings that was neither issued in contemplation of such
Subsidiary becoming a Subsidiary nor acquired at that time, (iii) the ownership
by directors of director qualifying shares or the ownership by foreign nationals
of Capital Stock of any Restricted Subsidiary, to the extent mandated by
applicable law, (iv) arrangements existing on the Issuance Date, (v) any
issuance, sale or other disposition of Capital Stock (other than Preferred
Stock) of a Restricted Subsidiary if, immediately after giving effect thereto,
such Restricted Subsidiary would remain a Restricted Subsidiary, or (vi) any
issuance, sale or other disposition of Capital Stock of a Restricted Subsidiary
if, immediately after giving effect thereto, such Person would no longer
constitute a Restricted Subsidiary and any Investment in such Person remaining
after giving effect thereto would have been permitted to be made (and shall be
deemed to have been made) under Section 4.7 on the date of such issuance, sale
or other disposition.
Section 4.18 Limitation on Guarantees of Indebtedness by Restricted
------------------------------------------------------
Subsidiaries.
- ------------
(a) Holdings will not permit any Restricted Subsidiary, directly or indirectly,
to guarantee, assume or in any other manner become liable with respect to any
Pari Passu Indebtedness or Subordinated Indebtedness of Holdings unless, with
respect to any guarantee by a Restricted Subsidiary of Pari Passu Indebtedness
of Holdings, any such guarantee shall be pari passu with such Restricted
Subsidiary's Note Guarantee, if any, and with respect to any guarantee by a
Restricted Subsidiary of Subordinated Indebtedness of Holdings, any such
guarantee shall be subordinated to such Restricted Subsidiary's Note Guarantee
at least to the same extent as such guaranteed Indebtedness is subordinated to
the Notes.
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(b) Notwithstanding the foregoing, any guarantee of the Notes created pursuant
to the provisions described in the foregoing paragraph (a) will provide by its
terms that it will automatically and unconditionally be released and discharged
upon (i) any sale, exchange or transfer to any Person not an Affiliate of
Holdings of all of Holdings' Capital Stock of such Restricted Subsidiary (which
sale, exchange or transfer is otherwise in compliance with this Indenture) or
(ii) the designation of such Restricted Subsidiary as an Unrestricted Subsidiary
in accordance with the terms of the Indenture.
Section 4.19 Assumption of Indenture by LifePoint and Holdings.
-------------------------------------------------
Upon Healthtrust validly transferring the America Group assets to
LifePoint, Healthtrust will cause LifePoint to assume, (a) by a supplemental
indenture (the "First Supplemental Indenture") in the form of Exhibit G,
Healthtrust's obligation for the due and punctual payment of the principal of,
premium, if any, Additional Interest, if any, and interest on all the Notes and
the performance and observance of every covenant of this Indenture on the part
of Healthtrust to be performed or observed and (b) the rights and obligations of
Healthtrust under the Registration Rights Agreement. Upon the America Group
assets being validly transferred to LifePoint, the execution and delivery of the
First Supplemental Indenture by Healthtrust, LifePoint and the Trustee and the
execution and delivery of the LifePoint Assumption Agreement to the Registration
Rights Agreement by Healthtrust and LifePoint, Healthtrust will be fully,
unconditionally and irrevocably released from all obligations under this
Indenture and the Registration Rights Agreement. Upon LifePoint validly
transferring the America Group assets to Holdings, LifePoint will cause Holdings
to assume, (i) by a supplemental indenture (the "Second Supplemental Indenture")
in the form of Exhibit H, LifePoint's obligation for the due and punctual
payment of the principal of, premium, if any, Additional Interest, if any, and
interest on all the Notes and the performance and observance of every covenant
of this Indenture on the part of LifePoint to be performed or observed and (ii)
the rights and obligations of LifePoint under the Registration Rights Agreement.
Upon the America Group assets being validly transferred to Holdings, the
execution and delivery of the Second Supplemental Indenture by LifePoint,
Holdings and the Trustee and the execution and delivery of the Holdings
Assumption Agreement to the Registration Rights Agreement by LifePoint and
Holdings, LifePoint will be fully, unconditionally and irrevocably released from
all obligations under this Indenture and the Registration Rights Agreement.
Section 4.20 Limitations on Healthtrust.
--------------------------
For so long as Healthtrust is the obligor under the Notes and this
Indenture, Healthtrust will not, and will not permit any of its Subsidiaries to
(a) incur (as defined in Section 4.9) any Indebtedness, (b) make any Restricted
Payments (as used in this Section 4.20, "Restricted Payments" shall be deemed to
be Restricted Payments of Healthtrust and its Subsidiaries), (c) create, incur,
assume or suffer to exist any Liens on any asset of Healthtrust or its
Subsidiaries or (d) transfer (as defined in the definition of "Asset Sale"),
directly or indirectly, any asset of Healthtrust or its Subsidiaries except, in
each case, for the transactions to be consummated in connection with the
distribution of the common stock of LifePoint and Triad to
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the stockholders of Columbia/HCA and any related transactions and for
transactions which do not materially impair the ability of Healthtrust to
satisfy its payment obligations under the Notes and this Indenture.
Section 4.21 Limitations on LifePoint.
------------------------
For so long as LifePoint is the obligor under the Notes and this
Indenture, LifePoint will not, and will not permit any of its Subsidiaries to
(a) incur (as defined in Section 4.9) any Indebtedness, (b) make any Restricted
Payments (as used in this Section 4.21, "Restricted Payments" shall be deemed to
be Restricted Payments of LifePoint and its Subsidiaries), (c) create, incur,
assume or suffer to exist any Liens on any asset of LifePoint or its
Subsidiaries or (d) transfer (as defined in the definition of "Asset Sale"),
directly or indirectly, any asset of LifePoint or its Subsidiaries except, in
each case, for the transactions to be consummated in connection with the
distribution of the common stock of LifePoint and Triad to the stockholders of
Columbia/HCA and any related transactions and for transactions which do not
materially impair the ability of LifePoint to satisfy its payment obligations
under the Notes and this Indenture.
Section 4.22 Transition Agreements.
---------------------
The Company shall cause the parties to the Distribution Agreement, Tax
Sharing and Indemnification Agreement and Computer and Data Processing Service
Agreement referred to in the definition of "Transition Agreements" in Section
1.1 to execute and deliver such Transition Agreements prior to or as soon as
practicable after the Spin-Off-Distribution.
Section 4.23 Further Assurances.
------------------
(a) Upon the request of the Trustee or as otherwise required, the Company
and the Guarantors will execute and deliver such further instruments and
undertake such further reasonable action as may be reasonably required to
carry out the purposes of this Indenture.
(b) The Company shall use its reasonable best efforts to cause the
limitation contained in Section 8.4(e) of the Amended and Restated Limited
Partnership Agreement of Dodge City Healthcare Group, L.P., a Kansas
limited partnership ("Dodge Sub"), effective as of March 1, 1995, among
Columbia/HCA of Dodge City, Inc., American Medicorp Development Co.,
Western Plains Regional Hospital, Inc. and Dodge City Outpatient Surgical
Facility, Inc., as amended, to be modified as soon as practicable to permit
Dodge Sub to guarantee all of the obligations of Holdings hereunder and
under the Notes without the limitation contained in such Section 8.4(e).
(c) The Company shall use its reasonable best efforts to cause the
limitation contained in Section 8.4(f) of the Amended and Restated Limited
Partnership Agreement of Bartow Healthcare System, Ltd., a Florida limited
partnership ("Bartow Sub"),
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68
effective as of August 19, 1996, among HCA of Florida, Inc. and Bartow
Memorial Hospital, Inc., as amended, to be modified as soon as practicable
to permit Bartow Sub to guarantee all of the obligations of Holdings
hereunder and under the Notes without the limitation contained in such
Section 8.4(f).
(d) The Company shall cause Columbia/HCA to (i) execute and deliver to the
Trustee a Fourth Supplemental Indenture in the form attached as Exhibit J
and a notation of its Note Guarantee substantially in the form of Exhibit E
and (ii) deliver to the Trustee an Opinion of Counsel that such Fourth
Indenture Supplement has been authorized, executed and delivered by
Columbia/HCA and constitutes a legal, valid, binding and enforceable
obligation of Columbia/HCA (subject to normal exceptions), in each case, at
the time that the Restricted Subsidiaries of Holdings are required to
execute and deliver the Third Supplemental Indenture pursuant to Section
4.16. The Fourth Supplemental Indenture shall provide, among other things,
that (i) the portion of the Columbia/HCA Note Guarantee relating to the
Dodge Sub will be released when the limitation described in clause (b)
above is eliminated or the Note Guarantee of the Dodge Sub is released,
(ii) the portion of the Columbia/HCA Note Guarantee relating to the Bartow
Sub will be released when the limitation described in clause (c) above is
eliminated or the Note Guarantee of the Bartow Sub is released and (iii)
the Columbia/HCA Note Guarantee will be released when the limitations
described in both of clauses (b) and (c) above are eliminated or when the
Note Guarantees of both the Dodge Sub and the Bartow Sub are released.
ARTICLE 5
SUCCESSORS
Section 5.1 Consolidation, Merger and Sale of Assets.
----------------------------------------
2.3 Holdings will not, in a single transaction or through a series of
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any other Person or Persons or permit any of its
Restricted Subsidiaries to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in the sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the properties and assets of Holdings
and its Restricted Subsidiaries on a consolidated basis to any other Person or
Persons, unless at the time and immediately after giving effect thereto (i)
either (a) Holdings will be the continuing corporation or (b) the Person (if
other than Holdings) formed by such consolidation or into which Holdings or such
Restricted Subsidiary is merged or the Person that acquires by sale, assignment,
conveyance, transfer, lease or disposition all or substantially all the
properties and assets of Holdings and its Restricted Subsidiaries on a
consolidated basis (the "Surviving Entity") (1) will be a corporation duly
organized and validly existing under the laws of the United States of America,
any state thereof or the District of Columbia and (2) will expressly assume, by
a supplemental indenture in form reasonably satisfactory to the Trustee,
Holdings' obligation for the due and punctual payment of
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69
the principal of, premium, if any, Additional Interest, if any, and interest on
all the notes and the performance and observance of every covenant of the
Indenture on the part of Holdings to be performed or observed, (ii) immediately
before and immediately after giving effect to such transaction or series of
transactions on a pro forma basis (and treating any obligation of Holdings or
any Restricted Subsidiary incurred in connection with or as a result of such
transaction or series of transactions as having been incurred at the time of
such transaction), no Default or Event of Default will have occurred and be
continuing, (iii) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (on the assumption
that the transaction or series of transactions occurred on the first day of the
four- quarter period immediately prior to the consummation of such transaction
or series of transactions with the appropriate adjustments with respect to the
transaction or series of transactions being included in such pro forma
calculation), Holdings (or the Surviving Entity if Holdings is not the
continuing obligor under this Indenture) could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under the provisions
of Section 4.9, (iv) immediately after giving effect to such transaction on a
pro forma basis, the Consolidated Net Worth of Holdings (or the Surviving Entity
if Holdings is not the continuing obligor under the Indenture) is equal to or
greater than the Consolidated Net Worth of Holdings immediately prior to such
transaction; and (v) each Guarantor, if any, unless it is the other party to the
transactions described above, shall have by supplemental indenture confirmed
that its Note Guarantee will apply to such Person's obligations under this
Indenture and the Notes.
In connection with any such consolidation, merger, sale, assignment,
conveyance, transfer, lease or other disposition, Holdings or the Surviving
Entity shall have delivered to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition, and if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with the requirements of this Indenture and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Each Guarantor, if any (other than any Subsidiary whose Note Guarantee
is being released pursuant to the provisions under Section 11.5 or Section 4.18
as a result of such transaction), shall not, and Holdings will not permit a
Guarantor to, in a single transaction or through a series of related
transactions, merge or consolidate with or into any other corporation or other
entity (other than Holdings or any Guarantor), or sell, assign, convey,
transfer, lease or otherwise dispose of its properties and assets on a
consolidated basis substantially as an entirety to any entity (other than
Holdings or any Guarantor) unless (i) either (a) such Guarantor shall be the
continuing corporation or partnership or (b) the Person (if other than such
Guarantor) formed by such consolidation or into which such Guarantor is merged
or the entity which acquires by sale, assignment, conveyance, transfer, lease or
disposition of all or substantially all of the properties and assets of such
Guarantor, as the case may be, shall be a corporation or partnership organized
and validly existing under the laws of the United States, any state thereof or
the District of Columbia, and shall expressly assume by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of such Guarantor
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under the Notes and this Indenture, (ii) immediately before and immediately
after giving effect to such transaction on a pro forma basis, no Default or
Event of Default shall have occurred and be continuing, and (iii) such Guarantor
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, sale, assignment,
conveyance, transfer, lease or disposition and such supplemental indenture
comply with this Indenture.
Section 5.2 Successor Person Substituted.
----------------------------
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of Holdings or any Guarantor in accordance with Section 5.1, the
successor Person formed by such consolidation or into which Holdings or such
Guarantor, as the case may be, is merged or the successor Person to which such
sale, assignment, conveyance, transfer, lease or disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
Holdings or such Guarantor, as the case may be, under this Indenture and/or the
Note Guarantees, as the case may be, with the same effect as if such successor
had been named as Holdings or such Guarantor, as the case may be, herein and/or
in the Note Guarantees, as the case may be. When a successor assumes all the
obligations of its predecessor under this Indenture, the Notes or a Note
Guarantee, as the case may be, the predecessor shall be released from those
obligations; provided that in the case of a transfer by lease, the predecessor
shall not be released from the payment of principal and interest on the Notes or
a Note Guarantee, as the case may be.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
-----------------
Each of the following is an "Event of Default":
(a) default in the payment of any interest on any Note when it becomes due
and payable and continuance of such default for a period of 30 days;
(b) default in the payment of the principal of, premium, if any, or
Additional Interest, if any, on any Note at its Maturity (upon
acceleration, optional redemption, mandatory redemption, required purchase
or otherwise);
(c) default in the performance, or breach, of the provisions described in
Section 5.1, the failure to make or consummate a Change in Control Offer in
accordance with the provisions of Section 4.15 or the failure to make or
consummate an Excess Proceeds Offer in accordance with the provisions of
Section 4.10;
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71
(d) default in the performance, or breach, of any covenant or warranty of
the Company or any Guarantor contained in this Indenture or any Note
Guarantee (other than a default in the performance, or breach, of a
covenant or warranty which is specifically dealt with in clauses (a), (b)
or (c) above) and continuance of such default or breach for a period of 30
days after written notice shall have been given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding;
(e) (i) one or more defaults in the payment of principal of or premium, if
any, on Indebtedness of Holdings or any Restricted Subsidiary aggregating
$10,000,000 or more, when the same becomes due and payable at the Stated
Maturity thereof, and such default or defaults shall have continued after
any applicable grace period and shall not have been cured or waived or (ii)
Indebtedness of Holdings or any Restricted Subsidiary aggregating
$10,000,000 or more shall have been accelerated or otherwise declared due
and payable, or required to be prepaid or repurchased (other than by
regularly scheduled required prepayment) prior to the Stated Maturity
thereof;
(f) one or more final, non-appealable judgments or orders shall be rendered
against Holdings or any Restricted Subsidiary for the payment of money,
either individually or in an aggregate amount, in excess of $10,000,000
(net of any amounts that are fully covered by insurance) and shall not be
discharged and there shall have been a period of 60 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, was not in effect;
(g) any Note Guarantee of a Material Subsidiary or group of Restricted
Subsidiaries that, taken together, would constitute a Material Subsidiary
ceases to be in full force and effect or is declared null and void or any
Material Subsidiary or group of Restricted Subsidiaries that, taken
together, would constitute a Material Subsidiary denies that it has any
further liability under any Note Guarantee, or gives notice to such effect
(other than by reason of the termination of this Indenture or the release
of any such Note Guarantee in accordance with this Indenture);
(h) Holdings or any Material Subsidiary or group of Restricted Subsidiaries
that, taken together, would constitute a Material Subsidiary pursuant to or
within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an involuntary
case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
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(iv) makes a general assignment for the benefit of its creditors, or
(v) shall admit in writing its inability to pay debts generally.
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against Holdings or any Material Subsidiary or group
of Restricted Subsidiaries that, taken together, would constitute a
Material Subsidiary in an involuntary case;
(ii) appoints a custodian of Holdings or any Material Subsidiary or
group of Restricted Subsidiaries that, taken together, would
constitute a Material Subsidiary or for all or substantially all of
the property of Holdings or any Material Subsidiary or group of
Restricted Subsidiaries that, taken together, would constitute a
Material Subsidiary; or
(iii) orders the liquidation of Holdings or any Material Subsidiary,
or group of Restricted Subsidiaries that, taken together, would
constitute a Material Subsidiary; and the order or decree remains
unstayed and in effect for 60 consecutive days.
Section 6.2 Acceleration.
-------------
If an Event of Default (other than as specified in paragraphs (h)
or (i) of Section 6.1) shall, occur and be continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Notes then
outstanding, by written notice to the Company, may, and the Trustee, upon
receipt of the written request and indemnity satisfactory to it from such
Holders, shall declare the principal of, premium, if any, Additional Interest,
if any, and accrued interest on all of the outstanding Notes immediately due and
payable. Upon any such declaration all such amounts payable in respect of the
Notes shall become immediately due and payable. If an Event of Default specified
in paragraphs (h) or (i) of Section 6.1 above occurs and is continuing, then the
principal of, premium, if any, Additional Interest, if any, and accrued interest
on all of the outstanding Notes shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder of Notes.
At any time after a declaration of acceleration, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to the Company and the Trustee, may rescind
such declaration and its consequences if (a) the Company has paid or deposited
with the Trustee a sum sufficient to pay (i) all overdue interest and Additional
Interest,
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if any, on all outstanding Notes, (ii) all unpaid principal of and premium, if
any, on any outstanding Notes that has become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the Notes,
(iii) to the extent that payment of such interest is lawful, interest upon
overdue interest, Additional Interest, if any, and overdue principal at the rate
borne by the Notes, (iv) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and (b) all Events of Default, other
than the non-payment of amounts of principal of, premium, if any, Additional
Interest, if any, or interest on the Notes that has become due solely by such
declaration of acceleration, have been cured or waived. No such rescission shall
affect any subsequent default or impair any right consequent thereon.
Section 6.3 Other Remedies.
---------------
If an Event of Default occurs and is continuing, the Trustee may,
subject to Article 10, pursue any available remedy to collect the payment of
principal, premium, if any, Additional Interest, if any, and interest on the
Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.4 Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in aggregate principal amount
of the outstanding Notes may, on behalf of the Holders of all the Notes, waive
any past Defaults, except a Default in the payment of the principal of, premium,
if any, Additional Interest, if any, or interest on any Note, or in respect of a
covenant or provision which under this Indenture cannot be modified or amended
without the consent of the Holder of each Note outstanding. Upon such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section 6.5 Control by Majority.
-------------------
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. Holders may not enforce this Indenture or the Notes, however,
except as provided in this Indenture. In addition, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in personal liability.
<PAGE>
74
Section 6.6 Limitation on Suits.
-------------------
No individual Holder of any of the Notes has any right to
institute any proceeding with respect to this Indenture or any remedy hereunder,
unless the Holders of at least 25% in aggregate principal amount of the
outstanding Notes have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceeding as Trustee under the Notes and this
Indenture, the Trustee has failed to institute such proceeding within 60 days
after receipt of such notice and the Trustee, within such 60-day period, has not
received directions inconsistent with such written request by Holders of a
majority in aggregate principal amount of the outstanding Notes.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
Section 6.7 Rights of Holders of Notes to Receive Payment.
----------------------------------------------
Notwithstanding any other provision of this Indenture and subject
to Article 10 and Section 11.2, the right of any Holder of a Note to receive
payment of principal, premium and Additional Interest, if any, and interest on
the Note, on or after the respective due dates expressed in the Note (including
in connection with an offer to purchase), or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 6.8 Collection Suit by Trustee.
--------------------------
<PAGE>
75
If an Event of Default specified in Section 6.1(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Additional Interest, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
--------------------------------
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7 out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a Lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties that the Holders may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities.
----------
If the Trustee collects any money pursuant to this Article, it shall,
subject to Article 10, pay out the money in the following order:
First: to the Trustee, its agents and counsel for amounts due under
Section 7.7, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses
of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Additional Interest, if any, and interest,
ratably, without
<PAGE>
76
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Additional Interest, if any
and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.7, or a suit by Holders of more than 10%
in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee
and reasonably conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or
not they
<PAGE>
77
reasonably conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of any mathematical calculations or
other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section 7.1;
(ii) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved by a court of competent
jurisdiction that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to the
paragraphs of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with Holdings. Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.
Section 7.2 Rights of Trustee.
------------------
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or purportedly presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
<PAGE>
78
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from Holdings shall be sufficient if signed
by an Officer of Holdings.
(f) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights or powers under this Indenture at
the request or direction of any of the Holders unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
any loss, liability or expense that might be incurred by it in compliance with
such request or direction.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any document, but the Trustee, in its judgment, may
make such further inquiry or investigation into such facts or matters as it may
see fit and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of Holdings, personally or by agent or attorney at the sole cost of Holdings,
and shall incur no liability or additional liability of any kind by reason of
such inquiry or investigation.
(h) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(i) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
Default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture.
(j) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
Section 7.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with Holdings or any Affiliate
of Holdings with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
---------------------
<PAGE>
79
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to Holdings or upon Holdings' direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.5 Notice of Defaults.
------------------
If a Default or Event of Default occurs and is continuing and if
it is actually known to a Responsible Officer of the Trustee, the Trustee shall
mail to Holders of Notes as it appears on the Registrar a notice of the Default
or Event of Default within 10 days after it occurs. Except in the case of a
Default or Event of Default relating to the payment of principal or interest on
any Note, the Trustee may withhold the notice if it determines, in good faith,
that withholding the notice is in the interests of the Holders of the Notes.
Section 7.6 Reports by Trustee to Holders of the Notes.
------------------------------------------
Within 60 days after each April 15 beginning with the April 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA (S) 313(a) (but if no
event described in TIA (S) 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA (S) 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders
of Notes shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA (S) 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange and of any delisting thereof.
Section 7.7 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time
compensation for its acceptance of this Indenture and services as the Company
and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. Holdings shall reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
compensation, disbursements and expenses of the Trustee's agents and counsel.
2.11 The Company shall fully indemnify the Trustee and any predecessor
Trustee against any and all losses, damages, claims, liabilities or expenses
incurred by it
<PAGE>
80
including taxes (other than taxes based upon, measured by or determined by the
income of the Trustee) arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company (including this Section
7.7) and defending itself against any claim (whether asserted by the Company or
any Holder or any other person) or liability in connection with the acceptance,
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, damage, claim, liability or expense may be attributable to
its negligence or bad faith. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. Failure by the Trustee to so notify
the Company shall not relieve the Company of its obligations hereunder, except
to the extent that the Company is actually prejudiced thereby. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel. Holdings need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(h) or (i) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
Section 7.8 Replacement of Trustee.
----------------------
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if: (a) the Trustee fails to comply with Section 7.10; (b)
the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law; (c) a custodian or
public officer takes charge of the Trustee or its property; or (d) the Trustee
becomes incapable of acting.
<PAGE>
81
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by Holdings.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee, at the expense of the Company.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
Section 7.9 Successor Trustee by Merger, etc.
--------------------------------
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10 Eligibility; Disqualification.
-----------------------------
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 7.11 Preferential Collection of Claims Against Holdings.
--------------------------------------------------
<PAGE>
82
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
Section 7.12 Trustee's Application for Instructions from the
-----------------------------------------------
Company
-------
Any application by the Trustee for written instructions from the
Company, may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
five Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE 8
DEFEASANCE AND COVENANT DEFEASANCE; DISCHARGE
Section 8.1 Option to Effect Defeasance or Covenant Defeasance.
--------------------------------------------------
Holdings may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.2 or 8.3 be applied to all outstanding Notes and Notes
Guarantees upon compliance with the conditions set forth below in this Article
8.
Section 8.2 Defeasance and Discharge.
------------------------
<PAGE>
83
Upon Holdings' exercise under Section 8.1 of the option applicable to
this Section 8.2, Holdings shall, subject to the satisfaction of the conditions
set forth in Section 8.4, be deemed to have been discharged from its obligations
with respect to all outstanding Notes and the related Guarantees on the date the
conditions set forth below are satisfied (hereinafter, "Defeasance"). For this
purpose, Defeasance means that Holdings shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.5 and the other Sections of this Indenture referred to in (a) and (b) below,
and to have satisfied all its other obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of Holdings, shall
execute proper instruments acknowledging the same), except for the following
provisions which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Notes to receive, solely
from the trust fund described in Section 8.4, and as more fully set forth in
such Section 8.4, payments in respect of the principal of, premium, if any,
Additional Interest, if any, and interest on such Notes when such payments are
due, (b) Holdings' obligations with respect to such Notes under Article 2 and
Section 4.2, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and Holdings' obligations in connection therewith and (d) this
Article 8. Subject to compliance with this Article 8, Holdings may exercise its
option under this Section 8.2 notwithstanding the prior exercise of its option
under Section 8.3.
Section 8.3 Covenant Defeasance.
-------------------
Upon Holdings' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, Holdings and each Guarantor shall, subject to
the satisfaction of the conditions set forth in Section 8.4 hereof, be released
from their obligations under the covenants contained in Sections 4.3, 4.4, 4.7,
4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and clauses (ii), (iii)
and (iv) of Section 5.1 hereof with respect to the outstanding Notes on and
after the date the conditions set forth in Section 8.4 are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, Holdings and each
Guarantor may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision herein
or in any other document and such omission to comply shall not constitute a
Default or an Event of Default under Section 6.1, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon Holdings' exercise under Section 8.1 of the option
applicable to this Section 8.3, subject to the satisfaction of the conditions
set forth in Section 8.4, Sections 6.1(c) through 6.1(f) shall not constitute
Events of Default.
Section 8.4 Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
<PAGE>
84
The following shall be the conditions to the application of either Section
8.2 or 8.3 to the outstanding Notes:
(a) Holdings must irrevocably deposit or cause to be deposited with the
Trustee, as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Notes, money in an
amount, or non-callable U.S. Government Obligations which through the
scheduled payment of principal and interest thereon will provide money in
an amount, or a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay and
discharge the principal of, premium, if any, Additional Interest, if any,
and interest on the outstanding Notes on the Stated Maturity (or upon
redemption, if applicable) of such principal, premium, if any, Additional
Interest, if any, or installment of interest;
(b) in the case of an election under Section 8.2, Holdings shall have
delivered to the Trustee an Opinion of Counsel stating that Holdings has
received from, or there has been published by, the Internal Revenue Service
a ruling, or since the date of the final offering memorandum, there has
been a change in applicable federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that the Holders
of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Defeasance had not
occurred;
(c) in the case of an election under Section 8.3, Holdings shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Notes outstanding will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default will have occurred and be continuing on
the date of such deposit or, insofar as an event of bankruptcy under
paragraphs (h) and (i) of Section 6.1 is concerned, at any time during the
period ending on the 91st day after the date of such deposit;
(e) such Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under, this Indenture, the Senior
Credit Agreement or any other material agreement or instrument to which
Holdings or any Guarantor is a party or by which it is bound;
(f) Holdings shall have delivered to the Trustee an Opinion of Counsel to
the effect that (i) the trust funds will not be subject to any rights of
holders of Senior Indebtedness under the subordination provisions of
Article 10 and (ii) after the 91st day following the deposit or after the
date such opinion is delivered, the trust funds will not
<PAGE>
85
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) Holdings shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by Holdings with the intent of
preferring the Holders of Notes or any Note Guarantee over the other
creditors of either Holdings or any Guarantor with the intent of hindering,
delaying or defrauding creditors of either Holdings or any Guarantor; and
(h) Holdings shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for relating to either the Defeasance or the Covenant Defeasance,
as the case may be, have been complied with.
Section 8.5 Deposited Money and U.S. Government Obligations to
--------------------------------------------------
Be Held in Trust; Other Miscellaneous Provisions.
- ------------------------------------------------
(a)
Subject to Section 8.6, all money and non-callable U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 in respect of the outstanding Notes shall be
held in trust and applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including Holdings acting as Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
Holdings shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 8.4 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to Holdings from time to time upon the request of
Holdings any money or non-callable U.S. Government Obligations held by it as
provided in Section 8.4 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a)), are in excess of the amount thereof that would then be required to be
deposited to effect an equivalent Defeasance or Covenant Defeasance.
<PAGE>
86
Section 8.6 Repayment to Holdings.
---------------------
Any money deposited with the Trustee or any Paying Agent, or then held by
Holdings, in trust for the payment of the principal of, premium, if any,
Additional Interest, if any, or interest on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest has become due
and payable shall be paid to Holdings on its request or (if then held by
Holdings) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to Holdings for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of Holdings as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of Holdings cause to be published
once, in The New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to Holdings.
Section 8.7 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable U.S. Government Obligations in accordance with Section 8.2 or
8.3, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then Holdings' obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.2 or 8.3 until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 8.2 or 8.3, as the case may be;
provided, however, that, if Holdings makes any payment of principal of, premium,
if any, Additional Interest, if any, or interest on any Note following the
reinstatement of its obligations, Holdings shall be subrogated to the rights of
the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
Section 8.8 Discharge.
----------
This Indenture will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of the Notes as expressly
provided for in this Indenture and the compensation and indemnification
provisions relating to the Trustee) and the Trustee, at the expense of Holdings,
will execute proper instruments acknowledging satisfaction and discharge of this
Indenture when (a) either (i) all the Notes theretofore authenticated and
delivered (other than destroyed, lost or stolen Notes which have been replaced
or paid and Notes for whose payment money has been deposited in trust with the
Trustee or any paying agent or segregated and held in trust by Holdings and
thereafter repaid to Holdings or discharged from such trust as provided for in
this Indenture) have been delivered to the Trustee for cancellation or (ii) all
Notes not theretofore delivered to the Trustee for cancellation (x) have become
due and payable, (y) will become due and payable at Stated Maturity within one
year or (z) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the
<PAGE>
87
giving of notice of redemption by the Trustee in the name, and at the expense,
of Holdings, and Holdings has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for such purpose an amount sufficient
to pay and discharge the entire Indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation, for principal of, premium, if any,
Additional Interest, if any, and interest on the Notes to the date of such
deposit (in the case of Notes which have become due and payable) or to the
Stated Maturity or redemption date, as the case may be, (b) Holdings has paid or
caused to be paid all sums payable under this Indenture by Holdings, and (c)
Holdings has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided in this Indenture
relating to the satisfaction and discharge of this Indenture have been complied
with.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1 Without Consent of Holders of Notes.
-----------------------------------
Notwithstanding Section 9.2, the Company and the Trustee may (subject
to Section 10.14) amend or supplement this Indenture or the Notes without notice
to or the consent of any Holder of a Note: (a) to evidence the succession of
another Person to the Company, a Guarantor or any other obligor on the Notes,
and the assumption by any such successor of the covenants of the Company or such
obligor or Guarantor in this Indenture and in the Notes and in any Note
Guarantee in accordance with Article 5; (b) to add to the covenants of the
Company, any Guarantor or any other obligor upon the Notes for the benefit of
the Holders of the Notes or to surrender any right or power conferred upon the
Company or any other obligor upon the Notes, as applicable, in this Indenture,
in the Notes or in any Note Guarantee; (c) to cure any ambiguity, or to correct
or supplement any provision in this Indenture, the Notes or any Note Guarantee
which may be defective or inconsistent with any other provision in this
Indenture, the Notes or any Note Guarantee or make any other provisions with
respect to matters or questions arising under this Indenture, the Notes or any
Note Guarantee; provided that, in each case, such provisions shall not adversely
affect the interest of the Holders of the Notes; (d) to comply with the
requirements of the Commission in order to effect or maintain the qualification
of this Indenture under the TIA; (e) to add a Guarantor under this Indenture;
(f) to evidence and provide the acceptance of the appointment of a successor
Trustee under this Indenture; (g) to mortgage, pledge, hypothecate or grant a
security interest in favor of the Trustee for the benefit of the Holders of the
Notes as additional security for the payment and performance of the Company's
and any Guarantor's obligations under this Indenture, in any property, or
assets, including any of which are required to be mortgaged, pledged or
hypothecated, or in which a security is required to be granted to the Trustee
pursuant to this Indenture or otherwise; or (h) to execute the First
Supplemental Indenture, the Second Supplemental Indenture and the Third
Supplemental Indenture.
Upon the written request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture,
<PAGE>
88
and upon receipt by the Trustee of any of the documents requested by it pursuant
to Section 7.2(b), the Trustee shall join with the Company and the Guarantors in
the execution of such amended or supplemental Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, unless
such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its judgment, but shall not be obligated to, enter into such
amended or supplemental Indenture.
Section 9.2 With Consent of Holders of Notes.
--------------------------------
Except as provided below in this Section 9.2 and in Section 10.14, the
Company and the Trustee may amend or supplement this Indenture (including
Sections 4.10 and 4.15) or the Notes and/or any Note Guarantees may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, tender offer or exchange offer for, Notes), and, subject to Sections 6.4 and
6.7, any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, Additional
Interest, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture, the Notes or the Note Guarantees may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with a purchase of, tender
offer or exchange offer for, Notes). Section 2.8 shall determine which Notes are
considered to be "outstanding" for purposes of this Section 9.2.
Upon the written request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of any document requested by it pursuant to Section 7.2(b), the
Trustee shall join with the Company and the Guarantors in the execution of such
amended or supplemental Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, unless such amended or
supplemental Indenture directly affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under this
Section 9.2 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
Holdings to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any
<PAGE>
89
such amended or supplemental Indenture or waiver. Subject to Sections 6.4 and
6.7, the Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular
instance by the Company and/or the Guarantors with any provision of this
Indenture, the Notes or the Notes Guarantees. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.2 may not
(with respect to any Notes held by a non-consenting Holder):
(a) change the Stated Maturity of the principal of, or any installment of
interest on, any Note, or reduce the principal amount thereof, or premium,
if any, or the rate of interest thereon or change the coin or currency in
which the principal of any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the redemption date);
(b) following the occurrence of an Asset Sale, amend, change or modify the
obligation of Holdings to make and consummate an Excess Proceeds Offer with
respect to any Asset Sale in accordance with Section 4.10, including
amending, changing or modifying any definition relating thereto in any
manner materially adverse to the Holders of the Notes affected thereby;
(c) following the occurrence of a Change in Control, amend, change or
modify the obligation of Holdings to make and consummate a Change in
Control Offer in the event of a Change in Control in accordance with
Section 4.15, including amending, changing or modifying any definition
relating thereto in any manner materially adverse to the Holders of the
Notes affected thereby;
(d) reduce the percentage in principal amount of outstanding Notes, the
consent of whose Holders is required for any such supplemental indenture or
the consent of whose Holders is required for any waiver of compliance with
certain provisions of this Indenture;
(e) modify any of the provisions relating to supplemental indentures
requiring the consent of Holders or relating to the waiver of past defaults
or relating to the waiver of certain covenants, except to increase the
percentage of outstanding Notes required for such actions or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Note affected thereby; or
(f) amend or modify any of the provisions of this Indenture relating to any
Note Guarantee in any manner adverse to the Holders of the Notes.
In addition, any amendment to, or waiver of, the provisions of Article
10 of this Indenture (including the related definitions) that adversely affects
the rights of the Holders of the
<PAGE>
90
Notes will require the consent of the Holders of at least 66-2/3% in aggregate
principal amount of the Notes then outstanding.
Section 9.3 Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.4 Notation on or Exchange of Notes.
--------------------------------
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. Holdings in exchange
for all Notes may issue and the Trustee shall, upon receipt of an Authentication
Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.5 Trustee to Sign Amendments, etc.
-------------------------------
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not in
the judgment of the Trustee adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Company may not sign an amendment or supplemental
Indenture until its Board of Directors approves it. In executing any amended or
supplemental indenture, the Trustee shall be entitled to receive and (subject to
Section 7.1) shall be fully protected in relying upon, in addition to the
documents required by Section 12.4, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental Indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
Section 10.1 Agreement to Subordinate.
------------------------
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness, interest and other obligations of any kind evidenced by the
Notes and this Indenture
<PAGE>
91
are subordinated in right of payment, to the extent and in the manner provided
in this Article 10, to the prior payment in full in cash of all Senior
Indebtedness (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Indebtedness.
Section 10.2 Liquidation; Dissolution; Bankruptcy.
------------------------------------
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relating to the Company or to its assets, or any
liquidation, dissolution or other winding-up of the Company, whether voluntary
or involuntary, or any assignment for the benefit of creditors or other
marshaling of assets or liabilities of the Company (except in connection with
the consolidation or merger of the Company or its liquidation or dissolution
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety upon the terms and conditions described in Article
5), the holders of Senior Indebtedness will be entitled to receive payment in
full in cash or Cash Equivalents of all Senior Indebtedness, or provision shall
be made for such payment in full, before the Holders of Notes will be entitled
to receive any payment or distribution of any kind or character (other than any
payment or distribution in the form of equity securities or subordinated
securities of the Company or any successor obligor that, in the case of any such
subordinated securities, are subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding to at least the same extent as
the Notes are so subordinated (such equity securities or subordinated securities
hereinafter being "Permitted Junior Securities") and any payment made pursuant
to the provisions described in Article 8 from monies or U.S. Government
Obligations previously deposited with the Trustee) on account of principal of,
or premium, if any, or Additional Interest, if any, or interest on the Notes;
and any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than a payment or
distribution in the form of Permitted Junior Securities and payments made
pursuant to the provisions described in Article 8 from monies or U.S. Government
Obligations previously deposited with the Trustee), by set-off or otherwise, to
which the Holders of the Notes or the Trustee would be entitled but for the
provisions of this Article 10 shall be paid by the liquidating trustee or agent
or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Indebtedness or their representative or representatives
ratably according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
Section 10.3 Default on Designated Senior Indebtedness.
-----------------------------------------
(a) No payment or distribution of any assets of the Company of any kind or
character, whether in cash, property or securities (other than Permitted Junior
Securities and payments made pursuant to the provisions described in Article 8
from monies or U.S. Government Obligations previously deposited with the
Trustee), may be made by or on behalf of
<PAGE>
92
Holdings on account of principal of, premium, if any, Additional Interest, if
any, or interest on the Notes or on account of the purchase, redemption or other
acquisition of Notes upon the occurrence of any default in payment (whether at
Stated Maturity, upon scheduled installment, by acceleration or otherwise) of
principal of, premium, if any, or interest on Designated Senior Indebtedness (a
"Payment Default") until such Payment Default shall have been cured or waived in
writing or shall have ceased to exist or such Designated Senior Indebtedness
shall have been discharged or paid in full in cash or Cash Equivalents.
(b) No payment or distribution of any assets of the Company of any kind or
character, whether in cash, property or securities (other than Permitted Junior
Securities and payments made pursuant to the provisions described in Article 8
from monies or U.S. Government Obligations previously deposited with the
Trustee), may be made by or on behalf of Holdings on account of principal of,
premium, if any, Additional Interest, if any, or interest on the Notes or on
account of the purchase, redemption or other acquisition of Notes for the period
specified below (a "Payment Blockage Period") upon the occurrence of any default
or event of default with respect to any Designated Senior Indebtedness other
than any Payment Default pursuant to which the maturity thereof may be
accelerated (a "Non-Payment Default") and receipt by the Trustee of written
notice thereof from the trustee or other representative of holders of Designated
Senior Indebtedness.
The Payment Blockage Period will commence upon the date of receipt by the
Trustee of written notice from the trustee or such other representative of the
holders of the Designated Senior Indebtedness in respect of which the
Non-Payment Default exists and shall end on the earliest of:
(i) 179 days thereafter (provided that any Designated Senior
Indebtedness as to which notice was given shall not theretofore have been
accelerated);
(ii) the date on which such Non-Payment Default is cured, waived or
ceases to exist;
(iii) the date on which such Designated Senior Indebtedness is
discharged or paid in full in cash or Cash Equivalents; or
(iv) the date on which such Payment Blockage Period shall have been
terminated by written notice to the Trustee or the Company from the trustee
or such other representative initiating such Payment Blockage Period,
after which the Company will resume making any and all required payments in
respect of the Notes, including any missed payments, unless the holders of the
Designated Senior Indebtedness or their representatives have accelerated the
maturity of such Designated Senior Indebtedness. In any event, not more than one
Payment Blockage Period may be commenced during any period of 360 consecutive
days. No event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be made, the basis
for the
<PAGE>
93
commencement of a subsequent Payment Blockage Period, unless such default has
been cured or waived for a period of not less than 90 consecutive days
subsequent to the commencement of such initial Payment Blockage Period.
Section 10.4 Acceleration of Securities.
--------------------------
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
Section 10.5 When Distribution Must Be Paid Over.
-----------------------------------
In the event that, notwithstanding the provisions of Section 10.3, any
payment shall be made to the Trustee (and not paid over to the Holders of the
Notes) which is prohibited by such provisions, then and in such event such
payment shall be paid over and delivered by such Trustee to the trustee or any
other representative of holders of Designated Senior Indebtedness, as their
interest may appear, for application to Designated Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
10, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.
Section 10.6 Notice by the Company.
---------------------
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article 10.
Section 10.7 Subrogation.
-----------
After all Senior Indebtedness is paid in full in cash and until the
Notes are paid in full, Holders of Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights of
holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the Holders
of Notes have been applied to the payment of Senior Indebtedness. A distribution
made under this Article 10 to holders of Senior Indebtedness that otherwise
would have been made to
<PAGE>
94
Holders of Notes is not, as between Holdings and Holders, a payment by the
Company on the Notes.
Section 10.8 Relative Rights.
---------------
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as
between the Company and Holders of Notes, the obligation of the Company, which
is absolute and unconditional, to pay principal of and interest on the Notes in
accordance with their terms; (ii) affect the relative rights of Holders of Notes
and creditors of Holdings other than their rights in relation to holders of
Senior Indebtedness; or (iii) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Indebtedness to receive distributions
and payments otherwise payable to Holders of Notes. If the Company fails because
of this Article 10 to pay principal of or interest on a Note on the due date,
the failure is still a Default or Event of Default.
Section 10.9 Subordination May Not Be Impaired by the Company.
------------------------------------------------
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
The Trustee and Holders agree that they will not challenge the
validity, enforceability or perfection of any Senior Indebtedness or the liens,
guarantees and security interests securing the same and that as between the
holders of the Senior Indebtedness on the one hand and the Trustee and Holders
on the other, the terms hereof shall govern even if all or part of the Senior
Indebtedness or such liens and security interests are voided, disallowed,
subordinated, set aside or otherwise invalidated in any judicial proceeding or
otherwise, regardless of the theory upon which such action is premised.
Without in any way limiting the generality of this Section 10.9, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Trustee or the Holders and without impairing or releasing
the subordination provided in this Article 10 or the obligations hereunder of
the Holders to the holders of Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness, the Senior Credit
Agreement or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding or secured; (b) sell, exchange, release,
foreclose against or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company, any Subsidiary thereof or any
other Person.
<PAGE>
95
Section 10.10 Distribution or Notice to Representative.
----------------------------------------
Whenever a distribution is to be made or a notice given to holders of any
Senior Indebtedness, the distribution may be made and the notice given to their
representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such representative(s) or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, all holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
Section 10.11 Rights of Trustee and Paying Agent.
----------------------------------
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes, unless a Responsible Officer of the Trustee shall have received at
its Corporate Trust Office at least three Business Days prior to the date of
such payment written notice of facts that would cause the payment of any
obligations with respect to the Notes to violate this Article 10. Only the
Company or a representative may give the notice. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.7.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
Section 10.12 Authorization to Effect Subordination.
-------------------------------------
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10 and the subordination of the Note Guarantees as provided in Section
11.2, and appoints the Trustee to act as such Holder's attorney-in-fact for any
and all such purposes, including, in the event of any dissolution, winding up,
liquidation or reorganization of Holdings or any Subsidiary (whether in
bankruptcy, insolvency, receivership, reorganization or similar proceedings or
upon an assignment for the benefit of creditors or otherwise), the filing of a
claim for the unpaid balance of its Notes in the form required in those
proceedings. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.9 at least
30 days before the expiration of the time to file such claim, the
representatives are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
<PAGE>
96
Section 10.13 Amendments.
----------
The provisions of this Article 10 or Section 11.2 (including, without
limitation, any definitions or other sections included by reference or
incorporation or the terms and conditions of the Note Guarantees) shall not be
amended or modified without the written consent of the holders of all Senior
Indebtedness.
ARTICLE 11.
NOTE GUARANTEES
Section 11.1 Guarantee.
---------
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of, premium, if any, Additional Interest, if any, and interest on the Notes will
be promptly paid by the Company in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of,
premium, if any, Additional Interest, if any, and interest on the Notes, if any,
if lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid by the Company in full or
performed by the Company, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same will be promptly paid by the Company in
full when due or performed by the Company in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due by the Company of any amount so guaranteed or any
performance so guaranteed which failure continues for three days after demand
therefor is made to the Company for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against Holdings, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment (except as specifically
provided in the preceding paragraph), filing of claims with a court in the event
of insolvency or bankruptcy of Holdings, any right to require a proceeding first
against Holdings, protest, notice and all demands (except as specifically
provided in the preceding paragraph) whatsoever and covenant that this Note
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture.
<PAGE>
97
If any Holder or the Trustee is required by any court or otherwise to return
to the Company, the Guarantors or any custodian, trustee, liquidator or other
similar official acting in relation to either the Company or the Guarantors, any
amount paid by either to the Trustee or such Holder, this Note Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee, failing payment when due by the Company
which failure continues for three days after demand therefor is made to the
Company. The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
Section 11.2 Subordination of Note Guarantee.
-------------------------------
The Obligations of each Guarantor under its Note Guarantee pursuant to
this Article 11 shall be junior and subordinated to the prior payment in full in
cash of the Senior Indebtedness of such Guarantor on the same basis as the Notes
are junior and subordinated to Senior Indebtedness of Holdings. For the purposes
of the foregoing sentence, the Trustee and the Holders shall have the right to
receive and/or retain payments by any of the Guarantors only at such times as
they may receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article 10 hereof.
Section 11.3 Limitation on Guarantor Liability.
---------------------------------
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor under its Note Guarantee and this Article 11 shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 11, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
<PAGE>
98
Section 11.4 Execution and Delivery of Note Guarantee.
----------------------------------------
To evidence the Note Guarantees set forth in Section 11.1, Holdings hereby
agrees to cause a notation of such Note Guarantee substantially in the form of
Exhibit E to be endorsed by manual or facsimile signature by an Officer of each
Guarantor on each Note authenticated and delivered by the Trustee and that a
supplemental indenture shall be executed on behalf of each Guarantor by its
President, Executive or Senior Vice President, Treasurer or one of its Vice
Presidents. Holdings shall cause all future Guarantors to execute a Supplemental
Indenture substantially in the form of Exhibit F (or, in the case of the initial
Guarantors, Exhibit I).
Each Guarantor hereby agrees that its Note Guarantee set forth in Section
11.1 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on any Supplemental Indenture or on the
Note Guarantee no longer holds that office at the time the Trustee authenticates
the Note on which a Note Guarantee is endorsed, the Note Guarantee shall be
valid and obligatory nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantors.
In the event that Holdings creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.16 hereof
Holdings shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Note Guarantees in accordance with Section 4.16 and this
Article 11, to the extent applicable; provided that all Subsidiaries that have
properly been designated as Unrestricted Subsidiaries in accordance with this
Indenture (a) will not be subject to the requirements of Section 4.16 and (b) be
released from all obligations under any Note Guarantee, in each case for so long
as they continue to constitute Unrestricted Subsidiaries.
Section 11.5 Releases Following Sale of Assets or Capital Stock.
--------------------------------------------------
The Note Guarantee of a Guarantor will be released:
(a) in connection with any sale or other disposition of all or
substantially all of the assets of such Guarantor (including by way of
merger or consolidation), if Holdings applies the Excess Proceeds of that
sale or other disposition in accordance with the applicable provisions of
this Indenture, including, without limitation, Section 4.10 or Article 10;
or
<PAGE>
99
(b) in connection with any sale of all of the Capital Stock of a
Guarantor to any Person that is not an Affiliate of Holdings, if Holdings
applies the Excess Proceeds of that sale in accordance with the applicable
provisions of this Indenture, including, without limitation, Section 4.10
or Article 10; or
(c) if Holdings designates any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in accordance with this Indenture.
The Trustee will provide any written confirmation or evidence of the
termination of such Note Guarantee as reasonably required by the representative.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 11.
ARTICLE 12.
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S) 318(c), the imposed duties shall control.
Section 12.2 Notices.
-------
Any notice or communication by the Company, any Guarantor or the Trustee to
the others is duly given if in writing and delivered in person or mailed by
first class mail (registered or certified, return receipt requested), or sent by
telecopier or overnight courier guaranteeing next day delivery, to the other's
address.
If to the Company and/or any Guarantor:
LifePoint Hospitals Holdings, Inc.
4525 Harding Road, Suite 300
Nashville, Tennessee 37205
Telecopier No.: (615) 344-6276
Attention: Chief Financial Officer
<PAGE>
100
With a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Telecopier No.: (212) 259-6333
Attention: Morton A. Pierce, Esq.
If to the Trustee:
Citibank N.A.
111 Wall Street, 5th Floor
New York, New York 10043
Telecopier No.: (212) 657-3862
Attention: Global Agency & Trust Services
Re: LifePoint Hospitals Holdings, Inc.
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, or by overnight air courier guaranteeing next day delivery to its address
shown on the register kept by the Registrar. Any notice or communication shall
also be so mailed to any Person described in TIA (S) 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 12.3 Communication by Holders of Notes with Other Holders
----------------------------------------------------
of Notes.
- --------
<PAGE>
101
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 12.4 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section
12.5) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.5)
stating that, in the opinion of such counsel, all such conditions precedent
and covenants have been satisfied.
Section 12.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 12.6 Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
<PAGE>
102
Section 12.7 No Personal Liability of Directors, Officers,
--------------------------------------------
Employees and Stockholders.
- ---------------------------
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes, this Indenture, the Note
Guarantees, the Registration Rights Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
Section 12.8 Governing Law.
-------------
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
Section 12.9 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of Holdings or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.10 Successors.
----------
All agreements of the Company in this Indenture and the Notes shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
Section 12.11 Severability.
------------
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12 Counterpart Originals; Acceptance by Trustee.
--------------------------------------------
<PAGE>
103
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement. The Trustee hereby accepts the trusts in this Indenture declared or
provided, upon the terms and conditions hereinabove set forth.
Section 12.13 Table of Contents, Headings, etc.
--------------------------------
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
104
SIGNATURES
Dated as of May 11, 1999
HEALTHTRUST, INC.--THE HOSPITAL COMPANY
By: /s/ R. Milton Johnson
Name: R. Milton Johnson
Title: Vice President
CITIBANK N.A.
as Trustee
By: /s/ Wafaa Orfy
Name: Wafaa Orfy
Title: Senior Trust Officer
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of May 11, 1999 (this "First
Supplemental Indenture"), is by and among Healthtrust, Inc.--The Hospital
Company, a Delaware corporation (the "Company"), LifePoint Hospitals, Inc., a
Delaware corporation("LifePoint"), and Citibank N.A., as trustee (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company and the Trustee are parties to an indenture dated as
May 11, 1999 (as amended, the "Indenture"), providing for the issuance of an
aggregate principal amount of up to $185,000,000 of 10 3/4% Senior Subordinated
Notes due 2009 (the "Notes");
WHEREAS, the Indenture provides that upon the Company transferring the
America Group assets to LifePoint, the Company will cause LifePoint to assume,
by a supplemental indenture the Company's obligation for the due and punctual
payment of the principal of, premium, if any, Additional Interest, if any, and
interest on all the Notes and the performance and observance of every covenant
of the Indenture on the part of the Company to be performed or observed; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this First Supplemental Indenture.
NOW, THEREFORE, for and in consideration of the foregoing premises, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Notes, as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
-----------------
shall have the meanings assigned to them in the Indenture.
2. Assumption by LifePoint. LifePoint hereby assumes the due and punctual
-----------------------
payment of the principal of, premium, if any, Additional Interest, if any, and
interest, on all outstanding Notes issued pursuant to the Indenture and the
performance of every obligation and covenant set forth in the Indenture to be
performed or observed on the part of the Company or Triad. LifePoint is hereby
substituted for, and may exercise every right and power of, the Company under
the Indenture with the same effect as if LifePoint had been named as the Company
in the Indenture, and LifePoint is a successor corporation under the Indenture.
3. Release of the Company. Upon the America Group assets being validly
----------------------
transferred to LifePoint, the execution and delivery of this First Supplemental
Indenture by the Company, LifePoint and the Trustee and the execution and
delivery of the LifePoint Assumption Agreement to the Registration Rights
Agreement by the Company and LifePoint, the Company will be fully,
unconditionally and irrevocably released from all liabilities, obligations and
covenants under the Indenture and the outstanding Notes.
1
<PAGE>
4. Notation on Notes. Notes authenticated and delivered after the date
-----------------
hereof may bear the following notation, which may be stamped or imprinted
thereon:
"In connection with the transfer by Healthtrust, Inc.--The Hospital
Company (the "Healthtrust") of the America Group assets to LifePoint
Hospitals, Inc. ("LifePoint") and pursuant to the First Supplemental
Indenture dated as of May 11, 1999, LifePoint has assumed the due and
punctual payment of the principal of, premium, if any, Additional Interest,
if any, and interest, on this Note and the performance of every obligation
and covenant of the Indenture on the part of Healthtrust or LifePoint to be
performed or observed and Healthtrust has been fully, unconditionally and
irrevocably released from all obligations hereunder."
5. Notices. For purposes of Section 12.2 of the Indenture, the address
-------
for notices to LifePoint shall be:
LifePoint Hospitals, Inc.
4525 Harding Road, Suite 300
Nashville, Tennessee 37205
Attention: General Counsel
6. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK
----------------------
SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE.
7. Counterparts. The parties may sign any number of copies of this First
------------
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. Effect of Headings. The Section headings herein are for convenience
------------------
only and shall not affect the construction hereof.
9. The Trustee. The Trustee shall not be responsible in any manner
-----------
whatsoever for or in respect of the validity or sufficiency of this First
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Company and LifePoint.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
2
<PAGE>
HEALTHTRUST, INC.--THE HOSPITAL COMPANY
By: /s/ R. Milton Johnson
------------------------
Name: R. Milton Johnson
Title: Vice President
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
CITIBANK N.A.
By: /s/ Citibank N.A.
--------------------
3
<PAGE>
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of May 11, 1999 (this "Second
Supplemental Indenture") is by and among LifePoint Hospitals, Inc., a Delaware
corporation ("LifePoint"), LifePoint Hospitals Holdings, Inc., a Delaware
corporation ("Holdings"), and Citibank N.A., as trustee (the "Trustee").
W I T N E S S E T H
WHEREAS, Healthtrust, Inc.--The Hospital Company, a Delaware corporation
("Healthtrust"), and the Trustee are parties to an indenture dated as May 11,
1999 (as amended, the "Indenture"), providing for the issuance of an aggregate
principal amount of up to $185,000,000 of 10 3/4% Senior Subordinated Notes due
2009 (the "Notes");
WHEREAS, pursuant to the First Supplemental Indenture, dated as of May 11,
1999, to the Indenture, LifePoint assumed all of the obligations of Healthtrust
under the Indenture and the Notes;
WHEREAS, the Indenture provides that upon LifePoint transferring
substantially all of its assets to Holdings, LifePoint will cause Holdings to
assume, by a supplemental indenture LifePoint's obligation for the due and
punctual payment of the principal of, premium, if any, Additional Interest, if
any, and interest on all the Notes and the performance and observance of every
covenant of this Indenture on the part of LifePoint to be performed or observed;
and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Second Supplemental Indenture.
NOW, THEREFORE, for and in consideration of the foregoing premises, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Notes, as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
-----------------
shall have the meanings assigned to them in the Indenture.
2. Assumption by Holdings. Holdings hereby assumes the due and punctual
----------------------
payment of the principal of, premium, if any, Additional Interest, if any, and
interest, on all outstanding Notes issued pursuant to the Indenture and the
performance of every obligation and covenant set forth in the Indenture to be
performed or observed on the part of the Company or Holdings. Holdings is
hereby substituted for, and may exercise every right and power of, the Company
under the Indenture with the same effect as if Holdings had been named as the
Company in the Indenture, and Holdings is a successor corporation under the
Indenture.
3. Release of LifePoint. Upon the America Group assets being validly
--------------------
transferred to Holdings, the execution and delivery of this Second Supplemental
Indenture by LifePoint, Holdings and the Trustee and the execution and delivery
of the
1
<PAGE>
Holdings Assumption Agreement to the Registration Rights Agreement by LifePoint
and Holdings, LifePoint will be fully, unconditionally and irrevocably released
from all liabilities, obligations and covenants under the Indenture and the
outstanding Notes.
4. Notation on Notes. Notes authenticated and delivered after the date
-----------------
hereof may bear the following notation, which may be stamped or imprinted
thereon:
"In connection with the transfer by LifePoint Hospitals, Inc. (the
"Company") of the America Group assets to LifePoint Hospitals Holdings,
Inc. ("Holdings") and pursuant to the Second Supplemental Indenture dated
as of May 11, 1999, Holdings has assumed the due and punctual payment of
the principal of, premium, if any, Additional Interest, if any, and
interest, on this Note and the performance of every obligation and covenant
of the Indenture on the part of the Company or Holdings to be performed or
observed and LifePoint has been fully, unconditionally and irrevocably
released from all obligations hereunder."
5. Notices. For purposes of Section 12.2 of the Indenture, the address
-------
for notices to Holdings shall be:
LifePoint Hospitals Holdings, Inc.
4525 Harding Road, Suite 300
Nashville, Tennessee 37205
Attention: General Counsel
6. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK
----------------------
SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE.
7. Counterparts. The parties may sign any number of copies of this Second
------------
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. Effect of Headings. The Section headings herein are for convenience
------------------
only and shall not affect the construction hereof.
9. The Trustee. The Trustee shall not be responsible in any manner
-----------
whatsoever for or in respect of the validity, legality or sufficiency of this
Second Supplemental Indenture or for or in respect of the recitals contained
herein, all of which recitals are made solely by the Company and Holdings.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
--------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
CITIBANK N.A.
By: /s/ Citibank N.A.
--------------------
3
<PAGE>
THIS THIRD SUPPLEMENTAL INDENTURE (this "Third Supplemental
Indenture"), dated as of May 11, 1999, is by and among the parties identified as
a Guarantor on the signature pages hereto (each, a "Guaranteeing Subsidiary" and
collectively, the "Guaranteeing Subsidiaries"), each a subsidiary of LifePoint
Hospitals Holdings, Inc. (or its permitted successor), a Delaware corporation
("Holdings"), Holdings and Citibank N.A., as trustee under the indenture
referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, Healthtrust, Inc.--The Hospital Company, a Delaware
corporation ("Healthtrust"), has heretofore executed and delivered to the
Trustee the indenture (as amended, the "Indenture"), dated as of May 11, 1999
providing for the issuance of an aggregate principal amount of up to
$185,000,000 of 10 3/4% Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, LifePoint Hospitals, Inc., a Delaware corporation
("LifePoint"), has assumed all of the obligations of Healthtrust under the
Indenture and the Notes pursuant to the First Supplemental Indenture dated as of
May 11, 1999;
WHEREAS, Holdings has assumed all of the obligations of LifePoint
under the Indenture and the Notes pursuant to the Second Supplemental Indenture
dated as of May 11, 1999;
WHEREAS, the Indenture provides that, following the contribution by
Holdings of certain assets to its direct, wholly-owned subsidiary, LifePoint
Holdings 2, LLC and the contribution by LifePoint Holdings 2, LLC of certain of
its assets to its direct, wholly-owned subsidiary, LifePoint Holdings 3, Inc.
and immediately prior to the Spin-Off Distribution, the Guaranteeing
Subsidiaries shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guaranteeing Subsidiaries shall unconditionally guarantee
all of Holdings' obligations under the Notes and the Indenture on the terms and
conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Third Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiaries and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
-----------------
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. Each of the Guaranteeing Subsidiaries
----------------------
hereby agrees as follows:
<PAGE>
(a) To jointly and severally Guarantee to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes or the obligations of
Holdings hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid by the Company in full when due, whether at maturity,
by acceleration, redemption or otherwise, and interest on
the overdue principal of and interest on the Notes, if any,
if lawful, and all other obligations of Holdings to the
Holders or the Trustee hereunder or thereunder will be
promptly paid by the Company in full or performed by the
Company, all in accordance with the terms hereof and
thereof; and
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same will
be promptly paid by the Company in full when due or
performed by the Company in accordance with the terms of the
extension or renewal, whether at stated maturity, by
acceleration or otherwise.
Failing payment when due by the Company of any amount so
guaranteed or any performance so guaranteed which failure
continues for three days after demand therefor is made to
the Company for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the
Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any
provisions hereof or thereof, the recovery of any judgment
against Holdings, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Guarantor.
(c) The following is hereby waived: diligence, presentment, demand of
payment (except as specifically provided in (a) above), filing of
claims with a court in the event of insolvency or bankruptcy of
Holdings, any right to require a proceeding first against
Holdings, protest, notice and all demands (except as specifically
provided in (a) above) whatsoever.
2
<PAGE>
(d) This Note Guarantee shall not be discharged except (i) by
complete performance of the obligations contained in the Notes
and the Indenture or (ii) as provided in Section 5 hereof.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to Holdings, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting
in relation to either Holdings or the Guarantors, any amount paid
by either to the Trustee or such Holder, this Note Guarantee, to
the extent theretofore discharged, shall be reinstated in full
force and effect.
(f) The Guaranteeing Subsidiaries shall not be entitled to any right
of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not due
and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee, failing
payment when due by the Company which failure continues for three
days after demand therefor is made to the Company.
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Note Guarantee.
(i) The obligations hereunder shall be subject to the subordination
provisions set forth in Article 10 of the Indenture.
(j) Notwithstanding any provision contained in this Third
Supplemental Indenture, the Indenture or the Note Guarantee of
Dodge City Healthcare Group, L.P., a Kansas limited partnership
("Dodge Sub"), the amount of the Guarantee of Dodge Sub contained
in this Third Supplemental Indenture, the Indenture and such Note
Guarantee shall be limited to 50% of the value of the assets of
Dodge Sub (as determined from the audited financial statements of
Dodge Sub as of the close of the immediately preceding fiscal
year of Dodge Sub); provided that such limitation to the
Guarantee of Dodge Sub shall no longer be effective, and
3
<PAGE>
shall no longer apply, after the Amended and Restated Limited
Partnership Agreement of Dodge Sub, effective as of March 1,
1995, among Columbia/HCA of Dodge City, Inc., American Medicorp
Development Co., Western Plains Regional Hospital, Inc. and Dodge
City Outpatient Surgical Facility, Inc., as amended, is modified
(as contemplated by Section 4.23(b) of the Indenture) to permit
the Guarantee by Dodge Sub of all of the obligations of Holdings
under the Notes and the Indenture.
(k) Notwithstanding any provision contained in this Third
Supplemental Indenture, the Indenture or the Note Guarantee of
Bartow Healthcare System Ltd., a Florida limited partnership
("Bartow Sub"), the amount of the Guarantee of Bartow Sub
contained in this Third Supplemental Indenture, the Indenture and
such Note Guarantee shall be limited to $1,000,000; provided that
such limitation to the Guarantee of Bartow Sub shall no longer be
effective, and shall no longer apply, after the Amended and
Restated Limited Partnership Agreement of Bartow Sub, effective
as of August 19, 1996, among HCA of Florida, Inc. and Bartow
Memorial Hospital, Inc., as amended, is modified (as contemplated
by Section 4.23(c) of the Indenture) to permit the Guarantee by
Bartow Sub of all of the obligations of Holdings under the Notes
and the Indenture.
3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that the
----------------------
Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. Guaranteeing Subsidiaries May Consolidate, Etc. on Certain Terms. The
----------------------------------------------------------------
Guaranteeing Subsidiaries may not sell or otherwise dispose of all or
substantially all of their assets, or consolidate with or merge with or into
(whether or not such Guarantors are the surviving Person) another corporation,
Person or entity whether or not affiliated with such Guarantors except in
accordance with the provisions set forth in the Indenture, including, without
limitation, Section 5.1 of the Indenture.
5. Releases. The Note Guarantee of the Guaranteeing Subsidiaries will
--------
be released in accordance with the provisions set forth in the Indenture,
including, without limitation, Section 11.5 of the Indenture. The Trustee will
provide any written confirmation or evidence of the termination of such Note
Guarantee as reasonably required by the Company. Any Guarantor not released from
its obligations under its Note Guarantee shall remain liable for the full amount
of principal of and interest on the Notes and for the other obligations of any
Guarantor under the Indenture as provided in Article 11 of the Indenture.
6. No Recourse Against Others. No director, officer, employee,
--------------------------
incorporator, stockholder or agent of each Guaranteeing Subsidiary, as such,
shall have any liability for any obligations of Holdings or any Guaranteeing
Subsidiaries under the
4
<PAGE>
Notes, the Indenture, any Note Guarantees or this Supplemental Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws.
7. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK
----------------------
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
8. Counterparts. The parties may sign any number of copies of this
------------
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for convenience
------------------
only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
-----------
whatsoever for or in respect of the validity, legality or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and
Holdings.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: May 11, 1999
AMERICA GROUP OFFICES, LLC,
as guarantor
By: LIFEPOINT CORPORATE SERVICES,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMERICA MANAGEMENT
COMPANIES, LLC, as guarantor
By: LIFEPOINT CORPORATE SERVICES,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - CROCKETT, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
6
<PAGE>
AMG - HILCREST, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - HILLSIDE, LLC, as guarantor
By: LIFEPOINT MEDICAL GROUP -
HILLSIDE, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - LIVINGSTON, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - LOGAN, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
7
<PAGE>
AMG - SOUTHERN TENNESSEE, LLC,
as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - TRINITY, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
ASHLEY VALLEY MEDICAL CENTER, LLC,
as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
ASHLEY VALLEY PHYSICIAN PRACTICE,
LLC, as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
8
<PAGE>
BARROW MEDICAL CENTER, LLC,
as guarantor
By: LIFEPOINT OF GEORGIA,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
BARTOW HEALTHCARE PARTNER, INC.,
as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
BARTOW HEALTHCARE SYSTEM, LTD.,
as guarantor
By: GENERAL PARTNER:
BARTOW HEALTHCARE PARTNER, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
BOURBON COMMUNITY HOSPITAL, LLC,
as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
9
<PAGE>
BUFFALO TRACE RADIATION ONCOLOGY
ASSOCIATES, LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
CASTLEVIEW HOSPITAL, LLC, as guarantor
By: CASTLEVIEW MEDICAL, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
CASTLEVIEW MEDICAL, LLC, as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
CASTLEVIEW PHYSICIAN PRACTICE, LLC,
as guarantor
By: CASTLEVIEW MEDICAL, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
10
<PAGE>
COMMUNITY HOSPITAL OF ANDALUSIA,
INC., as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
COMMUNITY MEDICAL, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
CROCKETT HOSPITAL, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
DODGE CITY HEALTHCARE GROUP, LP,
as guarantor
By: GENERAL PARTNER:
DODGE CITY HEALTHCARE PARTNER, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
11
<PAGE>
DODGE CITY HEALTHCARE PARTNER, INC.,
as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
GEORGETOWN COMMUNITY HOSPITAL,
LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
GEORGETOWN REHABILITATION, LLC,
as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HALSTEAD HOSPITAL, LLC, as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
12
<PAGE>
HCK LOGAN MEMORIAL, LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HDP ANDALUSIA, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HDP GEORGETOWN, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HILLSIDE HOSPITAL, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
13
<PAGE>
HST PHYSICIAN PRACTICE, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HTI GEORGETOWN, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HTI PINELAKE, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
INTEGRATED PHYSICIAN SERVICES, LLC,
as guarantor
By: LIFEPOINT OF GEORGIA,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
14
<PAGE>
KANSAS HEALTHCARE MANAGEMENT
COMPANY, INC., as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
KENTUCKY HOSPITAL, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
KENTUCKY MEDSERVE, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
KENTUCKY MSO, LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
KENTUCKY PHYSICIANS SERVICES, INC.,
as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
15
<PAGE>
LAKE CUMBERLAND HEALTH CARE, INC.,
as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LAKE CUMBERLAND REGIONAL
HOSPITAL, LLC, as guarantor
By: LAKE CUMBERLAND HEALTH CARE, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT CSGP, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT CSLP, LLC, as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
16
<PAGE>
LIFEPOINT CORPORATE SERVICES, LIMITED PARTNERSHIP,
as guarantor
By: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT HOLDINGS 2, INC., as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT HOLDINGS 3, INC., as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT MEDICAL GROUP -
HILLSIDE, INC., as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
17
<PAGE>
LIFEPOINT OF GEORGIA, LIMITED PARTNERSHIP,
as guarantor
By: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT OF GAGP, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT OF KENTUCKY, LLC, as guarantor
By: LIFEPOINT HOLDINGS 3, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT RC, INC., as guarantor
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
18
<PAGE>
LIVINGSTON REGIONAL HOSPITAL, LLC,
as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LOGAN MEDICAL, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LOGAN MEMORIAL HOSPITAL, LLC,
as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LOSCO, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
19
<PAGE>
MEADOWVIEW PHYSICIAN PRACTICE, LLC,
as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
MEADOWVIEW REGIONAL MEDICAL CENTER,
LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
MEADOWVIEW RIGHTS, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
PINELAKE PHYSICIAN PRACTICE,
LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
20
<PAGE>
PINELAKE REGIONAL HOSPITAL,
LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
POITRAS PRACTICE, LLC, as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
R. KENDALL BROWN PRACTICE,
LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
21
<PAGE>
RIVERTON MEMORIAL HOSPITAL, LLC,
as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
RIVERTON PHYSICIAN PRACTICES, LLC,
as guarantor
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
RIVERVIEW MEDICAL CENTER, LLC,
as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SELECT HEALTHCARE, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SILETCHNIK PRACTICE, LLC, as guarantor
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
22
<PAGE>
SMITH COUNTY MEMORIAL HOSPITAL, LLC,
as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SOUTHERN TENNESSEE EMS, LLC,
as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SOUTHERN TENNESSEE MEDICAL
CENTER, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SPRINGHILL MEDICAL CENTER, LLC,
as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
23
<PAGE>
SPRINGHILL MOB, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
THM PHYSICIAN PRACTICE, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
TRINITY HOSPITAL, LLC, as guarantor
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
WESTERN PLAINS REGIONAL
HOSPITAL, LLC, as guarantor
By: LIFEPOINT HOLDINGS 3, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
24
<PAGE>
CITIBANK N.A., as Trustee
By: /s/ Citibank N.A.
-------------------
25
<PAGE>
FOURTH SUPPLEMENTAL INDENTURE
FOURTH SUPPLEMENTAL INDENTURE (this "Fourth Supplemental Indenture"),
dated as of May 11, 1999, among Columbia/HCA Healthcare Corporation, a Delaware
corporation ("Columbia/HCA"), LifePoint Hospitals Holdings, Inc. (or its
permitted successor), a Delaware corporation ("Holdings"), and Citibank N.A., as
trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
-------------------
WHEREAS, Healthtrust, Inc.--The Hospital Company, a Delaware
corporation ("Healthtrust"), has heretofore executed and delivered to the
Trustee the indenture (as amended, the "Indenture"), dated as of May 11, 1999,
providing for the issuance of an aggregate principal amount of up to
$185,000,000 of 10 3/4% Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, LifePoint Hospitals, Inc., a Delaware corporation
("LifePoint") has assumed all of the obligations of Healthtrust under the
Indenture and the Notes pursuant to the First Supplemental Indenture dated as of
May 11, 1999;
WHEREAS, Holdings has assumed all obligations of LifePoint under the
Indenture and the Notes pursuant to the Second Supplemental Indenture dated as
of May 11, 1999;
WHEREAS, certain subsidiaries of Holdings, including without
limitation Dodge City Healthcare Group, L.P. (the "Dodge Sub") and Bartow
Healthcare System, Ltd. (the "Bartow Sub"), have guaranteed (the "Dodge
Guarantee" and the "Bartow Guarantee," respectively) Holdings' obligations under
the Notes and the Indenture pursuant to the Third Supplemental Indenture dated
as of May 11, 1999 (the "Third Supplemental Indenture");
WHEREAS, Columbia/HCA has agreed to execute and deliver to the Trustee
a supplemental indenture pursuant to which Columbia/HCA shall guarantee
Holdings' obligations under the Notes and the Indenture on the terms and
conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Fourth Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged,
Columbia/HCA, Holdings and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Notes as follows:
<PAGE>
1. Capitalized Terms. Capitalized terms used herein without definition
-----------------
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. Columbia/HCA hereby agrees as follows:
----------------------
(a) To jointly and severally Guarantee to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and
assigns, irrespective of the validity and enforceability of the
Indenture, the Notes or the obligations of Holdings hereunder or
thereunder, that:
(i) the principal of and interest on the Notes will be promptly paid by
the Company in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of
and interest on the Notes, if any, if lawful, and all other
obligations of Holdings to the Holders or the Trustee hereunder or
thereunder will be promptly paid by the Company in full or performed
by the Company, all in accordance with the terms hereof and thereof;
and
(ii) in case of any extension of time of payment or renewal of any Notes
or any of such other obligations, that same will be promptly paid by
the Company in full when due or performed by the Company in
accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.
Failing payment when due by the Company of any amount so guaranteed or
any performance so guaranteed which failure continues for three days
after demand therefor is made to the Company for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same
immediately.
(b) The obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver or consent by any
Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against Holdings, any action to enforce the same
or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Guarantor.
2
<PAGE>
(c) The following is hereby waived: diligence, presentment, demand of payment
(except as specifically provided in (a) above), filing of claims with a
court in the event of insolvency or bankruptcy of Holdings, any right to
require a proceeding first against Holdings, protest, notice and all
demands (except as specifically provided in (a) above) whatsoever.
(d) This Note Guarantee shall not be discharged except (i) by complete
performance of the obligations contained in the Notes and the Indenture
or (ii) as provided in Section 3 or Section 6 hereof.
(e) If any Holder or the Trustee is required by any court or otherwise to
return to Holdings, the Guarantors, or any Custodian, Trustee, liquidator
or other similar official acting in relation to either Holdings or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Note Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
(f) Columbia/HCA shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby
until payment in full of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 of the
Indenture for the purposes of this Note Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 6
of the Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of
this Note Guarantee, failing payment when due by the Company which
failure continues for three days after demand therefor is made to the
Company.
(h) The Guarantors shall have the right to seek contribution from any non-
paying Guarantor so long as the exercise of such right does not impair
the rights of the Holders under the Note Guarantee.
3
<PAGE>
(i) The obligations hereunder shall be subject to the subordination
provisions set forth in Article 10 of the Indenture.
3. Limitation on Note Guarantee. (a) Notwithstanding any other
----------------------------
provision of this Fourth Supplemental Indenture, the Indenture or the Note
Guarantee, the amount of the Note Guarantee of Columbia/HCA contained in this
Fourth Supplemental Indenture, the Indenture and the Note Guarantee shall be
limited to an amount (the "Cap") equal to the sum of: (A) the difference between
(i) the aggregate amount that would have been recovered under the Note
guarantees of all Guarantors without giving effect to the limitation on the
Dodge Guarantee referenced in Section 2(j) of the Third Supplemental Indenture
(as such limitation may be amended, the "Dodge Limitation") and (ii) the
aggregate amount recovered under the Note guarantees of all Guarantors after
giving effect to the Dodge Limitation and (B) the difference between (i) the
aggregate amount that would have been recovered under the Note guarantees of all
Guarantors without giving effect to the limitation on the Bartow Guarantee
referenced in Section 2(k) of the Third Supplemental Indenture (as such
limitation may be amended, the "Bartow Limitation") and (ii) the aggregate
amount recovered under the Note guarantees of all Guarantors after giving effect
to the Bartow Limitation.
(b) Immediately upon (i) the termination of the Dodge Limitation or (ii)
the discharge or release of the Dodge Guarantee, and without any further action
required by any party hereto, the amount of the Cap shall be reduced to an
amount calculated pursuant to clause (B) of Section 3(a) above. Immediately upon
(i) the termination of the Bartow Limitation or (ii) the discharge or release of
the Bartow Guarantee, and without any further action required by any party
hereto, the amount of the Cap shall be reduced to an amount calculated pursuant
to clause (A) of Section 3(a) above. Immediately upon (i) the termination of
both the Dodge Limitation and the Bartow Limitation, (ii) the release or
discharge of both the Dodge Guarantee and the Bartow Guarantee, (iii) the
termination of the Dodge Limitation and the release or discharge of the Bartow
Guarantee or (iv) the termination of the Bartow Limitation and the release or
discharge of the Dodge Guarantee, and without any further action required by any
party hereto, the Note Guarantee of Columbia/HCA shall be fully, unconditionally
and irrevocably discharged and released, and Columbia/HCA shall have no further
obligations under the Note Guarantee, this Fourth Supplemental Indenture and the
Indenture.
4. Execution and Delivery. Columbia/HCA agrees that the Note Guarantees
----------------------
shall remain in full force and effect notwithstanding any failure to endorse on
each Note a notation of such Note Guarantee.
5. Columbia/HCA May Consolidate, Etc. on Certain Terms. Columbia/HCA
---------------------------------------------------
may not sell or otherwise dispose of all or substantially all of its assets, or
consolidate with or merge with or into (whether or not Columbia/HCA is the
surviving Person) another corporation, Person or entity whether or not
affiliated with Columbia/HCA except in accordance with the provisions set forth
in the Indenture, including, without limitation, Section 5.1 of the Indenture.
4
<PAGE>
6. Releases. The Note Guarantee of Columbia/HCA will be released in
--------
accordance with the provisions set forth in the Indenture, including, without
limitation, Section 11.5 of the Indenture. The Note Guarantee will also be
released in accordance with the provisions of Section 3 above. The Trustee will
provide any written confirmation or evidence of the termination of such Note
Guarantee as reasonably required by the Company or Columbia/HCA.
7. No Recourse Against Others. No director, officer, employee,
--------------------------
incorporator, stockholder or agent of the Columbia/HCA, as such, shall have any
liability for any obligations of Holdings or Columbia/HCA under the Notes, the
Indenture, any Note Guarantees or this Fourth Supplemental Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws.
8. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW YORK
----------------------
SHALL GOVERN AND BE USED TO CONSTRUE THIS FOURTH SUPPLEMENTAL INDENTURE.
9. Counterparts. The parties may sign any number of copies of this
------------
Fourth Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
10. Effect of Headings. The Section headings herein are for convenience
------------------
only and shall not affect the construction hereof.
11. The Trustee. The Trustee shall not be responsible in any manner
-----------
whatsoever for or in respect of the validity, legality or sufficiency of this
Fourth Supplemental Indenture or for or in respect of the recitals contained
herein, all of which recitals are made solely by Columbia/HCA and Holdings.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated: May 11, 1999
COLUMBIA/HCA HEALTHCARE
CORPORATION
By: /s/ R. Milton Johnson
------------------------
Name: R. Milton Johnson
Title: Vice President
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
CITIBANK N.A.
By: /s/ Citibank N.A.
--------------------
6
<PAGE>
EXHIBIT 4.2(b)
(Face of Note)
CUSIP: 532195JAA2
10 3/4% Senior Subordinated Notes due 2009
No.:_______________________ $
Healthtrust, Inc.--The Hospital Company
promises to pay to ____________________________________________________________
or registered assigns,
the principal sum of __________________________________________________________
Dollars on May 15, 2009.
Interest Payment Dates: May 15 and November 15, commencing November 15, 1999.
Record Dates: May 1 and November 1.
Dated: ________________________
HEALTHTRUST, INC.--THE HOSPITAL
COMPANY
By: ___________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
CITIBANK N.A.,
as Trustee
By: ________________________________
Authorized Signatory
<PAGE>
(Back of Note)
10 3/4% Senior Subordinated Notes due 2009
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
Obligor. Healthtrust, Inc.--The Hospital Company, a Delaware
-------
corporation ("Healthtrust"), is the initial obligor under this Note. Upon the
execution and delivery of the First Supplemental Indenture by the parties
thereto, LifePoint Hospitals, Inc., a Delaware corporation ("LifePoint"), will
become the obligor under this Note. Upon the America Group assets being validly
transferred to LifePoint, the execution and delivery of the First Supplemental
Indenture by Healthtrust, LifePoint and the Trustee and the execution and
delivery of the LifePoint Assumption Agreement to the Registration Rights
Agreement by Healthtrust and LifePoint, Healthtrust will be fully,
unconditionally and irrevocably released from all obligations hereunder. Upon
the execution and delivery of the Second Supplemental Indenture by the parties
thereto, LifePoint Hospitals Holdings, Inc., a Delaware corporation
("Holdings"), will become the obligor under this Note. Upon the America Group
assets being validly transferred to Holdings, the execution and delivery of the
Second Supplemental Indenture by LifePoint, Holdings and the Trustee and the
execution and delivery of the Holdings Assumption Agreement to the Registration
Rights Agreement by LifePoint, and Holdings, LifePoint will be fully,
unconditionally and irrevocably released from all obligations hereunder. For
purposes of this Note, the "Company" shall refer to any of Healthtrust or
LifePoint or Holdings, depending on which such company is then the obligor under
this Note.
1. Interest. The Company promises to pay interest on the principal
--------
amount of this Note at 10 3/4% per annum from May 11, 1999 until maturity and
shall pay the Additional Interest payable pursuant to Section 2.5 of the
Registration Rights Agreement referred to below. Holdings will pay interest and
Additional Interest semi-annually on May 15 and November 15 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of original issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be November 15, 1999. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand to the extent lawful at a rate that is 1% per annum in excess of
the rate then in effect; it shall pay interest (including post-petition interest
in any proceeding under any
<PAGE>
Bankruptcy Law) on overdue installments of interest and Additional Interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
-----------------
(except defaulted interest) and Additional Interest to the Persons who are
registered Holders of Notes at the close of business on the May 1 or November 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. Principal,
premium, if any, and interest and Additional Interest on the Notes will be
payable at the office or agency of the Company maintained for such purpose or,
at the option of the Company, payment of interest and Additional Interest may be
made by check mailed to the Holders of the Notes at their respective addresses
set forth in the register of Holders of Notes. Until otherwise designated by the
Company, the Company's office or agency in New York will be the office of the
Trustee maintained for such purpose. The Notes will be issued in denominations
of $1,000 and integral multiples thereof. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, Citibank N.A., the Trustee
--------------------------
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. Indenture and Subordination. The Company issued the Notes under
---------------------------
an Indenture dated as of May 11, 1999 (as amended, the "Indenture") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb) (the
"TIA"). The Notes are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of such terms. To the extent any provision
of this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling. The payment of the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full in cash of all Senior Indebtedness.
5. Optional Redemption. Except as set forth in the following
-------------------
paragraph, Holdings shall not have the option to redeem prior to May 15, 2004.
On or after May 15, 2004, the Notes will be subject to redemption at any time at
the option of Holdings, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest, if any, and Additional
Interest thereon, if any, to the
<PAGE>
applicable redemption date, if redeemed during the twelve-month period beginning
May 15 of the years indicated below (subject to the right of Holders of record
on relevant record dates to receive interest due on an Interest Payment Date):
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004 105.375%
2005 103.583%
2006 101.792%
2007 and thereafter 100.000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to May 15,
2002, Holdings may on any one or more occasions redeem up to 35% of the
aggregate principal amount of Notes originally issued under the Indenture within
60 days of one or more Qualified Equity Offerings with the net proceeds of such
offering at a redemption price of 110.75% of the principal amount thereof, plus
accrued and unpaid interest and Additional Interest thereon, if any, to the
redemption date (subject to the right of Holders of record on relevant record
dates to receive interest due on an Interest Payment Date); provided that, after
giving effect to any such redemption, at least 65% of the original aggregate
principal amount of the Notes plus 65% of the aggregate principal amount of any
Notes issued pursuant to a supplemental indenture remains outstanding (excluding
Notes held by Holdings and its Subsidiaries).
1. Mandatory Redemption. (a) Except as set forth in clause (b) and
--------------------
Paragraph 8, the Company shall not be required to make mandatory redemption
payments with respect to the Notes.
2. (b) The Notes will be redeemed by the Company, in whole but not in
part, on the date that is five Business Days following the date the Notes are
originally issued, at a redemption price of 101% of the principal amount
thereof, plus accrued and unpaid interest to the redemption date, if (i) the
Spin-Off Transactions have not been consummated and (ii) Holdings has not
executed and delivered a supplemental indenture assuming all the debt issued
under the Indenture, in each case, by the date that is five Business Days
following the date the Notes are originally issued. Notice of the mandatory
redemption will be mailed to each Holder of the Notes not less than one Business
Day prior to the redemption date. Such notice shall identify the Notes to be
redeemed (including "CUSIP" number(s)) and state (i) the redemption date, (ii)
the redemption price, (iii) the name and address of the Paying Agent, (iv) that
Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price, (v) that, unless the Company defaults in making such
redemption payment, interest on the
<PAGE>
Notes shall cease to accrue on and after the redemption date and (vi) the
paragraph of the Notes pursuant to which the Notes are to be redeemed.
3. Repurchase at Option of Holder. (a) If a Change in Control shall
------------------------------
occur at any time, then each Holder of Notes will have the right to require that
Holdings purchase such Holder's Notes, in whole or in part in integral multiples
of $1,000, at a purchase price (the "Change in Control Purchase Price") in cash
in an amount ("Change in Control Payment") equal to 101% of the principal amount
thereof, plus accrued interest, if any, to the date of purchase (the "Change in
Control Purchase Date"), pursuant to the offer described below (the "Change in
Control Offer") and the other procedures set forth below.
4. Within 30 days following any Change in Control, Holdings shall notify
the Trustee thereof and give written notice of such Change in Control to each
Holder of Notes by first-class mail, postage prepaid, at the address of such
Holder appearing in the security register, describing the transaction or
transactions that constitute the Change in Control and stating, among other
things, (i) the Change in Control Purchase Price and the Change in Control
Purchase Date, which shall be a Business Day no earlier than 30 days nor more
than 60 days from the case such notice is mailed, or such later date as is
necessary to comply with requirements under the Exchange Act or any applicable
securities laws or regulations; (ii) that any Note not tendered will continue to
accrue interest; (iii) that, unless Holdings defaults in the payment of the
Change in Control Purchase Price, any Notes accepted for payment pursuant to the
Change in Control Offer shall cease to accrue interest after the Change in
Control Purchase Date; and (iv) certain procedures that a Holder of Notes must
follow to accept a Change in Control Offer or to withdraw such acceptance.
5. (b) When the aggregate amount of Excess Proceeds exceeds $7,500,000,
Holdings shall, within 30 Business Days, make an offer to purchase (an "Excess
Proceeds Offer") from all Holders of Notes, on a pro rata basis, in accordance
with the procedures set forth below, the maximum principal amount (expressed as
an integral multiple of $1,000) of Notes that may be purchased with the Excess
Proceeds. The offer price as to each Note shall be payable in cash in an amount
equal to 100% of the principal amount of such Note plus accrued interest, if
any, to the date such Excess Proceeds Offer is consummated ("Excess Proceeds
Payment"). To the extent that the aggregate principal amount of Notes tendered
pursuant to an Excess Proceeds Offer is less than the Excess Proceeds, Holdings
may use such deficiency for any lawful purposes not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Excess Proceeds, Notes to be purchased
will be selected on a pro rata basis. Notwithstanding the foregoing, if Holdings
is required to commence an Excess Proceeds Offer at any time when securities of
Holdings ranking pari passu in right of payment with the Notes are outstanding
and the terms of such securities provide that a similar offer must be made with
respect to such other securities, then the Excess Proceeds Offer for the Notes
shall be made concurrently with such other offers and securities of each issue
will be accepted on a pro rata basis in proportion to the aggregate principal
amount of securities of each
<PAGE>
issue which the holders thereof elect to have purchased. Any Excess Proceeds
Offer will be made only to the extent permitted under, and subject to prior
compliance with, the terms of agreements governing Senior Indebtedness. Upon
completion of such Excess Proceeds Offer, the amount of Excess Proceeds shall be
reset to zero.
6. Upon the commencement of an Excess Proceeds Offer, Holdings shall
send, by first class mail, a notice to the Trustee and to each Holder at its
registered address. The notice shall contain all instructions and materials
necessary to enable such Holder to tender Notes pursuant to the Excess Proceeds
Offer. Any Excess Proceeds Offer shall be made to all Holders. The notice, which
shall govern the terms of the Excess Proceeds Offer, shall state: (i) that the
Excess Proceeds Offer is being made pursuant to Section 4.10 of the Indenture;
(ii) the Excess Proceeds Offer amount, the Excess Proceeds Payment and the date
on which Notes tendered and accepted for payment shall be purchased, which date
shall be at least 30 days and no later than 60 days from the date such notice is
mailed (the "Excess Proceeds Payment Date"); (iii) that any Note not tendered or
accepted for payment shall continue to accrete or accrue interest; (iv) that,
unless Holdings defaults in making such payment, any Note accepted for payment
pursuant to the Excess Proceeds Offer shall cease to accrete or accrue interest
after the Excess Proceeds Payment Date; (v) that Holders electing to have a Note
purchased pursuant to the Excess Proceeds Offer may only elect to have all of
such Note purchased and may not elect to have only a portion of such Note
purchased; (vi) that Holders electing to have a Note purchased pursuant to any
Excess Proceeds Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to Holdings, a depositary, if
appointed by Holdings, or the Paying Agent at the address specified in the
notice at least three days before the Excess Proceeds Payment Date; (vii) that
Holders shall be entitled to withdraw their election if Holdings, the depositary
or the Paying Agent, as the case may be, receives, not later than the Excess
Proceeds Payment Date, a notice setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Note purchased; (viii)
that, if the aggregate principal amount of Notes surrendered by Holders exceeds
the Excess Proceeds Offer amount, Holdings shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by Holdings so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and (ix) that Holders whose
Notes were purchased only in part shall be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer).
7. Notice of Optional Redemption. Notice of redemption pursuant to
-----------------------------
Paragraph 6 of this Note will be mailed by first class mail at least 30 days but
not more than 60 days before the redemption date to each Holder of Notes to be
redeemed at its registered address. Notices of redemption may not be
conditional. Notes in denominations larger than $1,000 may be redeemed in part.
If any Note is to be redeemed in part only, the notice of redemption that
relates to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof
<PAGE>
upon cancellation of the original Note. On and after the redemption date
interest ceases to accrue on Notes or portions thereof called for redemption.
8. Denominations, Transfer, Exchange. The Notes are in registered
---------------------------------
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company or the Registrar is not required to
transfer or exchange any Note selected for redemption. Also, the Company or the
Registrar is not required to transfer or exchange any Notes for a period of 15
days before the mailing of a notice of redemption of Notes to be redeemed.
9. Persons Deemed Owners. The registered Holder of a Note may be
---------------------
treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
--------------------------------
the Indenture, the Notes or the Note Guarantees may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes) and
any existing default or compliance with any provision of the Indenture or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes). Without the consent of any Holder of Notes, the Company and the
Trustee may amend or supplement the Indenture or the Notes: (i) to evidence the
succession of another Person to the Company, a Guarantor or any other obligor on
the Notes, and the assumption by any such successor of the covenants of the
Company or such obligor or Guarantor in the Indenture and in the Notes and in
any Note Guarantee in accordance with Article 5 of the Indenture; (ii) to add to
the covenants of the Company, any Guarantor or any other obligor upon the Notes
for the benefit of the Holders of the Notes or to surrender any right or power
conferred upon the Company or any other obligor upon the Notes, as applicable,
in the Indenture, in the Notes or in any Note Guarantee; (iii) to cure any
ambiguity, or to correct or supplement any provision in the Indenture, the Notes
or any Note Guarantee which may be defective or inconsistent with any other
provision in the Indenture, the Notes or any Note Guarantee or make any other
provisions with respect to matters or questions arising under the Indenture, the
Notes or any Note Guarantee; provided that, in each case, such provisions shall
not adversely affect the interest of the Holders of the Notes; (iv) to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the TIA; (v) to add a Guarantor under the
Indenture; (vi) to evidence and provide the acceptance of the appointment of a
successor Trustee under the Indenture; (vii) to mortgage, pledge, hypothecate or
grant a security interest in favor of the Trustee for the benefit of the Holders
of the Notes as additional security for the payment and performance of the
Company's and any Guarantor's obligations under
<PAGE>
the Indenture, in any property, or assets, including any of which are required
to be mortgaged, pledged or hypothecated, or in which a security is required to
be granted to the Trustee pursuant to the Indenture or otherwise; or (viii) to
execute the First Supplemental Indenture, the Second Supplemental Indenture and
the Third Supplemental Indenture.
11. Defaults and Remedies. Each of the following is an "Event of
---------------------
Default": (i) default in the payment of any interest on any Note when it becomes
due and payable and continuance of such default for a period of 30 days; (ii)
default in the payment of the principal of, premium, if any, or Additional
Interest, if any, on any Note at its Maturity (upon acceleration, optional
redemption, mandatory redemption, required purchase or otherwise); (iii) default
in the performance, or breach, of the provisions described in Section 5.1 of the
Indenture, the failure to make or consummate a Change in Control Offer in
accordance with the provisions of Section 4.15 of the Indenture or the failure
to make or consummate an Excess Proceeds Offer in accordance with the provisions
of Section 4.10 of the Indenture; (iv) default in the performance, or breach, of
any covenant or warranty of Holdings or any Guarantor contained in the Indenture
or any Note Guarantee (other than a default in the performance, or breach, of a
covenant or warranty which is specifically dealt with in clauses (i), (ii) or
(iii) above) and continuance of such default or breach for a period of 30 days
after written notice shall have been given to Holdings by the Trustee or to
Holdings and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding; (v) (A) one or more defaults in the
payment of principal of or premium, if any, on Indebtedness of Holdings or any
Restricted Subsidiary aggregating $10,000,000 or more, when the same becomes due
and payable at the Stated Maturity thereof, and such default or defaults shall
have continued after any applicable grace period and shall not have been cured
or waived or (B) Indebtedness of Holdings or any Restricted Subsidiary
aggregating $10,000,000 or more shall have been accelerated or otherwise
declared due and payable, or required to be prepaid or repurchased (other than
by regularly scheduled required prepayment) prior to the Stated Maturity
thereof; (vii) one or more final, non-appealable judgments or orders shall be
rendered against Holdings or any Restricted Subsidiary for the payment of money,
either individually or in an aggregate amount, in excess of $10,000,000 (net of
any amounts that are fully covered by insurance) and shall not be discharged and
there shall have been a period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, was not in effect; (viii) any Note Guarantee of a Material Subsidiary
or group of Restricted Subsidiaries that, taken together, would constitute a
Material Subsidiary ceases to be in full force and effect or is declared null
and void or any Material Subsidiary or group of Restricted Subsidiaries that,
taken together, would constitute a Material Subsidiary denies that it has any
further liability under any Note Guarantee, or gives notice to such effect
(other than by reason of the termination of the Indenture or the release of any
such Note Guarantee in accordance with the Indenture); (ix) Holdings or any
Material Subsidiary or group of Restricted Subsidiaries that, taken together,
would constitute a Material Subsidiary pursuant to or within the meaning of
Bankruptcy Law: (A) commences a voluntary case, (B) consents to the entry of an
order for relief against it in an involuntary case, (C) consents to the
<PAGE>
appointment of a custodian of it or for all or substantially all of its
property, (D) makes a general assignment for the benefit of its creditors, or
(E) shall admit in writing its inability to pay debts generally; or (x) a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that: (A) is for relief against Holdings or any Material Subsidiary or group of
Restricted Subsidiaries that, taken together, would constitute a Material
Subsidiary in an involuntary case; (B) appoints a custodian of Holdings or any
Material Subsidiary or group of Restricted Subsidiaries that, taken together,
would constitute a Material Subsidiary or for all or substantially all of the
property of Holdings or any Material Subsidiary or group of Restricted
Subsidiaries that, taken together, would constitute a Material Subsidiary; or
(C) orders the liquidation of Holdings or any Material Subsidiary, or group of
Restricted Subsidiaries that, taken together, would constitute a Material
Subsidiary; and the order or decree remains unstayed and in effect for 60
consecutive days.
12. If an Event of Default (other than as specified in clauses (ix) or (x)
above) shall, occur and be continuing, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding, by written
notice to Holdings, may, and the Trustee, upon the written request of such
Holders, shall declare the principal of, premium, if any, and accrued interest
on all of the outstanding Notes immediately due and payable. Upon any such
declaration all such amounts payable in respect of the Notes shall become
immediately due and payable. If an Event of Default specified in paragraphs (ix)
or (x) above occurs and is continuing, then the principal of, premium, if any,
Additional Interest, if any, and accrued interest on all of the outstanding
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder of Notes.
13. At any time after a declaration of acceleration, but before a judgment
or decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in aggregate principal amount of the outstanding Notes, by
written notice to Holdings and the Trustee, may rescind such declaration and its
consequences if (a) Holdings has paid or deposited with the Trustee a sum
sufficient to pay (i) all overdue interest and Additional Interest, if any, on
all outstanding Notes, (ii) all unpaid principal of and premium, if any, on any
outstanding Notes that has become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Notes, (iii) to the
extent that payment of such interest is lawful, interest upon overdue interest,
Additional Interest, if any, and overdue principal at the rate borne by the
Notes, (iv) all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and (b) all Events of Default, other than the non-
payment of amounts of principal of, premium, if any, Additional Interest, if
any, or interest on the Notes that has become due solely by such declaration of
acceleration, have been cured or waived. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
14. If an Event of Default occurs and is continuing, the Trustee may,
subject to Article 10 of the Indenture, pursue any available remedy to collect
the payment
<PAGE>
of principal, premium, if any, Additional Interest, if any, and interest on the
Notes or to enforce the performance of any provision of the Notes or the
Indenture.
15. The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
16. Trustee Dealings with Holdings. The Trustee, in its individual or
------------------------------
any other capacity, may make loans to, accept deposits from, and perform
services for Holdings or its Affiliates, and may otherwise deal with Holdings or
its Affiliates, as if it were not the Trustee; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.
17. No Recourse Against Others. A director, officer, employee,
--------------------------
incorporator or stockholder, of the Company or any Guarantor, as such, shall not
have any liability for any obligations of the Company or any Guarantor under the
Notes, the Indenture, the Note Guarantees, the Registration Rights Agreement or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
18. Guarantees. Assuming certain conditions described in the
----------
Indenture have been satisfied, this Note will be entitled to the benefits of
certain Guarantees made for the benefit of the Holders. Reference is hereby made
to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
19. Authentication. This Note shall not be valid or obligatory until
--------------
authenticated by the manual signature of the Trustee or an authenticating agent.
20. Abbreviations. Customary abbreviations may be used in the name of
-------------
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. Additional Rights of Holders of Notes. In addition to the rights
-------------------------------------
provided to Holders of Notes under the Indenture, Holders of Notes shall have
all the rights set forth in the Registration Rights Agreement dated as of the
date of the Indenture, between the Company and the parties named on the
signature pages thereof (the "Registration Rights Agreement").
<PAGE>
22. CUSIP Numbers. Pursuant to a recommendation promulgated by the
-------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
23. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
-------------
GOVERN AND BE USED TO CONSTRUE THIS NOTE.
24. Holdings will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to: LifePoint Hospitals Holdings, Inc., 4525 Harding Road,
Suite 300, Nashville, Tennessee 37205, Telecopier No.: (615) 344-6276,
Attention: Chief Financial Officer.
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of Holdings. The agent may substitute another
to act for him.
Date: ____________________
Your Signature:________________
(Sign exactly as your name appears on the Note)
SIGNATURE GUARANTEE
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by Holdings pursuant
to Section 4.10 or 4.15 of the Indenture, check the box below:
Section 4.10 Section 4.15
If you want to elect to have only part of the Note purchased by
Holdings pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $_______________________________
Date: Your Signature:
(Sign exactly as your name appears on the Note)
Tax Identification No: _________________________
SIGNATURE GUARANTEE
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount
Date of Amount of Amount of of this Signature of
Exchange decrease in increase in Global Note authorized
-------- Principal Principal following such signatory of
Amount of Amount of decrease (or Trustee or
this Global Note this Global Note increase) Custodian
---------------- ---------------- --------- ---------
</TABLE>
____________________________
/1./ This should be included only if the Note is issued in global form.
<PAGE>
EXHIBIT 4.3(a)
HEALTHTRUST, INC.--THE HOSPITAL COMPANY
(A Delaware corporation)
Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
Dated: May 4, 1999
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. Representations and Warranties by Healthtrust 3
(a) Representations and Warranties 3
(i) Offering Memorandum. 3
(iii) Financial Statements 4
(iv) No Material Adverse Change in Business 4
(v) Good Standing of Healthtrust, LifePoint and Holdings 5
(vi) Good Standing of Designated Subsidiaries 5
(vii) Capitalization 5
(viii) Authorization of Agreements 6
(ix) Authorization of the Indenture 6
(x) Authorization of the Securities 7
(xi) Description of the Securities, the Indenture and the Registration Rights Agreement 8
(xii) Absence of Defaults, Violations and Conflicts 8
(xiii) Absence of Labor Dispute 9
(xiv) Absence of Proceedings 9
(xv) Possession of Intellectual Property 10
(xvi) Absence of Further Requirements 10
(xvii) Possession of Licenses, Permits and Consents 10
(xviii) Medicare and Medicaid 11
(xix) Title to Property 12
(xx) Environmental Laws 12
(xxi) Investment Company Act 13
(xxii) Similar Offerings 13
(xxiii) Rule 144A Eligibility 13
(xxiv) No General Solicitation 13
(xxv) No Registration Required 13
(xxvi) Reporting Company 13
(xxvii) Accounting Controls 14
(xxviii) Insurance 14
(xxix) Solvency 14
(xxx) Stabilization 14
(xxxi) Year 2000 Problem 14
(xxxii) Compliance with the Cuba Act. 15
(xxxiii) New Credit Agreement 15
(xxxiv) Regulations T, U and X 15
(xxxv) 15
(b) Officer's Certificates 15
SECTION 2. Sale and Delivery to Initial Purchasers; Closing 15
(a) Securities 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(b) Payment 15
(c) Denominations; Registration 16
SECTION 3. Covenants of the Company 16
(a) Offering Memorandum 16
(b) Notice and Effect of Material Events 16
(c) Amendment to Offering Memorandum and Supplements 17
(d) Qualification of Securities for Offer and Sale 17
(e) Rating of Securities 17
(f) DTC 17
(g) Use of Proceeds 17
(h) Restriction on Sale of Securities 17
(i) PORTAL Designation 17
(j) Investment Company Status 18
(k) Furnishing of Information to Holders. 18
(l) Furnishing of Information to Representative. 18
(m) Filing of Registration Statement. 18
(n) Reporting Requirements 18
SECTION 4. Payment of Expenses 18
(a) Expenses 18
(b) Termination of Agreement 19
SECTION 5. Conditions of Initial Purchasers' Obligations 19
(a) Opinion of Counsel for Company 19
(b) Opinion of Counsel for Initial Purchasers 19
(c) No Loss or Interference with Business 19
(d) Officers' Certificate. 20
(e) Accountants' Comfort Letter 20
(f) Bring-down Comfort Letter 20
(g) Maintenance of Rating 20
(h) PORTAL. 20
(i) Registration Rights Agreement 20
(j) Additional Documents 20
(k) New Credit Agreement. 21
(l) Termination of Agreement 21
SECTION 6. Subsequent Offers and Resales of the Securities 21
(a) Offer and Sale Procedures 21
(i) Offers and Sales only to Qualified Institutional Buyers 21
(ii) No General Solicitation 21
(iii) Purchases by Non-Bank Fiduciaries 21
(iv) Subsequent Purchaser Notification 21
(v) Minimum Principal Amount 22
(vi) Restrictions on Transfer 22
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
(vii) Delivery of Offering Memorandum 22
(b) Covenants of the Company 22
(i) Integration 22
(ii) Rule 144A Information 22
(iii) Restriction on Repurchases 22
(c) Qualified Institutional Buyer 23
(d) Resale Pursuant to Rule 144A 23
SECTION 7. Indemnification 23
(a) Indemnification of Initial Purchasers 23
(b) Indemnification of Company Directors and Officers 24
(c) Actions against Parties; Notification 24
(d) Settlement without Consent if Failure to Reimburse 25
SECTION 8. Contribution 25
SECTION 9. Representations, Warranties and Agreements to Survive Delivery 26
SECTION 10. Termination of Agreement 26
(a) Termination; General 26
(b) Liabilities 27
SECTION 11. Default by One or More of the Initial Purchasers 27
SECTION 12. Notices 28
SECTION 13. Parties 28
SECTION 14. GOVERNING LAW AND TIME 28
SECTION 15. Effect of Headings 28
</TABLE>
SCHEDULES:
Schedule A - List of Initial Purchasers Sch A-1
Schedule B - Pricing Information Sch B-1
EXHIBITS:
Exhibit A - Form of Opinion of Dewey Ballantine LLP A-1
Exhibit B - Form of Opinion of Waller Lansden & Davis B-1
Exhibit C - Form of Opinion of William F. Carpenter, III Esq. C-1
iii
<PAGE>
Exhibit D - Form of Opinion of John M. Franck II, Esq. D-1
Exhibit E - Form of LifePoint Assumption Agreement E-1
Exhibit F - Form of Holdings Assumption Agreement F-1
Exhibit G - Form of Guarantor Assumption Agreement G-1
Exhibit H - Form of Registration Rights Agreement H-1
iv
<PAGE>
HEALTHTRUST, INC. --THE HOSPITAL COMPANY
(a Delaware corporation)
$150,000,000
Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
May 4, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
as Representative of the several Initial Purchasers
c/o Merrill Lynch & Co.
North Tower
World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Healthtrust, Inc.--The Hospital Company, a Delaware corporation
("Healthtrust"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other
Initial Purchasers named in Schedule A hereto (collectively, the "Initial
Purchasers", which term shall also include any initial purchaser substituted as
hereinafter provided in Section 11 hereof), for whom Merrill Lynch is acting as
representative (in such capacity, the "Representative"), with respect to the
issue and sale by Healthtrust and the purchase by the Initial Purchasers, acting
severally and not jointly, of the respective principal amounts set forth in said
Schedule A of $150,000,000 aggregate principal amount of Healthtrust's Senior
Subordinated Notes due 2009 (the "Securities"). The Securities are to be
issued pursuant to an indenture dated as of May 11, 1999 (the "Indenture")
between Healthtrust and Citibank N.A., as trustee (the "Trustee"). Securities
issued in book-entry form will be issued to Cede & Co. as nominee of The
Depository Trust Company ("DTC") pursuant to a letter agreement, to be dated as
of the Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), among
Healthtrust, the Trustee and DTC.
Healthtrust understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after this Agreement has been executed and delivered.
The
<PAGE>
Securities are to be offered and sold through the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "1933 Act"),
in reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities if such Securities are hereafter registered
under the 1933 Act or if an exemption from the registration requirements of the
1933 Act is available (including the exemption afforded by Rule 144A ("Rule
144A") of the rules and regulations promulgated under the 1933 Act by the
Securities and Exchange Commission (the "Commission")).
Healthtrust has prepared and delivered to each Initial Purchaser
copies of a preliminary offering memorandum dated April 20, 1999 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to each
Initial Purchaser, on the date hereof or the next succeeding day, copies of a
final offering memorandum dated May 4, 1999 (the "Final Offering Memorandum"),
each for use by such Initial Purchaser in connection with its solicitation of
purchases of, or offering of, the Securities. "Offering Memorandum" means, with
respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
including annexes and exhibits thereto and any documents incorporated therein by
reference, which has been prepared and delivered by Healthtrust to the Initial
Purchasers in connection with their solicitation of purchases of, or offering
of, the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Offering Memorandum.
For purposes of this Agreement, (a) the term "Business" shall mean the
net assets, business and operations comprising the America Group Division of
Columbia/HCA Healthcare Corporation ("Columbia/HCA") and (b) the term
"Distribution" shall mean (i) the incurrence by Healthtrust of the indebtedness
evidenced by the Securities and by the new credit agreement described in the
Offering Memorandum (the "New Credit Agreement"), (ii) the transfer of the
Business by Healthtrust to LifePoint Hospitals, Inc. ("LifePoint"), a new wholly
owned subsidiary of Healthtrust, and the simultaneous assumption by LifePoint of
the indebtedness evidenced by the Securities and by the New Credit Agreement,
(iii) the subsequent transfer of the Business by LifePoint to LifePoint
Hospitals Holdings, Inc. ("Holdings"), a new wholly owned subsidiary of
LifePoint, and the simultaneous assumption by Holdings of the indebtedness
evidenced by the Securities and the New Credit Agreement, (iv) the distribution
by Healthtrust of all of the common stock of LifePoint to Columbia/HCA, and (v)
the distribution by Columbia/HCA of all of the common stock of LifePoint to the
stockholders of Columbia/HCA, in each case, as set forth in the Offering
Memorandum.
Upon Healthtrust transferring the Business to LifePoint and the
assumption by LifePoint of the indebtedness evidenced by the Securities,
Healthtrust will cause LifePoint to assume all the rights, obligations and
liabilities of Healthtrust under this Agreement pursuant to the LifePoint
Assumption
2
<PAGE>
Agreement, the form of which is attached as Exhibit E hereto. Upon LifePoint
transferring the Business to Holdings and the assumption by Holdings of the
indebtedness evidenced by the Securities, LifePoint will cause Holdings to
assume all rights, obligations and liabilities of LifePoint under this Agreement
pursuant to the Holdings Assumption Agreement, the form of which is attached as
Exhibit F hereto. Following the assumption by Holdings of the indebtedness
evidenced by the Securities, Holdings will contribute certain assets to its
subsidiary, LifePoint Holdings 2, LLC and LifePoint Holdings 2, LLC will then
contribute certain assets to its subsidiary, LifePoint Holdings 3, Inc.
Following these contributions and immediately prior to the completion of the
Distribution, Holdings will cause the Guarantors (as defined in the Guarantor
Assumption Agreement) to execute the Guarantor Assumption Agreement, the form of
which is attached as Exhibit G hereto, pursuant to which each Guarantor will
agree to observe and perform as a "Guarantor" all rights, obligations and
liabilities of such Guarantor under this Agreement. The parties hereto
acknowledge and agree that once (i) the Business has been validly transferred to
LifePoint and the LifePoint Assumption Agreement has been executed and delivered
by the parties thereto, Healthtrust shall automatically be fully,
unconditionally and irrevocably released from all rights, obligations and
liabilities under this Agreement and (ii) the Business has been validly
transferred to Holdings and the Holdings Assumption Agreement has been executed
and delivered by the parties thereto, LifePoint shall automatically be fully,
unconditionally and irrevocably released from all rights, obligations and
liabilities under this Agreement. For purposes of this Agreement, the "Company"
shall refer to any of Healthtrust or LifePoint or Holdings, depending on which
such company has then assumed all rights, obligations and liabilities under this
Agreement as discussed in this paragraph.
The holders of the Securities will be entitled to the benefits of the
registration rights agreement substantially in the form of Exhibit H hereto to
be dated as of the Closing Time (the "Registration Rights Agreement") among
Healthtrust and the Initial Purchasers, pursuant to which the Company will agree
to file as soon as practicable after the Closing Time but in any event within 90
days after the Closing Time, a registration statement with the Commission
registering the Exchange Notes (as defined in the Registration Rights Agreement)
under the 1933 Act.
SECTION 1. Representations and Warranties by Healthtrust .
---------------------------------------------
(a) Representations and Warranties . Healthtrust represents and warrants to
------------------------------
each Initial Purchaser as of the date hereof and as of the Closing Time
referred to in Section 2(b) hereof, and agrees with each Initial Purchaser,
as follows:
(i) Offering Memorandum. The Offering Memorandum and any
--------------------
amendments or supplements thereto do not and will not, as of their respective
dates and as of the Closing Time, contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall not
apply to any statements or omissions from the Offering Memorandum made in
reliance upon and in conformity with information furnished to the Company in
writing by any Initial Purchaser through Merrill Lynch expressly for use in the
Offering Memorandum.
3
<PAGE>
(ii) Independent Accountants. The accountants who certified the financial
-----------------------
statements and supporting schedules included in the Offering Memorandum are
independent public accountants with respect to each of LifePoint and its
subsidiaries and Columbia/HCA and its subsidiaries within the meaning of
Regulation S-X under the 1933 Act.
(iii) Financial Statements. The historical financial statements
--------------------
relating to LifePoint, together with the related schedules and notes, included
in the Offering Memorandum present fairly, in all material respects, the
financial position of Holdings at the dates indicated and the combined
statements of operations, combined statements of equity and combined statements
of cash flows of Holdings for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved except as
disclosed therein. The selected historical financial data and the summary
financial data included in the Offering Memorandum present fairly, in all
material respects, the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in the
Offering Memorandum. The pro forma financial statements of LifePoint and the
related notes thereto included in the Offering Memorandum present fairly in all
material respects the information shown therein, have been prepared in all
material respects in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled on the
bases described therein, and in the Company's opinion the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. The financial statements relating to Columbia/HCA, together with the
related schedules and notes, included in the Offering Memorandum present fairly
in all material respects the financial position of Columbia/HCA at the dates
indicated and the consolidated statements of operations, consolidated statements
of stockholders' equity and consolidated statements of cash flows of
Columbia/HCA for the periods specified; said financial statements have been
prepared in conformity with GAAP applied on a consistent basis throughout the
periods involved except as disclosed therein.
(iv) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Offering Memorandum,
except as otherwise described in the Offering Memorandum, (i) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Business whether or not
arising in the ordinary course of business (a "Material Adverse Effect"), (ii)
there have been no transactions entered into by the Business, LifePoint or
Holdings or any of the Designated Subsidiaries (as defined in Section 1(vi)
hereof), other than those in the ordinary course of business, which are material
with respect to the Business, and (iii) there has been no dividend or
distribution of any kind declared, paid or made by any of LifePoint or Holdings
on any class of its capital stock. Since the respective dates as of which
information is given in the Offering Memorandum, except as otherwise stated
therein, there has not been any material increase in the amount of debt to be
assumed by LifePoint and its subsidiaries in connection with the Distribution.
Since the respective dates as of which information is given in the Offering
Memorandum, there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of Healthtrust and its subsidiaries, considered as a whole, which
would materially adversely affect Healthtrust's ability to redeem the Securities
if it were required to do so pursuant to the mandatory redemption provisions in
the Indenture (a "Material Adverse Effect on the Mandatory Redemption").
4
<PAGE>
(v) Good Standing of Healthtrust, LifePoint and Holdings.
----------------------------------------------------
Each of Healthtrust, LifePoint and Holdings has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering Memorandum
and to enter into and perform its obligations under this Agreement; and each of
Healthtrust, LifePoint and Holdings is duly qualified as a foreign corporation
to transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(vi) Good Standing of Designated Subsidiaries. Each subsidiary
----------------------------------------
of Healthtrust to be contributed to Holdings in connection with the Distribution
(each a "Designated Subsidiary" and, collectively, the "Designated
Subsidiaries") has been duly organized and is validly existing as a corporation,
a limited liability company or a limited partnership in good standing under the
laws of the jurisdiction of its incorporation or formation, has the requisite
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and is duly qualified as a
foreign corporation or foreign limited liability company to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as otherwise
disclosed in the Offering Memorandum, all of the issued and outstanding capital
stock of each Designated Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and, with respect to shares owned by
Healthtrust, such shares are owned by Healthtrust, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity other than those created pursuant to the New Credit
Agreement; none of the outstanding shares of capital stock of the Designated
Subsidiaries was issued in violation of any preemptive or similar rights of any
securityholder of such Designated Subsidiary. LifePoint has no direct
subsidiaries other than Holdings and Holdings has no subsidiaries other than
LifePoint Holdings 2, LLC and LifePoint Holdings 3, Inc.
(vii) Capitalization. The authorized, issued and outstanding
--------------
capital stock of LifePoint, after giving effect to the Distribution, will be as
set forth in the Offering Memorandum in the column entitled "Pro Forma" under
the caption "Capitalization" (except for subsequent issuances, if any, pursuant
to this Agreement, pursuant to reservations, agreements, employee benefit plans
referred to in the Offering Memorandum or pursuant to the exercise of
convertible securities or options referred to in the Offering Memorandum). The
shares of issued and outstanding capital stock of each of Healthtrust, LifePoint
and Holdings have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of Healthtrust,
LifePoint or Holdings was issued in violation of the preemptive or other similar
rights of any securityholder of Healthtrust, LifePoint or Holdings. Healthtrust
owns 100% of the capital stock of LifePoint and LifePoint owns 100% of the
capital stock of Holdings.
(viii) Authorization of Agreements. This Agreement has been duly
---------------------------
authorized, executed and delivered by Healthtrust. At the Closing Time, this
Agreement will have been duly authorized by each of LifePoint, Holdings and the
Guarantors. Each of the Registration Rights Agreement and the DTC
5
<PAGE>
Agreement have been authorized by Healthtrust and, when executed and delivered
by Healthtrust, will constitute a valid and binding agreement of Healthtrust,
enforceable against Healthtrust in accordance with its terms, except that (A)
the enforcement thereof (x) may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and (y) is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and (B) any
rights to indemnity or contribution thereunder may also be limited by federal
and state securities laws and public policy considerations. At the Closing Time,
the Registration Rights Agreement will have been duly authorized by each of
LifePoint and Holdings and, when LifePoint and Holdings execute and deliver the
LifePoint Assumption Agreement and the Holdings Assumption Agreement to the
Registration Rights Agreement, respectively, will constitute a valid and binding
agreement of LifePoint and Holdings, respectively, enforceable against LifePoint
and Holdings, respectively, in accordance with its terms, except that (A) the
enforcement thereof (x) may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and (y) is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and (B) any
rights to indemnity or contribution thereunder may also be limited by federal
and state securities laws and public policy considerations. At the Closing Time,
the Registration Rights Agreement will have been duly authorized by the
Guarantors and, when such agreement is assumed as a "Guarantor" by the
Guarantors, will constitute a valid and binding agreement of the Guarantors,
enforceable against the Guarantors in accordance with its terms, except that (A)
the enforcement thereof (x) may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and (y) is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and (B) any
rights to indemnity or contribution thereunder may also be limited by federal
and state securities laws and public policy considerations. At the Closing Time,
the DTC Agreement will have been duly authorized by LifePoint and Holdings and,
when such Agreement is assumed by LifePoint and Holdings, respectively, will
constitute a valid and binding agreement of LifePoint and Holdings,
respectively, enforceable against LifePoint and Holdings, respectively, in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(ix) Authorization of the Indenture. The Indenture has been
------------------------------
duly authorized by Healthtrust and, when executed and delivered by Healthtrust
and the Trustee, will constitute a valid and binding agreement of Healthtrust,
enforceable against Healthtrust in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law). At the Closing Time, the Indenture will have been duly authorized by each
of LifePoint and Holdings and, when the first and second indenture supplements
to the Indenture are executed and delivered by LifePoint and Holdings,
respectively, will constitute a valid and binding
6
<PAGE>
agreement of LifePoint and Holdings, respectively, enforceable against LifePoint
and Holdings, respectively, in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law). At the Closing Time, the Indenture will have been duly authorized by the
Guarantors and, when the third indenture supplement to the Indenture is executed
and delivered by the Guarantors, will constitute a valid and binding agreement
of the Guarantors, enforceable against the Guarantors in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law). At the Closing Time, the Indenture will
conform in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the "1939 Act"), and the rules and regulations of the
Commission applicable to an indenture that is qualified thereunder.
(x) Authorization of the Securities. The Securities have been
-------------------------------
duly authorized and, at the Closing Time, will have been duly executed by
Healthtrust and, when authenticated, issued and delivered in the manner provided
for in the Indenture and delivered against payment of the purchase price
therefor as provided in this Agreement, will constitute valid and binding
obligations of Healthtrust, enforceable against Healthtrust in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and will be substantially in the form
contemplated by, and entitled to the benefits of, the Indenture. At the Closing
Time, the Securities will have been authorized by each of LifePoint and Holdings
and, when the first and second indenture supplements to the Indenture are
executed and delivered by LifePoint and Holdings, respectively, will constitute
valid and binding obligations of LifePoint and Holdings, respectively,
enforceable against LifePoint and Holdings, respectively, in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law). The Exchange Notes have been authorized by
each of Healthtrust, and, at the Closing Time, will have been authorized by
LifePoint and Holdings and, when executed and issued and delivered by the
Company in exchange for the Securities pursuant to the Exchange Offer (as
defined in the Registration Rights Agreement), will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
7
<PAGE>
(xi) Description of the Securities, the Indenture and the
----------------------------------------------------
Registration Rights Agreement. The Securities, the Exchange Notes, the
- -----------------------------
Indenture and the Registration Rights Agreement will conform in all material
respects to the descriptions thereof contained in the Offering Memorandum and
will be in substantially the respective forms previously delivered to the
Initial Purchasers.
(xii) Absence of Defaults, Violations and Conflicts. None of
---------------------------------------------
LifePoint, Holdings or any of the Designated Subsidiaries is in violation of its
charter, by-laws or other formation documents or in default in the performance
or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which any of them is a party or
by which or any of them may be bound, or to which any of the property or assets
of LifePoint, Holdings or any of the Designated Subsidiaries is subject
(collectively, the "Agreements and Instruments") or has violated or is in
violation of an applicable law, statute, rule, regulation, judgment, order, writ
or decree (including any "fraud and abuse legislation" or "anti-kickback law")
of any government, government instrumentality or court, domestic or foreign,
having jurisdiction over any of LifePoint, Holdings or any of the Designated
Subsidiaries or any of their assets, properties or operations (including,
without limitation, the Business), except, in each case, for such defaults or
violations that would not result in a Material Adverse Effect; and the
execution, delivery and performance by LifePoint or Holdings of this Agreement,
the Indenture, the Registration Rights Agreement, the Securities and the
Exchange Notes and any other agreement or instrument entered into or issued or
to be entered into or issued by any of LifePoint or Holdings in connection with
the transactions contemplated hereby or thereby and the consummation of (A) the
issuance and sale of the Securities and the use of the proceeds from the sale of
the Securities as described in the Offering Memorandum under the caption "Use of
Proceeds" and (B) the Distribution and compliance by each of LifePoint and
Holdings with their respective obligations hereunder have been duly authorized
by all necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or a Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of LifePoint, Holdings or any of the
Designated Subsidiaries pursuant to, the Agreements and Instruments, except for
such conflicts, breaches or defaults or liens, charges, encumbrances or
Repayment Events that, singly or in the aggregate, would not result in a
Material Adverse Effect or are disclosed in the Offering Memorandum, nor will
such action result in any violation of the provisions of (x) the charter, by-
laws or other formation documents of any of Healthtrust, LifePoint or Holdings
or any of the Designated Subsidiaries or (y) any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over any of
LifePoint or Holdings or any of the Designated Subsidiaries or any of their
assets, properties or operations (including, without limitation, the Business),
except, in the case of (y) above, for such violations that would not result in a
Material Adverse Effect. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by any of LifePoint or Holdings or any of the Designated Subsidiaries.
Healthtrust is not in violation of its Certificate of Incorporation or by-laws,
except for such violations that would not result in a Material Adverse
8
<PAGE>
Effect on the Mandatory Redemption; and the execution, delivery and performance
by Healthtrust of this Agreement, the Indenture, the Registration Rights
Agreement, the Securities and any other agreement or instrument entered into or
issued or to be entered into or issued by Healthtrust in connection with
transactions contemplated hereby or thereby and the consummation of (A) the
issuance and sale of the Securities and the use of proceeds from the sale of
Securities as described in the Offering Memorandum under the caption "Use of
Proceeds" and (B) the Distribution and compliance by Healthtrust with its
obligations under this Agreement, the Indenture, the Registration Rights
Agreement and the Securities have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default or a Healthtrust Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of Healthtrust pursuant to any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
Healthtrust is a party or by which it is bound or to which any of its properties
or assets is subject (collectively, the "Healthtrust Agreements and
Instruments"), except for such conflicts, breaches or defaults or liens,
charges, encumbrances or Healthtrust Repayment Events that, singly or in the
aggregate, would not result in a Material Adverse Effect on the Mandatory
Redemption or are disclosed in the Offering Memorandum, nor will such action
result in any violation of the provisions of (x) the Certificate of
Incorporation or by-laws of Healthtrust or (y) any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic of foreign, having jurisdiction over
Healthtrust or any of its assets, properties or operations, except in the case
of (y) above, for violations that would not result in a Material Adverse Effect
on the Mandatory Redemption. As used herein, a "Healthtrust Repayment Event"
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all of a portion
of such indebtedness by Healthtrust.
(xiii) Absence of Labor Dispute. No labor dispute with the
------------------------
employees of any of the Business, LifePoint or Holdings or any of the Designated
Subsidiaries exists or, to the knowledge of the Company, is imminent, which,
would result in a Material Adverse Effect.
(xiv) Absence of Proceedings. Except as disclosed in the Offering
----------------------
Memorandum, there is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of Healthtrust, LifePoint or
Holdings, threatened, against or affecting any of Healthtrust, LifePoint or
Holdings or any of the Designated Subsidiaries which would reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the Business or the consummation of
the transactions contemplated by this Agreement or the Distribution or the
performance by the Company of its obligations hereunder or under the Securities
or the Exchange Notes. The aggregate of all pending legal or governmental
proceedings to which any of Healthtrust, LifePoint or Holdings or any of the
Designated Subsidiaries is a party or of which any of their respective property
or assets is the subject which are not described in the Offering Memorandum,
including ordinary routine litigation incidental to the business, would not
result in a Material Adverse Effect.
9
<PAGE>
(xv) Possession of Intellectual Property. The Business owns or
-----------------------------------
possesses, or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
Business as currently conducted except as would not result in a Material Adverse
Effect, and none of Healthtrust, LifePoint, Holdings or any of their respective
subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Business therein,
and which infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by any of Healthtrust, LifePoint or Holdings of its
obligations hereunder, in connection with (A) the offering, issuance or sale of
the Securities hereunder, (B) the consummation of the transactions contemplated
by this Agreement, the Registration Rights Agreement and the Indenture, (C) the
consummation of the Distribution or (D) for the due execution, delivery or
performance of the Indenture and the Registration Rights Agreement by any of
Healthtrust, LifePoint or Holdings, except (v) such as have been already
obtained and are in full force and effect, (w) in connection with the
registration of the Exchange Notes pursuant to the Registration Rights
Agreement, (x) any filings under state securities or Blue Sky laws in connection
with the sale of the Securities and the Exchange Notes, (y) the qualification of
the Indenture under the 1939 Act, in connection with the Exchange Offer and (z)
for such approvals or consents the failure so to obtain with respect to
LifePoint and Holdings would not have a Material Adverse Effect and would not
materially and adversely affect the consummation of the transactions
contemplated by this Agreement, the Registration Rights Agreement, the Indenture
or the Distribution and, with respect to Healthtrust would not have a Material
Adverse Effect on the Mandatory Redemption.
(xvii) Possession of Licenses, Permits and Consents. Each of the
--------------------------------------------
Business, LifePoint, Holdings and the Designated Subsidiaries possess such
permits, licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") which have been issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them and to be conducted by them after giving effect to
the Distribution, except as disclosed in the Offering Memorandum and except
where the failure to so possess such Government Licenses would not, singly or in
the aggregate, have a Material Adverse Effect; each of the Business, LifePoint,
Holdings and the Designated Subsidiaries is in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so to
comply would not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and effect, except
as disclosed in the Offering Memorandum and except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and none of the
Business, LifePoint, Holdings or any of the Designated Subsidiaries has received
any notice of proceedings relating to the
10
<PAGE>
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect, except as disclosed in the Offering
Memorandum. Each of the Business, LifePoint and Holdings possess such permits,
licenses, approvals, consents and other authorizations (collectively,
"Authorizations") which are necessary for Holdings and its subsidiaries to
participate, after giving effect to the Distribution, in managed care programs
except as would not result in a Material Adverse Effect; each of the Business,
LifePoint, Holdings and Designated Subsidiaries is in compliance with the terms
and conditions of all such Authorizations, except where the failure so to comply
would not, singly or in the aggregate, have a Material Adverse Effect; all such
Authorizations are valid and in full force and effect, except where the
invalidity of such Authorizations or the failure of such Authorizations to be in
full force and effect would not have a Material Adverse Effect; and none of the
Business, LifePoint, Holdings or any of the Designated Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such
Authorizations which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xviii) Medicare and Medicaid. To the extent described in the
---------------------
Offering Memorandum and except as otherwise described in the Offering
Memorandum, all facilities to be owned, operated or managed as continuing
operations by Holdings and its subsidiaries after giving effect to the
Distribution (the "Company Facilities") (A) are, and after the Distribution,
will be licensed, to the extent necessary, under appropriate state laws to
conduct the business as described in the Offering Memorandum, except as would
not result in a Material Adverse Effect; (B) are, and after the Distribution,
will be certified for participation or enrollment in the Medicare and Medicaid
programs; (C) have, and after the Distribution, will have the benefit of a
current and valid provider contract with the Medicare and Medicaid programs; and
(D) are, and after the Distribution, will be in substantial compliance with the
terms and conditions of participation in such programs and have received all
approvals or qualifications necessary for reimbursement, except, in each case,
where the failure to be so licensed or certified, to have such contracts, to be
in such compliance or to have such approvals or qualifications, singly or in the
aggregate, would not have a Material Adverse Effect. To the knowledge of each
of Healthtrust, LifePoint and Holdings, the amounts established as provisions
for Medicare and Medicaid adjustments and adjustments by any other third party
payors on the financial statements of LifePoint are sufficient in all material
respects to pay any amounts for which Holdings or any of its subsidiaries may be
liable for such adjustments. Except as described in the Offering Memorandum,
none of the Business, LifePoint, Holdings or any of the Designated Subsidiaries
has received notice from the regulatory authorities which enforce the statutory
or regulatory provisions in respect of the Medicare or Medicaid programs of any
pending or threatened investigations, surveys (other than routine surveys) or
decertification proceedings, and none of Healthtrust, LifePoint, Holdings or any
of their respective subsidiaries has any reason to believe that any such
investigations, surveys or proceedings are pending, threatened or imminent, in
each case, which notices or threatened investigations, surveys or proceedings
singly or in the aggregate would have a Material Adverse Effect.
(xix) Title to Property. The Business, LifePoint and Holdings and
-----------------
the Designated Subsidiaries have good and marketable title to all real property
described in the Offering Memorandum as owned by each of them and good title to
all other properties described in the
11
<PAGE>
Offering Memorandum as owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except (A) such as are described in the Offering
Memorandum, (B) pursuant to the New Credit Agreement or (C) such as would not,
singly or in the aggregate, have a Material Adverse Effect; and all of the
leases and subleases material to the business of the Business, LifePoint,
Holdings and the Designated Subsidiaries and under which any of the Business,
LifePoint, Holdings or any of the Designated Subsidiaries holds properties
described in the Offering Memorandum, are in full force and effect, and none of
the Business, LifePoint, Holdings or any of the Designated Subsidiaries has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of any of the Business, LifePoint, Holdings or any of the
Designated Subsidiaries under any of the leases or subleases mentioned above, or
affecting or questioning the rights of any of the Business, LifePoint, Holdings
or any of the Designated Subsidiaries to the continued possession of the leased
or subleased premises under any such lease or sublease except such as would not,
singly or in the aggregate, have a Material Adverse Effect.
(xx) Environmental Laws. Except as described in the Offering
------------------
Memorandum and except such matters as would not, singly or in the aggregate,
result in a Material Adverse Effect, (A) none of the Business, LifePoint,
Holdings or any the Designated Subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Business, LifePoint, Holdings and the Designated Subsidiaries
have all permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with the requirements of such
permits, authorizations and approvals, (C) none of Healthtrust, LifePoint,
Holdings or any of the Designated Subsidiaries is aware of any pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against any of
the Business, LifePoint, Holdings or any of the Designated Subsidiaries and (iv)
none of Healthtrust, LifePoint, Holdings or any of the Designated Subsidiaries
is aware of any events or circumstances that might reasonably be expected to
form the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting any of the Business, LifePoint, Holdings or any of the Designated
Subsidiaries relating to Hazardous Materials or Environmental Laws.
(xxi) Investment Company Act. None of Healthtrust, LifePoint, or
----------------------
Holdings is, and upon the issuance and sale of the Securities as herein
contemplated, the application of the net proceeds therefrom as described in the
Offering Memorandum and the assumption of the obligations of the Securities by
LifePoint and Holdings pursuant to the first and second indenture supplements to
the Indenture, will be, an "investment
12
<PAGE>
company" or an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940 Act").
(xxii) Similar Offerings. None of Healthtrust, LifePoint, Holdings
-----------------
or any of their respective affiliates, as such term is defined in Rule 501(b)
under the 1933 Act (each, an "Affiliate"), has, directly or indirectly,
solicited any offer to buy, sold or offered to sell or otherwise negotiated in
respect of, or will solicit any offer to buy, sell or offer to sell or otherwise
negotiate in respect of, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be registered under
the 1933 Act.
(xxiii) Rule 144A Eligibility. Assuming compliance with the
---------------------
procedures set forth in Section 6 hereof, the Securities are eligible for resale
pursuant to Rule 144A and will not be, at the Closing Time, of the same class as
securities listed on a national securities exchange registered under Section 6
of the 1934 Act, or quoted in a U.S. automated interdealer quotation system.
(xxiv) No General Solicitation. None of Healthtrust, LifePoint,
-----------------------
Holdings, its Affiliates or any person acting on its or any of their behalf
(other than the Initial Purchasers, as to whom Healthtrust, LifePoint and
Holdings make no representation) has engaged or will engage, in connection with
the offering of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act.
(xxv) No Registration Required. Subject to compliance by the
------------------------
Initial Purchasers with the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Initial Purchasers and to each Subsequent Purchaser of the Securities in the
manner contemplated by this Agreement and the Offering Memorandum to register
the Securities under the 1933 Act or to qualify the Indenture under the 1939
Act.
(xxvi) Reporting Company. After the consummation of the Distribution,
-----------------
LifePoint will be subject to the reporting requirements of Section
13 or Section 15(d) of the 1934 Act.
(xxvii) Accounting Controls. Each of the Business, LifePoint, Holdings
-------------------
and the Designated Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(C) access to assets is permitted only in accordance with management's general
or specific authorization and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(xxviii) Insurance. Each of the Business, LifePoint, Holdings and the
---------
Designated Subsidiaries carry or are entitled to, and after giving effect to the
Distribution, will carry or be entitled to, the benefits of insurance in such
amounts and covering such risks as is generally maintained by companies of
established repute engaged in the same or similar business, except for failures
to carry or be entitled to benefits of insurance which would not have a Material
Adverse Effect.
13
<PAGE>
(xxix) Solvency. Healthtrust is, and immediately after the Closing Time
--------
will be, Solvent. Each of LifePoint and Holdings will be Solvent immediately
before and after they assume the obligations under the Securities and the
Indenture as contemplated by the first and second indenture supplements to the
Indenture. As used herein, the term "Solvent" means, with respect to
Healthtrust, LifePoint and Holdings, as the case may be, on a particular date,
that on such date (A) the fair market value of the assets of Healthtrust,
LifePoint and Holdings, as the case may be, is greater than the total amount of
liabilities (including contingent liabilities) of Healthtrust, LifePoint and
Holdings, as the case may be, (B) the present fair salable value of the assets
of Healthtrust, LifePoint and Holdings, as the case may be, is greater than the
amount that will be required to pay the probable liabilities of Healthtrust,
LifePoint and Holdings, as the case may be, on its debts as they become absolute
and matured, (C) Healthtrust, LifePoint and Holdings, as the case may be, able
to realize upon its assets and pay its debts and other liabilities, including
contingent obligations, as they mature, and (D) Healthtrust, LifePoint and
Holdings, as the case may be, does not have unreasonably small capital.
(xxx) Stabilization. None of Healthtrust, LifePoint, Holdings or any of their
-------------
respective officers, directors or controlling persons has taken, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of Healthtrust,
LifePoint or Holdings to facilitate the sale or resale of the Securities.
(xxxi) Year 2000 Problem. Each of Healthtrust, LifePoint and Holdings has
-----------------
reviewed and is continuing to review the operations of the Business and any
third parties with which the Business has a material relationship to evaluate
the extent to which the Business will be affected by the Year 2000 Problem. As a
result of such review, except as described in the Offering Memorandum each of
Healthtrust, LifePoint and Holdings has no reason to believe, and does not
believe, that the Year 2000 Problem will have a Material Adverse Effect. The
"Year 2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
(xxxii) Compliance with the Cuba Act. Each of Healthtrust, LifePoint and
----------------------------
Holdings has complied with all provisions of Section 517.075, Florida Statutes
(Chapter 92-198, Laws of Florida) relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(xxxiii) New Credit Agreement. The Company has received written commitments
--------------------
from lenders under the New Credit Agreement for 100% of the commitments under
the New Credit Agreement.
(xxxiv) Regulations T, U and X. None of the transactions contemplated by this
----------------------
Agreement (including, without limitation, the use of proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the 1934
Act, or any regulation promulgated thereunder,
14
<PAGE>
including, without limitation, Regulations T, U and X of the Board of Governors
of the Federal Reserve System.
(xxxv) Healthtrust Assets. (A) The only material assets owned by Columbia/HCA
------------------
are the capital stock of Healthtrust and intercompany notes in an amount not to
exceed $1,800,000,000 and (B) other than as described in clause (A), all other
material assets of Columbia/HCA have been validly transferred to and are owned
by Healthtrust. The assets held by Healthtrust comprise substantially all of the
assets of Columbia/HCA reflected on its balance sheet dated December 31, 1998
included in the Offering Memorandum, with the exception of the intercompany
notes referred to in clause (A) of the preceding sentence.
(b) Officer's Certificates '. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representative or to
counsel for the Initial Purchasers shall be deemed a representation and
warranty by the Company to each Initial Purchaser as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
------------------------------------------------
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth,
Healthtrust agrees to sell to each Initial Purchaser, severally and not
jointly, and each Initial Purchaser, severally and not jointly, agrees to
purchase from Healthtrust, at the price set forth in Schedule B, the
aggregate principal amount of Securities set forth in Schedule A opposite
the name of such Initial Purchaser, plus any additional principal amount of
Securities which such Initial Purchaser may become obligated to purchase
pursuant to the provisions of Section 11 hereof.
(b) Payment. Payment of the purchase price for, and delivery of certificates
for, the Securities shall be made at the offices of Dewey Ballantine LLP,
1301 Avenue of the Americas, New York, New York 10019, or at such other
place as shall be agreed upon by the Representative(s) and the Company, at
9:00 A.M. (eastern time) on May 11, 1999 (unless postponed in accordance
with the provisions of Section 11), or such other time not later than ten
business days after such date as shall be agreed upon by the Representative
and Healthtrust (such time and date of payment and delivery being herein
called the "Closing Time").
Payment shall be made to Healthtrust by wire transfer of immediately
available funds to a bank account designated by Healthtrust, against
delivery to the Representative for the respective accounts of the Initial
Purchasers of certificates for the Securities to be purchased by them. It
is understood that each Initial Purchaser has authorized the
Representative, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Securities which it has agreed
to purchase. Merrill Lynch, individually and not as representative of the
Initial Purchasers, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Initial Purchaser
whose funds have not been received by the Closing Time, but such payment
shall not relieve such Initial Purchaser from its obligations hereunder.
15
<PAGE>
(c) Denominations; Registration. Certificates for the Securities shall be in
such denominations ($100,000 or integral multiples of $1,000 in excess
thereof) and registered in such names as the Representative may request in
writing at least one full business day before the Closing Time. The
certificates representing the Securities shall be made available for
examination and packaging by the Initial Purchasers in The City of New York
not later than 10:00 A.M. on the last business day prior to the Closing
Time.
SECTION 3. Covenants of the Company. The Company covenants with
------------------------
each Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will furnish
to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately notify
each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of
the placement of the Securities by the Initial Purchasers as evidenced by a
notice in writing from the Initial Purchasers to the Company, any material
changes in or affecting the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Business which (i)
make any statement in the Offering Memorandum false or misleading or (ii)
are not disclosed in the Offering Memorandum. In such event or if during
such time any event shall occur as a result of which it is necessary, in
the reasonable opinion of any of the Company, its counsel, the Initial
Purchasers or counsel for the Initial Purchasers, to amend or supplement
the Final Offering Memorandum in order that the Final Offering Memorandum
not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company
will forthwith amend or supplement the Final Offering Memorandum by
preparing and furnishing to each Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the Final Offering
Memorandum (in form and substance satisfactory in the reasonable opinion of
counsel for the Initial Purchasers) so that, as so amended or supplemented,
the Final Offering Memorandum will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the
time it is delivered to a Subsequent Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or
supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchasers. Neither the
consent of the Initial Purchasers, nor the Initial Purchaser's delivery of
any such amendment or supplement, shall constitute a waiver of any of the
conditions set forth in Section 5 hereof.
(d) Qualification of Securities for Offer and Sale . The Company will use its
reasonable best efforts, in cooperation with the Initial Purchasers, to
qualify the Securities for offering
16
<PAGE>
and sale under the applicable securities laws of such states and other
jurisdictions as the Representative may reasonably request and will
maintain such qualifications in effect as long as necessary for the sale of
the Securities; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
(e) Rating of Securities . The Company shall take all reasonable action
necessary to enable Standard & Poor's Ratings Services, a division of
McGraw Hill, Inc. ("S&P"), and Moody's Investors Service Inc. ("Moody's")
to provide their respective credit ratings of the Securities.
(f) DTC . The Company will cooperate with the Representative and use its
reasonable best efforts to permit the Securities to be eligible for
clearance and settlement through the facilities of DTC.
(g) Use of Proceeds . Healthtrust will use the net proceeds received by it
from the sale of the Securities in substantially the manner specified in
the Offering Memorandum under "Use of Proceeds".
(h) Restriction on Sale of Securities . During a period of 90 days from the
date of the Offering Memorandum, Holdings will not, without the prior
written consent of Merrill Lynch, directly or indirectly, offer, sell,
contract to sell, or otherwise dispose of, any securities of Holdings that
are substantially similar to the Securities.
(i) PORTAL Designation . The Company will use its reasonable best efforts to
permit the Securities to be designated PORTAL securities in accordance with
the rules and regulations adopted by the National Association of Securities
Dealers, Inc. ("NASD") relating to trading in the PORTAL Market.
(j) Investment Company Status . The Company will not become, at any time prior
to the expiration of two years after the Closing Time, an open-end
investment company, unit investment trust, closed-end investment company or
face-amount certificate company that is or is required to be registered
under Section 8 of the 1940 Act.
(k) Furnishing of Information to Holders. To furnish to the holders of the
Securities as soon as practicable with annual reports, quarterly reports
and other documents required to be so furnished pursuant to Section 4.3 of
the Indenture.
(l) Furnishing of Information to Representative. During a period of five
years from the date of the Offering Memorandum, to furnish to you copies of
all reports or other communications (financial or other) furnished to
stockholders of the Company, and to deliver to the Representative (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities exchange on
which the Securities or any class of securities of the Company is listed;
and (ii) such additional information concerning the business and financial
condition of the Company as the Representative may from time to time
reasonably request (such financial
17
<PAGE>
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission).
(m) Filing of Registration Statement. The Company shall file and use its
reasonable best efforts to cause to be declared or become effective under
the 1933 Act, on or prior to 90 days after the Closing Time, a registration
statement on Form S-4 providing for the registration of the Exchange Notes,
and the exchange of the Securities for the Exchange Notes, all in a manner
which will permit persons who acquire the Exchange Notes to resell the
Exchange Notes pursuant to Section 4(1) of the 1933 Act, all in accordance
with the provisions of the Registration Rights Agreement.
(n) Reporting Requirements. The Company, during the period when the Offering
Memorandum is required to be delivered pursuant to Section 6(a)(vii)
hereof, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the performance
of its obligations under this Agreement, including (i) the preparation,
printing, delivery to the Initial Purchasers and any filing of the Offering
Memorandum (including financial statements and any schedules or exhibits
and any document incorporated therein by reference) and of each amendment
or supplement thereto, (ii) the preparation, printing and delivery to the
Initial Purchasers of this Agreement, any Agreement among Initial
Purchasers, the Indenture and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Initial Purchasers, including any
transfer taxes, any stamp or other duties payable upon the sale, issuance
and delivery of the Securities to the Initial Purchasers and any charges of
DTC in connection therewith, (iv) the fees and disbursements of the
Company's counsel, accountants and other advisors, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(d) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Initial Purchasers in connection therewith
and in connection with the preparation of the Blue Sky Survey, any
supplement thereto, (vi) the fees and expenses of the Trustee, including
the reasonable fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, (vii) any fees payable in
connection with the rating of the Securities, and (viii) any fees and
expenses payable in connection with the initial and continued designation
of the Securities as PORTAL securities under the PORTAL Market Rules
pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all
of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations'. The
----------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
18
<PAGE>
subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Opinion of Counsel for Company . At the Closing Time, the Representative
shall have received the opinion, dated as of the Closing Time, of each of
Dewey Ballantine LLP, special counsel for the Company, William F. Carpenter
III, Esq., General Counsel to LifePoint, John M. Franck II, Esq., Senior
Counsel to Healthtrust, and Waller Lansden Dortch & Davis, special
regulatory counsel for the Company, in each case, in form and substance
satisfactory to counsel for the Initial Purchasers, together with signed or
reproduced copies of such letters for each of the other Initial Purchasers
to the effect set forth in Exhibits A, B, C and D hereto and to such
further effect as counsel to the Initial Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers . At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of Simpson Thacher & Bartlett, counsel for the Initial
Purchasers, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers with respect to certain matters. In
giving such opinion such counsel may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon the opinions of counsel satisfactory to the
Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(c) No Loss or Interference with Business . None of the Business,
Healthtrust, LifePoint or Holdings, or any of the Designated Subsidiaries,
shall have sustained since the date of the latest audited financial
statements included in the Offering Memorandum any loss or interference
with its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Memorandum and except for such interference,
loss or damage which would not (i) with respect to Healthtrust, result in a
Material Adverse Effect on the Mandatory Redemption and (ii) with respect
to the Business, LifePoint or Holdings, result in a Material Adverse
Effect.
(d) Officers' Certificate. ' At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information
is given in the Offering Memorandum, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Business, whether or not arising in the ordinary
course of business, and the Representative shall have received a
certificate of the President or a Vice President of Healthtrust and of the
chief financial or chief accounting officer of Healthtrust, dated as of the
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1 hereof
are true and correct with the same force and effect as though expressly
made at and as of the Closing Time, and (iii) Healthtrust has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time.
(e) Accountants' Comfort Letter '. At the time of the execution of this
Agreement, the Representative shall have received from Ernst & Young LLP a
letter dated such date, in form and
19
<PAGE>
substance satisfactory to the Representative, together with signed or
reproduced copies of such letter for each of the other Initial Purchasers
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to Initial Purchasers with respect to the
financial statements and certain financial information contained in the
Offering Memorandum.
(f) Bring-down Comfort Letter . At the Closing Time, the Representative shall
have received from Ernst & Young LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to the Closing Time.
(g) Maintenance of Rating . At the Closing Time, the Securities shall be
rated at least B3 by Moody's and B- by S&P, and the Company shall have
delivered to the Representative a letter dated the Closing Time, from each
such rating agency, or other evidence satisfactory to the Representative,
confirming that the Securities have such ratings; and since the date of
this Agreement, there shall not have occurred a downgrading in the rating
assigned to the Securities or any of the Company's other debt by any
"nationally recognized statistical rating agency", as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no
such securities rating agency shall have publicly announced that it has
under surveillance or review, with possible negative implications, its
rating of the Securities or any of the Company's other debt.
(h) PORTAL. At the Closing Time, the Securities shall have been designated
for trading on PORTAL.
(i) Registration Rights Agreement . At the Closing Time, the Representative
shall have received the Registration Rights Agreement, executed by
Healthtrust and such agreement shall be in full force and effect.
(j) Additional Documents . At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as
they may require for the purpose of enabling them to pass upon the issuance
and sale of the Securities as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by Healthtrust in connection with the issuance and sale of the
Securities and the assumption by Holdings of the obligations under the
Securities, in each case, as herein contemplated shall be satisfactory in
form and substance to the Representative and counsel for the Initial
Purchasers.
(k) New Credit Agreement. The conditions to closing provided for in the New
Credit Agreement shall be simultaneously satisfied or waived, and
Healthtrust shall have received loan proceeds of not less than $110,000,000
under the New Credit Agreement.
(l) Termination of Agreement . If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to Healthtrust
at any time at or prior to the Closing Time, and such termination shall be
without liability of any party to any other party except as provided in
Section 4 and except that Sections 7 and 8 shall survive any such
termination and remain in full force and effect.
20
<PAGE>
SECTION 6. Subsequent Offers and Resales of the Securities.
-----------------------------------------------
(a) Offer and Sale Procedures . Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Qualified Institutional Buyers .
-------------------------------------------------------
Offers and sales of the Securities shall only be made to persons whom the
offeror or seller reasonably believes to be qualified institutional buyers, as
defined in Rule 144A under the 1933 Act ("Qualified Institutional Buyers").
Each Initial Purchaser severally agrees that it will not offer, sell or deliver
any of the Securities in any jurisdiction outside the United States.
(ii) No General Solicitation . No general solicitation or general advertising
-----------------------
(within the meaning of Rule 502(c) under the 1933 Act) will be used in the
United States in connection with the offering or sale of the Securities.
(iii) Purchases by Non-Bank Fiduciaries . In the case of a non-bank Subsequent
---------------------------------
Purchaser of a Security acting as a fiduciary for one or more third
parties, each third party shall, in the reasonable judgment of the
applicable Initial Purchaser, be a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification . Each Initial Purchaser will take
---------------------------------
reasonable steps to inform, and cause each of its U.S. Affiliates to take
reasonable steps to inform, persons acquiring Securities from such Initial
Purchaser or affiliate, as the case may be, in the United States that the
Securities (A) have not been and will not be registered under the 1933
Act, (B) are being sold to them without registration under the 1933 Act in
reliance on Rule 144A, and (C) may not be offered, sold or otherwise
transferred except (1) to the Company or (2) inside the United States in
accordance with (x) Rule 144A to a person whom the seller reasonably
believes is a Qualified Institutional Buyer that is purchasing such
Securities for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the 1933 Act.
(v) Minimum Principal Amount . No sale of the Securities to any one
------------------------
Subsequent Purchaser will be for less than U.S. $100,000 principal amount
and no Security will be issued in a smaller principal amount. If the
Subsequent Purchaser is a non-bank fiduciary acting on behalf of others,
each person for whom it is acting must purchase at least U.S. $100,000
principal amount of the Securities.
(vi) Restrictions on Transfer . The transfer restrictions and the other
------------------------
provisions set forth in the Offering Memorandum under the heading "Notice
to Investors", including the legend required thereby, shall apply to the
Securities except as otherwise agreed by the Company and the Initial
Purchasers.
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<PAGE>
(vii) Delivery of Offering Memorandum . Each Initial Purchaser will deliver to
-------------------------------
each purchaser of the Securities from such Initial Purchaser, in
connection with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such
delivery.
(b) Covenants of the Company . The Company covenants with each Initial
Purchaser as follows:
(i) Integration . The Company agrees that it will not and will cause its
-----------
Affiliates not to, directly or indirectly, solicit any offer to buy, sell
or make any offer or sale of, or otherwise negotiate in respect of,
securities of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the 1933 Act, such offer or
sale would render invalid (for the purpose of (i) the sale of the
Securities by the Company to the Initial Purchasers, (ii) the resale of
the Securities by the Initial Purchasers to Subsequent Purchasers or (iii)
the resale of the Securities by such Subsequent Purchasers to others) the
exemption from the registration requirements of the 1933 Act provided by
Section 4(2) thereof or by Rule 144A thereunder or otherwise.
(ii) Rule 144A Information . The Company agrees that, in order to render the
---------------------
Securities eligible for resale pursuant to Rule 144A under the 1933 Act,
while any of the Securities remain outstanding, it will make available,
upon request, to any holder of Securities or prospective purchasers of
Securities the information specified in Rule 144A(d)(4), unless the
Company furnishes information to the Commission pursuant to Section 13 or
15(d) of the 1934 Act.
(iii) Restriction on Repurchases . Until the expiration of two years after the
--------------------------
original issuance of the Securities, the Company will not, and will cause
its Affiliates not to, resell any Securities which are "restricted
securities" (as such term is defined under Rule 144(a)(3) under the 1933
Act), whether as beneficial owner or otherwise (except as agent acting as
a securities broker on behalf of and for the account of customers in the
ordinary course of business in unsolicited broker's transactions).
(c) Qualified Institutional Buyer . Each Initial Purchaser severally and not
jointly represents and warrants to, and agrees with, the Company that it
is a Qualified Institutional Buyer.
(d) Resale Pursuant to Rule 144A . Each Initial Purchaser understands that the
Securities have not been and will not be registered under the 1933 Act and
may not be offered or sold within the United States except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the 1933 Act. Each Initial Purchaser severally represents
and agrees that it has not offered or sold, and will not offer or sell,
any Securities constituting part of its allotment within the United States
except in accordance with Rule 144A under the 1933 Act or another
applicable exemption from the registration requirements of the 1933 Act.
Accordingly, neither it nor its affiliates or any persons acting on its or
their behalf have engaged or will engage in any directed selling efforts
with respect to the Securities.
SECTION 7. Indemnification .
---------------
22
<PAGE>
(a) Indemnification of Initial Purchasers . The Company and, upon execution
of the Guarantor Assumption Agreement, each Guarantor agree, jointly and
severally, to indemnify and hold harmless each Initial Purchaser and each
person, if any, who controls any Initial Purchaser within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including the fees
and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any Initial Purchaser through Merrill Lynch expressly for use in
the Offering Memorandum (or any amendment thereto) and, provided, further,
however, this indemnity agreement shall not inure to the benefit of any Initial
Purchaser or any person controlling such Initial Purchaser on account of any
loss, claim, damage or liability or action arising from the sale of the
Securities to any person by such Initial Purchaser if such Initial Purchaser
failed to send or give a copy of the Final Offering Memorandum, as the same may
be amended or supplemented, to that person, and the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact was corrected in the Final Offering Memorandum, or any supplement
or amendment thereto, as the case may be. It is understood and agreed that the
only written information furnished by any Initial Purchaser for inclusion in the
Offering Memorandum consists of the following information in the Offering
Memorandum: (i) the last paragraph on the front cover, (ii) the second sentence
under the caption "Risk Factors--You May Not be Able to Sell Your Notes", and
(iii) the second, fourth and ninth paragraphs and the second sentence of the
fifth paragraph under the caption "Plan of Distribution".
(b) Indemnification of Company, Directors and Officers . Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers and each
23
<PAGE>
person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions,
made in the Offering Memorandum in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such
Initial Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum.
(c) Actions against Parties; Notification . Each indemnified party shall give
notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account
of this indemnity agreement. In the case of parties indemnified pursuant
to Section 7(a) above, counsel to the indemnified parties shall be selected
by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 7(b) above, counsel to the indemnified parties shall be selected by
the Company. An indemnifying party may participate at its own expense in
the defense of any such action; provided, however, that counsel to the
-------- -------
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel
for all indemnified parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever in respect of
which indemnification or contribution could be sought under this Section or
Section 8 hereof (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse . If at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 7(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in
------------
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the
24
<PAGE>
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Initial Purchasers on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and
the Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
Healthtrust and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section were determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities purchased and sold by it hereunder
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
25
<PAGE>
For purposes of this Section, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company, each officer of the Company, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Initial Purchasers' respective obligations to
contribute pursuant to this Section are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
- --------
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any Initial
Purchaser or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Initial Purchasers. Notwithstanding
the foregoing, the parties hereto acknowledge and agree that the representations
and warranties relating to Healthtrust or Columbia/HCA and their respective
subsidiaries (other than the Business, LifePoint, Holdings and the Designated
Subsidiaries) shall survive only until the assumption of the indebtedness
evidenced by the Securities by Holdings has occurred and the Distribution has
been consummated.
SECTION 10. Termination of Agreement.
------------------------
(a) Termination; General . The Representative may terminate this Agreement, by
notice to the Company, at any time at or prior to the Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Business, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial
markets in the United States, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving
a prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make
it, in the judgment of the Representative, impracticable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of any of Columbia/HCA or LifePoint has been
suspended or materially limited by the Commission, the New York Stock
Exchange or the NASDAQ System, or if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the NASDAQ System has
been suspended or materially limited, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices have been required,
by any of said exchanges or by such system or by order of the Commission,
the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared
by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections
7 and 8 shall survive such termination and remain in full force and effect.
26
<PAGE>
SECTION 11. Default by One or More of the Initial Purchasers. If
------------------------------------------------
one or more of the Initial Purchasers shall fail at the Closing Time to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Initial Purchasers, or any other initial purchasers, to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the Representative shall not
have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the aggregate
principal amount of the Securities to be purchased hereunder, each of the
non-defaulting Initial Purchasers shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this
Agreement shall terminate without liability on the part of any non-
defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representative or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Offering Memorandum or in
any other documents or arrangements. As used herein, the term "Initial
Purchaser" includes any person substituted for an Initial Purchaser under this
Section.
SECTION 12. Notices. All notices and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Initial Purchasers shall be directed to the Representative at North Tower, World
Financial Center, New York, New York 10281, attention of Debt Capital Markets.
Notices to the Company shall be directed to it at 4525 Harding Road, Suite 300,
Nashville, Tennessee 37205, attention of General Counsel.
SECTION 13. Parties. This Agreement shall inure to the benefit of
-------
and be binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal
27
<PAGE>
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Initial Purchaser shall be deemed to be a
successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
----------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings
------------------
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
28
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to Healthtrust a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
HEALTHTRUST, INC.--THE HOSPITAL COMPANY
By /s/ Healthtrust, Inc. - The Hospital Company
---------------------------------------------
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DEUTSCHE BANK SECURITIES INC.
FLEET SECURITIES, INC.
SCOTIA CAPITAL MARKETS (USA) INC.
SUNTRUST EQUITABLE SECURITIES CORPORATION
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Merrill Lynch, Pierce, Fenner & Smith Incorporated
-------------------------------------------------------
For itself and as Representative of the other Initial Purchasers
named in Schedule A hereto.
29
<PAGE>
EXHIBIT 4.3(b)
LIFEPOINT ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Purchase Agreement, dated May 4, 1999 (the
"Agreement"), between Healthtrust, Inc.-The Hospital Company ("Healthtrust") and
the Initial Purchasers named therein. Unless otherwise defined herein, terms
defined in the Agreement and used herein shall have the meanings given them in
the Agreement.
LifePoint Hospitals, Inc. ("LifePoint") hereby unconditionally and irrevocably
expressly assumes, confirms and agrees to perform and observe as the "Company"
each and every of the covenants, agreements, terms, conditions, obligations,
appointments, duties, promises and liabilities of Healthtrust under the
Agreement, and upon the Business being validly transferred to LifePoint, the
assumption by LifePoint of the indebtedness evidenced by the Securities and
Healthtrust and LifePoint executing and delivering this LifePoint Assumption
Agreement, Healthtrust shall fully, unconditionally and irrevocably be released
of all covenants, agreements, terms, conditions, obligations, appointment,
duties, promises and liabilities under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as the other undersigned
party or the Representative may reasonably require to effect the purpose of this
LifePoint Assumption Agreement.
This LifePoint Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
HEALTHTRUST, INC.-THE HOSPITAL
COMPANY
By: /s/ R. Milton Johnson
--------------------------------
Name: R. Milton Johnson
Title: Vice President
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
--------------------------------
Name: William F. Carpenter III
Title: Vice President
<PAGE>
EXHIBIT 4.3(c)
HOLDINGS ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Purchase Agreement, dated May 4, 1999 (the
"Agreement"), between Healthtrust, Inc.-The Hospital Company ("Healthtrust") and
the Initial Purchasers named therein and the LifePoint Assumption Agreement,
dated May 11, 1999, between Healthtrust and LifePoint Hospitals, Inc.
("LifePoint"). Unless otherwise defined herein, terms defined in the Agreement
and used herein shall have the meanings given them in the Agreement.
LifePoint Hospitals Holdings, Inc. ("Holdings") hereby unconditionally and
irrevocably expressly assumes, confirms and agrees to perform and observe as
the "Company" each and every of the covenants, agreements, terms, conditions,
obligations, appointments, duties, promises and liabilities of LifePoint under
the Agreement, and upon the Business being validly transferred to Holdings, the
assumption by Holdings of the indebtedness evidenced by the Securities and
LifePoint and Holdings executing and delivering this Holdings Assumption
Agreement, LifePoint shall fully, unconditionally and irrevocably be released of
all covenants, agreements, terms, conditions, obligations, appointment, duties,
promises and liabilities under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as any other undersigned
party or the Representative may reasonably require to effect the purpose of this
Holdings Assumption Agreement.
<PAGE>
This Holdings Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT HOSPITALS HOLDINGS,
INC.
By: /s/ Kenneth C. Donahey
-----------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
<PAGE>
EXHIBIT 4.3(d)
GUARANTOR ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Purchase Agreement, dated May 4, 1999 (the
"Agreement"), between Healthtrust, Inc.-The Hospital Company ("Healthtrust") and
the Initial Purchasers named therein, the LifePoint Assumption Agreement, dated
May 11, 1999, between Healthtrust and LifePoint Hospitals, Inc. ("LifePoint")
and the Holdings Assumption Agreement, dated May 11, 1999, between LifePoint and
LifePoint Hospitals Holdings, Inc. Unless otherwise defined herein, terms
defined in the Agreement and used herein shall have the meanings given them in
the Agreement.
Each of the undersigned parties hereby unconditionally and irrevocably expressly
assumes, confirms and agrees to perform and observe as a "Guarantor" each and
any of the covenants, agreements, terms, conditions, obligations, appointments,
duties, promises and liabilities of the "Guarantors" under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as any other undersigned
party or the Representative may reasonably require to effect the purpose of this
Guarantor Assumption Agreement.
This Guarantor Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
AMERICA GROUP OFFICES, LLC
By: LIFEPOINT CORPORATE SERVICES,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
<PAGE>
AMERICA MANAGEMENT
COMPANIES, LLC
By: LIFEPOINT CORPORATE SERVICES,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - CROCKETT, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - HILCREST, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - HILLSIDE, LLC
By: LIFEPOINT MEDICAL GROUP - HILLSIDE,
INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
2
<PAGE>
AMG - Livingston, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - LOGAN, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - SOUTHERN TENNESSEE, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
AMG - TRINITY, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
3
<PAGE>
ASHLEY VALLEY MEDICAL CENTER, LLC
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
ASHLEY VALLEY PHYSICIAN PRACTICE,
LLC
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
BARROW MEDICAL CENTER, LLC
By: LIFEPOINT OF GEORGIA,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
BARTOW HEALTHCARE PARTNER, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
4
<PAGE>
BARTOW HEALTHCARE SYSTEM, LTD.
By: GENERAL PARTNER:
BARTOW HEALTHCARE PARTNER, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
BOURBON COMMUNITY HOSPITAL, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
BUFFALO TRACE RADIATION ONCOLOGY
ASSOCIATES, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
CASTLEVIEW HOSPITAL, LLC
By: CASTLEVIEW MEDICAL, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
5
<PAGE>
CASTLEVIEW MEDICAL, LLC
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
CASTLEVIEW PHYSICIAN PRACTICE, LLC
By: CASTLEVIEW MEDICAL, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
COMMUNITY HOSPITAL OF ANDALUSIA,
INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
COMMUNITY MEDICAL, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
CROCKETT HOSPITAL, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
6
<PAGE>
DODGE CITY HEALTHCARE GROUP,LP
By: GENERAL PARTNER:
DODGE CITY HEALTHCARE PARTNER, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
DODGE CITY HEALTHCARE PARTNER, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
GEORGETOWN COMMUNITY HOSPITAL,
LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
GEORGETOWN REHABILITATION, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
7
<PAGE>
HALSTEAD HOSPITAL, LLC
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HCK LOGAN MEMORIAL, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HDP ANDALUSIA, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HDP GEORGETOWN, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
8
<PAGE>
HILLSIDE HOSPITAL, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HST PHYSICIAN PRACTICE, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HTI GEORGETOWN, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
HTI PINELAKE, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
9
<PAGE>
INTEGRATED PHYSICIAN SERVICES, LLC
By: LIFEPOINT OF GEORGIA,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
KANSAS HEALTHCARE MANAGEMENT COMPANY, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
KENTUCKY HOSPITAL, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
KENTUCKY MEDSERVE, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
10
<PAGE>
KENTUCKY MSO, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
KENTUCKY PHYSICIANS SERVICES, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LAKE CUMBERLAND HEALTH CARE, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LAKE CUMBERLAND REGIONAL
HOSPITAL, LLC
By: LAKE CUMBERLAND HEALTH CARE, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
11
<PAGE>
LIFEPOINT CSGP, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT CSLP, LLC
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT CORPORATE SERVICES, LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT HOLDINGS 2, INC.
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
12
<PAGE>
LIFEPOINT HOLDINGS 3, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT MEDICAL GROUP -
HILLSIDE, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT OF GEORGIA, LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT OF GAGP, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
13
<PAGE>
LIFEPOINT OF KENTUCKY, LLC
By: LIFEPOINT HOLDINGS 3, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIFEPOINT RC, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LIVINGSTON REGIONAL HOSPITAL, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LOGAN MEDICAL, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
LOGAN MEMORIAL HOSPITAL, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
14
<PAGE>
LOSCO, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
MEADOWVIEW PHYSICIAN PRACTICE, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
MEADOWVIEW REGIONAL MEDICAL CENTER, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
MEADOWVIEW RIGHTS, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
15
<PAGE>
PINELAKE PHYSICIAN PRACTICE, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
PINELAKE REGIONAL HOSPITAL, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
POITRAS PRACTICE, LLC
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
R. KENDALL BROWN PRACTICE, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
16
<PAGE>
RIVERTON MEMORIAL HOSPITAL, LLC
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
RIVERTON PHYSICIAN PRACTICES, LLC
By: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
RIVERVIEW MEDICAL CENTER, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SELECT HEALTHCARE, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
17
<PAGE>
SILETCHNIK PRACTICE, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SMITH COUNTY MEMORIAL HOSPITAL, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SOUTHERN TENNESSEE EMS, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SOUTHERN TENNESSEE MEDICAL
CENTER, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
18
<PAGE>
SPRINGHILL MEDICAL CENTER, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
SPRINGHILL MOB, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
THM PHYSICIAN PRACTICE, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
TRINITY HOSPITAL, LLC
By: LIFEPOINT HOLDINGS 2, LLC
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
19
<PAGE>
WESTERN PLAINS REGIONAL
HOSPITAL, LLC
By: LIFEPOINT HOLDINGS 3, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
20
<PAGE>
EXHIBIT 4.4(a)
Registration Rights Agreement
Dated As of May 11, 1999
among
Healthtrust, Inc. -- The Hospital Company
and
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Deutsche Bank Securities
Fleet Securities, Inc.
Scotia Capital Markets
and
SunTrust Equitable Securities Corporation
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into this 11th day of May, 1999, among Healthtrust, Inc.--The Hospital
Company, a Delaware corporation ("Healthtrust" or the "Company"), and Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Deutsche Bank
Securities, Fleet Securities, Inc., Scotia Capital Markets and SunTrust
Equitable Securities Corporation (collectively, the "Initial Purchasers"), for
whom Merrill Lynch is acting as representative (in such capacity, the
"Representative").
This Agreement is made pursuant to the Purchase Agreement, dated May
4, 1999, among the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $150 million principal amount of the Company's 10
3/4% Senior Subordinated Notes due 2009 (the "Securities"), which are to be
unconditionally guaranteed by certain subsidiaries of LifePoint Hospitals
Holdings, Inc, a Delaware corporation ("Holdings"), following the assumption of
the Securities by Holdings and the asset contributions described below. In
order to induce the Initial Purchasers to enter into the Purchase Agreement, the
Company has agreed to provide to the Initial Purchasers and their direct and
indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.
Upon Healthtrust transferring the Business (as defined herein) to
LifePoint Hospitals, Inc., a Delaware corporation ("LifePoint"), and the
assumption by LifePoint of the indebtedness evidenced by the Securities,
Healthtrust will cause LifePoint to assume all the rights, obligations and
liabilities of Healthtrust under this agreement pursuant to the LifePoint
Assumption Agreement, the form of which is attached as Exhibit A hereto. Upon
LifePoint transferring the Business to Holdings and the assumption by Holdings
of the indebtedness evidenced by the Securities, LifePoint will cause Holdings
to assume all rights, obligations and liabilities of LifePoint under this
Agreement pursuant to the Holdings Assumption Agreement, the form of which is
attached as Exhibit B hereto. Following the assumption by Holdings of the
indebtedness evidenced by the Securities, Holdings will contribute certain
assets to its subsidiary, LifePoint Holdings 2, LLC and LifePoint Holdings 2,
LLC will then contribute certain assets to its subsidiary, LifePoint Holdings 3,
Inc. Following these contributions and immediately prior to the completion of
the Distribution, Holdings will cause the Guarantors (as defined in the
Guarantor Assumption Agreement) to execute and deliver the Guarantor Assumption
Agreement, the form of which is attached as Exhibit C hereto, pursuant to which
each Guarantor will agree to observe and perform as a "Guarantor" all rights,
obligations and liabilities of such Guarantor under this Agreement. The parties
hereto acknowledge and agree that once (i) the Business has been validly
transferred to LifePoint and the LifePoint Assumption Agreement has been
executed and delivered by the parties thereto, Healthtrust shall automatically
be fully, unconditionally and irrevocably released from all rights, obligations
and liabilities hereunder and (ii) the Business has been validly transferred to
Holdings and the Holdings Assumption Agreement has been executed and delivered
by the parties thereto,
1
<PAGE>
LifePoint shall automatically be fully, unconditionally and irrevocably released
from all rights, obligations and liabilities hereunder. For purposes of this
Agreement, the "Company" shall refer to any of Healthtrust or LifePoint or
Holdings, depending on which such company has then assumed all rights,
obligations and liabilities under this Agreement as discussed in this paragraph.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
-----------
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
--------
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
--------
from time to time.
"Business" shall mean the net assets, business and operations
--------
comprising the America Group Division of Columbia/HCA.
"Closing Date" shall mean the Closing Time as defined in the Purchase
------------
Agreement.
"Columbia/HCA" shall mean Columbia/HCA Healthcare Corporation, a
------------
Delaware corporation.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company, provided, however, that such
depositary must have an address in the Borough of Manhattan, in the City of
New York.
"Exchange Offer" shall mean the exchange offer by the Company of
--------------
Exchange Securities for Registrable Securities pursuant to Section 2.1
hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
---------------------------
Act effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, including the Prospectus contained therein, all exhibits thereto
and all documents incorporated by reference therein.
2
<PAGE>
"Exchange Period" shall have the meaning set forth in Section 2.1
---------------
hereof.
"Exchange Securities" shall mean the 10 3/4% Senior Subordinated Notes
-------------------
due 2009, issued by the Company under the Indenture containing terms
identical to the Securities in all material respects (except for references
to certain interest rate provisions, restrictions on transfers and
restrictive legends), to be offered to Holders of Securities in exchange
for Registrable Securities pursuant to the Exchange Offer. The Exchange
Securities shall be entitled to the guarantees provided for in the
Indenture (the "Guarantees").
----------
"Guarantors" shall have the meaning assigned thereto in the Indenture.
----------
"Holder" shall mean an Initial Purchaser, for so long as it owns any
------
Registrable Securities, and each of its successors, assigns and direct and
indirect transferees who become registered owners of Registrable Securities
under the Indenture and each Participating Broker-Dealer that holds
Exchange Securities for so long as such Participating Broker-Dealer is
required to deliver a prospectus meeting the requirements of the 1933 Act
in connection with any resale of such Exchange Securities.
"Indenture" shall mean the Indenture relating to the Securities, dated
---------
as of May 11, 1999 between the Company and Citibank, N.A., as trustee, as
the same may be amended, supplemented, waived or otherwise modified from
time to time in accordance with the terms thereof.
"Initial Purchaser" or "Initial Purchasers" shall have the meaning set
----------------- ------------------
forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of Outstanding (as defined in the Indenture)
Registrable Securities; provided that whenever the consent or approval of
--------
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company and other obligors on
the Securities or any Affiliate (as defined in the Indenture) of the
Company shall be disregarded in determining whether such consent or
approval was given by the Holders of such required percentage amount.
"Participating Broker-Dealer" shall mean any of Merrill Lynch, Pierce,
---------------------------
Fenner & Smith Incorporated, Deutsche Bank Securities, Fleet Securities,
Inc., Scotia Capital Markets and SunTrust Equitable Securities Corporation
and any other broker-dealer which makes a market in the Securities and
exchanges Registrable Securities in the Exchange Offer for Exchange
Securities.
3
<PAGE>
"Person" shall mean an individual, partnership (general or limited),
------
corporation, limited liability company, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2.1
----------------
hereof.
"Private Exchange Securities" shall have the meaning set forth in
---------------------------
Section 2.1 hereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble.
------------------
"Registrable Securities" shall mean the Securities and, if issued, the
----------------------
Private Exchange Securities; provided, however, that Securities and, if
issued, the Private Exchange Securities, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such
Securities shall have been declared effective under the 1933 Act and such
Securities shall have been disposed of pursuant to such Registration
Statement, (ii) such Securities have been sold to the public pursuant to
Rule 144 (or any similar provision then in force, but not Rule 144A) under
the 1933 Act, (iii) such Securities shall have ceased to be outstanding or
(iv) the Exchange Offer is consummated (except in the case of Securities
purchased from the Company and continued to be held by the Initial
Purchasers).
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. (the "NASD") registration and filing fees,
including, if applicable, the fees and expenses of any "qualified
independent underwriter" (and its counsel) that is required to be retained
by any holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all reasonable fees and expenses incurred in
connection with compliance with state securities or blue sky laws and
compliance with the rules of the NASD (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection with
blue sky qualification of any of the Exchange Securities or Registrable
Securities and any filings with the NASD), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus, any amendments
or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to
4
<PAGE>
the performance of and compliance with this Agreement, (iv) all fees and
expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges, (v) all
rating agency fees, (vi) the reasonable fees and disbursements of counsel
for the Company and of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, (vii) the
reasonable fees and expenses of the Trustee, and any escrow agent or
custodian, (viii) the reasonable fees and expenses of the Initial
Purchasers in connection with the Exchange Offer, including the reasonable
fees and expenses of counsel to the Initial Purchasers in connection
therewith, (ix) the reasonable fees and disbursements of special counsel
representing the Holders of Registrable Securities retained in connection
with a Shelf Registration (which counsel shall be reasonably satisfactory
to the Company and (x) the reasonable fees and disbursements of the
underwriters customarily required to be paid by issuers or sellers of
securities and the reasonable fees and expenses of any special experts
retained by the Company in connection with any Registration Statement, but
excluding underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of Registrable Securities by a
Holder.
"Registration Statement" shall mean any registration statement of the
----------------------
Company which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments
and supplements to any such Registration Statement, including post-
effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission or any
---
successor agency or government body performing the functions currently
performed by the United States Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company pursuant to the provisions of Section 2.2 of this
Agreement which covers all of the Registrable Securities or all of the
Private Exchange Securities on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including post-
effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Trustee" shall mean the trustee with respect to the Securities under
-------
the Indenture.
2. Registration Under the 1933 Act.
-------------------------------
5
<PAGE>
2.1 Exchange Offer. The Company and the Guarantors shall, for
--------------
the benefit of the Holders, at the Company's cost, (A) prepare and, as soon as
practicable but not later than 90 days following the Closing Date, use
reasonable best efforts to file with the SEC an Exchange Offer Registration
Statement on an appropriate form under the 1933 Act with respect to a proposed
Exchange Offer and the issuance and delivery to the Holders, in exchange for the
Registrable Securities (other than Private Exchange Securities), of a like
principal amount of Exchange Securities, (B) use its reasonable best efforts to
cause the Exchange Offer Registration Statement to be declared effective under
the 1933 Act within 180 days of the Closing Date, (C) use its reasonable best
efforts to keep the Exchange Offer Registration Statement effective until the
closing of the Exchange Offer and (D) use its reasonable best efforts to cause
the Exchange Offer to be consummated not later than 220 days following the
Closing Date. The Exchange Securities will be issued under the Indenture. Upon
the effectiveness of the Exchange Offer Registration Statement, the Company
shall promptly commence the Exchange Offer, it being the objective of such
Exchange Offer to enable each Holder eligible and electing to exchange
Registrable Securities for Exchange Securities (assuming that such Holder (a) is
not an affiliate of the Company within the meaning of Rule 405 under the 1933
Act, (b) is not a broker-dealer tendering Registrable Securities acquired
directly from the Company for its own account, (c) acquired the Exchange
Securities in the ordinary course of such Holder's business and (d) has no
arrangements or understandings with any Person to participate in the Exchange
Offer for the purpose of distributing the Exchange Securities) to transfer such
Exchange Securities from and after their receipt without any limitations or
restrictions under the 1933 Act and under state securities or blue sky laws.
In connection with the Exchange Offer, the Company shall:
(a) mail as promptly as practicable to each Holder a copy of the
Prospectus forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and related documents;
(b) keep the Exchange Offer open for acceptance for a period of not less
than 30 calendar days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law) (such period referred to
herein as the "Exchange Period");
(c) utilize the services of the Depositary for the Exchange Offer;
(d) permit Holders to withdraw tendered Registrable Securities at any time
prior to 5:00 p.m. (Eastern Time), on the last business day of the Exchange
Period, by sending to the institution specified in the notice, a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Securities delivered for
exchange, and a statement that such Holder is withdrawing such Holder's
election to have such Securities exchanged;
6
<PAGE>
(e) notify each Holder that any Registrable Security not tendered will
remain outstanding and continue to accrue interest, but will not retain any
rights under this Agreement (except in the case of the Initial Purchasers
and Participating Broker-Dealers as provided herein); and
(f) otherwise comply in all respects with all applicable laws relating to
the Exchange Offer.
If the Company effects the Exchange Offer, the Company will be
entitled to close the Exchange Offer 30 days after the commencement thereof
provided that (i) applicable law does not require that the Exchange Offer remain
open longer and that (ii) the Company has accepted all the Registrable
Securities theretofore validly tender in accordance with the terms of the
Exchange Offer.
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Securities acquired by them and having the status of an
unsold allotment in the initial distribution, the Company upon the request of
any Initial Purchaser shall, simultaneously with the delivery of the Exchange
Securities in the Exchange Offer, issue and deliver to such Initial Purchaser in
exchange (the "Private Exchange") for the Securities held by such Initial
Purchaser, a like principal amount of debt securities of the Company on a senior
basis, that are identical (except that such securities shall bear appropriate
transfer restrictions) to the Exchange Securities (the "Private Exchange
Securities"). The Private Exchange Securities shall be entitled to the
Guarantees.
The Exchange Securities and the Private Exchange Securities shall be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture and which, in either case, has been qualified under
the Trust Indenture Act of 1939, as amended (the "TIA"), or is exempt from such
qualification and shall provide that the Exchange Securities shall not be
subject to the transfer restrictions set forth in the Indenture but that the
Private Exchange Securities shall be subject to such transfer restrictions. The
Indenture or such indenture shall provide that the Exchange Securities, the
Private Exchange Securities and the Securities shall vote and consent together
on all matters as one class and that none of the Exchange Securities, the
Private Exchange Securities or the Securities will have the right to vote or
consent as a separate class on any matter. The Private Exchange Securities
shall be of the same series as and the Company shall use all commercially
reasonable efforts to have the Private Exchange Securities bear the same CUSIP
number as the Exchange Securities. The Company shall not have any liability
under this Agreement solely as a result of such Private Exchange Securities not
bearing the same CUSIP number as the Exchange Securities.
As soon as practicable after the close of the Exchange Offer and/or
the Private Exchange, as the case may be, the Company shall use its reasonable
best efforts to:
7
<PAGE>
(i) accept for exchange all Registrable Securities duly tendered and not
validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the letter of
transmittal which shall be an exhibit thereto;
(ii) accept for exchange all Securities properly tendered pursuant to the
Private Exchange;
(iii) deliver to the Trustee for cancellation all Registrable Securities so
accepted for exchange; and
(iv) cause the Trustee promptly to authenticate and deliver Exchange
Securities or Private Exchange Securities, as the case may be, to each
Holder of Registrable Securities so accepted for exchange in a principal
amount equal to the principal amount of the Registrable Securities of such
Holder so accepted for exchange.
Interest on each Exchange Security and Private Exchange Security will
accrue from the last date on which interest was paid on the Registrable
Securities surrendered in exchange therefor or, if no interest has been paid on
the Registrable Securities, from the date of original issuance of the
Registrable Securities. The Exchange Offer and the Private Exchange shall not
be subject to any conditions, other than (i) that the Exchange Offer or the
Private Exchange, or the making of any exchange by a Holder, does not violate
applicable law or any applicable interpretation of the staff of the SEC, (ii)
the due tendering of Registrable Securities in accordance with the Exchange
Offer and the Private Exchange, (iii) that each Holder of Registrable Securities
to be exchanged in the Exchange Offer shall have represented that all Exchange
Securities to be received by it shall be acquired in the ordinary course of its
business and that at the time of the consummation of the Exchange Offer it shall
have no arrangement or understanding with any person to participate in the
distribution (within the meaning of the 1933 Act) of the Exchange Securities and
shall have made such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to render the use of Form
S-4 or other appropriate form under the 1933 Act available and (iv) that no
action or proceeding shall have been instituted or threatened in any court or by
or before any governmental agency with respect to the Exchange Offer or the
Private Exchange which, in the Company's judgment, would reasonably be expected
to impair the ability of the Company to proceed with the Exchange Offer or the
Private Exchange. The Company shall inform the Initial Purchasers of the names
and addresses of the Holders to whom the Exchange Offer is made, and the Initial
Purchasers shall have the right to contact such Holders and otherwise facilitate
the tender of Registrable Securities in the Exchange Offer.
2.2 Shelf Registration. If, because of any changes in law, SEC rules or
------------------
regulations or applicable interpretations thereof by the staff of the SEC, the
Company is not permitted to effect the Exchange Offer as contemplated by Section
2.1 hereof, (ii) if for any other reason the Exchange Offer Registration
Statement is not declared effective within 180 days
8
<PAGE>
following the original issue of the Registrable Securities or the Exchange Offer
is not consummated within 220 days after the original issue of the Registrable
Securities, (iii) any Holder of Securities notifies the Company prior to the
20th day following completion of the Exchange Offer that (a) due to a change in
law or policy it is not eligible to participate in the Exchange Offer, (b) due
to a change in law or policy it may not resell the Exchange Securities acquired
by it in the Exchange Offer to the public without delivering a Prospectus and
the Prospectus contained in the Exchange Registration Statement is not
appropriate or available for such resales by such Holder or (c) it is a broker-
dealer and owns Securities acquired directly from the Company or an affiliate of
the Company, or (iv) the Majority Holders may not resell the Exchange Securities
acquired by them in the Exchange Offer to the public without restriction under
the 1933 Act and without restriction under applicable blue sky or state
securities laws, then in case of each of clauses (i) through (iv) the Company
and the Guarantors shall, at its cost:
(ii)
(a) As promptly as practicable (but no later than the later of 90 days
after the Closing Date or 90 days after the time such obligation to file
arises, or in the case of clause (ii), 30 days), use reasonable best
efforts to file with the SEC, and thereafter shall use its reasonable best
efforts to cause to be declared effective as promptly as practicable but no
later than 90 days after such Shelf Registration Statement is filed, a
Shelf Registration Statement relating to the offer and sale of the
Registrable Securities by the Holders from time to time in accordance with
the methods of distribution elected by the Majority Holders participating
in the Shelf Registration and set forth in such Shelf Registration
Statement and Rule 415 under the 1933 Act; provided, however, that no
Holder (other than an Initial Purchaser) shall be entitled to have the
Securities held by it covered by such Shelf Registration Statement unless
such Holder agrees in writing to be bound by all the provisions of this
Agreement applicable to such Holder.
(b) Use its reasonable best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus forming
part thereof to be usable by Holders for a period of two years from the
date the Shelf Registration Statement is declared effective by the SEC, or
for such shorter period that will terminate when all Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or cease to be outstanding or otherwise to be
Registrable Securities (the "Effectiveness Period"); provided, however,
-------- -------
that the Effectiveness Period in respect of the Shelf Registration
Statement shall be extended to the extent required to permit dealers to
comply with the applicable prospectus delivery requirements of Rule 174
under the 1933 Act and as otherwise provided herein. Notwithstanding this
clause (b), the foregoing shall not apply to actions taken (or contemplated
to be taken) by the Company in good faith and for valid business reasons,
involving a material undisclosed event (a "Suspension Event"), including,
without limitation, the acquisition or divestiture of assets or the
offering or sale of securities, so long as the Company promptly thereafter
complies with requirements of Section 3(k) hereof, if applicable. Any such
period during which the Company is excused from
9
<PAGE>
keeping the Shelf Registration Statement effective and usable for offers
and sale of the Registrable Securities is referred to as a "Suspension
Period;" provided, that such Suspension Period shall not exceed 45 days in
any 12-month period (whereafter Additional Interest shall accrue and be
payable); and provided further that the number of days of any actual
Suspension Period shall be added on to the end of the two-year period
described above. A Suspension Period shall commence on and include the date
that the Company gives notice that the Shelf Registration Statement is no
longer effective or the Prospectus included therein in no longer usable for
offers and sales of Registrable Securities and shall end on the earlier of
(1) the date when each seller of Registrable Securities covered by the
Shelf Registration Statement either receives the copies of the supplemented
or amended Prospectus contemplated by Section 3(k) hereof or is advised in
writing by the Company that use of the Prospectus may be resumed or (2) the
expiration of 45 days in any 12-month period during which one or more
Suspension Periods has been in effect.
(c) Notwithstanding any other provisions hereof, use its reasonable best
efforts to ensure that (i) any Shelf Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any
supplement thereto complies in all material respects with the 1933 Act and
the rules and regulations thereunder, (ii) any Shelf Registration Statement
and any amendment thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (iii) any Prospectus forming part of any Shelf
Registration Statement, and any supplement to such Prospectus (as amended
or supplemented from time to time), does not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements, in light of the circumstances under which they were made,
not misleading.
The Company shall not permit any securities other than Registrable
Securities to be included in the Shelf Registration Statement. The Company
further agrees, if necessary, to supplement or amend the Shelf Registration
Statement, as required by Section 3(b) below, and to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
2.3 Expenses. The Company shall pay all Registration Expenses
--------
in connection with the registration pursuant to Section 2.1 or 2.2. Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
2.4
(a) Effectiveness. The Company will be deemed not to have used
-------------
its reasonable best efforts to cause the Exchange Offer Registration Statement
or the Shelf Registration Statement, as the case may be, to become, or to
remain, effective during the requisite period if the Company voluntarily takes
any action (other than an action permitted by
10
<PAGE>
Section 2.2) that would, or omits to take any action which omission would,
result in any such Registration Statement not being declared effective or in the
Holders of Registrable Securities covered thereby not being able to exchange or
offer and sell such Registrable Securities during that period as and to the
extent contemplated hereby, unless such action is required by applicable law.
(b) An Exchange Offer Registration Statement pursuant to Section 2.1 hereof or
a Shelf Registration Statement pursuant to Section 2.2 hereof will not be deemed
to have become effective unless it has been declared effective by the SEC;
provided, however, that if, after it has been declared effective, the offering
of Registrable Securities pursuant to an Exchange Offer Registration Statement
or a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have become
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
2.5 Interest. The Indenture executed in connection with the
--------
Securities will provide that in the event that either (a) any Registration
Statement required to be filed pursuant to this Agreement is not filed on or
before the date specified herein for such filing, (b) any of such Registration
Statements have not become effective or been declared effective by the SEC on or
prior to the date specified for such effectiveness, subject to certain limited
exceptions, (c) the Exchange Offer is not consummated within 30 business days
after the effective date of the Exchange Offer Registration Statement or (d) the
Shelf Registration Statement or the Exchange Offer Registration Shipment is
declared effective but thereafter ceases to be effective (other than by reason
of a Suspension Event) or usable in connection with the Exchange Offer or
resales or Registrable Securities, as the case may be, during the periods
specified in this Agreement (each such event referred to in clauses (a) through
(d) above, a "Registration Default"), the interest rate borne by the Securities
shall be increased ("Additional Interest") over and above the interest set forth
in the title of the Securities, with respect to the first 90-day period (or
portion thereof) while a Registration Default or Defaults is continuing
immediately following the occurrence of such Registration Default or Defaults by
0.25%, such interest rate increasing by an additional 0.25% at the beginning of
each subsequent 90-day period (or portion thereof ) while a Registration Default
or Defaults, is continuing until all Registration Defaults have been cured, up
to a maximum rate of Additional Interest of 1.0%. Following the cure of all
Registration Defaults, the accrual of Additional Interest on the Securities will
cease and the interest rate will revert to the original rate. Additional
Interest pursuant to this Section 2.5 constitutes liquidated damages with
respect to Registration Defaults and shall be the exclusive monetary remedy
available to the Holders of the Securities in respect of any Registration
Default. Additional Interest will not accrue and be payable as set forth above
during any Suspension Period.
A Registration Default referred to above shall be deemed not to have
occurred and be continuing in relation to a Shelf Registration Statement or the
related Prospectus if (i) such Registration Default has occurred solely as a
result of (x) the filling of a post-effective
11
<PAGE>
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related Prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related Prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related Prospectus to describe such events.
The Company shall notify the Trustee within three business days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due as described above shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture and
the Securities, on each interest payment date, as more fully set forth in the
Indenture and the Securities. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Securities, as the case may be, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
Each obligation to pay Additional Interest shall be deemed to accrue from and
including the day following the applicable Event Date and shall cease on, but
excluding the day such Registration Default is cured.
12
<PAGE>
3. Registration Procedures.
-----------------------
In connection with the obligations of the Company and the
Guarantors with respect to Registration Statements pursuant to Sections 2.1 and
2.2 hereof, the Company and the Guarantors shall:
(a) prepare and file with the SEC a Registration Statement, within the relevant
time period specified in Section 2, on the appropriate form under the 1933 Act,
which form (i) shall be selected by the Company, (ii) shall, in the case of a
Shelf Registration, be available for the sale of the Registrable Securities by
the selling Holders thereof, (iii) shall comply as to form in all material
respects with the requirements of the applicable form and include or incorporate
by reference all financial statements required by the SEC to be filed therewith
or incorporated by reference therein, and (iv) shall comply in all respects with
the requirements of Regulation S-T under the 1933 Act, and use its reasonable
best efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective amendments
to each Registration Statement as may be necessary under applicable law to keep
such Registration Statement effective for the applicable period; and cause each
Prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provision then in
force) under the 1933 Act and comply with the provisions of the 1933 Act, the
1934 Act and the rules and regulations thereunder applicable to them with
respect to the disposition of all securities covered by each Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the selling Holders thereof (including sales by any
Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of Registrable
Securities, at least five business days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is being filed
and advising such Holders that the distribution of Registrable Securities will
be made in accordance with the method selected by the Majority Holders
participating in the Shelf Registration; (ii) furnish to each Holder of
Registrable Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter may
reasonably request, including financial statements and schedules and, if the
Holder so requests, all exhibits in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) subject to Section 2.2(b)
and the penultimate paragraph of this Section 3, hereby consent to the use of
the Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) use its reasonable best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any
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Holder of Registrable Securities covered by a Registration Statement and each
underwriter of an underwritten offering of Registrable Securities shall
reasonably request by the time the applicable Registration Statement is declared
effective by the SEC, and do any and all other acts and things which may be
reasonably necessary or advisable to enable each such Holder and underwriter to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that neither the Company nor
the Guarantors shall not be required to (i) qualify as a foreign corporation or
as a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), or (ii) take any action which
would subject it to general service of process or taxation in any such
jurisdiction where it is not then so subject;
(e) notify promptly each Holder of Registrable Securities under a Shelf
Registration or any Participating Broker-Dealer who has notified the Company
that it is utilizing the Exchange Offer Registration Statement as provided in
paragraph (f) below and, if requested by such Holder or Participating Broker-
Dealer, confirm such advice in writing promptly (i) when a Registration
Statement has become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of any request by the SEC or any
state securities authority for post-effective amendments and supplements to a
Registration Statement and Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the SEC or
any state securities authority of any stop order suspending the effectiveness of
a Registration Statement or the initiation of any proceedings for that purpose,
(iv) in the case of a Shelf Registration, if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering cease to be true and correct in all
material respects, (v) of the happening of any event or the discovery of any
facts during the period a Shelf Registration Statement is effective which makes
any statement made in such Registration Statement or the related Prospectus
untrue in any material respect or which requires the making of any changes in
such Registration Statement or Prospectus in order to make the statements
therein not misleading, (vi) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Registrable
Securities or the Exchange Securities, as the case may be, for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose
and (vii) of any determination by the Company that a post-effective amendment to
such Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer Registration Statement (i) include in
the Exchange Offer Registration Statement a section entitled "Plan of
Distribution" which section shall be reasonably acceptable to Merrill Lynch on
behalf of the Participating Broker-Dealers, and which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that holds
Registrable Securities acquired for its own account as a result of market-making
activities or other trading activities and that will be the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Securities to be
received by such broker-dealer in the Exchange
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Offer, whether such positions or policies have been publicly disseminated by the
staff of the SEC or such positions or policies, in the reasonable judgment of
Merrill Lynch on behalf of the Participating Broker-Dealers and its counsel,
represent the prevailing views of the staff of the SEC, including a statement
that any such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory underwriter
and must deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of such Exchange Securities, (ii) furnish to each
Participating Broker-Dealer who has delivered to the Company the notice referred
to in Section 3(e), without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such Participating
Broker-Dealer may reasonably request, (iii) hereby consent to the use of the
Prospectus forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto, by any Person subject to the prospectus
delivery requirements of the SEC, including all Participating Broker-Dealers, in
connection with the sale or transfer of the Exchange Securities covered by the
Prospectus or any amendment or supplement thereto, and (iv) include in the
transmittal letter or similar documentation to be executed by an exchange
offeree in order to participate in the Exchange Offer (x) the following
provision:
(B)
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities, it will deliver a prospectus
meeting the requirements of the 1933 Act in connection with any resale
of Exchange Securities received in respect of such Registrable
Securities pursuant to the Exchange Offer;" and
(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Registrable Securities, the broker-dealer will not be deemed to
admit that it is an underwriter within the meaning of the 1933 Act; and
(B) in the case of any Exchange Offer Registration Statement, the Company
agrees to deliver to the Initial Purchasers on behalf of the Participating
Broker-Dealers upon the effectiveness of the Exchange Offer Registration
Statement officers' certificates substantially in the form customarily delivered
in a public offering of debt securities;
(g) (i) in the case of an Exchange Offer, furnish counsel for the Initial
Purchasers and (ii) in the case of a Shelf Registration, furnish counsel for the
Holders of Registrable Securities copies of any comment letters received from
the SEC or any other request by the SEC or any state securities authority for
amendments or supplements to a Registration Statement and Prospectus or for
additional information;
(h) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
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(i) in the case of a Shelf Registration, furnish to each Holder of Registrable
Securities, and each underwriter, if any, without charge, at least one conformed
copy of each Registration Statement and any post-effective amendment thereto,
including financial statements and schedules (without documents incorporated
therein by reference and all exhibits thereto, unless requested);
(j) in the case of a Shelf Registration, cooperate with the selling Holders of
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the Indenture) and registered
in such names as the selling Holders or the underwriters, if any, may reasonably
request in writing at least three business days prior to the closing of any sale
of Registrable Securities;
(k) in the case of a Shelf Registration, upon the occurrence of any event or
the discovery of any facts, each as contemplated by Sections 3(e)(v) and
3(e)(vi) hereof, as promptly as practicable after the occurrence of such an
event, use its reasonable best efforts to prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Securities
or Participating Broker-Dealers, such Prospectus will not contain at the time of
such delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company agrees to
notify each Holder to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and each Holder agrees to suspend use of
the Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission. At such time as such public disclosure is
otherwise made or the Company determines that such disclosure is not necessary,
in each case to correct any misstatement of a material fact or to include any
omitted material fact, the Company agrees promptly to notify each Holder of such
determination and to furnish each Holder such number of copies of the Prospectus
as amended or supplemented, as such Holder may reasonably request;
(l) in the case of a Shelf Registration, a reasonable time prior to the filing
of any Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus or any document which is to
be incorporated by reference into a Registration Statement or a Prospectus after
initial filing of a Registration Statement, provide copies of such document to
the Initial Purchasers on behalf of such Holders; and make representatives of
the Company as shall be reasonably requested by the Holders of Registrable
Securities, or the Initial Purchasers on behalf of such Holders, available for
discussion of such document;
(m) obtain a CUSIP number for all Exchange Securities, Private Exchange
Securities or Registrable Securities, as the case may be, not later than the
effective date of a
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Registration Statement, and provide the Trustee with printed certificates for
the Exchange Securities, Private Exchange Securities or the Registrable
Securities, as the case may be, in a form eligible for deposit with the
Depositary;
(n) cause the Indenture to be qualified under the TIA in connection with the
registration of the Exchange Securities or Registrable Securities, as the case
may be, (ii) cooperate with the Trustee and the Holders to effect such changes
to the Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and (iii) execute, and use its reasonable
best efforts to cause the Trustee to execute, all documents as may be required
to effect such changes, and all other forms and documents required to be filed
with the SEC to enable the Indenture to be so qualified in a timely manner;
(o) in the case of a Shelf Registration, enter into such customary agreements
(including underwriting agreements) and take all other customary and appropriate
actions, if any, as reasonably requested by the Majority Holders in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration:
(i) make such representations and warranties to the Holders of such
Registrable Securities and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in similar
underwritten offerings as may be reasonably requested by them;
(ii) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the holders of a
majority in principal amount of the Registrable Securities being sold)
addressed to each selling Holder and the underwriters, if any, covering the
matters customarily covered in opinions requested in sales of securities or
underwritten offerings similar to such transactions and such other matters
as may be reasonably requested by such Holders and underwriters;
(iii) obtain "cold comfort" letters and updates thereof from the Company's
independent certified public accountants (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements
are, or are required to be, included in the Registration Statement)
addressed to the underwriters, if any, and use reasonable efforts to have
such letter addressed to the selling Holders of Registrable Securities (to
the extent consistent with Statement on Auditing Standards No. 72 of the
American Institute of Certified Public Accounts), such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters to underwriters in connection with similar
underwritten offerings;
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(iv) if requested by the Majority Holders, enter into a securities sales
agreement with the Holders and an agent of the Holders providing for, among
other things, the appointment of such agent for the selling Holders for the
purpose of soliciting purchases of Registrable Securities, which agreement
shall be in form, substance and scope customary for similar offerings;
(v) if an underwriting agreement is entered into, cause the same to set
forth indemnification provisions and procedures substantially equivalent to
the indemnification provisions and procedures set forth in Section 4 hereof
with respect to the underwriters and all other parties to be indemnified
pursuant to said Section or, at the request of any underwriters, in the
form customarily provided to such underwriters in similar types of
transactions; and
(vi) deliver such documents and certificates as may be reasonably
requested and as are customarily delivered in similar offerings to the
Holders of a majority in principal amount of the Registrable Securities
being sold and the managing underwriters, if any.
The above shall be done at (i) the effectiveness of such Registration Statement
(and, if appropriate, each post-effective amendment thereto) and (ii) each
closing under any underwriting or similar agreement as and to the extent
required thereunder;
(p) in the case of a Shelf Registration or if a Prospectus is required to be
delivered by any Participating Broker-Dealer in the case of an Exchange Offer,
make reasonably available for inspection during normal business hours by
representatives of the Holders of the Registrable Securities, any underwriters
participating in any disposition pursuant to a Shelf Registration Statement, any
Participating Broker-Dealer and any counsel or accountant retained by any of the
foregoing, all relevant financial and other records, pertinent corporate
documents and properties of the Company reasonably requested by any such persons
on reasonable prior notice, and cause the respective officers, directors,
employees, and any other agents of the Company to supply all relevant
information reasonably requested by any such representative, underwriter,
special counsel or accountant in connection with a Registration Statement, and
make such representatives of the Company available for discussion of such
documents as shall be reasonably requested by the Initial Purchasers;
(q) in the case of an Exchange Offer Registration Statement, a reasonable time
prior to the filing of any Exchange Offer Registration Statement, any Prospectus
forming a part thereof, any amendment to an Exchange Offer Registration
Statement or amendment or supplement to such Prospectus, provide copies of such
document to the Initial Purchasers and their counsel and make such changes in
any such document prior to the filing thereof as the Initial Purchasers or their
counsel may reasonably request and is agreed to by the Company (such agreement
not to be unreasonably withheld), except as otherwise required by applicable
law, not file any such document in a form to which the Initial Purchasers on
behalf of the Holders of
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Registrable Securities and counsel to the Holders of Registrable Securities
shall not have previously been advised and furnished a copy of or to which the
Initial Purchasers on behalf of the Holders of Registrable Securities or counsel
to the Holders of Registrable Securities shall reasonably object within a
reasonable time period, and make the representatives of the Company available
for discussion of such documents as shall be reasonably requested by the Initial
Purchasers; and
(ii) in the case of a Shelf Registration, a reasonable time prior
to filing any Shelf Registration Statement, any Prospectus forming a part
thereof, any amendment to such Shelf Registration Statement or amendment or
supplement to such Prospectus, provide copies of such document to the Holders of
Registrable Securities, to the Initial Purchasers, to counsel for the Holders
and to the underwriter or underwriters of an underwritten offering of
Registrable Securities, if any, make such changes in any such document prior to
the filing thereof as the Initial Purchasers, the counsel to the Holders or the
underwriter or underwriters reasonably request is agreed to by the Company (such
agreement not to be unreasonably withheld) and not file any such document in a
form to which the Majority Holders, the Initial Purchasers on behalf of the
Holders of Registrable Securities, counsel for the Holders of Registrable
Securities or any underwriter shall not have previously been advised and
furnished a copy of or to which the Majority Holders, the Initial Purchasers of
behalf of the Holders of Registrable Securities, counsel to the Holders of
Registrable Securities or any underwriter shall reasonably object within a
reasonable time period, and make the representatives of the Company available
for discussion of such document as shall be reasonably requested by the Holders
of Registrable Securities, the Initial Purchasers on behalf of such Holders,
counsel for the Holders of Registrable Securities or any underwriter;
(r) in the case of a Shelf Registration, use its reasonable best efforts to
cause all Registrable Securities to be listed on any securities exchange on
which similar debt securities issued by the Company are then listed if requested
by the Majority Holders, or if requested by the underwriter or underwriters of
an underwritten offering of Registrable Securities, if any;
(s) in the case of a Shelf Registration, use its reasonable best efforts to
cause the Registrable Securities to be rated by the appropriate rating agencies,
if so requested by the Majority Holders, or if requested by the underwriter or
underwriters of an underwritten offering of Registrable Securities, if any;
(t) otherwise use its reasonable best efforts comply with all applicable rules
and regulations of the SEC and make available to its security holders (or
otherwise provide in accordance with Section 11(a) of the 1933 Act), as soon as
reasonably practicable (but not until the end of the first full fiscal quarter
following effectiveness), an earnings statement covering at least 12 months
which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
thereunder; and
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(u) cooperate and assist in any filings required to be made with the NASD and,
in the case of a Shelf Registration, in the performance of any due diligence
investigation by any underwriter and its counsel (including any "qualified
independent underwriter" that is required to be retained in accordance with the
rules and regulations of the NASD).
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing.
In the event that the Company fails to effect the Exchange Offer or file
any Shelf Registration Statement and maintain the effectiveness of any Shelf
Registration Statement as provided herein, the Company shall not file any
Registration Statement with respect to any securities (within the meaning of
Section 2(1) of the 1933 Act) of the Company other than Registrable Securities.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
or the discovery of any facts, each of the kind described in Section 3(e)(v)
hereof, such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to a Registration Statement until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
3(k) hereof, and, if so directed by the Company, such Holder will deliver to the
Company (at its expense) all copies in such Holder's possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the underwriter or
underwriters and manager or managers that will manage such offering will be
selected by the Majority Holders of such Registrable Securities included in such
offering and shall be acceptable to the Company. No Holder of Registrable
Securities may participate in any underwritten registration hereunder unless
such Holder (a) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
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4. Indemnification; Contribution.
-----------------------------
(a) Each of the Company and each Guarantor, jointly and severally, agrees to
indemnify and hold harmless the Initial Purchasers, each Holder, each
Participating Broker-Dealer, each Person who participates as an underwriter (any
such Person being an "Underwriter") and each Person, if any, who controls any
Holder or Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
(or any amendment or supplement thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
4(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including the
reasonable fees and disbursements of counsel chosen by any indemnified
party), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense of the Initial Purchasers, any Holder, any
Participating Broker-Dealer or Underwriter, as the case may be, to the extent
arising out of (i) any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with written information
furnished to the Company by such Initial Purchasers, any Holder, Participating
Broker-Dealer or Underwriter expressly for use in a Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto) or (ii) with respect to any
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untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus relating to a Shelf Registration Statement, the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
person or entity from whom the person asserting any such losses, claims, damages
or liabilities purchased the Securities concerned, to the extent that a
Prospectus relating to such Securities was required to be delivered by such
person or entity under the 1933 Act in connection with such purchase and any
such loss, claim damage or liability of such person or entity results from the
fact that there was not sent or given to such purchaser, at, or prior to the
written confirmation of the sale of such Securities to such purchaser, a copy of
the revised final prospectus containing a correction of such alleged
misstatements or omissions.
(b) Each Holder severally, but not jointly, agrees to indemnify and hold
harmless the Company, the Guarantors, the Initial Purchasers, each Underwriter
and the other selling Holders, and each of their respective directors and
officers, and each Person, if any, who controls the Company, the Initial
Purchasers, any Underwriter or any other selling Holder within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in Section 4(a) hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus included
therein (or any amendment or supplement thereto) in reliance upon and in
conformity with written information with respect to such Holder furnished to the
Company by such Holder expressly for use in the Shelf Registration Statement (or
any amendment thereto) or such Prospectus (or any amendment or supplement
thereto); provided, however, that no such Holder shall be liable for any claims
hereunder in excess of the amount of net proceeds received by such Holder from
the sale of Registrable Securities pursuant to such Shelf Registration
Statement.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action or proceeding commenced
against it in respect of which indemnity may be sought hereunder, but failure so
to notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 4 (whether or
not the indemnified parties are
22
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actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 4(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(e) If the indemnification provided for in this Section 4 is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, in such proportion as is appropriate to reflect the relative
fault of the Company and the Guarantors on the one hand and the Holders and the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative fault of the Company and the Guarantors on the one hand and
the Holders and the Initial Purchasers on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Guarantors, the Holders
or the Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Guarantors, the Holders and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
4 were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
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<PAGE>
Notwithstanding the provisions of this Section 4, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities sold by it were offered exceeds the amount
of any damages which such Initial Purchaser has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each Person, if any, who controls an
Initial Purchaser or Holder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
Initial Purchaser or Holder, and each director of the Company, and each Person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Company. The Initial Purchasers' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A to the
Purchase Agreement and not joint.
5. Miscellaneous.
-------------
5.1 Rule 144 and Rule 144A. For so long as the Company is
----------------------
subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the
Company covenants that it will file the reports required to be filed by it under
the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company covenants that it will upon the
request of any Holder of Registrable Securities (a) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the 1933
Act, (b) deliver such information to a prospective purchaser as is necessary to
permit sales pursuant to Rule 144A under the 1933 Act and it will take such
further action as any Holder of Registrable Securities may reasonably request,
and (c) take such further action that is reasonable in the circumstances, in
each case, to the extent required from time to time to enable such Holder to
sell its Registrable Securities without registration under the 1933 Act within
the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act,
as such Rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
5.2 No Inconsistent Agreements. The Company has not entered
--------------------------
into and the Company will not after the date of this Agreement enter into any
agreement which conflicts with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder do not and will
24
<PAGE>
not for the term of this Agreement in any way conflict with the rights granted
to the holders of the Company's other issued and outstanding securities under
any such agreements.
5.3 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure.
5.4 Notices. All notices and other communications provided for
-------
or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (a) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 5.4, which address initially is the address set forth in the Purchase
Agreement with respect to the Initial Purchasers; and (b) if to the Company or
any Guarantor, initially at the Company's address set forth in the Purchase
Agreement, and thereafter at such other address of which notice is given in
accordance with the provisions of this Section 5.4.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; two
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee
under the Indenture, at the address specified in such Indenture.
5.5 Successor and Assigns. This Agreement shall inure to the
---------------------
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
--------
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
25
<PAGE>
5.6 Third Party Beneficiaries. The Initial Purchasers shall be
-------------------------
third party beneficiaries to the agreements made hereunder between the Company
and the Guarantors, on the one hand, and the Holders, on the other hand, and
shall have the right to enforce such agreements directly to the extent they deem
such enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Registrable Securities shall be a third party
beneficiary to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights hereunder.
5.7 Restriction on Resales. Until the expiration of two years
----------------------
after the original issuance of the Securities and the Guarantees, the Company
and the Guarantor will not, and will use reasonable best efforts to cause their
"affiliates" (as such term is defined in Rule 144(a)(1) under the 1933 Act) not
to, resell any Securities and Guarantees which are "restricted securities" (as
such term is defined under Rule 144(a)(3) under the 1933 Act) that have been
reacquired by any of them and shall immediately upon any purchase of any such
Securities and Guarantees submit such Securities and Guarantees to the Trustee
for cancellation.
5.8 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
5.9 Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
5.11 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
26
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
1.1 HEALTHTRUST, INC. -- THE
HOSPITAL COMPANY
By: /s/ R. Milton Johnson
------------------------------
Name: R. Milton Johnson
Title: Vice President
Confirmed and accepted as
of the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DEUTSCHE BANK SECURITIES
FLEET SECURITIES, INC.
SCOTIA CAPITAL MARKETS
SUNTRUST EQUITABLE SECURITIES CORPORATION
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Merrill Lynch, Pierce, Fenner & Smith Incorporated
------------------------------------------------------
Name:
Title:
27
<PAGE>
EXHIBIT 4.4(b)
LIFEPOINT ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Registration Rights Agreement, dated May 11,
1999 (the "Agreement"), between Healthtrust, Inc.--The Hospital Company
("Healthtrust") and the Initial Purchasers named therein. Unless otherwise
defined herein, terms defined in the Agreement and used herein shall have the
meanings given them in the Agreement.
LifePoint Hospitals, Inc. ("LifePoint") hereby unconditionally and irrevocably
expressly assumes, confirms and agrees to perform and observe as the "Company"
each and every of the covenants, agreements, terms, conditions, obligations,
appointments, duties, promises and liabilities of Healthtrust under the
Agreement, and upon the Business being validly transferred to LifePoint, the
assumption by LifePoint of the indebtedness evidenced by the Securities and
Healthtrust and LifePoint executing and delivering this LifePoint Assumption
Agreement, Healthtrust shall automatically be fully, unconditionally and
irrevocably released of all covenants, agreements, terms, conditions,
obligations, appointment, duties, promises and liabilities under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as the other undersigned
party or the Representative may reasonably require to effect the purpose of this
LifePoint Assumption Agreement.
This LifePoint Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
HEALTHTRUST, INC.THE HOSPITAL
COMPANY
By: /s/ R. Milton Johnson
----------------------
Name: R. Milton Johnson
Title: Vice President
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-----------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
EXHIBIT 4.4(c)
HOLDINGS ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Exchange and Registration Rights Agreement,
dated May 11, 1999 (the "Agreement"), between Healthtrust, Inc.--The Hospital
Company ("Healthtrust") and the Initial Purchasers named therein and the
LifePoint Assumption Agreement, dated May 11, 1999, between Healthtrust and
LifePoint Hospitals, Inc. ("LifePoint").
LifePoint Hospitals Holdings, Inc. ("Holdings") hereby unconditionally and
irrevocably expressly assumes, confirms and agrees to perform and observe as
the "Company" each and every of the covenants, agreements, terms, conditions,
obligations, appointments, duties, promises and liabilities of LifePoint under
the Agreement, and upon the Business being validly transferred to Holdings, the
assumption by Holdings of the indebtedness evidenced by the Securities and
LifePoint and Holdings executing and delivering this Holdings Assumption
Agreement, LifePoint shall automatically be fully, unconditionally and
irrevocably released of all covenants, agreements, terms, conditions,
obligations, appointment, duties, promises and liabilities under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as any other undersigned
party or the Representative may reasonably require to effect the purpose of this
Holdings Assumption Agreement.
This Holdings Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
LIFEPOINT HOSPITAL, INC.
By: /s/ William F. Carpenter III
---------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT HOSPITALS HOLDINGS,
INC.
By: /s/ Kenneth C. Donahey
---------------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President
<PAGE>
EXHIBIT 4.4(d)
GUARANTOR ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Registration Rights Agreement, dated May 11,
1999 (the "Agreement"), between Healthtrust, Inc.The Hospital Company
("Healthtrust") and the Initial Purchasers named therein and the LifePoint
Assumption Agreement, dated May 11, 1999, between Healthtrust and LifePoint
Hospitals, Inc. ("LifePoint") and the Holdings Assumption Agreement, dated May
11, 1999, between LifePoint and LifePoint Hospitals Holdings, Inc. Unless
otherwise defined herein, terms defined in the Agreement and used herein shall
have the meanings given them in the Agreement.
Each of the undersigned parties hereby unconditionally and irrevocably expressly
assumes, confirms and agrees to perform and observe as a "Guarantor" each and
any of the covenants, agreements, terms, conditions, obligations, appointments,
duties, promises and liabilities of the "Guarantors" under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as any other undersigned
party or the Representative reasonably require to effect the purpose of this
Guarantor Assumption Agreement.
This Guarantor Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
AMERICA GROUP OFFICES, LLC
BY: LIFEPOINT CORPORATE SERVICES, LIMITED
PARTNERSHIP
BY: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
AMERICA MANAGEMENT
COMPANIES, LLC
BY: LIFEPOINT CORPORATE SERVICES, LIMITED
PARTNERSHIP
BY: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
AMG - CROCKETT, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
AMG - HILCREST, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
AMG - HILLSIDE, LLC
BY: LIFEPOINT MEDICAL GROUP HILLSIDE, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
AMG - LIVINGSTON, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
AMG - LOGAN, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
AMG - SOUTHERN TENNESSEE, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
AMG - TRINITY, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
ASHLEY VALLEY MEDICAL CENTER, LLC
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
ASHLEY VALLEY PHYSICIAN PRACTICE, LLC
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
BARROW MEDICAL CENTER, LLC
BY: LIFEPOINT OF GEORGIA,
LIMITED PARTNERSHIP
BY: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
BARTOW HEALTHCARE PARTNER, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
BARTOW HEALTHCARE SYSTEM, LTD.
BY: GENERAL PARTNER:
BARTOW HEALTHCARE PARTNER, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
BOURBON COMMUNITY HOSPITAL, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
BUFFALO TRACE RADIATION ONCOLOGY
ASSOCIATES, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
CASTLEVIEW HOSPITAL, LLC
BY: CASTLEVIEW MEDICAL, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
CASTLEVIEW MEDICAL, LLC
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
CASTLEVIEW PHYSICIAN PRACTICE, LLC
BY: CASTLEVIEW MEDICAL, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
COMMUNITY HOSPITAL OF ANDALUSIA, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
COMMUNITY MEDICAL, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
CROCKETT HOSPITAL, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
DODGE CITY HEALTHCARE GROUP, LP
BY: GENERAL PARTNER:
DODGE CITY HEALTHCARE PARTNER, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
DODGE CITY HEALTHCARE PARTNER, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
GEORGETOWN COMMUNITY HOSPITAL, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
GEORGETOWN REHABILITATION, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
HALSTEAD HOSPITAL, LLC
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
HCK LOGAN MEMORIAL, LLC
By: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
HDP ANDALUSIA, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
HDP GEORGETOWN, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
HILLSIDE HOSPITAL, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
HST PHYSICIAN PRACTICE, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
HTI GEORGETOWN, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
HTI PINELAKE, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
INTEGRATED PHYSICIAN SERVICES, LLC
BY: LIFEPOINT OF GEORGIA,
LIMITED PARTNERSHIP
BY: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
KANSAS HEALTHCARE MANAGEMENT COMPANY, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
KENTUCKY HOSPITAL, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
KENTUCKY MEDSERVE, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
KENTUCKY MSO, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
KENTUCKY PHYSICIANS SERVICES, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LAKE CUMBERLAND HEALTH CARE, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LAKE CUMBERLAND REGIONAL HOSPITAL, LLC
BY: LAKE CUMBERLAND HEALTH CARE, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT CSGP, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT CSLP, LLC
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
LIFEPOINT CORPORATE SERVICES, LIMITED
PARTNERSHIP
BY: GENERAL PARTNER:
LIFEPOINT CSGP, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT HOLDINGS 2, INC.
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT HOLDINGS 3, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT MEDICAL GROUP - HILLSIDE, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT OF GEORGIA, LIMITED
PARTNERSHIP
BY: GENERAL PARTNER:
LIFEPOINT OF GAGP, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
LIFEPOINT OF GAGP, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT OF KENTUCKY, LLC
BY: LIFEPOINT HOLDINGS 3, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIFEPOINT RC, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LIVINGSTON REGIONAL HOSPITAL, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LOGAN MEDICAL, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
LOGAN MEMORIAL HOSPITAL, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
LOSCO, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
MEADOWVIEW PHYSICIAN PRACTICE, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
MEADOWVIEW REGIONAL MEDICAL CENTER, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
MEADOWVIEW RIGHTS, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
PINELAKE PHYSICIAN PRACTICE, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
PINELAKE REGIONAL HOSPITAL, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
POITRAS PRACTICE, LLC
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
R. KENDALL BROWN PRACTICE, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
RIVERTON MEMORIAL HOSPITAL, LLC
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
RIVERTON PHYSICIAN PRACTICES, LLC
BY: LIFEPOINT HOSPITALS HOLDINGS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
RIVERVIEW MEDICAL CENTER, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
SELECT HEALTHCARE, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
SILETCHNIK PRACTICE, LLC
BY: LIFEPOINT OF KENTUCKY, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
SMITH COUNTY MEMORIAL HOSPITAL, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
SOUTHERN TENNESSEE EMS, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
SOUTHERN TENNESSEE MEDICAL CENTER, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
SPRINGHILL MEDICAL CENTER, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
SPRINGHILL MOB, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
THM PHYSICIAN PRACTICE, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
TRINITY HOSPITAL, LLC
BY: LIFEPOINT HOLDINGS 2, LLC
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
WESTERN PLAINS REGIONAL HOSPITAL, LLC
BY: LIFEPOINT HOLDINGS 3, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
<PAGE>
EXHIBIT 10.1
TAX SHARING AND INDEMNIFICATION AGREEMENT
PREAMBLE
--------
This Tax Sharing and Indemnification Agreement (this "Agreement"),
dated as of May 11, 1999, is made and entered into by and among Columbia/HCA
Healthcare Corporation, a Delaware corporation ("Columbia/HCA"), LifePoint
Hospitals, Inc., a Delaware corporation ("LifePoint"), and Triad Hospitals,
Inc., a Delaware corporation ("Triad") (collectively, the "Parties").
RECITALS
--------
WHEREAS, the Parties have entered into the Distribution Agreement,
dated as of May 11, 1999 (the "Distribution Agreement"), pursuant to which
Columbia/HCA will distribute to its stockholders all of the issued and
outstanding common stock of LifePoint and Triad (the "Public Distribution");
WHEREAS, in order to consummate the Public Distribution, it is
necessary and desirable for HealthTrust, Inc. - The Hospital Company, a Delaware
corporation that is wholly-owned by Columbia/HCA and that is currently the
direct parent of LifePoint and Triad, to distribute to Columbia/HCA all of the
issued and outstanding common stock of LifePoint and Triad (the "Internal
Distribution") (the Public Distribution and the Internal Distribution together,
the "Distributions");
WHEREAS, the Distributions are intended to qualify as tax-free
distributions under section 355 of the Code (as defined below);
<PAGE>
WHEREAS, in connection with the Distributions, the Parties and certain
of their Affiliates (as defined below) have engaged and will engage in certain
internal restructuring transactions (the "Internal Restructuring") (the
Distributions and the Internal Restructuring, collectively, the
"Reorganization");
WHEREAS, on March 30, 1999, Columbia/HCA received an advance letter
ruling from the Internal Revenue Service setting forth certain United States
federal income tax consequences of the Reorganization;
WHEREAS, the Parties wish to (a) provide for the payment of tax
liabilities and entitlement to refunds thereof, (b) allocate responsibility for
and provide for their cooperation in the filing of tax returns, (c) provide for
certain other matters relating to taxes, and (d) set forth certain covenants and
indemnities relating to the preservation of the tax treatment of the
Reorganization set forth in the Letter Ruling (as defined below);
NOW, THEREFORE, in consideration of their mutual promises, the Parties
hereby agree as follows:
2
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ARTICLE I
DEFINITIONS AND CONSTRUCTION
Section 1.01. Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the following meanings:
"Affiliate" means, with respect to a specified Person, any other
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such Person (including any
Person that is a member of the same consolidated group as the specified Person
for Tax purposes).
"Agreement" has the meaning set forth in the Preamble hereof.
"Ancillary Agreements" has the meaning set forth in the Distribution
Agreement.
"Benefited Party" has the meaning set forth in Section 3.04 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto, as in effect for the taxable period in question.
"Columbia/HCA" has the meaning set forth in the Preamble of this
Agreement.
"Columbia/HCA Approval" means the advance, written consent of
Columbia/HCA, which consent may be granted or withheld in its sole and absolute
discretion. Columbia/HCA agrees to use its best efforts to respond to a request
for Columbia/HCA Approval within 30 days of the receipt of a written request for
such consent.
"Columbia/HCA Group" means, with respect to any taxable period or
portion thereof, Columbia/HCA and its Affiliates.
"Columbia/HCA Return" has the meaning set forth in Section 2.02(a) of
this Agreement.
3
<PAGE>
"Detrimented Party" has the meaning set forth in Section 3.04 of this
Agreement.
"Distribution Agreement" has the meaning set forth in the Recitals of
this Agreement.
"Distribution Date" means the date as of which the Public Distribution
will be effected, as determined by the Board of Directors of Columbia/HCA.
"Distributions" has the meaning set forth in the Recitals of this
Agreement.
"Federal Income Tax" means any Tax imposed under Subtitle A of the
Code (including the Taxes imposed by sections 11, 55, 59A, 1201(a) and 1502 of
the Code and the Treasury Regulations promulgated thereunder), and any other
income-based United States federal Tax that is hereinafter imposed, plus any
interest, additions to tax or penalties applicable or related thereto.
"Final Determination" means the final resolution of liability of a
Party or any of its relevant Affiliates for any Tax for a taxable period (i) by
Internal Revenue Service Form 870 or 870-AD (or any successor forms thereto), on
the date of acceptance by or on behalf of the IRS, or by a comparable form under
the laws of other jurisdictions, on the date of acceptance by or on behalf of
the Taxing Authority of such jurisdiction, except that a Form 870 or 870-AD or
comparable form that reserves (whether by its terms or by operation of law) the
right of the taxpayer to file a claim for refund and/or the right of the IRS or
other Taxing Authority to assert a further deficiency shall not constitute a
Final Determination; (ii) by a decision, judgment, decree, or other order by a
court of competent jurisdiction, which has become final and unappealable; (iii)
by a closing agreement or accepted offer in compromise under section 7121 or
7122 of the Code, or comparable agreements under the laws of other
jurisdictions; (iv) by any allowance of a refund or credit in respect of an
overpayment of Tax, but only after the expiration
4
<PAGE>
of all periods during which such refund may be recovered (including by way of
offset) by the jurisdiction imposing the Tax; or (v) by any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.
"Gross Assets" means, when used with respect to a specified Person,
the fair market value of such Person's assets unencumbered by any liabilities.
"Group" means any of the Columbia/HCA Group, the LifePoint Group or
the Triad Group, as the context may require.
"Indemnified Parties" has the meaning set forth in Section 5.02(a) of
this Agreement.
"Indemnifying Parties" has the meaning set forth in Section 5.02(a) of
this Agreement.
"Internal Distribution" has the meaning set forth in the Recitals of
this Agreement.
"Internal Restructuring" has the meaning set forth in the Recitals of
this Agreement.
"IRS" means the Internal Revenue Service.
"Letter Ruling" means the advance letter rulings issued by the IRS to
Columbia/HCA setting forth certain Federal Income Tax consequences of the
Reorganization, and any supplemental or additional letter rulings that may be
issued by the IRS to any of the Parties or their Affiliates with respect to the
Reorganization or any part thereof, provided that any such supplemental or
additional letter ruling is issued in response to a ruling request by
Columbia/HCA or a ruling request that received Columbia/HCA Approval.
"Liability Issue" has the meaning set forth in Section 6.01(b) of this
Agreement.
5
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"LifePoint" has the meaning set forth in the Preamble of this
Agreement.
"LifePoint ESOP" means the employee stock ownership plan to be adopted
by LifePoint, as described in the Ruling Request.
"LifePoint Group" means, with respect to any taxable period or portion
thereof, LifePoint and its Affiliates.
"LifePoint Return" has the meaning set forth in Section 2.02(b) of
this Agreement.
"Non-Qualified Vested Options" means all options to acquire stock of
Columbia/HCA, LifePoint or Triad that are vested at the time of the
Distributions.
"Notifying Party" has the meaning set forth in Section 6.01(b) of this
Agreement.
"Opinion of Counsel" means an opinion of independent tax counsel of
recognized national standing and experienced in the issues to be addressed and
otherwise acceptable to Columbia/HCA, in its sole and absolute discretion, that
is in form and substance satisfactory to Columbia/HCA, in its sole and absolute
discretion.
"Original Ruling Request" means the ruling request submissions
(together with all exhibits and appendices thereto) that were submitted to the
IRS on behalf of Columbia/HCA, dated August 14, 1998, October 16, 1998, November
20, 1998, December 23, 1998, January 13, 1999, February 8, 1999, February 10,
1999, March 2, 1999, March 16, 1999, March 23, 1999, March 26, 1999, March 29,
1999 and March 30, 1999.
"Parties" has the meaning set forth in the Preamble of this Agreement.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or other
entity (regardless of whether such entity is disregarded as an entity for
Federal Income Tax purposes).
6
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"Post-Distribution Period" means a taxable period that begins after
the Distribution Date.
"Pre-Distribution Period" means a taxable period that ends on or
before the Distribution Date.
"Public Distribution" has the meaning set forth in the Recitals of
this Agreement.
"Reorganization" has the meaning set forth in the Recitals of this
Agreement.
"Representative" means with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys, and representatives.
"Restricted Period" means the Distribution Date and the three-year
period following the Distribution Date.
"Ruling Request" means the Original Ruling Request and any
supplemental letter ruling requests submitted to the IRS, pursuant to which the
Letter Ruling is issued.
"Section 475 Adjustment" has the meaning set forth in Section 3.08 of
this Agreement.
"Spinco" means LifePoint or Triad, as the context may require.
"Spinco Group" means the LifePoint Group or the Triad Group, as the
context may require.
"Straddle Period" means a taxable period that begins on or before and
ends after the Distribution Date.
"Subsequent Benefit Decrease Event" has the meaning set forth in
Section 3.07 of this Agreement.
7
<PAGE>
"Subsequent Benefit Increase Event" has the meaning set forth in
Section 3.07 of this Agreement.
"Tainting Act" has the meaning set forth in Section 5.02(a) of this
Agreement.
"Tax" means any form of taxation imposed by a national, municipal,
governmental, administrative, judicial, state, federal, foreign, or other body
(a "Taxing Authority"), regardless of when such form of taxation was or is
created or imposed, including any net income, alternative or add-on minimum,
gross income, sales, use, ad valorem, escheat, gross receipts, value added,
franchise, profits, license, transfer, recording, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profit, custom duty, or other tax, government fee or other like assessment or
charge of any kind whatsoever, together with any related interest, penalties, or
other additions to tax, or additional amount imposed by any such Taxing
Authority.
"Tax Benefit" means an amount by which the Tax liability of an
Indemnified Party is reduced (including by deduction, reduction of income by
virtue of increased tax basis or otherwise, or entitlement to a Tax refund,
credit or otherwise).
"Tax Controversy" has the meaning set forth in Section 6.02(a) of this
Agreement.
"Tax Detriment" means an amount by which the Tax liability of an
Indemnified Party is increased (including decreases in Tax refunds and credits).
"Tax Item" means any item of income, gain, loss, deduction, credit,
recapture of credit, or any other item that may have the effect of increasing or
decreasing Taxes paid or payable.
"Tax Practices" has the meaning set forth in Section 2.01 of this
Agreement.
8
<PAGE>
"Tax Return" means any return, filing, questionnaire or other document
required to be filed or that may be filed (including requests for extensions of
time, filings made with estimated Tax payments, claims for refund, elections or
amended returns) for any taxable period with any Taxing Authority in connection
with any Tax (whether or not a payment is required to be made with respect to
such return, filing, questionnaire or other document).
"Taxing Authority" has the meaning set forth in the definition of the
term "Tax" in this Section 1.01.
"Transitional Services Agreements" means the Transitional Services
Agreements entered into by and between Columbia/HCA and each of LifePoint and
Triad dated as of May 11, 1999.
"Treasury Regulations" means the regulations promulgated under the
Code, and any successor provisions thereof, as in effect for the relevant
taxable period.
"Triad" has the meaning set forth in the Preamble of this Agreement.
"Triad ESOP" means the employee stock ownership plan to be adopted by
Triad, as described in the Ruling Request.
"Triad Group" means, with respect to any taxable period or portion
thereof, Triad and its Affiliates.
"Triad Return" has the meaning set forth in Section 2.02(c) of this
Agreement.
Section 1.02. Interpretation and Construction of this Agreement. The
-------------------------------------------------
definitions in Section 1.01, above, shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine or neuter form. The
words "include," "includes" and "including" when used in this Agreement shall be
deemed to be followed by the phrase "without limitation." The
9
<PAGE>
headings contained in this Agreement are inserted for convenience only and shall
not constitute a part hereof. This Agreement shall be construed in accordance
with its fair meaning and shall not be construed strictly against the drafter.
10
<PAGE>
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
-------------------------------------
Section 1.01. Manner of Filing. All Tax Returns filed by any Party
----------------
(including any Affiliate of any Party) after the date of this Agreement shall be
prepared on a basis that is consistent with the Letter Ruling and shall be filed
on a timely basis (including extensions) by the Party responsible for such
filing under this Agreement. All Tax Returns for tax periods beginning or ending
during the Restricted Period filed after the date of this Agreement by the
Spincos and their Affiliates shall (except to the extent of a Spinco's receipt
of Columbia/HCA Approval) be prepared in a manner that is consistent with past
practices, elections, accounting methods, conventions, and principles of
Taxation (collectively, "Tax Practices") used by Columbia/HCA and its Affiliates
for the most recent taxable period ending on or before December 31, 1999 for
which Tax Returns involving similar items have been filed by the applicable
member of the Columbia/HCA Group; provided, however, that the Spincos and their
Affiliates may make such new Tax elections or adopt such new methods of
accounting for Post-Distribution Periods as are permitted under applicable Tax
laws, and provided, further, that the Spincos and their Affiliates shall not be
required to follow a Tax Practice that is determined by a Final Determination to
be unlawful.
Section 2.02. Responsibility for Filing. (a) Columbia/HCA shall have the
-------------------------
sole and exclusive responsibility for the preparation and filing of (i) all Tax
Returns for Pre-Distribution Periods and, except as provided to the contrary in
Section 2.02(b) or (c), below, Straddle Periods, and (ii) all Tax Returns for
(or that relate to the businesses, assets or activities of) the Columbia/HCA
Group for Post-Distribution Periods (the Tax Returns described in (i) and (ii),
collectively, the "Columbia/HCA Returns").
11
<PAGE>
(b) LifePoint shall have the sole and exclusive responsibility for
the preparation and filing of all Tax Returns for (or that relate to the
businesses, assets or activities of) the LifePoint Group (i) for Post-
Distribution Periods and (ii) for any Straddle Period, provided that such
Straddle Period Tax Return does not relate to or include any Tax Item
attributable to any business, asset or activity of any member of the
Columbia/HCA Group or Triad Group (as constituted immediately after the
Distributions), and provided, further, that LifePoint shall provide to
Columbia/HCA for its review a copy of any such Straddle Period Tax Return at
least 45 days prior to the due date thereof (including extensions), and
Columbia/HCA shall provide comments to LifePoint within 30 days after its
receipt thereof (the Tax Returns described in (i) and (ii), collectively, the
"LifePoint Returns").
(c) Triad shall have the sole and exclusive responsibility for the
preparation and filing of all Tax Returns for (or that relate to the businesses,
assets or activities of) the Triad Group (i) for Post-Distribution Periods and
(ii) for any Straddle Period, provided that such Straddle Period Tax Return does
not relate to or include any Tax Item attributable to any business, asset or
activity of any member of the Columbia/HCA Group or LifePoint Group (as
constituted immediately after the Distributions), and provided, further, that
Triad shall provide to Columbia/HCA for its review a copy of any such Straddle
Period Tax Return at least 45 days prior to the due date thereof (including
extensions), and Columbia/HCA shall provide comments to Triad within 30 days
after its receipt thereof (the Tax Returns described in (i) and (ii),
collectively, the "Triad Returns").
(d) The preparation and/or filing by Columbia/HCA or one of its
Affiliates of any LifePoint Return or Triad Return under the Transitional
Services Agreements or any other Ancillary Agreement shall not cause such Tax
Return to be characterized as a Columbia/HCA
12
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Return for purposes of this Agreement, and shall not otherwise affect the
rights, responsibilities, obligations or liabilities of the Parties under this
Agreement.
Section 2.03. Amended Returns and Other Matters Pertaining to Taxes for
---------------------------------------------------------
Pre-Distribution Periods and Straddle Periods. (a) Unless requested by
- ---------------------------------------------
Columbia/HCA (in which event each Spinco shall comply with such request, and
Columbia/HCA shall reimburse such Spinco for reasonable third-party costs and
expenses directly related thereto), neither of the Spincos nor any of their
Affiliates shall file or permit to be filed any amended Tax Return with respect
to any Tax for any Pre-Distribution Period or any portion thereof without
obtaining Columbia/HCA Approval.
(b) Unless requested by Columbia/HCA (in which event each Spinco
shall comply with such request, and Columbia/HCA shall reimburse such Spinco for
reasonable third-party costs and expenses directly related thereto), LifePoint
shall not file or permit to be filed any amended Tax Return with respect to any
Straddle Period, and Triad shall not file or permit to be filed any amended Tax
Return with respect to any Straddle Period, unless LifePoint or Triad, as the
case may be, has obtained the prior written consent of Columbia/HCA, which
consent shall not be unreasonably withheld.
(c) Neither of the Spincos nor any of their Affiliates shall, with
respect to any Tax relating to (i) any Pre-Distribution Period or Straddle
Period or any portion thereof or (ii) any matter that is the subject of this
Agreement, the Distribution Agreement or any of the Ancillary Agreements, take
any position, initiate (or permit to be initiated) any claim or otherwise take
(or fail to take) any action that might adversely affect Columbia/HCA or any of
its Affiliates with respect to Taxes.
13
<PAGE>
(d) Without limiting the generality of any of the foregoing
provisions of this Section 2.03, neither of the Spincos, nor any of their
Affiliates, shall (unless requested by Columbia/HCA, in which event each Spinco
shall comply with such request and Columbia/HCA shall reimburse such Spinco for
reasonable third-party costs and expenses directly related thereto) take any
action that could affect the assessment, collection or refund (including the
filing of an amended Tax Return or the application of any overpayment of sales
or use tax for a Pre-Distribution Period or Straddle Period to reduce the amount
of sales or use tax owed by a Spinco or any of its Affiliates for any Post-
Distribution Period) of any sales or use tax for Pre-Distribution Periods or
Straddle Periods.
Section 2.04. Treatment of Payments. The Parties agree that any payments
---------------------
made among the Parties pursuant to this Agreement, the Distribution Agreement or
the Ancillary Agreements with respect to periods prior to the Public
Distribution, or as the result of an event or action (or failure to act)
occurring prior to the Public Distribution, shall be treated for all Tax and
financial accounting purposes as nontaxable payments (dividends or capital
contributions, as the case may be) made immediately prior to the Public
Distribution, unless, and then only to the extent, otherwise required by a Final
Determination.
14
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ARTICLE III
ALLOCATION AND PAYMENT OF TAXES
-------------------------------
Section 3.01. In General. The Parties agree to allocate their respective
----------
shares of Taxes as provided in this Agreement. Payments to Taxing Authorities
and among the Parties, as the case may be, shall be made in accordance with such
Tax allocations and/or as provided in this Agreement.
Section 3.02. Allocation and Payment of Taxes, Generally. Except as other-
------------------------------------------
wise provided in this Agreement:
(a) Columbia/HCA shall pay or cause to be paid to the relevant Taxing
Authority, shall indemnify and hold the LifePoint Group and the Triad Group
harmless against, and shall be entitled to all refunds of (i) all Taxes for Pre-
Distribution Periods (including the portion of Taxes that is allocated to Pre-
Distribution Periods pursuant to Section 3.03, below) and (ii) all Taxes for
Post-Distribution Periods (including the portion of Taxes that is allocated to
Post-Distribution Periods pursuant to Section 3.03, below) that are attributable
to the Columbia/HCA Group; provided, however, that LifePoint shall pay or cause
to be paid to the relevant Taxing Authority any Taxes with respect to LifePoint
Returns for Straddle Periods, and Triad shall pay or cause to be paid to the
relevant Taxing Authority any Taxes with respect to Triad Returns for Straddle
Periods;
(b) LifePoint shall pay or cause to be paid to the relevant Taxing
Authority, shall indemnify and hold the Columbia/HCA Group and the Triad Group
harmless against, and shall be entitled to all refunds of all Taxes for Post-
Distribution Periods (including the portion of
15
<PAGE>
Taxes that is allocated to Post-Distribution Periods pursuant to Section 3.03,
below) that is attributable to the LifePoint Group; and
(c) Triad shall pay or cause to be paid to the relevant Taxing
Authority, shall indemnify and hold the Columbia/HCA Group and the LifePoint
Group harmless against, and shall be entitled to all refunds of all Taxes for
Post-Distribution Periods (including the portion of Taxes that is allocated to
Post-Distribution Periods pursuant to Section 3.03, below) that are attributable
to the Triad Group.
Section 3.03. Allocation and Payment of Certain Straddle Period Taxes.
-------------------------------------------------------
(a) For purposes of this Agreement, in the case of periodic Taxes attributable
to a Straddle Period that are not based on income or receipts (e.g., property
taxes), the Straddle Period shall be treated as if it were divided into a Pre-
Distribution Period and a Post-Distribution Period and such periodic Taxes shall
be allocated between such Pre-Distribution Period and such Post-Distribution
Period based upon the ratio of (x) the number of days in the taxable period (i)
before and including the Distribution Date (with respect to the Pre-Distribution
Period) or (ii) following the Distribution Date (with respect to the Post-
Distribution Period) and (y) the number of days in the entire taxable period.
With respect to Taxes that are allocated to a Post-Distribution Period in
accordance with this Section 3.03(a), (i) LifePoint shall pay or cause to be
paid (to Columbia/HCA, with respect to any Columbia/HCA Returns, and to the
relevant Taxing Authority, with respect to any LifePoint Returns for Straddle
Periods), and shall indemnify and hold the Columbia/HCA Group and the Triad
Group harmless against, the amount of Taxes that is attributable to the
LifePoint Group and (ii) Triad shall pay or cause to be paid (to Columbia/HCA,
with respect to any Columbia/HCA Returns, and to the relevant Taxing Authority,
with respect to any Triad Returns for Straddle Periods), and shall indemnify and
hold
16
<PAGE>
the Columbia/HCA Group and the LifePoint Group harmless against, the amount of
Taxes that is attributable to the Triad Group.
(b) For purposes of this Agreement, in the case of Taxes that are
attributable to a Straddle Period and are not described in Section 3.03(a),
above, the Straddle Period shall be treated as if it were divided into a Pre-
Distribution Period and a Post-Distribution Period and such Taxes shall be
allocated between such Pre-Distribution Period and such Post-Distribution Period
by allocating Tax Items between such Pre-Distribution Period and Post-
Distribution Period based upon (i) an actual closing of the books as of the
close of business on April 30, 1999 and (ii) a ratable allocation election as
described in Treasury Regulation section 1.1502-76(b)(2)(iii) with respect to
the month of May 1999; provided, however, that any Tax Items attributable to
transactions or events not in the ordinary course of business occurring on the
Distribution Date prior to or at the time of the Public Distribution will be
allocated to the Pre-Distribution Period, and any Tax Items attributable to
transactions or events not in the ordinary course of business occurring on the
Distribution Date after the Public Distribution shall be allocated to the Post-
Distribution Period, in each case in accordance with the principles of Treasury
Regulation section 1.1502-76(b)(1). With respect to Tax Items that are allocated
to a Pre-Distribution Period in accordance with this Section 3.03(b),
17
<PAGE>
(i) Columbia/HCA shall pay or cause to be paid to LifePoint with respect to
LifePoint Returns for Straddle Periods, and shall indemnify and hold the
LifePoint Group harmless against, the amount of Taxes that is attributable to
those Tax Items, and (ii) Columbia/HCA shall pay or cause to be paid to Triad
with respect to Triad Returns for Straddle Periods, and shall indemnify and hold
the Triad Group harmless against, the amount of Taxes that is attributable to
those Tax Items. With respect to Tax Items that are allocated to a Post-
Distribution Period in accordance with this Section 3.03(b), (i) LifePoint shall
pay or cause to be paid (to Columbia/HCA, with respect to any Columbia/HCA
Returns, and to the relevant Taxing Authority, with respect to any LifePoint
Returns for Straddle Periods), and shall indemnify and hold the Columbia/HCA
Group and the Triad Group harmless against, the amount of Taxes that is
attributable to the LifePoint Group, computed as if the taxable period for
LifePoint and its Affiliates for such Taxes began immediately following the
Distribution Date, and (ii) Triad shall pay or cause to be paid (to
Columbia/HCA, with respect to any Columbia/HCA Returns, and to the relevant
Taxing Authority, with respect to any Triad Returns for Straddle Periods), and
shall indemnify and hold the Columbia/HCA Group and the LifePoint Group harmless
against, the amount of Taxes that is attributable to the Triad Group, computed
as if the taxable period for Triad and its Affiliates for such Taxes began
immediately following the Distribution Date.
Section 3.04. Adjustments. If any adjustment is made to any Tax Return
-----------
relating to a Party or any of its Affiliates (whether such adjustment is the
result of or in settlement of any audit, other administrative proceeding or
judicial proceeding or the filing of an amended return to reflect the
consequences of any determination made in connection with any such audit or
proceeding or otherwise) and there is a correlative adjustment applicable to
another Party or any of its Affiliates for any taxable period (or portion
thereof) ending after the Distribution Date, the Party whose adjustment is
favorable (i.e., the Party to which there inures, directly or indirectly, a net
----
Tax benefit as a result of any adjustment) (the "Benefited Party") shall pay to
the Party whose adjustment is unfavorable (i.e., the Party which suffers,
directly or indirectly, a net Tax detriment as a result of any adjustment (the
"Detrimented Party") the amount of such net Tax benefit, at such time or times
as and to the extent that such benefit is realized through a refund of Tax or
actual reduction in the amount of Tax that the Benefited Party otherwise would
have paid if such
18
<PAGE>
adjustment had not been made; provided, that the Benefited Party shall not be
obligated to make any payment pursuant to this Section 3.04 in respect of a net
Tax benefit to the extent that the amount of such payment would exceed (a) the
aggregate amount of all prior net Tax detriments suffered by the Detrimented
Party with respect to adjustments that are the subject of this Section 3.04 less
(b) the aggregate amount of all prior payments made by the Benefited Party under
this Section 3.04.
Upon notice from any Party hereto regarding any event (including the filing
of an amended Return or the occurrence of an audit or other proceeding) that
could give rise to a Tax detriment to such Party, a Party having a potential Tax
benefit with respect to the same underlying adjustment shall take all actions as
may be necessary to maximize any correlative adjustment that might ultimately
reduce payments hereunder, and shall coordinate with, the Party with the
potential Tax detriment with respect to the taking of such actions.
Section 3.05 Manner of Payment. Except as otherwise provided in this
-----------------
Agreement, any payment required to be made among the Parties pursuant to this
Article III with respect to any Tax Return shall be made by the Party obligated
to make such payment (i) in the case of a refund of Tax, within 30 business days
after receipt (whether by way of payment, credit, or offset against any payments
due or otherwise) of such refund, (ii) in the case of the payment of Tax with
respect to any Tax Return other than a Straddle Period Tax Return, within 30
days after the later of such payment of Tax to the relevant Taxing Authority
(including a deemed payment through the use of a Tax loss, credit, deduction or
other allowance) and the delivery of written demand for the payment hereunder to
the Party obligated to make such payment and (iii) in the case of the payment of
Tax with respect to any Straddle Period Tax Return, the later of the date such
Straddle Period Tax Return is filed or 15 days following the delivery of written
demand for
19
<PAGE>
the payment hereunder to the Party obligated to make such payment. Any payment
described in clause (i), above, and any demand for payment described in clause
(ii) or (iii), above, shall be accompanied by a calculation setting forth the
basis for the amount paid or demanded. Any payment that is required under this
Agreement that is not made within the prescribed time period shall thereafter
bear interest at a fluctuating rate per annum equal to the prime commercial
lending rate publicly announced by The Chase Manhattan Bank or any successor
thereto at its principal office (or any alternative rate substituted therefor by
such bank).
Section 3.06. Carrybacks. A Spinco shall be entitled to any refund for
----------
any Tax obtained by the Columbia/HCA Group (or any member of the Columbia/HCA
Group) as a result of the carryback of losses or credits of any member of such
Spinco's Group from any taxable period beginning on or after the Distribution
Date to any taxable period ending on or before the Distribution Date, provided
that the Spinco has received Columbia/HCA Approval with respect to such
carryback. Such refund shall be limited to the net amount received by the
Columbia/HCA Group (by refund, offset against other Taxes or otherwise), net of
any net Tax cost and other expenses incurred by the Columbia/HCA Group with
respect to such refund, and shall be paid within 30 days after payment is
received (or deemed received by reason of the reduction of Taxes otherwise
payable) by Columbia/HCA from a Taxing Authority. The application of any such
carrybacks by a Spinco and/or any Affiliate of a Spinco shall be in accordance
with the Code and the consolidated return regulations promulgated thereunder or
other applicable Tax laws. The Spinco shall indemnify Columbia/HCA for any costs
(including any interest, fines and penalties) resulting from the carryback of
any item under this paragraph. Notwithstanding this Section 3.06, each Spinco
and any member of a Spinco Group shall have the right, in its sole discretion,
to make any election regarding any such carrybacks, including the
20
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election under section 172(b)(3) of the Code, that would eliminate or limit the
carryback of any loss or credit to any taxable period ending before or including
the Distribution Date.
Section 3.07. Deductions Attributable to Non-Qualified Vested Options.
-------------------------------------------------------
Each Spinco agrees to pay to Columbia/HCA any benefit received by its Spinco
Group that is attributable to any transaction or items relating to the Non-
Qualified Vested Options. The benefit payable by a Spinco to Columbia/HCA under
this Section 3.07 with respect to any taxable period shall equal the excess of
(i) the amount of Taxes that such Spinco Group would have paid in the absence of
any transactions or items under the Non-Qualified Vested Options over (ii) the
amount of Taxes actually payable by such Spinco Group. Payment of such benefit
shall be made within 30 days after the filing of the Spinco Group's Federal
Income Tax Return for any taxable period in which a benefit is realized
(including through the use of a net operating loss that is created or increased
by any transaction or item under the Non-Qualified Vested Options). If
subsequent to the Spinco's payment of any such amount, there is (A) a Final
Determination under applicable law to the effect that all or part of the
deduction giving rise to such payment was not allowable or available, or (B) a
reduction in the amount of the benefit the Spinco realizes as a result of a
Final Determination increasing the amount of income or gain associated with
those transactions, Columbia/HCA shall repay to the Spinco within 30 days of any
event described in (A) or (B) (a "Subsequent Benefit Decrease Event") any amount
that would have not been payable to Columbia/HCA pursuant to this Section 3.07
had the amount of the benefit been initially determined in light of the
Subsequent Benefit Decrease Events, together with the amount of any interest and
penalties payable to any Taxing Authority with respect to those amounts. If
subsequent to the Spinco's payment of any amount under this Section 3.07, there
is (A) a Final Determination under applicable law to the effect that a deduction
giving rise to such payment
21
<PAGE>
exceeded the amount claimed or (B) an increase in the amount of the benefit the
Spinco realizes as a result of a Final Determination decreasing the amount of
income or gain associated with those transactions, the Spinco shall pay to
Columbia/HCA within 30 days of any event described in (A) or (B) (a "Subsequent
Benefit Increase Event") any additional amount that would have been payable to
Columbia/HCA pursuant to this Section 3.07 had the amount of the benefit been
initially determined in light of the Subsequent Benefit Increase Events. Each
Spinco shall take all actions as shall be necessary to maximize the amounts
payable by the Spinco to Columbia/HCA under this Section 3.07 and shall
coordinate with, and follow the instruction of, Columbia/HCA with respect to the
taking of such actions.
Section 3.08. Section 475 Adjustments. Columbia/HCA shall pay to each
-----------------------
Spinco an amount equal to each Spinco Group's net increase in Taxes that is
attributable to an adjustment under Code section 481(a) pursuant to section
7003(c)(2) of the Internal Revenue Service Restructuring and Reform Act of 1998
(P.L. 105-206) (a "Section 475 Adjustment"). The amount payable by Columbia/HCA
to a Spinco under this Section 3.08 with respect to any taxable period shall
equal the excess of (i) the amount of Taxes actually payable by such Spinco
Group for such taxable period over (ii) the amount of Taxes that would have been
payable by such Spinco Group for such taxable period in the absence of the
Section 475 Adjustment.
Section 3.09. Certain Disputes Regarding Tax Liabilities. In the event of
------------------------------------------
a dispute regarding (i) the allocation of liability pursuant to the provisions
of this Article III, (ii) a payment for the use of losses or credits
attributable to a Spinco Group pursuant to Section 3.06, above, (iii) a payment
pursuant to Section 3.07, above, attributable to a deduction arising from a
transaction or item relating to the Non-Qualified Vested Options, or (iv) a
payment pursuant to Section 3.08, above, attributable to a Section 475
Adjustment, the parties to the dispute shall
22
<PAGE>
employ (and equally share the expense of) a mutually acceptable and jointly
engaged nationally recognized public accounting firm to determine the proper
allocation of such liability or amount of such payment. In the event the Parties
are unable to agree to a mutually acceptable nationally recognized accounting
firm within 10 days, the parties shall each select a nationally recognized
accounting firm, which accounting firms shall select a third nationally
recognized accounting firm, which third nationally recognized accounting firm
shall be jointly engaged by the parties to determine the proper allocation of
such liability or amount of such payment.
23
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ARTICLE IV
REPRESENTATIONS AND COVENANTS
-----------------------------
Section 4.01. LifePoint Representations. (a) LifePoint has reviewed the
-------------------------
Ruling Request and the Letter Ruling and, to the best of LifePoint's knowledge,
these materials, including any representations and statements concerning
LifePoint, its business operations, capital structure and/or organization, are
complete and accurate in all material respects. LifePoint shall, and shall cause
each member of the LifePoint Group to, comply in all material respects with each
such representation and statement concerning LifePoint and the LifePoint Group
made in the Ruling Request and in the Letter Ruling, including statements
relating to actions intended to facilitate (i) LifePoint's adoption of the
LifePoint ESOP and other line-of-sight compensation and (ii) LifePoint's
improvement of operations and management focus with respect to its facilities.
Without limiting the generality of the foregoing, with respect to any
representation or statement made by, on behalf of, or with respect to LifePoint
or the LifePoint Group in connection with the Ruling Request or the Letter
Ruling, and to the extent such representation or statement relates to future
actions or events under their control, neither LifePoint nor any member of the
LifePoint Group will take (or fail to take) any action during the Restricted
Period that would have caused such representation or statement to be untrue if
LifePoint or any member of the LifePoint Group had planned or intended to take
(or fail to take) such action at the time such representation or statement was
made by or on behalf of LifePoint or the LifePoint Group.
(b) LifePoint hereby represents and warrants that it has no intention
to undertake any of the transactions set forth in Section 4.02(a)(ii), below,
nor does LifePoint or any member of the LifePoint Group have any intention to
cease to engage in the active conduct of its trade or business (within the
meaning of section 355(b)(2) of the Code), including the
24
<PAGE>
ownership and operation of the following hospitals and the assets associated
therewith: Castleview Hospital (located in Price, Utah), Ashley Valley Medical
Center (located in Vernal, Utah) and Riverton Memorial Hospital (located in
Riverton, Wyoming).
Section 4.02. LifePoint Covenants. (a) LifePoint covenants and agrees on
-------------------
behalf of itself and each other member of the LifePoint Group that during the
Restricted Period:
(i) LifePoint and the members of the LifePoint Group will continue to
engage in the business of owning and operating hospitals and related health
care facilities and will continue to maintain a substantial portion of
their respective assets and business operations as they existed immediately
prior to the Distributions.
(ii) Except as provided in Section 4.02(d), below, neither LifePoint nor
any of its Affiliates nor any of its or their respective Representatives
will undertake, authorize, approve, recommend, permit, facilitate, or enter
into any contract, or consummate any transaction with respect to:
(1) the issuance of stock of LifePoint or any Affiliate thereof
or instrument that could constitute equity for Federal Income Tax
purposes (or any instrument or contract with respect thereto,
including options, warrants, rights or securities exercisable for,
or convertible into, stock of LifePoint or an Affiliate of
LifePoint) in a single transaction or in a series of related or
unrelated transactions other than (A) options and stock issued
pursuant to option and other equity plans as approved by the Board
of Directors of Columbia/HCA on April 15, 1999 (without regard to
subsequent amendments thereto), in an amount not to exceed 6,850,000
shares of LifePoint common stock, (B) stock sold to the LifePoint
ESOP, as described in the Ruling Request and (C) options pledged to
a private foundation
25
<PAGE>
to be established by LifePoint (and the issuance of stock pursuant
to the exercise of such options), as described in the Ruling
Request, in an amount not to exceed 100,000 shares of LifePoint
common stock;
(2) any transaction or series of related or unrelated
transactions with respect to the capital stock of, or other equity
interest in, LifePoint or any of its Affiliates, including any
redemptions, repurchases, stock acquisitions or stock dispositions
or the dissolution, merger, consolidation or complete or partial
liquidation of LifePoint or any of its Affiliates (or any
announcement of any such action), other than (A) transactions
pursuant to the "Odd-Lot Programs" described in the Ruling Request,
(B) stock acquisitions described in Section 4.02(a)(ii)(1)(A) and
(B), above, and (C) normal market trading;
(3) the transfer of assets to any Person in which LifePoint or
any of its Affiliates holds, directly or indirectly, any stock,
option, debt or other interest;
(4) any disposition of assets (other than assets that were
identified as "Held For Sale Assets" or "Potential Held For Sale
Assets" in the Ruling Request submission dated March 2, 1999, to the
extent that such assets are disposed in a manner that was described
in the Original Ruling Request with respect to Held For Sale Assets)
that (A) is outside the ordinary course of business or (B) is of
assets that are held, directly or indirectly, by LifePoint of
Kentucky, LLC;
(5) the effectuation of any recapitalization of LifePoint or any
of its Affiliates, including any stock split, reverse stock split,
stock dividend or other change in capital structure (other than the
repayment of any indebtedness outstanding immediately after the
Distributions);
26
<PAGE>
(6) the making of any election under Treasury Regulations
promulgated under Code Section 7701, or any successor regulation or
provision.
(iii) LifePoint will take the actions related to the LifePoint ESOP detailed
in the Ruling Request within the time period specified in the Letter Ruling.
(b) LifePoint covenants and agrees, on behalf of itself and each
other member of the LifePoint Group, that neither LifePoint nor any other member
of the LifePoint Group will take any position (on a Tax Return, in a Tax
proceeding or audit, or otherwise) that is inconsistent with the Letter Ruling
or the Ruling Request.
(c) In addition to the other representations, warranties, covenants
and agreements set forth in this Agreement, LifePoint and each member of the
LifePoint Group will take, or refrain from taking, as the case may be, such
actions as Columbia/HCA may require as necessary to ensure that the
Reorganization qualifies for the intended Tax treatment, including such actions
as Columbia/HCA determines may be necessary to preserve the Tax treatment set
forth in the Letter Ruling. Without limiting the generality of the foregoing,
LifePoint and the LifePoint Group shall cooperate with Columbia/HCA if
Columbia/HCA determines to obtain additional IRS rulings with respect to the
Reorganization or any portion thereof, including rulings pertaining to whether
any actual or proposed change in facts and circumstances affects the Tax
treatment of the Reorganization or any portion thereof, and Columbia/HCA shall
reimburse LifePoint for reasonable third-party costs and expenses directly
related to requests for additional IRS rulings that are initiated by
Columbia/HCA.
(d) Following the Distribution Date, LifePoint and its Affiliates may
take any action or engage in conduct otherwise prohibited by this Section 4.02
so long as prior to such action or conduct, as the case may be, LifePoint
obtains Columbia/HCA Approval and, if
27
<PAGE>
Columbia/HCA so requires, Columbia/HCA or LifePoint receives (A) a ruling from
the IRS in form and substance satisfactory to Columbia/HCA, in its sole and
absolute discretion, and upon which Columbia/HCA can rely, to the effect that
the proposed action or conduct, as the case may be, will not cause the
Reorganization or any portion thereof to fail to qualify for the Tax treatment
stated in the Letter Ruling, or (B) an Opinion of Counsel that is satisfactory
to Columbia/HCA in its sole and absolute discretion, and upon which Columbia/HCA
can rely (which ruling or Opinion of Counsel, as the case may be, shall be
obtained at the sole cost and expense of the LifePoint), to the effect that the
proposed action or conduct, as the case may be, will not cause the
Reorganization or any portion thereof to fail to qualify for the Tax treatment
stated in the Letter Ruling.
(e) LifePoint covenants, on behalf of itself and each other member of
the LifePoint Group, that neither LifePoint nor any member of the LifePoint
Group will apply for any additional IRS ruling pertaining to the Reorganization
or any portion thereof without Columbia/HCA Approval. Columbia/HCA shall be
entitled to review and approve any request for, or document relating to, any
such ruling prior to its submission to the IRS.
(f) LifePoint covenants that it will make sufficient contributions to
the LifePoint ESOP to enable the LifePoint ESOP to repay, over a period of not
more than 10 years, the promissory note issued by it to LifePoint, in accordance
with the terms of such promissory note. LifePoint covenants that it will not
take any action to cause the disposition of unallocated stock held by the
LifePoint ESOP prior to the full repayment of the loan incurred by the LifePoint
ESOP and the full allocation of all shares acquired in connection with such
loan.
Section 4.03. Triad Representations. (a) Triad has reviewed the Ruling
---------------------
Request and the Letter Ruling and, to the best of Triad's knowledge, these
materials, including any
28
<PAGE>
representations and statements concerning Triad, its business operations,
capital structure and/or organization, are complete and accurate in all material
respects. Triad shall, and shall cause each member of the Triad Group to, comply
in all material respects with each such representation and statement concerning
Triad and the Triad Group made in the Ruling Request and in the Letter Ruling,
including statements relating to actions intended to facilitate (i) Triad's
adoption of the Triad ESOP and other line-of-sight compensation and (ii) Triad's
improvement of operations and management focus with respect to its facilities.
Without limiting the generality of the foregoing, with respect to any
representation or statement made by, or on behalf of, Triad or the Triad Group
in connection with the Ruling Request or the Letter Ruling, and to the extent
such representation or statement relates to future actions or events under their
control, neither Triad nor any member of the Triad Group will take (or fail to
take) any action during the Restricted Period that would have caused such
representation or statement to be untrue if Triad or any member of the Triad
Group had planned or intended to take (or fail to take) such action at the time
such representation or statement was made by or on behalf of Triad or the Triad
Group.
(b) Triad hereby represents and warrants that it has no intention to
undertake any of the transactions set forth in Section 4.04(a)(ii), below, nor
does Triad or any member of the Triad Group have any intention to cease to
engage in the active conduct of its trade or business (within the meaning of
section 355(b)(2) of the Code), including the ownership and operation of the
following hospitals and the assets associated therewith: Northwest Hospital
(located in Tucson, Arizona), San Leandro Hospital (located in San Leandro,
California) and Williamette Valley Medical Center (located in McMinnville,
Oregon).
Section 4.04. Triad Covenants. (a) Triad covenants and agrees on behalf of
---------------
itself and each other member of the Triad Group that during the Restricted
Period:
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<PAGE>
(i) Triad and the members of the Triad Group will continue to engage in
the business of owning and operating hospitals and related health care
facilities and will continue to maintain a substantial portion of their
respective assets and business operations as they existed immediately prior
to the Distributions;
(ii) Except as provided in Section 4.04(d), below, neither Triad nor any
of its Affiliates nor any of its or their respective Representatives will
undertake, authorize, approve, recommend, permit, facilitate, or enter into
any contract, or consummate any transaction with respect to:
(1) the issuance of stock of Triad or any Affiliate thereof or
instrument that could constitute equity for Federal Income Tax
purposes (or any instrument or contract with respect thereto,
including options, warrants, rights or securities exercisable for,
or convertible into, stock of Triad or an Affiliate of Triad) in a
single transaction or in a series of related or unrelated
transactions other than (A) options and stock issued pursuant to
option and other equity plans as approved by the Board of Directors
of Columbia/HCA on April 15, 1999 (without regard to subsequent
amendments thereto), in an amount not to exceed 6,850,000 shares of
Triad common stock, (B) stock sold to the Triad ESOP, as described
in the Ruling Request and (C) options pledged to a private
foundation to be established by Triad (and the issuance of stock
pursuant to the exercise of such options), as described in the
Ruling Request, in an amount not to exceed 100,000 shares of Triad
common stock;
(2) any transaction or series of related or unrelated
transactions with respect to the capital stock of, or other equity
interest in, Triad or any of its Affiliates,
30
<PAGE>
including any redemptions, repurchases, stock acquisitions or stock
dispositions or the dissolution, merger, consolidation or complete
or partial liquidation of Triad or any of its Affiliates (or any
announcement of any such action), other than (A) transactions
pursuant to the "Odd-Lot Programs" described in the Ruling Request,
(B) stock acquisitions described in Section 4.04(a)(ii)(1)(A) and
(B), above, and (C) normal market trading;
(3) the transfer of assets to any Person in which Triad or any
of its Affiliates holds, directly or indirectly, any stock, option,
debt or other interest;
(4) any disposition of assets (other than assets that were
identified as "Held for Sale Assets" or "Potential Held for Sale
Assets" in the Ruling Request submission dated March 2, 1999, to the
extent that such assets are disposed in a manner that was described
in the Original Ruling Request with respect to Held For Sale Assets)
that is outside the ordinary course of business;
(5) the effectuation of any recapitalization of Triad or any of
its Affiliates, including any stock split, reverse stock split,
stock dividend or other change in capital structure (other than the
repayment of any indebtedness outstanding immediately after the
Distributions);
(6) the making of any election under Treasury Regulations
promulgated under Code Section 7701, or any successor regulation or
provision.
(iii) Triad will take the actions related to the Triad ESOP detailed in
the Ruling Request within the time period specified in the Letter Ruling.
(b) Triad covenants and agrees, on behalf of itself and each
other member of the Triad Group, that neither Triad nor any other member of the
Triad Group will take any
31
<PAGE>
position (on a Tax Return, in a Tax proceeding or audit, or otherwise) that is
inconsistent with the Letter Ruling or the Ruling Request.
(c) In addition to the other representations, warranties, covenants
and agreements set forth in this Agreement, Triad and each member of the Triad
Group will take, or refrain from taking, as the case may be, such actions as
Columbia/HCA may require as necessary to ensure that the Reorganization
qualifies for the intended Tax treatment, including such actions as Columbia/HCA
determines may be necessary to preserve the Tax treatment set forth in the
Letter Ruling. Without limiting the generality of the foregoing, Triad and the
Triad Group shall cooperate with Columbia/HCA if Columbia/HCA determines to
obtain additional IRS rulings with respect to the Reorganization or any portion
thereof, including rulings pertaining to whether any actual or proposed change
in facts and circumstances affects the Tax treatment of the Reorganization or
any portion thereof, and Columbia/HCA shall reimburse Triad for reasonable
third-party costs and expenses directly related to requests for additional IRS
rulings that are initiated by Columbia/HCA.
(d) Following the Distribution Date, Triad and its Affiliates may
take any action or engage in conduct otherwise prohibited by this Section 4.04
so long as prior to such action or conduct, as the case may be, Triad obtains
Columbia/HCA Approval and, if Columbia/HCA so requires, Columbia/HCA or Triad
receives (A) a ruling from the IRS in form and substance satisfactory to
Columbia/HCA, in its sole and absolute discretion, and upon which Columbia/HCA
can rely, to the effect that the proposed action or conduct, as the case may be,
will not cause the Reorganization or any portion thereof to fail to qualify for
the Tax treatment stated in the Letter Ruling, or (B) an Opinion of Counsel that
is satisfactory to Columbia/HCA in its sole and absolute discretion, and upon
which Columbia/HCA can rely (which ruling or
32
<PAGE>
Opinion of Counsel, as the case may be, shall be obtained at the sole cost and
expense of Triad), to the effect that the proposed action or conduct, as the
case may be, will not cause the Reorganization or any portion thereof to fail to
qualify for the Tax treatment stated in the Letter Ruling.
(e) Triad covenants, on behalf of itself and each other member of the
Triad Group, that neither Triad nor any member of the Triad Group will apply for
any additional IRS ruling pertaining to the Reorganization or any portion
thereof without Columbia/HCA Approval. Columbia/HCA shall be entitled to review
and approve any request for, or document relating to, any such ruling prior to
its submission to the IRS.
(f) Triad covenants that it will make sufficient contributions to the
Triad ESOP to enable the Triad ESOP to repay, over a period of not more than 10
years, the promissory note issued by it to Triad, in accordance with the terms
of such promissory note. Triad covenants that it will not take any action to
cause the disposition of unallocated stock held by the Triad ESOP prior to the
full repayment of the loan incurred by the Triad ESOP and the full allocation of
all shares acquired in connection with such loan.
33
<PAGE>
ARTICLE V
INDEMNITY OBLIGATIONS
---------------------
Section 5.01. Breach. Columbia/HCA, LifePoint and Triad shall each
------
indemnify and hold harmless the other Parties and their Affiliates from and
against any payment required to be made under this Agreement as a result of the
breach by a member of the Columbia/HCA Group, LifePoint Group or Triad Group, as
the case may be, of any obligation under this Agreement.
Section 5.02. Tax Indemnification. Notwithstanding any other provision of
-------------------
this Agreement to the contrary:
(a) If any Party or any of its Affiliates (collectively, jointly and
severally, the "Indemnifying Parties") takes any action prohibited by Article
IV, above, or violates a representation or covenant contained in Article IV,
above, or takes or fails to take any other action (any such action, failure to
act or violation, a "Tainting Act") and the Reorganization or any portion
thereof fails to qualify for the Tax treatment stated in the Letter Ruling in
whole or in part as a result of such Tainting Act, then the Indemnifying Parties
shall (jointly and severally) indemnify and hold harmless each of the other
Parties and their Affiliates (collectively, the "Indemnified Parties") against
any and all Taxes and any other costs and liabilities imposed upon or incurred
by the Indemnified Parties as a result of the Tainting Act, including any
liability of the Indemnified Parties arising from Taxes imposed on shareholders
of a Party to the extent any shareholder or the IRS or other Taxing Authority
successfully seeks recourse against the Indemnified Parties on account of any
such Tainting Act, or any liability for such Taxes or other costs or liabilities
that the Indemnified Parties may assume or otherwise incur;
(b) Each Spinco and its Affiliates shall (jointly and severally)
indemnify and hold harmless Columbia/HCA and its Affiliates for any Tax imposed
upon or incurred by
34
<PAGE>
Columbia/HCA and its Affiliates as a direct or indirect result of any action
taken after the Distributions by such Spinco or any of its Affiliates.
Section 5.03. Gross-Up. Any payment under this Agreement shall be (i)
--------
increased to take account of any Tax Detriment incurred from the receipt or
accrual of payments hereunder (i.e., grossed-up for any Tax incurred on such
payment, accrual and/or increase) and (ii) reduced to take account of any Tax
Benefit attributable to the items to which such payments relate.
Section 5.04. Tender Offer Or Purchase Offer. Notwithstanding anything to
------------------------------
the contrary set forth in this Agreement, if, during the Restricted Period, any
Person or group of Persons acquires beneficial ownership of LifePoint or Triad
common stock (or any other class of outstanding LifePoint or Triad stock) or
commences a tender or other purchase offer for the capital stock of LifePoint or
Triad or initiates any other form of transaction to acquire directly or
indirectly LifePoint or Triad capital stock, upon consummation of which such
Person or group of Persons would acquire beneficial ownership of LifePoint or
Triad common stock (or any other class of outstanding LifePoint or Triad stock)
such that the Reorganization or any portion thereof shall fail to qualify for
the Tax treatment stated in the Letter Ruling as a result of such acquisition,
tender or other purchase offer, or other form of transaction, then the
Indemnifying Parties shall indemnify and hold harmless the Indemnified Parties
against any and all Taxes and any other costs and liabilities imposed upon or
incurred by the Indemnified Parties and/or their shareholders as a result of the
failure of the Reorganization or any portion thereof to so qualify.
Section 5.05. Tax Indemnity Payments. An Indemnifying Party shall make
----------------------
any payment or indemnity required by this Article V no later than 30 days after
receipt of written notice from the Indemnified Parties of such payment or
indemnity obligation, which notice shall be accompanied by a computation of the
amounts due.
35
<PAGE>
Section 5.06. Effect Of Sections 4.02(d) and 4.04(d) of This Agreement.
--------------------------------------------------------
The Indemnified Parties shall be indemnified and held harmless under this
Article V without regard to the fact that any Indemnifying Party or Indemnified
Party may have received Columbia/HCA Approval, a ruling from the IRS or an
Opinion of Counsel, as contemplated by Sections 4.02(d) and 4.04(d), above, or
otherwise. The Indemnified Parties shall be indemnified and held harmless under
Section 5.04, above, without regard to whether an acquisition of beneficial
ownership results from a transaction that is not prohibited under Article IV,
above.
36
<PAGE>
ARTICLE VI
COOPERATION AND EXCHANGE OF INFORMATION
---------------------------------------
Section 6.01. Cooperation (a) Each Party shall cooperate (and shall
-----------
cause its Affiliates to cooperate) fully at such time and to the extent
reasonably requested by any other Party in connection with the preparation and
filing of any Tax Return or the conduct of any audit, dispute, proceeding, suit
or action concerning any issues or any other matter contemplated hereunder. Such
cooperation shall include (1) the retention and provision on demand of books,
records, documentation, other information, or copies thereof relating to any Tax
Return until the later of (x) a Final Determination regarding liability for
Taxes to which such Tax Return relates and (y) in the event any claim has been
made under this Agreement for which such information is relevant, a final
resolution with respect to such claim; (2) the provision of additional
information with respect to an explanation of Tax Practices and material
provided under clause (1) of this Section 6.01(a); (3) the execution of any
document (including powers of attorney) that may be necessary or reasonably
helpful in connection with the filing of any Tax Return by any member of the
Columbia/HCA Group or a Spinco Group, or in connection with any audit, dispute,
proceeding, suit or action addressed in the preceding sentence; (4) the use of
the Party's reasonable best efforts to obtain any documentation from a
governmental authority or a third party that may be necessary or helpful in
connection with the foregoing; (5) the completion of such tax packages and other
work papers as requested, and within the reasonable time specified, by the
requesting party (including the provision of such information in electronic
format, if so specified by the requesting party); and (6) the satisfaction of
applicable withholding requirements. Each Party shall make its employees and
facilities available on a mutually convenient basis to facilitate such
cooperation.
37
<PAGE>
(b) Each Party (a "Notifying Party") shall use reasonable efforts to
keep each other Party advised as to the status of Tax audits and litigation
involving any issue (a "Liability Issue") that (i) relates to a Tax of the other
Party (or its Affiliates), or (ii) could give rise to the liability of the other
Party (or its Affiliates) under this Agreement. The Notifying Party shall
promptly furnish such other Party or Parties copies of any inquiries or requests
for information from any Taxing Authority concerning any Liability Issue. If
applicable under Section 6.02, below, the other Party or Parties shall have the
right to consult with the Notifying Party regarding any responses to such
requests and the Notifying Party shall provide such other Party or Parties with
copies of any such written responses before such responses are given to any
Taxing Authority. Without limiting the generality of the foregoing, each Party
shall promptly furnish to the other Party or Parties, upon receipt, a copy of
any revenue agent's report or similar report, notice of proposed adjustment or
notice of deficiency received by such Party or any of its Affiliates, as the
case may be, relating to any Liability Issue or any adjustment referred to in
Section 6.01(c), below.
(c) Columbia/HCA shall advise and consult with each of the Spincos
with respect to any proposed Tax adjustments relating to the Columbia/HCA Group
that are the subject of an audit or investigation of a Taxing Authority or are
the subject of litigation and that may affect any Tax Item of any member of such
Spinco's Group after the Distribution Date.
Section 6.02. Contest Provisions (a) Subject to the cooperation
------------------
provisions in Section 6.01, above, Columbia/HCA shall have the full
responsibility and control over the handling of any Tax controversy, including
an audit, a protest to the Appeals Division of the IRS, litigation in the Tax
Court or any other court of competent jurisdiction, and any other federal,
state, local or foreign hearing or administrative proceeding, (a "Tax
Controversy"), involving (i) any
38
<PAGE>
Columbia/HCA Return or (ii) the Reorganization or any portion thereof. Upon
request by a Spinco, however, and subject to Columbia/HCA Approval and the
cooperation provisions in Section 6.01, above, the Spinco shall, at the Spinco's
expense, be allowed to participate in the handling of any Tax Controversy with
respect to any item that would give rise to a payment of Tax for which such
Spinco would be liable, or a refund of Tax for which such Spinco would be
entitled to receive payment, under this Agreement.
(b) Subject to the cooperation provisions in Section 6.01, above,
LifePoint shall have the full responsibility and control over the handling of
any Tax Controversy involving any LifePoint Return; provided, however, that
Columbia/HCA shall, at Columbia/HCA's expense and in its sole discretion, be
allowed to participate in or assume full responsibility and control over the
handling of any Tax Controversy with respect to any item that would give rise to
a payment of Tax for which Columbia/HCA would be liable, or a refund of Tax for
which Columbia/HCA would be entitled to receive payment, under this Agreement.
(c) Subject to the cooperation provisions in Section 6.01, above,
Triad shall have the full responsibility and control over the handling of any
Tax Controversy involving any Triad Return; provided, however, that Columbia/HCA
shall, at Columbia/HCA's expense and in its sole discretion, be allowed to
participate in or assume full responsibility and control over the handling of
any Tax Controversy with respect to any item that would give rise to a payment
of Tax for which Columbia/HCA would be liable, or a refund of Tax for which
Columbia/HCA would be entitled to receive payment, under this Agreement.
(d) Each Party shall promptly notify the other Parties of any
inquiries by any Taxing Authority that relate to any Tax that may be imposed on
the other Parties or any of their
39
<PAGE>
Affiliates or that might give rise to any liability on any of the part of any of
the other Parties or any of their Affiliates under this Agreement.
Section 6.03. Notices. Any notice, demand, claim or other communication
-------
under this Agreement shall be in writing and shall be deemed given upon delivery
if delivered personally, upon mailing if sent by certified mail, return receipt
requested, postage prepaid, or upon completion of transmission if sent by
telecopy or facsimile, to the Parties at the following address:
To Columbia/HCA or any member of the Columbia/HCA Group:
Columbia/HCA Healthcare Corporation
One Park Plaza
P.O. Box 550
Nashville, Tennessee 37202
Attention: Ronald Lee Grubbs, Jr.
Vice President/Tax
To LifePoint or any member of the LifePoint Group:
LifePoint Hospitals, Inc.
4525 Harding Road
Nashville, Tennessee 37205
Attention: Elizabeth N. Alexander
Director of Tax
To Triad or any member of the Triad Group:
Triad Hospitals, Inc.
13455 Noel Road, 20th Floor
Dallas, Texas 75240
Attention: Robert P. Frutiger
Director of Tax
In each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Attention: Gordon E. Warnke, Esq.
40
<PAGE>
Section 6.04. Complete Agreement. This Agreement, together with the
------------------
Distribution Agreement, constitutes the entire agreement of the Parties
concerning the subject matter hereof, and supersedes all other agreements,
whether or not written, in respect of any Tax between or among any member or
members of the Columbia/HCA Group, LifePoint Group and Triad Group. In the
event and to the extent there is a conflict between the provisions of this
Agreement and Distribution Agreement, the provisions of this Agreement shall
control. This Agreement may not be amended except by an agreement in writing,
signed by the Parties.
Section 6.05. Disputes. Except as otherwise provided in Section 3.09,
--------
above, resolution of any and all disputes arising from or in connection with
this Agreement shall be in accordance with the provisions of Section 11.3 of the
Distribution Agreement.
Section 6.06. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the state of Delaware.
Section 6.07. Parties in Interest, Successors and Assigns. This Agreement
-------------------------------------------
is being entered into by Columbia/HCA, LifePoint and Triad on behalf of
themselves and their respective Affiliates immediately following the
Distributions. This Agreement shall constitute a direct obligation of each such
Person and shall be deemed to have been readopted and affirmed on behalf of any
Person that becomes a member of the Columbia/HCA Group, LifePoint Group or Triad
Group in the future. All of the provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties and their Affiliates and their
respective successors and permitted assigns. A Party's rights and obligations
under this Agreement may not be assigned without the prior written consent of
the other Parties.
Section 6.08. No Third-Party Beneficiaries. This Agreement is solely for
----------------------------
the benefit of the Parties and their respective Affiliates and should not be
deemed to confer upon third parties
41
<PAGE>
any remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without this Agreement.
Section 6.09. Legal Enforceability. Any provision of this Agreement that
--------------------
is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions. Any prohibition
or unenforceability of any provision of this Agreement in any jurisdiction shall
not invalidate or render unenforceable the provision in any other jurisdiction.
Section 6.10. Expenses. Unless otherwise expressly provided in this
--------
Agreement or in the Distribution Agreement, each Party shall bear any and all
expenses that arise from its respective obligations under this Agreement.
Section 6.11. Confidentiality. Except as required by law or with the prior
---------------
written consent of the other Parties, all Tax Returns, documents, schedules,
work papers and similar items and all information contained therein, which Tax
Returns and other materials are within the scope of this Agreement, and any
other information that is obtained by a Party or any of its Affiliates pursuant
to this Agreement, shall be kept confidential by such Party and its Affiliates
and Representatives, shall not be disclosed to any other Person and shall be
used only for the purposes provided herein. If a Party or any of its Affiliates
is required by law to disclose any such information, such Party shall give
written notice to the other Parties prior to making such disclosure.
Section 6.12. Privileged Matters. Except as otherwise provided in this
------------------
Agreement, matters of privilege that arise under or in connection with this
Agreement or the matters addressed herein shall be governed by Section 9.6 of
the Distribution Agreement.
42
<PAGE>
Section 6.13. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signature thereto and hereto were upon the same instrument.
* * *
43
<PAGE>
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the date first above written.
COLUMBIA/HCA HEALTHCARE CORPORATION
By: /s/ Ronald Lee Grubbs, Jr.
------------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President, General Counsel and
Secretary
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President, General Counsel and
Secretary
44
<PAGE>
EXHIBIT 10.2
BENEFITS AND EMPLOYMENT MATTERS
AGREEMENT
by and among
COLUMBIA/HCA HEALTHCARE CORPORATION,
and
TRIAD HOSPITALS, INC.
and
LIFEPOINT HOSPITALS, INC.
dated as of May 11, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
BENEFITS AND EMPLOYMENT MATTERS AGREEMENT............................ 1
RECITALS............................................................. 1
Article I. DEFINITIONS............................................... 1
Section 1.1 Definitions........................................... 1
Section 1.2 Other Terms........................................... 5
Section 1.3 Certain Constructions................................. 5
Section 1.4 Sections.............................................. 5
Section 1.5 Survival.............................................. 5
Article II. EMPLOYEE BENEFITS........................................ 6
Section 2.1 General............................................... 6
Section 2.2 Tax-Qualified Plans................................... 7
Section 2.3 Stock Option Plans.................................... 10
Section 2.4 Welfare Benefit Plans................................. 14
Section 2.5 Services to be Provided by Columbia/HCA and Mutuality. 16
Section 2.6 Preservation of Right To Amend or Terminate Plans..... 18
Section 2.7 Reimbursement......................................... 18
Section 2.8 Payroll Reporting and Withholding..................... 19
Article III. LABOR AND EMPLOYMENT MATTERS............................ 20
Section 3.1 Independent Employers................................. 20
Section 3.2 Employment Policies and Practices..................... 20
Section 3.3 Notice of Claims...................................... 20
Section 3.4 Assumption of Unemployment Tax Rates.................. 20
Section 3.5 No Third-Party Beneficiary Rights..................... 21
Article IV. DEFAULT.................................................. 21
Section 4.1 Default............................................... 21
Section 4.2 Force Majeure......................................... 21
Article V. MISCELLANEOUS............................................. 22
Section 5.1 Access Information; Cooperation...................... 22
Section 5.2 Assignment............................................ 22
Section 5.3 Headings.............................................. 22
Section 5.4 Attorney-Client Privilege............................. 22
Section 5.5 Severability.......................................... 22
Section 5.6 Parties Bound......................................... 22
Section 5.7 Notices............................................... 22
Section 5.8 Further Action........................................ 23
Section 5.9 Waiver................................................ 23
Section 5.10 Governing Law......................................... 24
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 5.11 Consent to Jurisdiction............................... 24
Section 5.12 Waiver of Jury Trial.................................. 24
Section 5.13 Entire Agreement...................................... 24
Section 5.14 Counterparts.......................................... 25
</TABLE>
ii
<PAGE>
BENEFITS AND EMPLOYMENT MATTERS AGREEMENT
THIS BENEFITS AND EMPLOYMENT MATTERS AGREEMENT (this "Agreement") is made
this 11th day of May 1999 by and among Columbia/HCA Healthcare Corporation, a
Delaware corporation ("Columbia/HCA"), Triad Hospitals, Inc., a Delaware
corporation and wholly owned subsidiary of Columbia/HCA ("Triad"), and LifePoint
Hospitals, Inc., a Delaware corporation and wholly owned subsidiary of
Columbia/HCA ("LifePoint") (each, singly, a "Party" and, collectively, the
"Parties"). Capitalized terms used in this Agreement are defined in Article I
and Section 2.3.
RECITALS
--------
WHEREAS, Columbia/HCA, directly and through its subsidiaries, owns and
operates health care facilities and related assets;
WHEREAS, the Board of Directors of Columbia/HCA has determined that it is
in the best interests of Columbia/HCA and its shareholders to distribute all of
the shares of Triad Stock and LifePoint Stock to the holders of Columbia/HCA
Stock (the "Distributions");
WHEREAS, in connection with the Distributions, Columbia/HCA, Triad and
LifePoint have set forth in a certain distribution agreement (the "Distribution
Agreement") the corporate transactions required to effect the Distributions and
the agreements that will govern certain matters following the Distributions; and
WHEREAS, as contemplated by the Distribution Agreement, Columbia/HCA, Triad
and LifePoint have agreed to enter into this agreement allocating
responsibilities with respect to employee compensation, benefits, labor, plan
administration and certain other employment matters pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the meanings indicated below:
Affiliate: any entity required to be aggregated with Columbia/HCA,
---------
Triad or LifePoint, as appropriate, pursuant to Code sections 414(b), 414(c),
414(m) or 414(o).
COBRA: Code section 4980B and ERISA Sections 601 through 608,
-----
establishing employer requirements for continuation of health care benefits for
certain current and former employees or dependents thereof.
<PAGE>
Code: the Internal Revenue Code of 1986, as amended, or any successor
----
legislation.
Columbia/HCA Defined Benefit Plan: any Defined Benefit Plan sponsored
---------------------------------
by a Subsidiary of Columbia/HCA prior to the Distribution Date.
Columbia/HCA Employee: any Employee of Columbia/HCA or an Affiliate
---------------------
thereof immediately prior to the Distributions, excluding Triad Employees and
LifePoint Employees.
Columbia/HCA Plans: the Columbia/HCA Retirement Plans and the
------------------
Columbia/HCA Welfare Plans, collectively.
Columbia/HCA Retirement Plans: the Columbia/HCA Healthcare
-----------------------------
Corporation Money Purchase Pension, Stock Bonus and Salary Deferral Plans.
Columbia/HCA Stock: the Class A Common Stock, par value $.01 per
------------------
share, of Columbia/HCA.
Columbia/HCA Terminee: any individual who (i) is no longer employed
---------------------
by Columbia/HCA or any Affiliate thereof immediately prior to the Distribution
Date and (ii) is not a LifePoint Terminee or a Triad Terminee.
Columbia/HCA Welfare Plans: the Columbia Medical Plan, the Columbia
--------------------------
Dental Plan, the Columbia Flexible Benefits Plan, the Columbia Life, Accidental
Death & Dismemberment Plan, the Columbia Long-Term Disability Plan and the
Columbia Flexible Spending Account Plan.
Defined Benefit Plan: a tax-qualified retirement Plan (under Code
--------------------
section 401(a)) that is not a Defined Contribution Plan.
Defined Contribution Plan: a tax-qualified retirement Plan (under
-------------------------
Code section 401(a)) defined in Code section 414(i).
Distribution Date: the date on which the Distributions occur.
-----------------
Distribution Year: the calendar year which includes the Distribution
-----------------
Date.
Employee: with respect to any entity, an individual who is
--------
considered, according to the payroll and other records of such entity, to be
employed by such entity, regardless of whether such individual is, at the
relevant time, actively at work or on leave of absence (including vacation,
holiday, sick leave, family and medical leave, disability leave, military leave,
jury duty, layoff with rights of recall, and any other leave of absence or
similar interruption of active employment that is not considered, according to
the policies or practices of such entity, to have resulted in a permanent
termination of such individual's employment).
EPIC Plan: the EPIC Healthcare Group, Inc. Profit Sharing Plan.
---------
2
<PAGE>
ERISA: the Employee Retirement Income Security Act of 1974, as
-----
amended, or any successor legislation.
ESOP: an employee stock ownership plan, as defined in Code section
----
4975.
HMO: any health maintenance organization organized under 42 U.S.C.
---
(S) 300e-9, or a state health maintenance organization statute that provides
medical services for Columbia/HCA Employees, Triad Employees or LifePoint
Employees under any Plan.
HealthTrust Plan: the HealthTrust, Inc.--The Hospital Company 401(k)
----------------
Retirement Program.
IRS: the Internal Revenue Service.
---
LifePoint Business: any business conducted by LifePoint, or a
------------------
LifePoint Subsidiary, on the Distribution Date.
LifePoint Employee: an Employee of LifePoint, or any direct or
------------------
indirect Subsidiary of LifePoint that is an Affiliate thereof, on the
Distribution Date.
LifePoint Retirement Plan: a Defined Contribution Plan to be
-------------------------
established by LifePoint pursuant to Plan Spin-offs from the Columbia/HCA
Retirement Plans in accordance with Section 2.2(a).
LifePoint Stock: the Common Stock, par value $.01 per share, of
---------------
LifePoint.
LifePoint Terminee: any individual who is no longer employed by
------------------
Columbia/HCA or any Affiliate thereof immediately prior to the Distribution
Date, but who was employed by a LifePoint Business immediately prior to his
termination of employment from Columbia/HCA and its Affiliates.
LifePoint Welfare Plans: the Welfare Benefit Plans to be established
-----------------------
by LifePoint pursuant to Plan Spin-offs in accordance with Section 2.4(a).
Plan: any plan, policy, arrangement, contract or agreement providing
----
compensation or benefits for any group of Employees or former Employees or
individual Employee or former Employee, or the dependents or beneficiaries of
any such Employee or former Employee, whether formal or informal or written or
unwritten, and including, without limitation, any means, whether or not legally
required, pursuant to which any benefit is provided by an employer to any
Employee or former Employee or the beneficiaries of any such Employee or former
Employee, adopted or entered into by a Party prior to, upon or after the
Distribution, regardless of whether such plan, policy, arrangement, contract or
agreement is governed by ERISA. The term "Plan" as used in this Agreement does
not include any contract, agreement or understanding entered into by
Columbia/HCA prior to the Distributions, or any contract, agreement or
understanding entered into by Columbia/HCA, Triad or LifePoint after the
Distributions, relating to settlement of actual or potential employee-related
litigation claims.
3
<PAGE>
Plan Spin-off: a procedure whereby accrued benefits and/or rights and
-------------
elections of a particular group of participants or employees in a Plan are
transferred to a new Plan.
Qualified Beneficiary: an individual (or dependent thereof) who
---------------------
either (a) experiences (or has experienced) a "qualifying event" (as that term
is defined in Code section 4980B(f)(3) and ERISA Section 603) while a
participant in any medical, dental or flexible spending account plan, or (b)
becomes (or previously became) a "qualified beneficiary" (as that term is
defined in Code section 4980B(g)(1) and ERISA Section 607(3)) under any medical,
dental or flexible spending account plan, and who is included in any one of the
following categories:
(i) LifePoint Qualified Beneficiary: any LifePoint Employee or
-------------------------------
LifePoint Terminee (or dependent thereof) who, on the Distribution Date, is
a Qualified Beneficiary under any Columbia/HCA medical, dental or flexible
spending account plan; or
(ii) Columbia/HCA Qualified Beneficiary: any Columbia/HCA Employee
----------------------------------
or Columbia/HCA Terminee (or dependent thereof) who, on the Distribution
Date, is a Qualified Beneficiary under any Columbia/HCA medical, dental or
flexible spending account plan; or
(iii) Triad Qualified Beneficiary: any Triad Employee or Triad
---------------------------
Terminee (or dependent thereof) who, on the Distribution Date, is a Qualified
Beneficiary under any Columbia/HCA medical, dental or flexible spending account
plan.
Service Credit: the period taken into account under any Plan in
--------------
determining length of service or plan participation for purposes of eligibility,
exercisability, vesting, benefit accrual or similar requirements under such
Plan.
Small Defined Contribution Plan: any Defined Contribution Plan, other
-------------------------------
than the HealthTrust Plan and the EPIC Plan, sponsored by a Subsidiary of
Columbia/HCA prior to the Distribution Date.
Small Welfare Benefit Plans: any Welfare Benefit Plan sponsored by a
---------------------------
Subsidiary of Columbia/HCA prior to the Distribution Date.
Spinco: either of Triad or LifePoint.
------
Spinco Employee: an individual who is an Employee of LifePoint or
---------------
Triad on the Distribution Date.
Spinco Retirement Plan: the LifePoint Retirement Plan or the Triad
----------------------
Retirement Plan (collectively, the Spinco Retirement Plans).
Spinco Welfare Benefit Plans or Spinco Welfare Plans: the LifePoint
----------------------------------------------------
Welfare Plans and the Triad Welfare Plans, collectively.
Subsidiary: With respect to any entity, (i) any corporation in which
----------
such entity, directly or indirectly, owns or controls, at the time of
determination, at least a majority in interest
4
<PAGE>
of the outstanding voting stock (having by the terms thereof voting power under
ordinary circumstances to elect a majority of the directors of such corporation,
irrespective of whether or not stock of any other class or classes of such
corporation shall have or might have voting power by reason of the occurrence of
a contingency); or (ii) any non-corporate entity in which such entity either (a)
directly or indirectly, at the time of determination, has at least a majority
ownership interest, or (b) on the date of determination, is a general partner or
an entity performing similar functions (for example, manager of a limited
liability company or a trustee of a trust).
Triad Business: any business conducted by Triad, or a Triad
--------------
Subsidiary, on the Distribution Date.
Triad Employee: an Employee of Triad, or any direct or indirect
--------------
Subsidiary of Triad that is an Affiliate thereof, on the Distribution Date.
Triad Retirement Plan: a Defined Contribution Plan to be established
---------------------
by Triad pursuant to Plan Spin-offs from the Columbia/HCA Retirement Plans, in
accordance with Section 2.2(a).
Triad Stock: the Common Stock, par value $.01 per share, of Triad.
-----------
Triad Terminee: any individual who is no longer employed by
--------------
Columbia/HCA or any Affiliate thereof immediately prior to the Distribution Date
but was employed by a Triad Business immediately prior to his termination of
employment from Columbia/HCA and its Affiliates.
Triad Welfare Plans: the Welfare Benefit Plans to be established by
-------------------
Triad pursuant to Plan Spin-offs in accordance with Section 2.4(a).
Welfare Benefit Plan or Welfare Plan: an employee welfare benefit
------------------------------------
plan or welfare plan, as defined in ERISA Section 3(1).
Section 1.2 Other Terms. Any capitalized terms used herein but not
-----------
defined herein shall have the meaning set forth in the Distribution Agreement.
Section 1.3 Certain Constructions. References to the singular in this
---------------------
Agreement shall refer to the plural and vice-versa and references to the
masculine shall refer to the feminine and vice-versa.
Section 1.4 Sections. References to a "Section" are, unless otherwise
--------
specified, to one of the Sections of this Agreement.
Section 1.5 Survival. Obligations described in this Agreement shall
--------
remain in full force and effect and shall survive the Distribution Date.
5
<PAGE>
ARTICLE II.
EMPLOYEE BENEFITS
Section 2.1 General.
-------
(a) Allocation of Responsibilities on the Distribution Date. Except
-------------------------------------------------------
to the extent retained or assumed by Columbia/HCA, as the case may be, under
this Agreement, on the Distribution Date (i) Triad or a Subsidiary thereof shall
retain or assume responsibility as employer for the Triad Employees, and (ii)
LifePoint or a Subsidiary thereof shall retain or assume responsibility as
employer for the LifePoint Employees. On the Distribution Date, Columbia/HCA or
a Subsidiary thereof shall retain or assume responsibility as employer for the
Columbia/HCA Employees, except to the extent such responsibility is retained or
assumed by Triad or LifePoint, as the case may be, under this Agreement. Except
to the extent provided in this Agreement, Columbia/HCA or a Subsidiary thereof
shall retain or assume liability with respect to LifePoint Terminees and Triad
Terminees. The assumption or retention of responsibility as employer by
Columbia/HCA, Triad or LifePoint, as the case may be, described in this Section
2.1 shall not, in itself, constitute a severance or a termination of employment
under any Plan of severance maintained by Columbia/HCA, nor shall it constitute
a change of control of Columbia/HCA for purposes of any Plan.
(b) Service Credits. Except to the extent provided in this
---------------
Agreement, for purposes of determining service credit under any Plan, the
Parties shall credit each of their respective Employees with such Employee's
Service Credit as reflected for comparable purposes in the Columbia/HCA payroll
system records as of the Distribution Date (regardless of whether, or the
capacity in which, the individual is employed by any of the Parties on the
Distribution Date), subject to generally applicable break-in-service rules under
the provisions of the Columbia/HCA Plans (as to periods the individual is not
employed by any of the Parties or their Affiliates). In addition, service credit
shall be granted for tax-qualified plan purposes as provided in Section 2.2(k),
and for Welfare Plan purposes as provided in Section 2.4(g), subject to
generally applicable break-in-service rules under the provisions of the
Columbia/HCA Plans (as to periods the individual is not employed by any of the
Parties or their Affiliates).
(c) Correction of Employee Classification. Notwithstanding anything
-------------------------------------
elsewhere in the Agreement, if at any time the Parties determine that any one or
more individuals were identified as Columbia/HCA Terminees in error and should
have been identified as Triad Terminees or LifePoint Terminees, and the Parties
agree to correct such error, such individuals shall be considered Triad
Terminees or LifePoint Terminees, as appropriate, and the parties shall use
their reasonable best efforts to implement the terms of this Agreement as they
apply to such individuals as if such individuals had been correctly identified
as of the Distribution Date.
(d) Employee Stock Purchase Plan. Columbia/HCA agrees to assist
----------------------------
Triad in developing an employee stock purchase plan that is similar to the
employee stock purchase plan provided by Columbia/HCA to its employees as has
been contemplated by Triad's benefits design parameters since the inception of
benefits planning for Triad by: (i) providing its plan document and supporting
written materials as models, (ii) assisting with designing enrollment
6
<PAGE>
procedures and (iii) consulting with Triad with respect to otherwise
establishing the employee stock purchase plan and its necessary relationships.
Section 2.2 Tax-Qualified Plans.
-------------------
(a) General. On or before the Distribution Date (as decided by
-------
Columbia/HCA in its sole discretion), each of Triad and LifePoint shall take, or
cause to be taken, all action specified by Columbia/HCA as necessary and
appropriate to establish a Triad Retirement Plan and a LifePoint Retirement Plan
and related trusts, respectively, that will accept plan-to-plan transfers,
following the Distribution Date, pursuant to Plan Spin-offs, as described in
Section 2.2(d), of participant account balances (and related assets) under the
Columbia/HCA Retirement Plans which are attributable to (1) Triad Employees and
Triad Terminees and (2) LifePoint Employees and LifePoint Terminees,
respectively, who are participants in the Columbia/HCA Retirement Plans
immediately prior to the Distribution Date. Such plans, being the Triad
Retirement Plan and the LifePoint Retirement Plan, respectively, may be combined
with the ESOPs described in Section 2.2(j).
(b) Columbia/HCA Retirement Plans. Except as provided in Section
-----------------------------
2.2(a), following the respective Plan Spin-offs, Columbia/HCA shall retain sole
responsibility for all liabilities and obligations under the Columbia/HCA
Retirement Plans, and Triad and LifePoint shall have no liability or obligation
with respect thereto.
(c) Spinco Retirement Plans. Subject to Section 2.6, Triad shall
-----------------------
provide benefits under the Triad Retirement Plan after the Plan Spin-offs
described in Section 2.2(a) for all Triad Employees and Triad Terminees (and
Employees of Triad admitted to participation in such Plan after the Plan Spin-
off), subject to the terms and provisions of such Plans as in effect from time
to time. Subject to Section 2.6, LifePoint shall provide benefits under the
LifePoint Retirement Plan after the Plan Spin-offs described in Section 2.2(a)
for all LifePoint Employees and LifePoint Terminees (and Employees of LifePoint
admitted to participation in such Plan after the Plan Spin-off), subject to the
terms and provisions of such Plans as in effect from time to time.
(d) Transfer of Account Balances. As soon as practicable following
----------------------------
the Distribution Date, Columbia/HCA shall cause the trustees of the Columbia/HCA
Retirement Plans to effect transfers, in kind, to the trustees of the Triad
Retirement Plan and the LifePoint Retirement Plan, respectively, of the assets
allocable to the accounts of (1) all Triad Employees and Triad Terminees and (2)
all LifePoint Employees and LifePoint Terminees, respectively, and appropriate
account balances for such individuals shall be established under the Triad
Retirement Plan and the LifePoint Retirement Plan, respectively. Each such
transfer shall comply with section 414(l) of the Code and the requirements of
ERISA and the regulations promulgated thereunder. Each of Triad and LifePoint
shall cause the trustees of the respective Spinco Retirement Plans to accept the
plan-to-plan transfers from the trustees of the respective Columbia/HCA
Retirement Plans, and to credit the accounts of such Triad Employees and Triad
Terminees, and LifePoint Employees and LifePoint Terminees, under the Triad
Retirement Plan and the LifePoint Retirement Plan, as appropriate, with the
assets transferred on their behalf. In addition, if any Columbia/HCA Employee
shall transfer employment to Triad or LifePoint
7
<PAGE>
within the Distribution Year, a transfer shall be made in the year 2000 from the
Columbia/HCA Retirement Plans to the appropriate Spinco Retirement Plan (in the
manner described in this Section 2.2(d)) of the assets allocable to the accounts
of such Columbia/HCA Employee. Upon the transfers of account balances in
accordance with this Section 2.2(d) to the appropriate Spinco Retirement Plan,
such Plan shall assume all liabilities with respect to the individuals for whom
accounts are transferred and the Columbia/HCA Retirement Plans shall have no
further liability with respect to such individuals. The potential buyback
liabilities of the Columbia/HCA Retirement Plans under Section 204(e) of ERISA
with respect to LifePoint Terminees and Triad Terminees whose non-vested accrued
benefits were forfeited upon an earlier distribution shall be transferred to the
LifePoint Retirement Plan and the Triad Retirement Plan, respectively. In
addition, accounts of Employees who work for both Columbia/HCA and a Spinco on
the Distribution Date may transfer to the respective Spinco Retirement Plan, as
provided in Section 2.2(k).
(e) Regulatory Filings. Columbia/HCA, Triad and LifePoint shall, in
------------------
connection with the Plan Spin-offs described in Section 2.2(d), cooperate in
making any and all appropriate filings required by the Securities and Exchange
Commission or the IRS, or required under the Code or ERISA or any applicable
securities laws and the regulations thereunder, and take all such action as may
be necessary or appropriate to cause such plan-to-plan transfers to take place
as soon as practicable after the Distribution Date or as otherwise required by
law. Triad and LifePoint shall each seek (or Columbia/HCA shall seek, on their
behalf) a favorable IRS determination letter that the Triad Retirement Plan and
the LifePoint Retirement Plan, respectively, satisfy all qualification
requirements under section 401(a) of the Code. Notwithstanding the foregoing,
such plan-to-plan transfers shall take place pending issuance of such favorable
determination letters, but shall be subject to IRS approval. The Parties shall
each make any necessary amendments on a retroactive basis to the Triad
Retirement Plan, LifePoint Retirement Plan or Columbia/HCA Retirement Plans,
respectively, as required by the IRS to issue the favorable determination
letters described above.
(f) HealthTrust and EPIC Plans. The preceding provisions of this
--------------------------
Section 2.2 shall also apply to the HealthTrust Plan and the EPIC Plan. However,
the assets which are disputed in the HealthTrust v. Usher lawsuit shall not be
transferred to any Plans established by LifePoint or Triad, but rather shall
remain in the HealthTrust Plan (or any successor thereto), subject to its terms.
(g) Merger of Plans. Should any of the Columbia/HCA Retirement
---------------
Plans, the HealthTrust Plan or the EPIC Plan be merged together prior to the
Distribution Date, then the preceding provisions of this Section 2.2 shall apply
to such merged plan(s).
(h) Small Defined Contribution Plans. Spin-off Plans shall not be
--------------------------------
established with respect to any Small Defined Contribution Plans. Rather, the
Plan sponsor of each Small Defined Contribution Plan immediately before the
Distribution Date shall remain that respective Plan's sponsor immediately after
the Distribution Date. Thus, if a Small Defined Contribution Plan is maintained
by a Spinco or a Subsidiary thereof immediately before the Distribution Date,
then such Plan shall continue to be maintained by the Spinco or its Subsidiary
immediately after the Distribution Date.
8
<PAGE>
(i) Defined Benefit Plans. Spin-off Plans shall not be established
---------------------
with respect to any Columbia/HCA Defined Benefit Plan. Rather, the Plan sponsor
of each Columbia/HCA Defined Benefit Plan immediately before the Distribution
Date shall remain that respective Plan's sponsor immediately after the
Distribution Date. Thus, if a Defined Benefit Plan is maintained by a Spinco or
a Subsidiary thereof immediately before the Distribution Date, then such Plan
shall continue to be maintained by that Spinco or its Subsidiary immediately
after the Distribution Date.
(j) Spinco ESOPs. Prior to, contemporaneous with, or following the
------------
Distribution Date (as specified by Columbia/HCA), LifePoint and Triad shall each
adopt an ESOP. The terms of the respective ESOPs shall be subject to the review
and approval of Columbia/HCA. Subject to applicable law, LifePoint and Triad
shall take all steps necessary to cause the following to occur in connection
with their respective ESOPs:
(i) As promptly as practicable after the Distributions, the
LifePoint ESOP shall purchase, at fair market value, stock constituting
approximately 8.3% of the outstanding shares of LifePoint Stock; and as
promptly as practicable after the Distributions, the Triad ESOP shall
purchase, at fair market value, stock constituting approximately 9% of the
outstanding shares of Triad Stock.
(ii) Each purchase will be financed by (a) issuing a promissory note
to LifePoint in the case of the LifePoint ESOP or by issuing a promissory
note to Triad in the case of the Triad ESOP or (b) borrowing from a third
party lender (which loan will be guaranteed by LifePoint in the case of the
LifePoint ESOP or Triad in the case of the Triad ESOP). Such loans shall
provide for repayment in level annual (or more frequent) installments over
not more than a ten-year period. LifePoint and Triad shall make any
contribution commitments necessary in this connection.
Notwithstanding any provision of this agreement to the contrary and
consistent with Section 2.2(a), the ESOPs described in this Section may be part
of a tax-qualified plan which includes other features, including elective
deferrals and matching contributions.
(k) Pension Service Credit and 1999 Special Rules. The Parties shall
---------------------------------------------
amend their tax-qualified plans as provided in this Subsection, and shall
administer such Plans accordingly. Consistent with the terms of the Columbia/HCA
Plans, with respect to the accounts which transfer to the respective Spinco
Retirement Plans pursuant to Subsection (d) of this Section, Service Credit
shall be transferred for all years of service with Columbia/HCA and all
Columbia/HCA hours of service during 1999 performed prior to the transfer for
purposes of both participation and vesting. Subject to applicable law, each
Spinco shall grant compensation credit for compensation earned from Columbia/HCA
during 1999 prior to the Distribution Date. With respect to any individual who
is an Employee of any Party on the Distribution Date and who changes employers
to another Party during 1999 after the Distribution Date, Service Credit (i.e.,
----
hours of service) and compensation credit shall be granted by the new employer
under its tax-qualified retirement plans for purposes of eligibility, vesting
and benefit accrual for service performed for any prior employer Party during
1999. Any Spinco Employee who separates from service with Spinco during 1999
after the Distribution Date and is hired by Columbia/HCA during 1999 shall be
treated as a rehired Employee under the Columbia/HCA Plans, and all of
9
<PAGE>
his Service Credit under the Columbia/HCA Plans which is transferred to the
respective Spinco Retirement Plan pursuant to the second sentence of this
Subsection shall apply equally under the Columbia/HCA Plans. In addition, any
Spinco Employee who separates from service after the Distribution Date in 1999
and is hired by the other Spinco at any time during 1999 shall be treated as a
rehired Employee under the new employer's Spinco Retirement Plan, and all of his
Service Credit under the prior employer's tax-qualified plan shall apply equally
under the new employer's tax-qualified plan. With respect to any Employee who
works for both Columbia/HCA and a Spinco on the Distribution Date, the
Employee's accounts in the Columbia/HCA Plans shall be transferred only if the
Spinco is his primary employer (as determined by Columbia/HCA), and all Service
Credit under the Columbia/HCA Plans on the Distribution Date (including 1999
hours of service) and all compensation earned from Columbia/HCA in 1999 prior to
the Distribution Date shall apply equally to the Columbia/HCA Plans and the
Spinco Retirement Plan. Notwithstanding the foregoing provisions of this
Subsection, in no event shall any period of service (including hours of service)
or any compensation be counted more than once under any tax-qualified plan.
Section 2.3 Stock Option Plans.
------------------
(a) Establishment of Spinco Option Plans.
------------------------------------
(i) Triad Option Plan. The Board of Directors of Columbia/HCA has
-----------------
taken all action necessary and appropriate to establish a new stock option
plan (the "Triad Option Plan") and the Compensation Committee has taken all
action necessary or appropriate to provide certain options on Triad Stock
("Triad Options") thereunder. Triad hereby assumes all liabilities and
obligations under the Triad Option Plan and under the Triad Options.
(ii) LifePoint Option Plan. The Board of Directors of Columbia/HCA
---------------------
has taken all action necessary and appropriate to establish a new stock
option plan (the "LifePoint Option Plan") and the Compensation Committee
has taken all action necessary or appropriate to provide certain options on
LifePoint Stock ("LifePoint Options") thereunder. LifePoint hereby assumes
all liabilities and obligations under the LifePoint Option Plan and under
the LifePoint Options.
(b) Columbia/HCA Option Plans. Effective as of the Distribution
-------------------------
Date, except with respect to stock options (or any portion thereof) replaced by
Triad Options or LifePoint Options as described in Section 2.3(c), Columbia/HCA
is to retain sole responsibility for all liabilities and obligations under the
Columbia/HCA Option Plans, and neither Triad nor LifePoint is to have any
liability or obligation with respect thereto.
(c) Adjustment and Replacement of Existing Columbia/HCA Options.
-----------------------------------------------------------
(i) Vested Non-Qualified Options other than De Minimis Options.
----------------------------------------------------------
The treatment described in this paragraph (i) is to apply with respect to
each Columbia/HCA Non-Qualified Option that is a Vested Option that is not
De Minimis. Pursuant to action taken by the Compensation Committee, each
such option is to continue to cover the
10
<PAGE>
Original Number of Shares but the per share exercise price is to be
adjusted as described below. In addition, pursuant to action taken by the
Compensation Committee under the LifePoint Option Plan, each holder of such
an option is to be entitled to a LifePoint Option which covers a number of
shares of LifePoint Stock equal to the Original Number of Shares multiplied
by the LifePoint Share Multiple and which has a per share exercise price
calculated as described below. Pursuant to action taken by the Compensation
Committee under the Triad Option Plan, each such option holder is to also
be entitled to a Triad Option which covers a number of shares of Triad
Stock equal to the Original Number of Shares multiplied by the Triad Share
Multiple and which has a per share exercise price calculated as described
below. The per share exercise prices under the adjusted options described
above are to be equal to the per share exercise price of the original
Columbia/HCA Non-Qualified Option multiplied by (1) the LifePoint Ratio, in
the case of such LifePoint Option, (2) the Triad Ratio, in the case of such
Triad Option and (3) the Columbia/HCA Ratio, in the case of such Columbia
Option.
(ii) Vested Non-Qualified Options that are De Minimis Options.
--------------------------------------------------------
The treatment described in this paragraph (ii) is to apply with respect to
each Columbia/HCA Non-Qualified Option that is De Minimis. Pursuant to
action taken by the Compensation Committee, each such option shall be
adjusted so that (a) the per share exercise price shall equal the original
per share exercise price multiplied by the Columbia/HCA Ratio, and (b) the
number of shares of Columbia/HCA stock covered shall equal the Original
Number of Shares divided by the Columbia/HCA Ratio.
(iii) ISOs. The treatment described in this paragraph (iii) is to
----
apply to each Columbia/HCA ISO. Pursuant to action taken by the Compensation
Committee under the LifePoint Option Plan, each such Columbia/HCA Option that is
held by a LifePoint Employee, or by a LifePoint Terminee (or his estate), is to
be replaced by a LifePoint Option which (1) covers a number of shares of
LifePoint Stock equal to the Original Number of Shares divided by the LifePoint
Ratio and (2) has a per share exercise price equal to the original per share
exercise price multiplied by the LifePoint Ratio. Pursuant to action taken by
the Compensation Committee under the Triad Option Plan, each such option that is
held by a Triad Employee, or by a Triad Terminee (or his estate), is to be
replaced by a Triad Option which (1) covers a number of shares of Triad Stock
equal to the Original Number of Shares divided by the Triad Ratio and (2) has a
per share exercise price equal to the original per share exercise price
multiplied by the Triad Ratio. Pursuant to action taken by the Compensation
Committee, each such option that is not covered by the foregoing is to continue
as a Columbia/HCA Option but is to be adjusted so that (1) the per share
exercise price shall equal the original per share exercise price multiplied by
the Columbia/HCA Ratio and (2) the number of shares of Columbia/HCA Stock
covered shall equal the Original Number of Shares divided by the Columbia/HCA
Ratio. The substitution or adjustment provided for herein is to be made in
accordance with section 424 of the Code, so as not to result in a modification
of the option.
(iv) Rounding. In making the adjustments described in paragraphs
--------
(i), (ii) and (iii) above, any resulting per share exercise price which is
not equal to a whole multiple of a cent is to be rounded up to the next
whole cent and any resulting number of shares
11
<PAGE>
covered by an option which is not equal to a whole multiple of a share is
to be rounded down to the next whole share.
(v) General Terms and Conditions. The terms and conditions of each
----------------------------
adjusted Columbia/HCA Option and/or substituted Triad Option or LifePoint
Option described in paragraphs (i), (ii) and (iii) hereof in respect of a
Columbia/HCA Option are to be substantially the same as those of the
applicable Columbia/HCA Option prior to such adjustment and/or
substitution, except as otherwise specifically described in this Section
2.3 and except that:
(1) Pursuant to action taken by the Compensation Committee, in the
case of any Triad Option or LifePoint Option described in
paragraphs (i), (ii) or (iii) hereof, any period of prior
employment with Columbia/HCA or a Subsidiary thereof is to be
credited as covered employment for purposes of determining the
vesting and exercisability of such option (to the same extent
such period was credited for such purposes under the related
original Columbia/HCA Option).
(2) Pursuant to action taken by the Compensation Committee, in the
case of any Triad Option or LifePoint Option that is described in
paragraph (i) or (ii) hereof, the optionee is to be considered to
be employed by the issuer of the option so long as he is employed
by Columbia/HCA, Triad or LifePoint (or a Subsidiary thereof),
for purposes of determining when the option will cease to be
exercisable on account of termination of employment. At such time
as the optionee ceases to be employed by Columbia/HCA, Triad or
LifePoint (or a Subsidiary thereof), such cessation of employment
shall be treated as though it were a cessation of employment with
the issuer under comparable circumstances .
(3) Pursuant to action taken by the Compensation Committee, in the
case of any Columbia/HCA Option that is described in paragraph
(i) or (ii) hereof, the optionee is to be considered to be
employed by Columbia/HCA so long as he is employed by Triad or
LifePoint (or a Subsidiary thereof), for purposes of determining
when the option will cease to be exercisable on account of
termination of employment, if he is employed by LifePoint or
Triad on the Distribution Date or transfers, at the request of
Columbia/HCA, to employment with LifePoint or Triad (or a
Subsidiary thereof) by the first anniversary of the Distribution
Date. At such time as the optionee ceases to be employed by Triad
or LifePoint (or a Subsidiary thereof), such cessation of
employment shall be treated as though it were a cessation of
employment with Columbia/HCA under comparable circumstances.
(vi) Directors' Options. The foregoing provisions of this
------------------
Section 2.3(c), as applied to Columbia/HCA Employees, are to be applied in
a comparable manner with respect to any Columbia/HCA Options held by a
member (or former member) of the Board of Directors of Columbia/HCA, except
that any reference to employment shall be deemed to mean service as a
member of such Board.
12
<PAGE>
(vii) Discretionary LifePoint Options and Triad Options to
----------------------------------------------------
Columbia/HCA Executives. Pursuant to action taken by the Compensation
-----------------------
Committee, certain executives of Columbia/HCA have been granted
discretionary LifePoint Options and Triad Options. Under such options, the
optionee is to be considered to be employed by the issuer of the option for
all purposes so long as he is employed by Columbia/HCA, Triad or LifePoint
(or a Subsidiary thereof). At such time as the optionee ceases to be
employed by Columbia/HCA, Triad or LifePoint (or a Subsidiary thereof),
such cessation of employment shall be treated as though it were a cessation
of employment with the issuer under comparable circumstances.
(d) Definitions. For purposes hereof, the following definitions
-----------
shall apply:
(i) "Columbia/HCA ISO" shall mean any option outstanding under a
Columbia/HCA Option Plan on the Distribution Date that is intended to
qualify as an "Incentive Stock Option" under section 422 of the Code.
(ii) "Columbia/HCA Non-Qualified Option" shall mean any stock option
outstanding under a Columbia/HCA Option Plan on the Distribution Date that
is not a Columbia/HCA ISO. Any such option shall be considered a "Vested
Option" to the extent that it is exercisable on the date in question and
shall be considered a "Non-Vested Option" to the extent that it is not yet
exercisable on such date.
(iii) "Columbia/HCA Option" shall mean a Columbia/HCA ISO or
Columbia/HCA Non-Qualified Option, as the context shall indicate.
(iv) "Columbia/HCA Option Plan" shall mean any Plan maintained by
Columbia/HCA under which there are stock options outstanding on the
Distribution Date.
(v) "Columbia/HCA Ratio" shall mean a fraction whose numerator is
an amount equal to (1) the closing price of the Columbia/HCA Stock on the
trading date immediately preceding the Ex-Dividend Date minus (2) the
closing price of the LifePoint Stock on such trading date immediately
preceding the Ex-Dividend Date multiplied by the number of shares of
LifePoint Stock to be distributed per share of Columbia/HCA Stock on the
Distribution Date and minus (3) the closing price of the Triad Stock on
such trading date immediately preceding the Ex-Dividend Date multiplied by
the number of shares of Triad Stock to be distributed per share of
Columbia/HCA Stock on the Distribution Date, and whose denominator is the
closing price of the Columbia/HCA Stock on such trading date immediately
preceding the Ex-Dividend Date.
(vi) "Compensation Committee" shall mean the Compensation Committee
of the Board of Directors of Columbia/HCA, including the 162(m)
Compensation Sub-Committee.
(vii) "De Minimis" shall mean, as to any Columbia/HCA Option, an
option covering 1000 or fewer shares of Columbia/HCA Stock.
13
<PAGE>
(viii) "Ex-Dividend Date" shall mean the first trading date on which
the Columbia/HCA stock shall trade on an ex-dividend basis with respect to
the distribution of the LifePoint and Triad stock.
(ix) "LifePoint Ratio" shall mean a fraction whose numerator is the
closing price of the LifePoint Stock on the trading date immediately
preceding the Ex-Dividend Date and whose denominator is the closing price
of the Columbia/HCA Stock on the trading date immediately preceding the Ex-
Dividend Date.
(x) "LifePoint Share Multiple" shall mean the number of shares of
LifePoint Stock to be distributed per share of Columbia/HCA Stock on the
Distribution Date.
(xi) "Original Number of Shares" shall mean, as to any Columbia/HCA
Option, the number of shares of Columbia/HCA Stock covered by such Option
immediately prior to the application of Section 2.3(c).
(xii) "Triad Ratio" shall mean a fraction whose numerator is the
closing price of the Triad Stock on the trading date immediately preceding
the Ex-Dividend Date and whose denominator is the closing price of the
Columbia/HCA Stock on the trading date immediately preceding the Ex-
Dividend Date.
(xiii) "Triad Share Multiple" shall mean the number of shares of Triad
Stock to be distributed per share of Columbia/HCA Stock on the Distribution
Date.
Section 2.4 Welfare Benefit Plans.
---------------------
(a) Spinco Welfare Benefit Plans. Prior to the Distribution Date
----------------------------
(in a time and manner specified by Columbia/HCA), LifePoint and Triad shall each
establish welfare benefit plans that mirror (i.e., are identical to) the
----
Columbia/HCA Welfare Plans. Pursuant to Plan Spin-offs, effective on the
Distribution Date, all LifePoint Employees and Triad Employees then
participating in the Columbia/HCA Welfare Plans shall cease to be participants
in such Plans, effective immediately prior to the Distributions, and shall
thereupon become participants in the LifePoint Welfare Plans and Triad Welfare
Plans, respectively. All claims experience (e.g., with respect to deductibles
----
and stop-loss limitations) under the Columbia/HCA Welfare Plans for the
Distribution Year shall be carried over to the appropriate Spinco Welfare
Benefit Plans, as if such claims experience had occurred under such Spinco
Welfare Benefit Plans for such year.
(b) Liability for Claims. Columbia/HCA shall be responsible for,
--------------------
or cause its applicable insurance carriers or HMOs to be responsible for, all
liabilities and obligations related to claims incurred or premiums owed or due
under any Columbia/HCA Welfare Plans with respect to periods prior to the
Distribution Date. Beginning on the Distribution Date, Triad and LifePoint shall
be responsible for, or cause their applicable insurance carriers or HMOs to be
responsible for, all liabilities and obligations related to claims incurred or
premiums owed or due under the Triad Welfare Plans and the LifePoint Welfare
Plans, respectively, for periods thereafter and Columbia/HCA shall have no
liability with respect thereto. For these purposes, (1) medical and dental
claims shall be considered to be incurred at the time the services are
performed; (2) death and dismemberment claims shall be deemed to be incurred on
the date that
14
<PAGE>
death or dismemberment (as the case may be) occurs; and (3) disability claims
shall be considered to be incurred on the date the disability occurs.
(c) Continuation Coverage Administration. Columbia/HCA shall
------------------------------------
continue to be responsible after the Distribution Date for providing and
administering the continuation coverage required by COBRA as it relates to any
Columbia/HCA Qualified Beneficiary. On and after the Distribution Date,
LifePoint shall be responsible for providing and administering the continuation
coverage required by COBRA to any LifePoint Qualified Beneficiary, and Triad
shall be responsible for providing and administering the continuation coverage
required by COBRA to any Triad Qualified Beneficiary.
(d) Small Welfare Benefit Plans. The Plan sponsor of each Small
---------------------------
Welfare Benefit Plan shall remain that Plan's sponsor after the Distribution
Date. If a Small Welfare Benefit Plan is maintained by a Spinco or a Subsidiary
thereof before the Distribution Date, then such Plan shall continue to be
maintained by that Spinco or its Subsidiary after the Distribution Date.
(e) FSA Plan Coordination. The flexible spending account ("FSA")
---------------------
plans which are established by LifePoint and Triad pursuant to the Welfare
Benefit Plans that they establish under Section 2.4(a) and the cafeteria plans
established pursuant to Section 2.4(a) shall carry over all elections made under
the Columbia/HCA FSA Plan for the year of the Distributions. The remaining FSA
benefit amounts available to the respective participants for such year shall be
available under the FSA Plans established by LifePoint and Triad, respectively.
LifePoint and Triad shall each establish voluntary employee benefits
associations (VEBAs) to collect FSA premiums, pay FSA claims and pay medical and
dental self-insured benefits. The portions of any Columbia/HCA VEBA surplus in
existence on December 31, 1998 (adjusted to reflect investment returns,
administrative expenses and claims payment experience) attributable to LifePoint
Employees and Triad Employees, respectively, shall be transferred to the
LifePoint VEBA and the Triad VEBA, respectively, in 1999 or 2000. In addition,
any 1999 FSA premiums collected which exceed claims expenditures and
administrative expenses for benefits for 1999 claims prior to the Distribution
Date attributable to LifePoint Employees and Triad Employees, respectively,
shall be transferred to the respective LifePoint and Triad VEBAs in 1999 or
2000.
(f) HealthTrust Premium Holiday. Pursuant to an agreement with the
---------------------------
U.S. Department of Labor ("DOL"), a premium holiday was created in 1997 for
certain former HealthTrust employees. In the event that such holiday has not
expired prior to the Distribution Date, LifePoint and Triad each agree to
establish an identical holiday to that agreed upon by Columbia/HCA and the DOL
for the benefit of their respective former HealthTrust employees. Columbia/HCA
shall determine the portion of any remaining holiday amount as of the
Distribution Date attributable to LifePoint and Triad, respectively (and the
amount of any related funds, which shall be made available to LifePoint and
Triad for this purpose). However, in the event that the surplus in existence as
of the Distribution Date is de minimis, as agreed upon by the parties, then no
such holiday shall be created by Triad or LifePoint. In such case, the remaining
surplus shall be utilized by Columbia/HCA to benefit former HealthTrust
employees in accordance with the settlement agreement with the DOL.
15
<PAGE>
(g) Special Rules for 1999. The Parties shall administer their
----------------------
Welfare Plans pursuant to this Subsection (g). With respect to any Employee who
separates from service with one Party after the Distribution Date in 1999, and
begins service with another Party on or prior to the earlier of ninety (90) days
after separation or December 31, 1999, all service with the prior Party shall
carry over for purposes of eligibility under the new employer's Welfare Plan(s).
Regardless of whether service carries over pursuant to the preceding sentence,
if the new employer is LifePoint or Triad, new elections will need to be made
with respect to all Welfare Plans of the new employer. However, if the new
employer is Columbia/HCA, then the elections made in 1998 (to apply to 1999)
shall apply. These rules shall also apply to any other fringe benefits which do
not qualify as Welfare Plan benefits such as vacation pay, extended illness
banks, etc.
Section 2.5 Services to be Provided by Columbia/HCA and Mutuality.
-----------------------------------------------------
(a) Services to be Rendered to Triad.
--------------------------------
(1) Pension. No administrative or investment services, whether
-------
ministerial or fiduciary in nature, shall be provided to Triad by Columbia/HCA
with respect to any pension plans of Triad on and after the Distribution Date.
All such services performed by Columbia/HCA shall cease on the Distribution
Date, and Triad shall supply all such services on and after the Distribution
Date, other than as provided herein. Notwithstanding the two preceding
sentences, in the event that services are performed or costs are incurred for
the MCA 401(k) Plan that are chargeable to the plan sponsor, and Triad Employees
participate in such Plan, then Triad shall pay its pro rata share of such costs,
with proration based on relative participant numbers. In the event any other
pension services are performed for Triad by Columbia/HCA at the request of
Triad, Triad shall pay Columbia/HCA $30.00 for each hour worked by any Employee
of Columbia/HCA. All charges not paid within thirty (30) days of written
request shall bear simple interest, at a rate of ten percent (10%) per annum.
Triad shall also reimburse any direct costs of vendors.
(2) Welfare. For the remainder of the Distribution Year (i.e., services
------- ----
to cease on December 31, 1999), Columbia/HCA and possibly its agents, as chosen
by Columbia/HCA, shall provide ministerial administrative services, but no
fiduciary services, to Triad with respect to the Triad Welfare Plans. For this
purpose, ministerial administrative services shall include all ministerial
services incident to administering, satisfying all reporting requirements with
respect to, and maintaining the Triad Welfare Plans. Triad shall provide
specific guidelines for Columbia/HCA to follow in performing ministerial
functions. Triad shall perform the fiduciary administrative and all investment
services incident to the Triad Welfare Plans. Triad shall indemnify and hold
harmless Columbia/HCA, its Employees, directors, officers and its agents with
respect to any and all liability, losses, claims, damages and expenses
(including, but not limited to, attorneys' fees) incurred in connection with
providing such services, even if functions which were designated ministerial are
determined to be fiduciary in nature, provided that Columbia/HCA and its agents
have acted, or failed to act, in good faith. Triad shall fully cooperate with
Columbia/HCA in its fulfillment of the provisions of this Section 2.5(a). All
services of Columbia/HCA shall cease on the last day of the Distribution Year.
In consideration for the services to be performed by Columbia/HCA, Triad shall
compensate Columbia/HCA beginning on the Distribution Date at a rate of $30.00
per hour worked by an employee of
16
<PAGE>
Columbia/HCA. All charges not paid within thirty (30) days of written request
shall bear simple interest, at a rate of ten percent (10%) per annum. Triad
shall also reimburse any direct costs of vendors.
(3) General Indemnification. In the event of a finding that Welfare Plan
-----------------------
services have been performed for Triad after the last day of the Distribution
Year, or pension services have been performed for Triad after the Distribution
Date, and Columbia/HCA or any Employee, officer, director or agent thereof
incurs any liability or costs incident thereto, Triad shall indemnify and hold
harmless Columbia/HCA and any of its Employees, officers, directors or agents
with respect to any liabilities or costs incurred attributable to services
relating to Triad's plans, provided that Columbia/HCA and its Employees,
officers, directors or agents acted, or omitted to act, in good faith.
(b) Services to be Rendered to LifePoint.
------------------------------------
(1) Pension. No administrative or investment services, whether
-------
ministerial or fiduciary in nature, shall be provided to LifePoint by
Columbia/HCA with respect to any pension plans of LifePoint on and after the
Distribution Date. All such services performed by Columbia/HCA shall cease on
the Distribution Date, and LifePoint shall supply all such services on and after
the Distribution Date, other than as provided herein. Notwithstanding the two
preceding sentences, in the event that services are performed or costs are
incurred for the MCA 401(k) Plan that are chargeable to the plan sponsor, and
LifePoint Employees participate in such Plan, then LifePoint shall pay its pro
---
rata share of such costs, with proration based on relative participant numbers.
- ----
In the event any other pension services are performed for LifePoint by
Columbia/HCA at the request of LifePoint, LifePoint shall pay Columbia/HCA
$30.00 for each hour worked by any employee of Columbia/HCA. All charges not
paid within thirty (30) days of written request shall bear simple interest at a
rate of ten percent (10%) per annum. LifePoint shall also reimburse any direct
costs of vendors.
(2) Welfare. Subject to the following provisions of this paragraph,
-------
Columbia/HCA shall perform Welfare Benefit Plan services for LifePoint through
May 31, 1999 which are identical to the services to be performed for Triad
through the remainder of the Distribution Year pursuant to the provisions of
Section 2.5(a)(2). All terms and conditions relating to Triad with respect to
its Welfare Plan under Section 2.5(a)(2), including compensation (at the rate of
$30 per hour for any Columbia/HCA Employee providing services), shall apply to
LifePoint with respect to such services. In the event that such services shall
extend beyond May 31, 1999 or end prior thereto pursuant to a written agreement
between Columbia/HCA and LifePoint, then such Triad terms and conditions shall
apply for such longer or shorter period, as the case may be.
(3) General Indemnification. In the event of a finding that Welfare Plan
-----------------------
services have been performed for LifePoint beyond the time specified in Section
2.5(b)(2), or that pension services have been performed for LifePoint after the
Distribution Date, and Columbia/HCA or any Employee, officer, director or agent
thereof incurs any liability or costs incident thereto, LifePoint shall
indemnify and hold harmless Columbia/HCA and any of its Employees, officers,
directors or agents with respect to any liabilities or costs incurred
attributable to services relating to LifePoint's plans, provided that
Columbia/HCA and its Employees, officers, directors or agents acted, or omitted
to act, in good faith.
17
<PAGE>
(c) Insurance and HMO Shopping. For the remainder of the Distribution
--------------------------
Year, LifePoint and Triad specifically agree that Columbia/HCA may negotiate
contracts with insurance companies, HMOs, third-party administrators and other
service providers that consider the employees of LifePoint and Triad, in
addition to the employees of Columbia/HCA, for purposes of negotiating to
receive the lowest rates or costs possible. LifePoint and Triad agree to fully
cooperate with Columbia/HCA in this regard. LifePoint and Triad agree to
utilize whatever providers are chosen by Columbia/HCA for the Distribution Year,
regardless of whether Columbia/HCA is or is not successful in achieving group
rates that consider Columbia/HCA, Triad and/or LifePoint Employees.
Notwithstanding the preceding sentence, LifePoint or Triad may terminate any
provider with the prior written consent of Columbia/HCA.
(d) Preferred Provider Mutuality. For the remainder of the
----------------------------
Distribution Year, Columbia/HCA, LifePoint and Triad shall treat each facility
maintained by Columbia/HCA, LifePoint or Triad as their own facility for the
entire Distribution Year for purposes of managed care discounts, preferred
provider discounts and any similar discounts or cost reductions available to
participants under their respective welfare benefit plans.
(e) Spinco Welfare Plans for the Distribution Year. As a condition
----------------------------------------------
of the arrangement, Triad and LifePoint agree that the Spinco Welfare Plans
shall continue to be maintained by Triad and LifePoint, respectively, for the
remainder of the Distribution Year. Triad and LifePoint agree that they shall
not amend the Spinco Welfare plans without the prior written consent of
Columbia/HCA for the remainder of such year. At the request of Columbia/HCA,
Triad and LifePoint shall amend such Spinco Welfare Plans as necessary for such
Plans to be identical to the Columbia/HCA Welfare Plans with respect to the
Distribution Year. In the event of a failure of LifePoint and/or Triad to
comply with any of the preceding sentences of this subsection, Columbia/HCA
shall be authorized to take whatever action it deems appropriate under the
circumstances, including cessation of services, and the party failing to comply
shall pay Columbia/HCA all costs it or its agents incurs as a result of such
failure to comply.
Section 2.6 Preservation of Right To Amend or Terminate Plans. Except
-------------------------------------------------
as otherwise expressly provided herein, no provisions of this Agreement shall be
construed as a limitation on the right of Columbia/HCA, Triad or LifePoint to
amend any Plan or terminate its participation therein which Columbia/HCA, Triad
or LifePoint would otherwise have under the terms of such Plan or otherwise;
provided, however, that no Party shall amend any Plan to the extent that such
- -------- -------
amendment would have the effect of increasing the liabilities of any other Party
under any Plan of such other Party, without such Party's written consent. No
provision of this Agreement shall be construed to create a right in any Employee
or former Employee of Columbia/HCA, Triad or LifePoint or dependent or
beneficiary of such Employee or former Employee under a Plan which such person
would not otherwise have under the terms of the Plan itself.
Section 2.7 Reimbursement. The Parties acknowledge that any Party may
-------------
mistakenly incur costs and expenses directly related to benefits, including, but
not limited to, contributions to Plans and the payment of insurance premiums
arising from or related to any of the Plans which are, under this Agreement, the
responsibility of another Party hereto.
18
<PAGE>
Accordingly, each Party shall reimburse any applicable other Party, as soon as
practicable, but in any event within thirty (30) days of receipt of appropriate
verification, for all such costs and expenses. However, there will be no
reimbursement by Columbia/HCA to either Spinco with respect to contributions for
1999 under the Spinco Retirement Plans. Subject to Section 2.5, beginning on the
Distribution Date, all parties shall bear and be responsible for their
respective plan establishment and administrative expenses.
Section 2.8 Payroll Reporting and Withholding.
---------------------------------
(a) Form W-2 Reporting. The Parties hereby agree, to the extent
------------------
applicable, to each adopt the "alternative procedure" for preparing and filing
IRS Forms W-2 (Wage and Tax Statements), as described in section 5 of Revenue
Procedure 96-60, 1996-2 IRS Cumulative Bulletin 399 ("Rev. Proc. 96-60"). Under
this procedure, each of Triad and LifePoint, as a successor employer, shall
provide all required forms W-2 to Triad Employees and LifePoint Employees,
respectively, reflecting all wages paid and taxes withheld by both Columbia/HCA
as the predecessor employer and Triad or LifePoint (as applicable) as the
successor employer for the entire year during which the Distribution takes
place. Columbia/HCA shall provide all required Forms W-2 to all Columbia/HCA
Employees reflecting all wages and taxes paid and withheld by Columbia/HCA.
In connection with the aforesaid agreement under Rev. Proc. 96-60,
each business unit or business operation of Columbia/HCA shall be assigned to
either Columbia/HCA, Triad or LifePoint, depending upon whether it is a business
retained by Columbia/HCA following the Distributions, a Triad Business or a
LifePoint Business, and each Columbia/HCA Employee, Triad Employee or LifePoint
Employee associated with such business unit or business operation shall be
assigned for payroll reporting purposes to Columbia/HCA, Triad or LifePoint, as
the case may be. Each of Columbia/HCA, Triad or LifePoint shall be responsible
for filing IRS Forms 941 and all other payroll returns for their respective
Employees.
(b) Forms W-4 and W-5. The Parties agree, to the extent applicable,
-----------------
to each adopt the alternative procedure of Rev. Proc. 96-60 with respect to IRS
Forms W-4 (Employee's Withholding Allowance Certificate) and W-5 (Earned Income
Credit Advance Payment Certificate). Under this procedure, Columbia/HCA shall
provide to Triad or LifePoint, as the respective successor employers, all IRS
Forms W-4 and W-5 on file with respect to each Triad Employee or LifePoint
Employee, and each of Triad and LifePoint will honor these forms until such
time, if any, as any such Triad Employee or LifePoint Employee, as the case may
be, submits a revised form.
(c) Garnishments, Tax Levies, Child Support Orders, and Wage
--------------------------------------------------------
Assignments. With respect to Employees with garnishments, tax levies, child
- -----------
support orders, and wage assignments in effect with Columbia/HCA on the
Distribution Date, each of Triad and LifePoint as the successor employers with
respect to Triad Employees or LifePoint Employees, respectively, shall honor
such payroll deduction authorizations and shall continue to make payroll
deductions and payments to the authorized payee, as specified by the court or
governmental order which was filed with Columbia/HCA.
19
<PAGE>
(d) Authorizations for Payroll Deductions. Unless otherwise
-------------------------------------
prohibited by this or another agreement entered into in connection with the
Distributions, or by a Plan document, with respect to Triad Employees or
LifePoint Employees with authorizations for payroll deductions in effect with
Columbia/HCA on the Distribution Date, Triad and LifePoint as the respective
successor employers will honor such payroll deduction authorizations relating to
each such Triad Employee or LifePoint Employee, respectively, and shall not
require that such Triad Employee or LifePoint Employee, as the case may be,
submit a new authorization to the extent that the type of deduction by Triad and
LifePoint does not differ from that made by Columbia/HCA. The Triad Retirement
Plan and the LifePoint Retirement Plan shall, respectively, provide that any
elective deferral or other elections under the Columbia/HCA Retirement Plans in
existence immediately prior to the Distribution Date shall carry over to the
Spinco Retirement Plans upon the Distribution Date. All elections under any
Columbia/HCA Welfare Plans shall similarly carry over to the Spinco Welfare
Benefit Plans.
(e) Subsidiaries. With respect to individuals who are employed after
------------
the Distribution Date by a Subsidiary of Triad or LifePoint, all references in
this Section 2.8 to Triad or LifePoint shall be deemed to refer to the
appropriate Subsidiaries thereof, and Triad and LifePoint, respectively, shall
take such actions as are necessary to assure that the appropriate Subsidiary
thereof takes any actions required hereunder.
ARTICLE III.
LABOR AND EMPLOYMENT MATTERS
Notwithstanding any other provision of this Agreement or any other
Agreement between Columbia/HCA and Triad or LifePoint to the contrary,
Columbia/HCA, Triad and LifePoint understand and agree to the matters provided
for in this Article:
Section 3.1 Independent Employers. On and after the Distribution Date,
----------------------
each of Columbia/HCA, Triad and LifePoint will be separate and independent
employers.
Section 3.2 Employment Policies and Practices. Except as limited by
---------------------------------
applicable law (including, without limitation, ERISA) or as otherwise provided
in this Agreement, each of Columbia/HCA, Triad and LifePoint may adopt,
continue, modify or terminate such employment policies, compensation practices,
retirement plans, welfare benefit plans, and other employee benefit plans of any
kind or description, as each may determine, in its sole discretion, are
necessary and/or appropriate.
Section 3.3 Notice of Claims. Each Party will notify in writing and
----------------
consult with any other applicable Party prior to making any settlement of an
employee claim which may reasonably result in liability to such other Party.
Section 3.4 Assumption of Unemployment Tax Rates. Changes in state
------------------------------------
unemployment tax experience from that of Columbia/HCA as of the Distribution
Date shall be handled as follows. In the event an option exists to allocate
state unemployment tax experience of Columbia/HCA, the Columbia/HCA experience
shall be transferred to Triad or LifePoint, if this results in the lowest
aggregate unemployment tax costs for each of Columbia/HCA and
20
<PAGE>
Triad or LifePoint, as the case may be, combined, and the Columbia/HCA
experience shall be retained by Columbia/HCA if this results in the lowest
aggregate unemployment tax costs for each of Columbia/HCA and Triad or
LifePoint, as the case may be, combined.
Section 3.5 No Third-Party Beneficiary Rights.
---------------------------------
(a) This Agreement is not intended to, nor does it, create any third-
party contractual or other common law rights. No person (including any Employee,
any beneficiary or dependent thereof) shall be deemed a third-party beneficiary
of this Agreement.
(b) Nothing contained in this Agreement shall confer upon any
Employee any right with respect to continuance of employment by any Party, nor
shall anything herein interfere with the right of any Party to terminate the
employment of any Employee at any time, with or without cause, or restrict any
Party in the exercise of its independent business judgment in modifying any of
the terms and conditions of the employment of an Employee, except as provided by
applicable law.
ARTICLE IV.
DEFAULT
Section 4.1 Default. If any Party or Parties defaults hereunder, the
-------
non-defaulting Party or Parties shall be entitled to all remedies provided by
law or equity (including reasonable attorneys' fees and costs of suit incurred),
and shall be entitled to recover all legal and other costs incurred in pursuing
the defaulting Party at law or otherwise .
Section 4.2 Force Majeure. Columbia/HCA shall not be liable to
-------------
LifePoint or Triad, as appropriate, for a delay or failure to comply with the
terms of this Agreement if such delay or failure results from causes beyond its
reasonable control. Such causes may include, without limitation, acts of God,
fires or other catastrophes, telecommunication failures, equipment failures,
power failures, labor disputes, strikes, delays in transportation, riots, war,
governmental regulations, non-performance by Columbia/HCA suppliers and vendors,
or problems experienced by Columbia/HCA as a result of its own or any third
party's computer software or hardware not being Year 2000 compliant (an "Event
of Force Majeure"). Columbia/HCA shall give LifePoint or Triad, as appropriate,
prompt notice of any Event of Force Majeure that may cause delay or non-
performance hereunder. For so long as such Event of Force Majeure shall
continue, LifePoint or Triad, as appropriate, may elect to have the services
affected by the Event of Force Majeure performed by other means without such
election being deemed to be a termination or breach of this Agreement, provided
--------
that LifePoint or Triad, as appropriate, provides prompt notice of such election
to Columbia/HCA after having received notice of the Event of Force Majeure.
21
<PAGE>
ARTICLE V.
MISCELLANEOUS
Section 5.1 Access Information; Cooperation. LifePoint and Triad shall
-------------------------------
maintain all Employee and participant records and data (including records and
data relating to any Plans of Columbia/HCA) for a period of ten (10) years
following the Closing Date. The Parties and their authorized agents shall be
given reasonable access to and may take copies of all information relating to
the subjects of this Agreement or any other employment or employee benefit
matters (to the extent permitted by federal and state confidentiality laws) in
the custody of any other Party, including any agent, contractor, subcontractor,
or any other person or entity under the contract of such Party. The Parties
shall provide one another with such information as is reasonably necessary to
administer each Party's Plans. The Parties shall cooperate with each other to
minimize the disruption caused by any such access and providing of information.
The Parties shall cooperate with each other with respect to Plan administrative
matters for 1999 and thereafter.
Section 5.2 Assignment. No Party shall, without the prior written
----------
consent of the other, have the right to assign any rights or delegate any
obligations under this Agreement.
Section 5.3 Headings. The section headings contained in this Agreement
--------
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
Section 5.4 Attorney-Client Privilege. Any provisions herein requiring
-------------------------
the Parties to this Agreement to cooperate shall not be deemed to be a waiver of
the attorney-client privilege for any Party nor shall it require any Party to
waive its attorney-client privilege.
Section 5.5 Severability. In the event that any provision hereof is
------------
prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 5.6 Parties Bound. This Agreement shall inure to the benefit of
-------------
and be binding upon the Parties hereto and their respective successors and
permitted assigns. Nothing herein, expressed or implied, shall be construed to
give any other person any legal or equitable rights hereunder.
Section 5.7 Notices. All notices or other communications required or
-------
permitted under this Agreement shall be in writing and sufficient if sent by
registered or certified mail, postage prepaid, addressed as provided below; or
delivered personally, by private courier or fax, and followed by such mailing:
22
<PAGE>
If to Columbia/HCA, to
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2075
Attention: Robert A. Waterman, Esq.
Senior Vice President and General Counsel
If to LifePoint, to
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6276
Attention: Mr. Scott L. Mercy
Chairman and Chief Executive Officer
If to Triad, to
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972) 663-3945
Attention: Mr. James D. Shelton
Chairman, President and Chief Executive Officer
In each case, with a copy to
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
Any Party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
Section 5.8 Further Action. The Parties shall cooperate in good faith
--------------
and take such steps and execute such papers as may be reasonably requested by
another Party to implement the terms and provisions of this Agreement
Section 5.9 Waiver. The Parties agree that the waiver of any default
------
under any term or condition of this Agreement shall not constitute a waiver of
any subsequent default or nullify the effectiveness of that term or condition.
23
<PAGE>
Section 5.10 Governing Law. This Agreement shall be deemed to be made
-------------
in and in all respects shall be interpreted, construed and governed by and in
accordance with the law of the State of Tennessee without regard to the conflict
of law principles thereof.
Section 5.11 Consent to Jurisdiction. Columbia/HCA, LifePoint and Triad
-----------------------
each hereby expressly (a) submits and consents in advance to the jurisdiction of
any Tennessee State Court sitting in Nashville, Tennessee or in the United
States District Court for the Middle District of Tennessee with respect to any
actions or proceedings arising out of or relating to this Agreement, (b) waives
any objection which it may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens, (c) agrees that all claims with respect
to such actions or proceedings may be heard and determined in any Tennessee
State Court sitting in Nashville, Tennessee or the United States District Court
for the Middle District of Tennessee, (d) agrees not to commence any action or
proceeding relating to this Agreement other than in a Tennessee State Court
sitting in Nashville, Tennessee or in the United States District Court for the
Middle District of Tennessee and (e) agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Section 5.12 Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND
--------------------
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 5.12.
Section 5.13 Entire Agreement. This Agreement and the Distribution
----------------
Agreement constitute the entire understanding between the Parties hereto with
respect to the subject matter hereof, and supersede all prior written or oral
communications relating to such subject matter. No amendment, modification,
extension or failure to enforce any condition of this Agreement by any Party
shall be deemed a waiver of any of its rights herein. This Agreement shall not
be amended except by a writing executed by the Parties. In the event a matter
arises relating to employee benefits which is not covered by this Agreement, the
parties shall act in good faith to resolve such matter to correspond to the
intents and purposes of this Agreement to the fullest extent possible.
24
<PAGE>
Section 5.14 Counterparts. This Agreement may be executed in any number
------------
of separate counterparts, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.
25
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first above written.
COLUMBIA/HCA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/ Ronald Lee Grubbs, Jr.
------------------------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
TRIAD HOSPITALS, INC.,
a Delaware corporation
By: /s/ Donald P. Fay
------------------------------------------
Name: Donald P. Fay
Title: Executive Vice President, General
Counsel and Secretary
LIFEPOINT HOSPITALS, INC.,
a Delaware corporation
By: /s/ William F. Carpenter III
------------------------------------------
Name: William F. Carpenter III
Title: Senior Vice President, General
Counsel and Secretary
26
<PAGE>
EXHIBIT 10.3
INSURANCE ALLOCATION AND ADMINISTRATION AGREEMENT
by and among
COLUMBIA/HCA HEALTHCARE CORPORATION,
and
TRIAD HOSPITALS, INC.
and
LIFEPOINT HOSPITALS, INC.
dated as of May 11, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Allocation of Existing Coverages and Liabilities............... 2
Section 2. Cooperation and Joint Insurance................................ 3
Section 3. Administrative Services........................................ 4
Section 4. Amendment of Policies.......................................... 4
Section 5. Access to Records and Other Information........................ 5
Section 6. Successors and Assigns......................................... 5
Section 7. Counterparts................................................... 5
Section 8. Governing Law.................................................. 5
Section 9. No Impairments of Other Rights................................. 5
Section 10 Subrogation.................................................... 5
Section 11. Subsidiaries................................................... 6
Section 12. No Third Party Beneficiaries................................... 6
Section 13. Construction................................................... 6
Section 14. Entire Agreement; Amendment.................................... 6
Section 15. Waivers........................................................ 6
Section 16. Confidentiality................................................ 7
Section 17. Notices........................................................ 7
Section 18. Legal Enforceability........................................... 9
Section 19. Survival of Agreements......................................... 9
</TABLE>
<PAGE>
This Insurance Allocation and Administration Agreement (the
"Agreement") is made and entered into as of this 11th day of May, 1999 by and
---------
among Columbia/HCA Healthcare Corporation, a Delaware corporation
("Columbia/HCA"), LifePoint Hospitals, Inc., a Delaware corporation (together
------------
with its successors and permitted assigns, "LifePoint"), and Triad Hospitals,
---------
Inc., a Delaware corporation (together with its successors and permitted
assigns, "Triad").
-----
WHEREAS, Columbia/HCA, LifePoint and Triad have entered into that
certain Distribution Agreement, dated as of May 11, 1999 (the "Distribution
------------
Agreement"), pursuant to which (a) Columbia/HCA and its Subsidiaries shall cause
- ---------
to be consummated certain corporate transactions in order to divide and separate
their existing businesses and assets so that (i) the Columbia/HCA Business shall
be owned, controlled, and operated, directly and indirectly, by Columbia/HCA,
(ii) the America Group Business shall be owned, controlled, and operated,
directly and indirectly, by LifePoint and (iii) the Pacific Group Business shall
be owned, controlled, and operated, directly and indirectly, by Triad, and (b)
Columbia/HCA shall distribute to the holders of Columbia/HCA's outstanding
shares of common stock, the outstanding shares of America common stock and the
outstanding shares of Pacific common stock owned by Columbia/HCA (such
distributions being collectively referred to as the "Distributions"), upon the
-------------
terms and subject to the conditions set forth in the Distribution Agreement;
WHEREAS, Columbia/HCA, its Subsidiaries and their respective
predecessors have historically maintained various insurance policies (the
"Policies") for the benefit or protection of one or more of Columbia/HCA and its
- ---------
Subsidiaries, some of which are professional liability policies purchased from
Health Care Indemnity, Inc. (the "HCI Policies");
------------
WHEREAS, in connection with the transactions contemplated by the
Distribution Agreement, Columbia/HCA, LifePoint and Triad have determined that
it is necessary and desirable to provide for the respective continuing rights
and obligations in respect of the Policies from and after the Distribution Date
and the administration of claims thereunder as well as interim administration by
Columbia/HCA of new policies entered into by LifePoint and Triad on and after
the Distribution Date;
WHEREAS, under the Distribution Agreement, Columbia/HCA has agreed to
indemnify LifePoint and Triad for losses in excess of any insurance proceeds
with respect to activities prior to the Distribution Date;
WHEREAS, the parties desire to enter into this Agreement in order to
define the relationship between the parties regarding insurance of their
respective properties and liabilities and the exercise of certain rights,
remedies and options by the respective parties hereto under the Policies; and
<PAGE>
WHEREAS, pursuant to the Distribution Agreement the parties hereto
have agreed to enter into this Agreement;
NOW THEREFORE, in consideration of the mutual agreements, provisions,
and covenants contained in this Agreement and the Distribution Agreement, the
parties hereto hereby agree as follows:
Unless otherwise defined herein or unless the context otherwise
requires, all capitalized terms shall have the meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined)
attributed to them in the Distribution Agreement.
Section 1. Allocation of Existing Coverages and Liabilities.
------------------------------------------------
1.01 Claims in Process. Any claims made against insurers under the
-----------------
Policies prior to the Distribution Date and unpaid as of such date shall be for
the account of the party (i) whose asset after the Distribution Date is the
basis for the claim, or (ii) in the case of a liability claim, which is the
owner after the Distribution Date of the facility at which the activity which is
the subject of the claim occurred or is alleged to have occurred. If the
proceeds of the claim are received by a party other than the party entitled to
receive such proceeds pursuant to this Section 1.01, such receiving party shall
pay over such proceeds to such other party. In respect of claims under Policies
for the account of LifePoint or Triad, in the event that any deductible, co-
insurance or self-insured retention in respect of such claim has not been paid
or accounted for prior to the Distribution Date, or if the Policy under which
the claim was made provides for any aggregate deductible, co-insurance or self-
insured retention or if the claim is not fully covered because the aggregate
policy limits have been exhausted, such amounts shall be paid to such party by
Columbia/HCA pursuant to the indemnification provided for in the Distribution
Agreement.
1.02 Retroactive Rate Adjustments. Retroactive adjustments in
----------------------------
respect of any Policies for periods ended on or prior to the Distribution Date
shall be paid or received by Columbia/HCA, and LifePoint and Triad shall have no
liability or receive no refund therefor regardless of the reason for the
adjustment.
1.03 Incurred But Not Reported Claims. (a) The parties shall do all
--------------------------------
things necessary to assure that all Policies which provide coverage remain
applicable to LifePoint and Triad and their respective Subsidiaries and assets
after the Distribution Date, to the extent they were applicable prior to the
Distribution Date with respect to losses incurred prior to the Distribution
Date.
(b) The parties shall do all commercially reasonable things necessary
to assure continued coverage for incurred but not reported claims and incidents
which have not been filed with insurers which would have been covered under
Policies which provide coverage on a claims made basis had they been made and
reported prior to the Distribution Date including the purchase of tail coverage
by Columbia/HCA with respect to claims made policies if the replacement policies
acquired by LifePoint or Triad do not have retroactive dates which provide
coverage for all occurrences which would have been covered by the Policies had
they remained in effect after the Distribution Date.
2
<PAGE>
(c) Indemnity payments under Policies which are on an occurrence
basis in respect of claims made after the Distribution Date arising out of
occurrences prior to the Distribution Date shall be for the account of the party
(i) whose asset after the Distribution Date was the basis for the claim or (ii)
in the case of liability claims, which is the owner after the Distribution Date
of the facility at which the activity which is the subject of the claim occurred
or is alleged to have occurred; provided, however, that, in respect of claims
-------- -------
under Policies for the account of LifePoint or Triad, if the Policy under which
the claim was made provides for any deductible, co-insurance or self-insured
retention or if the claim is not fully covered because the policy limits have
been exhausted, such amounts shall be paid to such party by Columbia/HCA
pursuant to the indemnification provided for in the Distribution Agreement.
Section 2. Cooperation and Joint Insurance.
-------------------------------
2.01 Cooperation in Acquiring Insurance. Columbia/HCA, LifePoint and
----------------------------------
Triad shall cooperate with each other in the purchase of insurance coverage for
periods commencing after the Distribution Date with the aim of obtaining
appropriate insurance coverage on the best available terms and conditions and at
the most reasonable rates, always taking into account the quality of the
insurers with which coverage is being placed. The parties anticipate that
LifePoint and Triad will purchase continuous coverage under extensions or
renewals of the HCI Policies, or separate policies issued by Health Care
Indemnity, Inc. which provide continuous coverage. Each party shall be entitled
to purchase its own separate coverage in the event it believes that, after a
good faith attempt to obtain appropriate joint coverage (which shall include an
attempt to agree upon allocation of premium on an other than pro rata basis in
--- ----
the event the insurer views one party as a higher risk than the other), its own
interests dictate that course of action. In situations in which the parties are
required by law to maintain separate coverage or to make changes in existing
joint coverage, they shall cooperate in so doing.
Columbia/HCA, LifePoint and Triad agree that there are certain
situations in which existing coverage must be retained as a result of state law
or regulation. In these situations the parties will cooperate to maintain such
coverage and appropriate financial accommodation will be made so that LifePoint
or Triad, as the case may be, will pay or receive value so that it will be in
the same financial position as it would have been had it obtained coverage
independently. In this regard the current participation of hospitals in the
patient compensation fund in the state of Kansas will be continued in order to
maintain the retroactive date on claims made coverage. In consideration
therefore, the value of a tail policy will be transferred. In addition, in
respect of Triad in the state of Texas the hospitals have opted out of the
workers compensation program and will maintain a benefit program in lieu
thereof. Reserves will be continued on the books of the participating hospitals
in order to permit the program to continue.
2.02 Joint Liability and Claims. (a) In the event that a claim by a
--------------------------
third party is made against two or more of the parties (or a Subsidiary of a
party and another party or a Subsidiary thereof) (a "Joint Claim"), and
-----------
indemnification under the Distribution Agreement is provided by Columbia/HCA,
Columbia/HCA shall defend the Joint Claim at its expense and the other party or
parties shall cooperate in such defense. In the event that no indemnification is
provided for under the Distribution Agreement and there is no other existing
agreement or indemnification with respect to such Joint Claim, the parties to
the Joint Claim agree to handle
3
<PAGE>
such Joint Claim in accordance with this Section 2.02. Such parties shall
jointly defend such Joint Claim and shall attempt to agree upon the appropriate
allocation of any liability or expenses. In the event that such parties cannot
agree upon an appropriate allocation, the issue shall be referred to arbitration
in accordance with the procedures described in subsection (b) below, but only
after a final determination of liability (through final court judgment,
settlement or otherwise) has been made. None of the parties, nor any Subsidiary
of any of them, shall institute any court proceedings against the other
involving a Joint Claim.
In the event that any of the parties purchases separate liability
coverage, each of them shall make known to its insurer this Agreement and in
particular the provisions of this Section 2.02.
(b) Any and all disputes arising from or in connection with this
Agreement shall be resolved in accordance with the procedures set forth in
Article XI of the Distribution Agreement (including, without limitation,
provisions set forth therein regarding attempts to amicably resolve any dispute
through discussions among members of senior management, consent to jurisdiction
and waiver of jury trial).
Section 3. Administrative Services.
-----------------------
3.01 Engagement. LifePoint and Triad each authorizes Columbia/HCA to
----------
perform and provide the technical and administrative service, assistance and
support functions described in Schedule 3.01 attached hereto (the "Services").
--------
Columbia/HCA hereby accepts such appointment. Compensation for such services
shall be as provided for in Schedule 3.01.
3.02 General Description of the Services. The purpose of this
-----------------------------------
Agreement is to set forth the terms upon which Columbia/HCA shall provide to
LifePoint and Triad the Services (i) in connection with the Policies and (ii) on
an interim basis in respect of post-Distribution Date insurance, in order to
permit LifePoint and Triad the opportunity to obtain alternative sources of
supply of the Services. In general, the Services shall be consistent with the
comparable services provided by Columbia/HCA with respect to the Policies
immediately prior to the Distribution Date.
3.03 Performance by Affiliates. The Parties recognize that the
-------------------------
Services may include services which, by their nature, are more effectively to be
provided by Affiliates of Columbia/HCA. Subject to the next sentence of this
Section 3.03, Columbia/HCA shall, to the extent required in order for its
Affiliates to provide such Services, cause its Affiliates to provide such
Services hereunder as if such Affiliates were themselves parties hereto. In
connection with the provision of such Services, Columbia/HCA's Affiliates shall
be entitled, as if such Affiliates were themselves parties hereto, to the
benefits of (i) the limitations on liability set forth herein and (ii) the
limitations on the obligation to provide Services set forth herein.
Section 4. Amendment of Policies.
---------------------
So long as LifePoint or Triad is covered by any Policy, Columbia/HCA
will not enter into any material amendment, change or modification of any such
Policy which would materially adversely affect LifePoint's or Triad's rights
under such Policy without the express
4
<PAGE>
prior written consent to such amendment, change or modification by LifePoint or
Triad, unless all reasonably anticipated claims thereunder are covered by the
indemnification under the Distribution Agreement after taking into account the
amendment, change or modification.
Section 5. Access to Records and Other Information.
---------------------------------------
In order to enable it to prosecute any claim or determine coverage
thereunder, either party, at its expense, may at any reasonable time examine or
copy any letter, account, or other documentation or information in the
possession or control of the other party or any affiliate of such party relating
to or connected with any Policy with respect to a policy period during which
such party or an affiliate was covered thereby and relating to prior losses
which are the subject of this Agreement. The other party shall, at the request
and expense of the requesting party, take reasonable steps to obtain for the
requesting party any information or documents in the possession of any third
party relating to or in connection with the Documents and identified by the
requesting party.
Section 6. Successors and Assigns.
----------------------
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Neither party hereto may assign its rights or delegate its
obligations under this Agreement without the prior written consent of the other
party.
Section 7. Counterparts.
------------
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but such counterparts shall together constitute one
and the same instrument.
Section 8. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
Section 9. No Impairments of Other Rights.
------------------------------
Nothing in this Agreement is intended or shall be construed to impair,
diminish or otherwise adversely affect any other rights under the Policies or
otherwise either party may have or may obtain against any person other than the
other party to this Agreement.
Section 10. Subrogation.
-----------
Each party agrees that the other party shall be subrogated to such
party's rights and remedies under the Documents to the extent of the portion of
any amounts recoverable thereunder determined in accordance with the terms of
this Agreement regarding allocation of liabilities, losses, claims and expenses.
Each party further agrees to cooperate with the other party in connection with
the other party's enforcement of any such rights and remedies and agrees not to
take any actions that would prejudice the exercise of such right of subrogation.
5
<PAGE>
This Section is not intended to result in any reallocation of amounts
recoverable under this Agreement. It is intended to avoid any waiver of
subrogation.
Section 11. Subsidiaries.
------------
Each of the parties hereto shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set forth
herein to be performed by any Subsidiary of such party which is contemplated to
be a Subsidiary of such party on and after the Distribution Date; provided,
--------
however, that this Section 1 shall not apply to any obligation of Health Care
- -------
Indemnity, Inc. pursuant to any Policy under which it is an insurer.
Section 12. No Third Party Beneficiaries.
----------------------------
This Agreement is solely for the benefit of the parties hereto and
their respective Subsidiaries and Affiliates and should not be deemed to confer
upon third parties any remedy, claim, liability, reimbursement, claim of action
or other right in excess of those existing without reference to this Agreement.
Section 13. Construction. In this Agreement,
------------
(i) unless the context otherwise requires, the terms
"herein," "hereof," "hereto," and "hereunder" refer to this Agreement;
and
(ii) the headings of the sections and subsections
hereof and the table of contents hereof are inserted for convenience
only and do not constitute a part of this Agreement.
Section 14. Entire Agreement; Amendment.
---------------------------
This Agreement including the Schedule hereto, which is an integral
part hereof, the Distribution Agreement and the other agreements referred to
herein or therein or entered into in connection herewith or therewith set forth
the entire agreement and understanding of the parties with respect to the
transactions contemplated hereby and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof. No
representation, promise, inducement or statement of intention has been made by
either party hereto which is not embodied in this Agreement or such other
agreements, the Schedules or Exhibits or thereto, or the written statements or
other documents delivered pursuant hereto and thereto, and neither party hereto
shall be bound by or liable for any alleged representation, promise, inducement
or statement of intention not so set forth. This Agreement may be amended or
modified only by a written instrument executed by both parties hereto or by
their successors and permitted assigns.
Section 15. Waivers.
-------
No failure or delay on the part of any party in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No
modification or waiver of any provision of this Agreement nor consent to any
departure by any
6
<PAGE>
party therefrom shall in any event be effective unless the same shall be in
writing, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
Section 16. Confidentiality.
---------------
Subject to any contrary requirement of law and the right of each party
to enforce its rights hereunder in any legal action, each party shall keep
strictly confidential, and shall cause its employees and agents to keep strictly
confidential, any information of or concerning the other party which it or any
of its agents or employees may acquire pursuant to, or in the course of
performing its obligations under, any provision of this Agreement; provided,
--------
however, that such obligation to maintain confidentiality shall not apply to
- -------
information which (i) at the time of disclosure was in the public domain, (ii)
after disclosure enters the public domain not as a result of acts by the
receiving party, (iii) was already independently in the possession of the
receiving party at the time of disclosure or (iv) is received by the receiving
party from a third party who did not receive such information from the
disclosing party under an obligation of confidentiality.
Section 17. Notices.
-------
All notices, consents, requests, instructions, approvals and other
communications hereunder shall be in writing and shall be deemed to have been
duly given, if delivered in person or by courier, telegraphed, telexed or by
facsimile transmission or mailed, by, certified or registered mail, postage
prepaid at the following address (or at such other address provided by one party
to the other in writing):
If to Columbia/HCA:
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2075
Attention: Robert A. Waterman, Esq.
Senior Vice President & General Counsel
with a copy to:
James D. Hinton
Vice President of Risk and Insurance
Columbia/HCA HealthCare Corporation
One Park Plaza
Nashville, TN 37203
7
<PAGE>
If to LifePoint, to
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6276
Attention: Mr. Scott L. Mercy
Chairman and Chief Executive Officer
with a copy to:
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6272
Attention: William F. Carpenter III, Esq.
Senior Vice President and General Counsel
If to Triad, to
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972)663-3945
Attention: Mr. James D. Shelton
President and Chief Executive Officer
with a copy to:
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972)701-9604
Attention: Donald P. Fay, Esq.
Executive Vice President
and General Counsel
8
<PAGE>
In each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
William W. Rosenblatt, Esq.
Section 18. Legal Enforceability.
--------------------
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision or remedies
otherwise available to any party hereto. Without prejudice to any rights or
remedies otherwise available to any party hereto, each party hereto acknowledges
that damages would be an inadequate remedy for any breach of the provisions of
this Agreement and agrees that the obligations of the parties hereunder shall be
specifically enforceable.
Section 19. Survival of Agreements.
----------------------
Except as otherwise contemplated by this Agreement, all covenants and
agreements of the parties contained in this Agreement shall survive the
Distribution Date.
9
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
COLUMBIA/HCA HEALTHCARE CORPORATION
By: /s/ Ronald Lee Grubbs, Jr.
-------------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President, General Counsel and
Secretary
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
-------------------------------
Name: Donald P. Fay
Title: Executive Vice President, General Counsel and
Secretary
10
<PAGE>
Schedule 3.01(c)
[To be agreed.]
11
<PAGE>
EXHIBIT 10.4
TRANSITIONAL SERVICES AGREEMENT
TRANSITIONAL SERVICES AGREEMENT, dated as of May 11, 1999 by and
between COLUMBIA/HCA HEALTHCARE CORPORATION, a Delaware corporation
("Columbia/HCA"), and LIFEPOINT HOSPITALS, INC., a Delaware corporation
(together with its successors and assigns, "LifePoint").
W I T N E S S E T H:
-------------------
WHEREAS, Columbia/HCA has determined to distribute to its
stockholders, on a pro rata basis, all of the issued and outstanding shares of
common stock of LifePoint owned by Columbia/HCA (the "Distribution"), all as set
forth in that certain Distribution Agreement by and among Columbia/HCA,
LifePoint and Triad Hospitals, Inc., a Delaware corporation, dated as of May 11,
1999 (the "Distribution Agreement"), the Distribution to be effective on the
Distribution Date (as defined in the Distribution Agreement); and
WHEREAS, Columbia/HCA currently furnishes certain services to the
hospitals and other healthcare facilities which, as of the Distribution Date,
will be owned by LifePoint (the "LifePoint Facilities"), such as services
relating to treasury, payroll, accounting, real estate project management,
legal, human resources, sales and marketing, and quality assurance and
accreditation matters; and
WHEREAS, LifePoint desires that Columbia/HCA shall continue to
provide, and Columbia/HCA is willing to continue to provide, such services for a
transitional period following the Distribution Date on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, Columbia/HCA and LifePoint
hereby agree as follows:
1. Services.
--------
(a) Basic Services. Columbia/HCA shall furnish, or cause to
--------------
be furnished, to LifePoint and to the LifePoint Facilities those services which
are currently furnished by Columbia/HCA to the LifePoint Facilities (the "Basic
Services"), upon the reasonable direction of LifePoint, including without
limitation those services that are described on Exhibit A hereto. The Basic
Services shall be performed throughout the Term of this Agreement (as
hereinafter defined), except to the extent that (i) LifePoint requests earlier
discontinuation of all or a portion of the Basic Services pursuant to Section 5
hereof or (ii) a different time period for the performance of a particular basic
service is set forth on Exhibit A hereto.
(b) Additional Services. Columbia/HCA and LifePoint hereby
-------------------
agree that Columbia/HCA may also provide such other services to LifePoint and to
the LifePoint Facilities (the "Additional Services") as Columbia/HCA and
LifePoint may agree, including without limitation services relating to ongoing
educational programs for physicians and other employees, governmental relations,
facilities management, ethics and compliance matters, travel, document
management, and newsletters.
<PAGE>
(c) Excluded Services. This Agreement is not intended to
-----------------
address matters involving computer services, employee benefits, tax, aviation,
insurance, telecommunications, Year 2000, intellectual property, purchasing or
any other matters addressed in the Distribution Agreement or in any of the
Ancillary Agreements (as defined in the Distribution Agreement), which matters
shall be governed exclusively by the provisions of the applicable agreement.
2. Term of Agreement. The term of this Agreement shall commence as
-----------------
of the Distribution Date and shall continue until December 31, 2000 (the
"Term").
3. Charges for Services.
--------------------
(a) Costs. Columbia/HCA's costs associated with performing the
-----
Basic Services (the "Costs") shall be comprised of (i) the portion of all
Columbia/HCA employee compensation and benefits (calculated at 20% of salary)
incurred in connection with or allocable directly to the performance of the
Basic Services hereunder ("Compensation Costs"); and (ii) all out-of-pocket
expenses incurred by Columbia/HCA, including without limitation expenses
resulting from travel, photocopying, delivery and long distance telephone
services, and professional fees and expenses of Columbia/HCA's outside
accountants, legal counsel and other consultants incurred by Columbia/HCA and
allocable to performance of the Basic Services hereunder (collectively, the
"Reimbursable Expenses"). Employees of Columbia/HCA and outside accountants and
legal counsel shall maintain specific timesheets to record time spent in
performing the Basic Services hereunder for purposes of calculating the
Compensation Costs and Reimbursable Expenses.
(b) Charges for Basic Services. Except where a different charge
--------------------------
is set forth on Exhibit A with regard to a particular Basic Service, LifePoint
shall pay all Costs incurred by Columbia/HCA in connection with Columbia/HCA's
performance of the Basic Services during the period that such Basic Services are
performed.
(c) Charges for Additional Services. In the event that LifePoint
-------------------------------
requests Columbia/HCA to perform, and Columbia/HCA agrees to perform, Additional
Services as provided in Section 1(b) hereof, the parties shall agree in writing
on reasonable charges to be paid by LifePoint to Columbia/HCA for any such
Additional Services, which charges shall include reimbursement of Columbia/HCA
for all out-of-pocket expenses incurred by Columbia/HCA, as described in clause
(ii) of Section 3(a) above, and allocable to performance of the Additional
Services.
4. Payment by LifePoint.
--------------------
(a) Payment of Charges. Columbia/HCA shall invoice LifePoint on
------------------
a monthly basis for the charges relating to the Basic Services and Additional
Services which have been performed hereunder and for reimbursement of any
invoices paid by Columbia/HCA on LifePoint's behalf. Columbia/HCA's invoice
shall specifically identify charges for Basic Services and Additional Services
and the amounts of any such reimbursements. LifePoint shall pay to Columbia/HCA
all amounts invoiced by Columbia/HCA within thirty (30) days after delivery of
such invoice. Any amount remaining unpaid when due, including disputed amounts
that are ultimately determined to be payable, shall bear interest during the
period that such
2
<PAGE>
amount remains unpaid (computed on the basis of a 360-day year of twelve 30-day
months) at a fluctuating rate per annum equal to the prime commercial lending
rate publicly announced by The Chase Manhattan Bank or any successor thereto at
its principal office (or any alternative rate substituted therefor by such
bank).
(b) Disputed Charges. In the event that LifePoint disputes any
----------------
charges invoiced by Columbia/HCA, LifePoint shall deliver a written statement
describing the dispute to Columbia/HCA within fifteen (15) days following
receipt of Columbia/HCA's invoice. The statement shall provide a sufficiently
detailed description of the disputed items to permit Columbia/HCA to research
and resolve the dispute. Charges not so disputed shall be deemed accepted. If
Columbia/HCA finds the disputed charge to be inconsistent with the terms of this
Agreement, the disputed amount shall be credited against any invoice issued by
Columbia/HCA following the resolution of such dispute, or, if no further invoice
is issued within sixty (60) days following such resolution, Columbia/HCA shall
refund the disputed amount to LifePoint.
5. LifePoint's Request to Discontinue Basic Services. At any time
-------------------------------------------------
during the Term of this Agreement, LifePoint may request Columbia/HCA to
discontinue performing all or a portion of the Basic Services, provided that
LifePoint shall give Columbia/HCA at least thirty (30) days' prior written
notice, and provided further that the requested discontinuance of services is
reasonably feasible and shall not prevent Columbia/HCA from providing the
remaining Basic Services.
6. Limited Warranty and Limitation of Liability.
--------------------------------------------
(a) Standard of Care. Columbia/HCA will provide the Basic
----------------
Services and the Additional Services hereunder (collectively, the "Services") in
good faith and with due care consistent with the care that it exercises in
performing such Services for itself. LifePoint acknowledges and agrees that
Columbia/HCA does not regularly provide Services to third parties as part of its
business, and, except as specifically stated elsewhere herein, Columbia/HCA does
not otherwise warrant or assume any responsibility for its performance of the
Services.
(b) Limitation of Liability. In addition to the obligations set
-----------------------
forth in Section 6(a) above, Columbia/HCA shall be responsible for any direct
compensatory damages suffered by LifePoint in the event of a breach by
Columbia/HCA of its obligations set forth herein which breach results from
Columbia/HCA's intentional misconduct or gross negligence. Except for the
limited warranties provided hereunder, Columbia/HCA shall have no liability to
LifePoint under this Agreement and LifePoint's remedies under this Section 6
shall constitute its sole and exclusive remedies under this Agreement; provided
that LifePoint shall be entitled to preliminary and other injunctive relief
against any willful breach by Columbia/HCA of this Agreement. Under no
circumstances shall Columbia/HCA be liable for any indirect, consequential,
incidental or punitive damages, whether arising under contract, in tort, at law,
or in equity, of LifePoint or any other person. LifePoint hereby acknowledges
that Columbia/HCA does not regularly provide Services to third parties as part
of its business and that Columbia/HCA has agreed to provide the Services under
this Agreement only to assist LifePoint in its transition to operation as an
independent public company.
3
<PAGE>
(c) Warranty. The warranties stated in subsection (a) above are
--------
in lieu of any and exclusive of all other representations and warranties of any
kind whatsoever.
7. Indemnification. LifePoint shall, to the fullest extent permitted
--------------
by law, defend, indemnify and hold harmless Columbia/HCA and its directors,
officers, employees, agents and affiliates from and against any and all losses,
liabilities, claims and costs, including, but not limited to, attorneys' fees
and legal costs arising from any lawsuits, administrative agency or other
actions by third parties (collectively, "Losses") to which Columbia/HCA is
subjected arising out of or attributed, directly or indirectly, to the
performance or non-performance of any of the Services under this Agreement.
Notwithstanding the foregoing, LifePoint shall not be required to defend,
indemnify and hold harmless Columbia/HCA and its directors, officers, employees,
agents and affiliates in respect of any such Losses that are determined by a
judgment of a court that is binding, final and not subject to review on appeal
to have resulted from Columbia/HCA's intentional misconduct or gross negligence.
8. Employees. Neither party hereto shall have authority to employ
---------
persons on behalf of the other party, and no employees of one party shall be
deemed to be employees or agents of the other party, except with the prior
written consent of the parties hereto. Each party hereto shall have the sole and
exclusive control over its labor and employee relations policy and policies
relating to wages, hours, working conditions and terms of employment.
9. Confidential Information.
------------------------
(a) In order for Columbia/HCA to perform the Services under this
Agreement, each party may make available to the other party certain information
and/or data in connection with its past, current or potential operations and/or
business strategies (hereinafter collectively referred to as "Confidential
Information"). Confidential Information may be oral, written, recorded or
otherwise captured in any medium.
(b) Each party shall hold, and shall cause its consultants and
advisors to hold, in strict confidence all Confidential Information of the other
party. Each party agrees not to make use of the Confidential Information of the
other party for its own benefit and to use the Confidential Information only in
connection with the Basic Services and the Additional Services to be performed
pursuant to this Agreement. Each party agrees that it will refrain from
releasing or disclosing any Confidential Information to any other person, except
that Confidential Information may be disclosed by each party to its consultants
and advisors. Each party agrees that all Confidential Information of the other
party shall at all times remain the sole property of the other party and shall
be returned to such other party immediately upon the termination of this
Agreement. The provisions of this Section 9 shall survive any termination of
this Agreement.
(c) Notwithstanding the foregoing provisions of this Section 9,
no party hereto shall be prohibited from using or permitting the use of, and no
party shall be required to hold in confidence, any Confidential Information to
the extent that the information constituting such Confidential Information (i)
has been or is in the public domain through no fault of such party, or (ii) is,
after the Distribution Date, lawfully acquired by such party from sources other
than a party hereto. To the extent that a party hereto (or, to the knowledge of
such party, any current or former employee of such party) is requested (by oral
questions, interrogatories,
4
<PAGE>
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose any information required to be kept confidential
pursuant to this Section 9, such party agrees to (or in respect of a current or
former employee, agrees to use its reasonable efforts to cause such employee to)
maintain the confidentiality of such Confidential Information and to provide
prompt notice to the party to which such Confidential Information pertains, so
that such party may seek an appropriate protective order or waive the notifying
party's compliance with this Section 9. If, in the absence of a protective order
or the receipt of a waiver hereunder, the party which has received such a
request is, nonetheless, in the reasonable written opinion of counsel, legally
required to disclose such Confidential Information, such person may disclose
such Confidential Information and shall not be liable pursuant to this Section
9; provided, that such person furnishes only that portion of the Confidential
Information which such person is advised by counsel to disclose and exercises
its reasonable efforts to obtain assurance that confidential treatment will be
accorded to the disclosed portion of the Confidential Information.
Notwithstanding the foregoing, each party will be permitted to disclose
Confidential Information in any proceeding in which such party is in an
adversarial position to any other party to this Agreement.
10. Termination for Cause. Either party may terminate this Agreement
---------------------
in the event the other party files a proceeding under any federal or state
bankruptcy laws now or hereafter in effect, or in the event that a proceeding is
instituted against the other party under any federal or state bankruptcy laws
now or hereafter in effect which proceeding is not dismissed within thirty (30)
days, by the giving of written notice, which termination shall be effective
immediately upon the giving of such notice. In addition, in the event of a
breach of any obligation or covenant under this Agreement by either party, the
party not in breach may give the party in breach written notice of the specifics
of the breach and the party in breach shall then have thirty (30) days (the
"Cure Period") in which to cure such breach or cause the breach to be cured. If
the breach is not cured, or waived by the non-breaching party, within the Cure
Period, then the non-breaching party shall be entitled to pursue any remedies it
may have by reason of such breach, including without limitation terminating this
Agreement with cause. Failure to terminate this Agreement shall not serve to
waive any breach hereof. If either party commences legal action alleging any
breach of this Agreement, the non-prevailing party shall pay all costs and
reasonable attorneys' fees incurred by the prevailing party in connection
therewith.
11. Force Majeure. Columbia/HCA shall not be liable to LifePoint for
-------------
a delay or failure to comply with the terms of this Agreement if such delay or
failure results from causes beyond its reasonable control. Such causes may
include, without limitation, acts of God, fires or other catastrophes,
telecommunications failures, equipment failures, power failures, labor disputes,
strikes, delays in transportation, riots, war, governmental regulations, non-
performance by Columbia/HCA suppliers and vendors, or problems experienced by
Columbia/HCA as a result of its own or any third party's computer software or
hardware not being Year 2000 compliant (an "Event of Force Majeure").
Columbia/HCA shall give LifePoint prompt notice of any Event of Force Majeure
that may cause delay or non-performance hereunder. For so long as such Event of
Force Majeure shall continue, LifePoint may elect to have such Services
performed by other means without such election being deemed to be a termination
or breach of this Agreement, provided that LifePoint provides prompt notice of
such election to Columbia/HCA after having received notice of the Event of Force
Majeure.
5
<PAGE>
12. Assignment. Neither this Agreement, nor any of the rights,
----------
licenses or duties set forth herein, may be assigned by LifePoint without the
prior written consent of Columbia/HCA. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the parties hereto and their
respective successors and permitted assigns.
13. Access to Books and Records. Upon written request of the
---------------------------
Secretary of Health and Human Services or the Comptroller General or any of
their duly authorized representatives, Columbia/HCA shall make available to the
requesting party those contracts, books, documents and records necessary to
verify the nature and extent of the cost of providing the Services hereunder.
Columbia/HCA shall cause such materials to be available for inspection for at
least four (4) years after the rendering of such Services. If Columbia/HCA
carries out any of the duties of this Agreement with a value of $10,000 or more
over a twelve (12) month period through a subcontract with a related individual
organization, Columbia/HCA shall include this requirement in all such
subcontracts. The parties agree that any attorney-client, accountant/client or
any other legal privilege shall not be deemed waived by virtue of the provisions
of this Section 13.
14. Taxes. The fees for Services specified to be payable by LifePoint
-----
hereunder do not include any sales, use, excise, value added, utility or other
similar tax or charge which may be or hereafter become applicable to the
Services provided hereunder. Consequently, in addition to such fees, the amount
of any such taxes or charges which may be or hereafter become applicable shall
also be payable by LifePoint to Columbia/HCA, except that LifePoint shall have
no responsibility for payment of taxes on Columbia/HCA's income or for payment
of franchise taxes related to authorization of Columbia/HCA to conduct business
in any state. In lieu of paying any such taxes that may otherwise be due,
LifePoint may provide Columbia/HCA with a tax exemption certificate acceptable
to the taxing authorities. LifePoint shall be given prompt written notice of any
tax assessment against Columbia/HCA for which LifePoint is liable hereunder, and
LifePoint shall have the right, at its own expense, to contest any such
assessment prior to its payment by Columbia/HCA. In the event LifePoint
exercises such right, it shall indemnify and hold harmless Columbia/HCA from
liability for all interest and penalties relating to such contest. LifePoint
shall control any such contest and Columbia/HCA shall provide information and
assistance in connection with such contest to the extent reasonably requested by
and at the expense of LifePoint.
15. Relationship of Parties. In performing the Services under this
-----------------------
Agreement, Columbia/HCA is acting as an independent contractor and not as an
agent or employee of LifePoint.
16. Limitation on Solicitation of Employees. Neither party shall
---------------------------------------
directly or indirectly approach, counsel or induce any employee of the other
party to leave his or her employment during the term of this Agreement without
the prior written consent of such other party.
17. Governing Law. This Agreement shall be deemed to be made in and
-------------
in all respects shall be interpreted, construed and governed by and in
accordance with the laws of the State of Tennessee without regard to the
conflict of law principles thereof.
6
<PAGE>
18. Consent to Jurisdiction. Columbia/HCA and LifePoint each hereby
-----------------------
expressly (a) submits and consents in advance to the jurisdiction of any
Tennessee State Court sitting in Nashville, Tennessee or the United States
District Court for the Middle District of Tennessee with respect to any legal
proceedings arising out of or relating to this Agreement, (b) waives any
objection which it may have based upon lack of personal jurisdiction, improper
venue or forum non conveniens, (c) agrees that all claims with respect to such
legal proceedings may be heard and determined in any Tennessee State Court
sitting in Nashville, Tennessee or the United States District Court for the
Middle District of Tennessee, (d) agrees not to commence any legal proceeding
relating to this Agreement other than in a Tennessee State Court sitting in
Nashville, Tennessee or the United States District Court for the Middle District
of Tennessee, and (e) agrees that a final judgment in any such legal proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
19. Waiver of Jury Trial. COLUMBIA/HCA AND LIFEPOINT EACH HEREBY
--------------------
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
20. Notices. All notices or other communications required or
-------
permitted under this Agreement shall be in writing and sufficient if sent by
registered or certified mail, postage prepaid, addressed as provided below; or
delivered personally, by private courier or fax, and followed by such mailing:
If to Columbia/HCA, to
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2075
Attention: Robert A. Waterman, Esq.
Senior Vice President and General Counsel
7
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If to LifePoint, to
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6276
Attention: Mr. Scott L. Mercy
Chairman and Chief Executive Officer
In each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
Any party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
21. Entire Agreement; Amendment. This Agreement, together with the
---------------------------
exhibits hereto, sets forth the entire agreement and understanding of the
parties hereto in respect of the matters addressed herein, and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
hereof. No party hereto has relied upon any oral or written statement,
representation, warranty, covenant, condition, understanding or agreement made
by any other party or any representative, agent or employee thereof, except for
those expressly set forth in this Agreement or in the exhibits or other
documents delivered pursuant hereto. This Agreement may be amended, modified,
superseded or supplemented only by an instrument in writing executed and
delivered by Columbia/HCA and LifePoint. Nothing herein is intended to diminish
any of the rights or obligations of either party pursuant to the Distribution
Agreement or pursuant to any of the Ancillary Agreements (as defined in the
Distribution Agreement).
22. No Third Party Beneficiaries. This Agreement is solely for the
----------------------------
benefit of the parties hereto, and should not be construed to confer upon any
other person any remedy, claim, liability, right of reimbursement, claim of
action or other right.
23. Headings. The section headings contained in this Agreement are
--------
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
24. Waiver. No delay or omission by either party to exercise any
------
right or power under this Agreement or pursuant to applicable law shall impair
such right or power or be construed as a waiver thereof. A waiver by either
party of any of the covenants to be performed by the other or any breach shall
not be construed to be a waiver of any succeeding breach or of any other
covenant. All rights and remedies conferred under this Agreement or by any other
instrument or law shall be cumulative and may be exercised singularly or
concurrently. The
8
<PAGE>
failure by either party to enforce any term shall not be deemed to be a waiver
of future enforcement of that or any other term of this Agreement.
25. Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.
26. Severability. In the event that any provision hereof is
------------
prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Transitional Services
Agreement to be executed by their duly authorized representatives as of the day
and date first referenced above.
COLUMBIA/HCA HEALTHCARE CORPORATION
By: /s/ Ronald Lee Grubbs, Jr.
------------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President, General Counsel and
Secretary
9
<PAGE>
EXHIBIT A
TRANSITION SERVICES
-------------------
The Basic Services shall include, without limitation, the following:
(a) Treasury. Columbia/HCA will provide LifePoint with support
--------
in treasury management.
(b) Payroll. Columbia/HCA will provide LifePoint with historical
-------
information relating to payroll records, wage verification and miscellaneous tax
reporting for employees of the LifePoint Facilities and will provide such
assistance as LifePoint may request in connection with payroll processing.
(c) Accounting. Columbia/HCA will provide LifePoint with
----------
historical financial information and 1999 year-to-date information for each of
the LifePoint Facilities, including general ledger and operating reports, to the
extent in the possession of Columbia/HCA and not presently on file at the
subject LifePoint Facility. Columbia/HCA will provide LifePoint with support in
accounting matters.
(d) Real Estate Project Management. Columbia/HCA will provide
------------------------------
LifePoint with support in construction design and management services, including
construction accounting. For a period not to extend past October 31, 1999,
Columbia/HCA will pay invoices related to LifePoint construction projects which
are currently in progress on LifePoint's behalf, and LifePoint will reimburse
Columbia/HCA for any such amounts paid on LifePoint's behalf. Any such
reimbursements will be invoiced to LifePoint and paid by LifePoint in accordance
with provisions of Section 4 of the Agreement.
(e) Legal. Columbia/HCA will provide LifePoint with support in
-----
connection with legal matters, including pending and threatened litigation.
(f) Human Resources. Columbia/HCA will provide LifePoint with
---------------
support in connection with human resources matters.
(g) Sales and Marketing. Columbia/HCA will provide LifePoint
-------------------
with support in connection with sales and marketing matters.
(h) Quality Assurance and Accreditation Matters. Columbia/HCA
-------------------------------------------
will provide LifePoint with support in quality assurance and accreditation
matters.
<PAGE>
(i) Early Out Collection Services. For a period not to extend
-----------------------------
past July 15, 1999, Columbia Patient Account Services, Inc., a Texas corporation
("CPAS"), will provide LifePoint with "early-out" collection services for
collection of third party insurance accounts that, at the 35th day after the
date of the bill, have an unpaid balance between $10 and $1,000, and patient due
accounts that, at the 25th day after the date of the bill, have an unpaid
balance greater than $10. LifePoint will pay to CPAS a fee equal to 2.7% of all
amounts received by CPAS, LifePoint or any LifePoint facilities on all such
accounts placed for collection with CPAS.
D-2
<PAGE>
EXHIBIT 10.5
COMPUTER AND DATA PROCESSING
SERVICES AGREEMENT
This COMPUTER AND DATA PROCESSING SERVICES AGREEMENT, dated as of May 11,
1999, (the "Effective Date") is by and between COLUMBIA INFORMATION SYSTEMS,
INC., a Tennessee corporation ("CIS") which is a wholly owned subsidiary of
Columbia/HCA Healthcare Corporation, a Delaware corporation ("Columbia/HCA"),
and LifePoint Hospitals, Inc., a Delaware corporation (together with its
successors and permitted assigns, hereinafter sometimes referred to as
"Customer").
W I T N E S S E T H:
WHEREAS, CIS is in the business of providing certain computer and data
processing services as more fully set forth herein; and
WHEREAS, Customer desires to purchase from CIS the services described in
this Agreement, and CIS is willing to provide such services to Customer, all on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, CIS and Customer agree as
follows:
1. Definitions. The following terms shall have the meanings set forth
-----------
below:
(a) APD or Adjusted Patient Days. An amount equal to a particular
----------------------------
hospital's patient days times the dividend of the total patient revenue divided
by inpatient revenue.
(b) Affiliate. CIS as well as those entities, businesses, facilities,
---------
and enterprises (however and in whatever manner conducted) that are controlled
by, controlling, or under common control with it, including, without limitation,
all parent corporations and their respective subsidiaries and affiliates, joint
ventures, partnerships, limited liability companies and partnerships, hospitals,
free-standing centers, home health agencies, surgery centers, physician
practices, syndications, medical laboratories, medical records processing
facilities, medical supply sellers, pharmacies, insurance providers, health care
providers, and managed care entities, together with any and all entities and
businesses to which CIS or any of the above described entities provide
management services, information processing services or purchasing services.
(c) CIS Software. The software listed in Exhibit B hereto and
------------
identified as being owned by CIS, including Enhancements, upgrades and custom
development.
(d) Communication Lines. The telephone communication and diagnostic
-------------------
lines for data transmission with the Data Center and/or CIS, whether dedicated
or not.
(e) Consumer Price Index. The Medical component of the United States
---------------------
Consumer Price Index published by the United States Department of Labor, All
Cities Average (1986=100) or such other successor index the parties shall
designate.
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<PAGE>
(f) Customer Data. Any data owned or held in custody by Customer,
-------------
including without limitation, financial data, patient medical record data or
patient identification data used or transmitted to the Data Center by Customer
in connection with its purchase of the Services under this Agreement.
(g) Data Center. The CIS Data Center(s) located in Nashville,
-----------
Tennessee and/or any of CIS's Regional Data Centers containing computer
processing equipment and the Software used by CIS to provide the Services, or
such other facilities as CIS may establish from time to time.
(h) Equipment. The computer hardware located at the Facility or
---------
Facilities.
(i) Facility/Facilities. The hospitals and other healthcare providers
-------------------
owned by Customer and listed in Exhibit A hereto.
(j) Hospital Resource Guide. This term is defined in Section 5(a).
-----------------------
(k) Initial Term. The seven (7) year period commencing on the
------------
Effective Date.
(l) Koala System. The proprietary intranet network currently provided
------------
by CIS for use by affiliated facilities to obtain information relevant to day-
to-day operations.
(m) Monthly Processing Fees. The fees for monthly service under this
-----------------------
Agreement as more fully set forth in Section 2 and Exhibit B.
(n) Parties. Collectively the individual entities which execute this
-------
Agreement.
(o) Software. The computer software identified in Exhibit B hereto as
--------
either CIS Software or Third Party Software which is used by CIS in providing
the Services to Customer, including Enhancements, upgrades and custom
development.
(p) Services. The installation, support, training, maintenance, data
--------
processing and other services provided to Customer by CIS pursuant to this
Agreement, as set forth in Exhibit C hereto.
(q) Systems. The Equipment and Software functioning together,
-------
located at one or more Facilities.
(r) Third-Party Software. The software indicated in Exhibit B hereto
--------------------
as being licensed to CIS by a third-party provider.
(s) Wide Area Network. The proprietary wide area network currently
-----------------
provided by CIS for use by affiliated facilities to deliver CIS products and/or
services (for example, e-mail, host application access, file transmission, Koala
System access).
2
<PAGE>
2. Services, Systems, Data, Payment.
--------------------------------
(a) CIS shall provide, and Customer shall purchase from CIS, the
Services and/or licenses to the Software described in the exhibits hereto, upon
the terms and subject to the conditions of this Agreement, for the benefit of
the Facility or Facilities.
(b) CIS shall designate certain coding and naming conventions for the
form of Customer Data and shall provide to Customer the coding requirements for
transmitting Customer Data to the Data Center and the treatment given to
different account and processing codes used by CIS. CIS reserves the right to
make changes in operating procedures, coding and naming conventions, hardware
and network configurations and applications and systems programming. CIS shall
provide Customer with thirty (30) days notice of such changes. Customer shall
be responsible for, and bear the cost of, (i) coding and transmitting Customer
Data to the Data Center, (ii) supervising the conversion of its financial data
into a form that can be processed by CIS, (iii) determining whether it has
complied with applicable accounting practices, (iv) determining whether it has
complied with applicable state and federal regulations governing financial
reporting obligations, (v) verifying the accuracy of Customer Data generated by
it and/or CIS and (vi) maintaining prudent internal controls of reports and
Customer Data.
(c) If Customer requests that CIS correct or reprocess data files
because of erroneous input data or output records, CIS will use its reasonable
best efforts to perform such correction and reprocessing. If possible, Customer
shall request any correction or reprocessing within seventy-two (72) hours after
production of the reports. If correction or reprocessing is requested because
of an error attributable to CIS or the negligence of CIS, there shall be no
charge for such rerun, provided that the request for reprocessing is made within
seventy-two (72) hours after production of the erroneous report. In the event
that the error is attributable to Customer's erroneous input data or output
records, or Customer requests reprocessing after such seventy-two (72) hour
period, CIS will determine whether it can perform the reprocessing and, if it
can perform the reprocessing, will provide a cost estimate to Customer for such
reprocessing services. Following mutual agreement on the cost, CIS will perform
the reprocessing services. If the parties are unable to agree on the cost for
the reprocessing services, CIS shall not perform such services.
(d) Customer shall pay CIS on behalf of the Facilities for the
Services rendered and licenses granted in accordance with the terms and subject
to the conditions contained herein and in the Exhibits hereto. Prices are
subject to change as set forth herein and in the Exhibits hereto.
(e) In the event that Customer makes a written request for the
performance of on-site Services by CIS, Customer shall pay the reasonable and
customary travel expenses of CIS personnel performing such Services for
Customer, in accordance with CIS's standard business travel policies.
(f) Unless otherwise provided herein, payment is due within thirty
(30) days of the date of receipt of an invoice. Without limiting CIS's rights
hereunder, any amounts not paid within thirty (30) days of the due date shall be
subject to a late charge equal to the lesser of twelve percent (12%) per annum
or the maximum amount allowed by applicable law; provided, however, that no late
charge shall apply with respect to amounts reasonably disputed by Customer if
written
3
<PAGE>
notice of such dispute is given to CIS within fourteen (14) days of receipt of
invoice; provided, however, that the interest on any disputed charges that are
ultimately resolved against Customer shall accrue from the date payment would
have otherwise been due. Disputes under this Section will be resolved pursuant
to the procedure set forth in Section 12(f).
(g) Customer's Monthly Processing Fees are indicated in Exhibit B.
The Monthly Processing Fee is due and payable within thirty (30) days of receipt
of an invoice. Monthly Processing Fees shall be calculated as set forth in
Exhibit B.
(h) On each anniversary date of this Agreement, CIS shall review and,
if necessary, adjust the Monthly Processing Fees of the Customer for the prior
twelve months as follows:
1) If, during the prior twelve month period, the actual total
system fees charged to Customer under this Agreement fall
below an amount equal to seventy-five percent (75%) of the
total system fees set forth in Exhibit E, CIS may charge
Customer the difference in fees actually charged and such
seventy five percent (75%) figure.
2) Added/Divested Facilities - The parties acknowledge that
Customer may add or divest Facilities from time to time
during the term of this Agreement. CIS shall provide
professional services in connection with added and divested
Facilities as described and for the fees set forth in
Exhibits C and D. For divested Facilities Customer's
Monthly Processing Fees shall be reduced beginning on the
date of such Facility's last use of the System. For added
facilities, Monthly Processing Fees shall be increased
beginning on the date of such Facility's first use of the
System.
(i) No more than once annually, CIS may increase any fees in this
Agreement or the Exhibits by an amount equal to the percentage increase in the
Consumer Price Index plus up to three percent (3%). In addition, CIS may at any
time pass through to Customer any fee increases actually charged to CIS for
Third Party Software.
(j) At each anniversary date of the Agreement, if the total fees paid
by Customer are more than one hundred and fifty percent (150%) of the fees paid
in the previous year, Customer shall be entitled to a credit on CIS's next
annual period fees equal to fifteen percent (15%) of such increase. For
purposes of this calculation, the first year shall be compared to the fees set
forth in Exhibit E.
3. New Services and Systems; Updates.
---------------------------------
(a) From time to time, CIS will offer new Services or Systems which
are offered to its own facilities to Customer, which Customer may purchase in
its discretion. Certain new Services and/or Systems may require Customer to pay
additional fees, purchase additional Equipment or Communications Lines or
license additional software.
4
<PAGE>
(b) From time to time CIS may update the Software or provide Updates
received from the licensor for Third Party Software. As used herein, the term
"Update" means any fix, change or modification which affects the operating
performance or efficiency of the Software, but does not alter the basic
functions that it performs. At the request of CIS, Customer will discontinue
use of the then-current version of the Software and, within sixty (60) days of
its receipt of the updated version (including receipt of all documentation
relating thereto), substitute therefor the updated version of the Software in
accordance with the Hospital Resource Guide. In the event that Customer fails
to update the Software, CIS shall not be required to maintain or support such
Software.
(c) From time to time CIS may enhance the Software System or provide
Enhancements received by it for Third Party Software. As used herein, the term
"Enhancement" means any new feature or function which improves the operating
performance or efficiency of the Software and/or new Equipment or infrastructure
standards. At CIS's option, fees for Enhancements may be charged to Customer.
(d) CIS may, in its sole discretion, migrate to a new System(s) which
shall be offered to Customer by CIS at a price to be determined by CIS at the
time of such offering. If the Customer elects not to purchase such System(s),
CIS shall continue to support the current system utilized by Customer at prices
to be determined by CIS. The Customer shall make such election within 60 days
after CIS provides an offer describing such System(s) and specifying the pricing
for same.
4. Software and Wide Area Network; Prohibited Uses.
-----------------------------------------------
(a) The use of the CIS Wide Area Network is expressly restricted to
accessing the Software, Customer Data and Services provided by CIS in the manner
described in user documentation and in CIS policy and standards manuals.
Customer acknowledges that the Wide Area Network provided by CIS to support
Customer's operation is proprietary. The Customer shall comply with the Hospital
Resource Guide, which describes the responsibilities and duties of CIS and the
Customer in respect of the Network. Customer shall not reverse engineer the
Wide Area Network in order to obtain access to proprietary data or for any other
purpose not specifically authorized herein.
Customer shall not perform any of the following activities or any other
activities not conforming to the stated use of the Wide Area Network and agrees
to provide reasonable notification to employees at the Facilities that they
shall not:
. Place any equipment on the Wide Area Network for the purpose of
recording CIS electronic communications or deciphering the content and
structure of CIS electronic communications;
. Access any piece or segment of the CIS Wide Area Network of computing
infrastructure via any telecommunications utility, for example,
without limitation, Telnet and TCP/IP, other than as specified in CIS
documentation and in a manner consistent with the documented access
policy and procedures for CIS Application Software and Services; or
5
<PAGE>
. Take any other action which would have the effect of impeding or
prohibiting normal operation of the Wide Area Network.
In addition to the foregoing, Customer will obtain approval from CIS prior to
adding any additional equipment or connections to the Wide Area Network, which
approval will not be unreasonably withheld.
. Customer acknowledges and agrees that access to the CIS Wide Area
Network may be temporarily terminated at CIS's sole discretion (with
notice to Customer) under the following circumstances:
. Customer engages in unauthorized use of the Wide Area Network as
indicated in this Agreement;
. A Customer site generates a condition that interferes with the normal
operation of the Wide Area Network, for example, without limitation, a
hardware problem generating excessive network traffic or conflicting
IP addresses are added to the network; or
. A non-Customer site generates a condition that interferes with the
normal operation of the Wide Area Network and a Customer site is taken
down as part of the process of identifying and remediating the
problem.
With respect to any event caused other than by a malicious act of Customer or by
the unauthorized use of the Wide Area Network, CIS will use its reasonable best
efforts to ensure that access to the Wide Area Network is restored in a timely
manner. With respect to any event caused by a malicious act or the unauthorized
use of the Wide Area Network, access will be restored when CIS has received
reasonable assurance from Customer that repeat acts or unauthorized use will not
occur. CIS will determine reasonable assurance in its sole discretion.
(b) Subject to the terms in each of the licenses for Third-Party
Software granted to CIS and as set forth below, CIS grants to Customer, for the
Initial Term and any renewal term of this Agreement, a non-transferable, non-
exclusive license to use the Software as contemplated in this Agreement. In
this context, "use" includes use by Customer and medical service providers
accessing directly or remotely the Software in the manner permitted by such
Software and CIS policy and standards.
(c) Customer shall have no rights to the Software or to information
obtained from the Wide Area Network or the Koala System not expressly granted
under this Agreement. Without limiting the generality of the foregoing,
Customer shall have no right to (i) alter the Software, (ii) create derivative
works, (iii) distribute or sublicense the Software copies to third parties, (iv)
incorporate additional software into the Software at the operating system or any
other level, (v) incorporate the Software into any publicly available data base
or (vi) reproduce the Software without CIS's prior written consent, which
consent will not be unreasonably withheld.
(d) Nothing herein shall be deemed to grant to Customer any ownership
interest in the Software.
6
<PAGE>
(e) Customer shall not use the Software for any purpose other than as
specifically permitted by this Agreement. Customer shall not alter or delete
any copyright or other proprietary notices in the Software.
(f) Customer shall have the right to copy documentation to support
use of the Software.
5. Equipment, Installation.
-----------------------
(a) If Customer purchases and installs Equipment and Communication
Lines (other than Equipment and Communication Lines currently installed at each
Facility as of the date hereof), then Customer shall comply with the parameters
set forth below and the installation guidelines in the Hospital Resource
Guidelines distributed by CIS from time to time (the "Hospital Resource Guide").
The Hospital Resource Guide describes the responsibilities and duties of CIS
and Customer with respect to Communication Lines. Selection of the most
appropriate installation site for any additional Equipment and Communication
Lines within the Facility is Customer's responsibility. At Customer's request,
CIS will assist Customer in identifying installation sites, provided that in
giving such assistance, CIS makes no representation that any installation site
is the appropriate site for Equipment. Proper installation may require the
removal of walls or other alterations to the premises. Customer shall be
responsible for any costs incurred in modifying the premises to accommodate the
installation of any Equipment or Communication Lines. Any damage to Customer's
Equipment and Software resulting from inadequate or incomplete site preparation
may not be covered by applicable maintenance agreements.
(b) With respect to any purchases and installations of new Equipment
and Communication Lines, Customer shall perform the following to ensure adequate
site preparation:
(1) When required by CIS, provide the CIS representative with
appropriate drawings indicating:
i. the location and lay-out of the installation site;
ii. the location of existing and proposed site wiring
(power and communications) and the paths and lengths thereof; and
iii. the location of other equipment capable of generating
electrical noise, electromagnetic interference, heat, etc.;
(2) Make alterations to the premises necessary to meet wiring
and other site requirements;
(3) Provide and install all communication cables, wall jacks,
special connectors and associated hardware;
(4) Install all necessary power distribution boxes, conduits,
grounds, lightning protection and associated hardware;
(5) Install all required auxiliary power protection and air
conditioning;
7
<PAGE>
(6) Provide required storage or service areas;
(7) Ensure the environmental requirements of the Equipment are
met;
(8) Provide floor coverings and environmental systems that
control static electricity build-up and discharge; and
(9) Comply with all applicable federal, state and municipal
laws, codes and regulations (including, without limitation,
electrical, building, safety and health laws).
Clauses (1) through (9) above set forth only the minimum standards,
are not intended to be comprehensive and do not modify the obligations of
Customer described in the Hospital Resource Guide or the obligation of Customer
to follow the instructions and recommendations of CIS relating to the use of the
Software and the Systems.
6. Maintenance and Support Services.
--------------------------------
(a) CIS shall provide maintenance services for the Equipment through
CIS's third-party maintenance providers and the CIS Depot Maintenance as set
forth in Exhibit B. Customer shall have the right to use an alternative
Equipment maintenance provider, provided that at least sixty (60) days' prior
written notice is given to CIS and CIS, in its reasonable discretion, approves
such proposed alternative Equipment maintenance provider. In such cases,
responsibility for vendor performance and system availability delivered via this
Equipment will transfer solely to Customer.
(b) Subject to availability, CIS will provide additional on-site
installation support to Customer at CIS's hourly rates then in effect. In
exchange for the software maintenance fees set forth in Exhibit B hereto, CIS
will provide customer assistance through its customer support center in a manner
consistent with that provided to a Facility prior to the Distribution Date.
(c) CIS shall not be required to provide maintenance or support
Services to any portion of the Software that has been altered by Customer
(without the prior written approval of CIS) if such alteration adversely affects
CIS's ability to provide such Services, as determined by CIS in its reasonable
discretion.
(d) Customer may utilize other vendors of computer systems requiring
interface with the Systems provided hereunder and, upon prior written notice to
and approval by CIS (which approval will not be unreasonably withheld), CIS
shall cooperate with such vendors or Customer in the development and maintenance
of necessary interfaces with the Systems, provided that nothing herein shall
require CIS to provide programming support in respect of such interfaces. CIS
will work with a third party vendor selected by Customer to supply, implement
and test any CIS existing interface transactions on a time and materials basis.
CIS will also adapt existing interfaces to add existing accessible data elements
to transactions on a time and materials basis. CIS will review data elements
that do not exist on CIS systems for potential additions on a time and materials
basis but retains the right to reject such additions in its sole discretion.
All costs and expenses incurred by CIS pursuant to this paragraph shall be
reimbursed by Customer at the then-current CIS billing rates for time and
materials. Except as provided in this paragraph, CIS shall
8
<PAGE>
have no obligation to provide Services for systems provided by a person other
than CIS or a vendor preferred by CIS. All such Services shall be Customer's
responsibility and at Customer's cost.
(e) The provision of Services may result in the disclosure to CIS of
third-party confidential or proprietary information in possession of Customer
and in which CIS has no rights. Customer shall indemnify and hold harmless CIS
from the failure of Customer to obtain any third-party consents that may be
required so that CIS may provide the Services.
(f) In the event Customer requires services beyond those provided in
this Agreement, or as a result of Customer's use of Software or Systems other
than in conformity with applicable specifications, then to the extent that CIS
agrees to provide additional services, the services shall be provided at the
then-current CIS billing rates for time and materials.
(g) CIS agrees to make its Wide Area Network available to Customer for
access and use only at Facilities listed in Exhibit A hereto as amended from
time to time as acquired by Customer. CIS agrees to make the Information
Systems portion of Koala System available to Customer for access by Facilities
in a manner consistent with the use prior to the Distribution Date. Customer
agrees that any information obtained by a Facility from the Koala System, to the
extent such information is not otherwise publicly available, will not be
disclosed to third parties or used other than as required in the operation of
the Facility.
(h) CIS shall maintain Disaster Recovery Plans for critical systems
and a named disaster recovery administrator to manage the plan. The purpose of
the disaster recovery plans will be to provide a cost-effective means to reduce
the amount of the time required to restore system functionality in the event of
a catastrophic failure at a single data center versus completely rebuilding the
computing infrastructure. These plans will be periodically tested, and the
result made available to customer upon request.
7. Customer Linkage. The CIS Director of Information Systems ("DIS") will
-----------------
continue to support the Customer locally and provide account management in a
manner consistent with that used to support facilities owned by CIS's corporate
parent. The DIS and Customer will conduct a joint effort to define overall
Customer objectives and develop an information technology plan whereby CIS can
assist in meeting these objectives. This process will allow for long-range
planning and budgeting for system growth, system requirements and resource
planning to meet stated objectives. Customer shall be entitled to make a one-
time designation of either its CEO or COO to participate in the Information
Systems Steering Committee (ISSC) and shall be entitled to designate one
Facility representative to participate in each of the User Review Groups (URGs)
designed to assist CIS in identifying and ranking system updates and
enhancements. There is no fee involved in participating in the URGs. Expenses
involved in participating in the URGs shall be borne by Customer.
CIS and Customer have defined non-binding Service Level Objectives ("SLOs")
to serve as a benchmark for CIS and Customer to periodically assess together the
functioning and satisfaction level derived from the outsourcing relationship.
SLOs are defined in Exhibit F. It is understood that the definition of the SLOs
may be changed over time as mutually agreed by the
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<PAGE>
parties. Customer and CIS agree to comply with their respective responsibilities
as set forth in Exhibit G.
8. Confidentiality; Proprietary Rights.
-----------------------------------
(a) Data and materials of Customer stored by CIS shall remain the
property of Customer. CIS shall provide such data and materials to Customer
within thirty (30) days of the receipt of Customer's request for such data or
materials. Notwithstanding the foregoing, CIS shall maintain copies of Customer
Data for such periods of time as are required under this Agreement and for such
other periods of time as CIS, in its sole discretion, shall deem to be
advisable.
(b) CIS warrants that it will retain all information belonging to
Customer in confidence and will neither use it nor disclose it to anyone without
the prior written consent of Customer. Notwithstanding the foregoing, to the
extent that CIS is requested (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any information required to be kept confidential pursuant
to this Section 8, CIS agrees to maintain the confidentiality of such
information and to provide prompt notice to Customer, so that Customer may seek
an appropriate protective order or waive compliance by CIS with this Section 8.
If, in the absence of a protective order or the receipt of a waiver by Customer
hereunder, CIS is, nonetheless, in the reasonable written opinion of counsel,
legally required to disclose such information, CIS may disclose such
information, and CIS shall not be liable pursuant to this Section 8; provided,
that (i) CIS shall furnish only that portion of the information which it is
advised by counsel to disclose and (ii) CIS shall exercise its reasonable
efforts to obtain assurance that confidential treatment will be accorded to the
disclosed portion of the information. Moreover, nothing in this Agreement shall
prevent CIS from disclosing confidential information in any proceeding in which
it is in an adversarial position to Customer.
(c) CIS will provide, and Customer agrees to comply with, reasonable
security measures and procedures designed to (i) limit access to the Software
and Customer Data to authorized personnel and (ii) minimize the possibility of
unauthorized access. CIS reserves the right to issue and change security
procedures from time to time with notice to Customer, including passwords and
user identification numbers, which may require acquisition and installation of
additional applications, tools and/or equipment at Customer cost. Customer
shall be responsible for safeguarding and controlling the use of passwords and
user identification numbers assigned by CIS.
(d) During the term of this Agreement and thereafter, Customer shall
keep confidential all information pertaining to the use or operation of the
Software, disclosing such information only to those persons who need to have
such information in order to utilize the Systems. Each party shall immediately
inform the other of any suit or action instituted against it based upon a claim
that the Software or any portion thereof infringes a patent, copyright, trade
secret or other proprietary right of a third party.
(e) The Software may include proprietary and copyrighted data or
programs of third parties. Such data and programs are supplied to Customer
pursuant to express authority of such third parties, subject to (i) the terms
and conditions of the rights granted to CIS and (ii) CIS obtaining required
consents from licensors of Third-Party Software, and may be subject to
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<PAGE>
revocation. In the event of revocation, CIS shall use its reasonable best
efforts to provide software with similar functionality as soon as reasonably
possible, it being understood that if additional cost is incurred, such
additional costs shall be paid by Customer. Neither Customer, Facility, CIS nor
such licensor shall be liable to the other for damages, indirect, consequential
or special, that may result from the use of the Software by Customer or any
employee or agent thereof.
9. Warranties. Subject to the limitations of this section and Section 10
----------
hereof and subject to such limitations as are expressly provided elsewhere in
this Agreement, CIS warrants that the Services provided by it hereunder shall be
performed, in all material respects, in a professional, timely and workmanlike
manner and shall be as described in this Agreement and the exhibits hereto. In
addition, CIS warrants that, to the best of its knowledge, it has the legal
right to license or sublicense to Customer the Software and to perform the
Services. CIS makes no warranties of any kind in connection with the
Communication Lines or services provided by any telephone company. CIS makes no
warranties of any kind with respect to the Equipment. Customer must look solely
to the manufacturer of such Equipment for any warranties relating thereto.
(a) Ownership and Quiet Enjoyment. CIS hereby warrants and represents
-----------------------------
to Customer that CIS owns all right, title and interest in and to the Software,
Documentation and other proprietary material provided under this Agreement, or
otherwise has the right to grant to Customer the license to use same as set
forth in this Agreement without violating or infringing upon any rights of any
third party and without breach of any third-party license to CIS, and to the
knowledge of CIS there is currently no actual or threatened suit by any third
party based on an alleged violation, infringement or breach by CIS. CIS shall
not interfere with use of the Software and the Documentation in accordance with
this Agreement shall not be disturbed or interfered with during the continuation
of the license granted hereunder.
(b) Software Operation. The Software shall perform in accordance with
------------------
the Documentation; provided, however, if a Customer makes an unauthorized
modification to the Software, then this warranty shall terminate.
(c) Performance Standards. Each of CIS's employees, agents or
---------------------
representatives assigned to perform services hereunder shall have the proper
skill, training and background so as to be able to perform in a competent and
professional manner and all work will be so performed in a manner compatible
with Customer's business operations at its premises.
(d) Virus. CIS warrants and represents that the Software provided
-----
under this Agreement, at the time it is supplied, is completely free of any
virus, rouge program, time bomb, turn off instruction, or any other device
however characterized that is potentially damaging to the materials provided,
other programs, data, computer hardware, computer software, telecommunications
equipment or any other material or device in any manner whatsoever.
(e) Alpha/Beta Site. CIS warrants and represents that Customer is not
---------------
an alpha or a beta site for the Software and will not be for any new services
unless the consent of Customer's Chief Information Officer or Chief Executive
Officer is obtained.
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<PAGE>
(f) Regulatory Updates. CIS shall use commercially reasonable efforts
------------------
to develop modifications to the System to comply with changes in United States
federal regulatory requirements. Such federal regulatory modifications will be
developed at no charge so long as Customer is covered under the terms of this
Agreement. At Customer's request, CIS shall use all commercially reasonable
efforts to modify the System to comply with state and local regulatory
modifications on a "Fair Share Basis". As used herein "Fair Share Basis" means
charges will be incurred on a time and material basis with costs divided by the
total number of CIS Customers affected by a given modification).
THE FOREGOING WARRANTIES ARE THE EXCLUSIVE WARRANTIES UNDER THIS AGREEMENT
AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. CUSTOMER EXPRESSLY WAIVES AND SHALL NOT MAKE ANY CLAIM OF
ANY KIND AGAINST CIS ARISING OUT OF THE FAILURE OF PERFORMANCE OF ANY PIECE OF
EQUIPMENT, OF CIS SOFTWARE OR THIRD-PARTY SOFTWARE, OR OF THE COMMUNICATION
LINES, OR OUT OF THE BREACH OF ANY WARRANTY PROVIDED BY THE MANUFACTURER OF SAID
EQUIPMENT OR BY THE TELEPHONE COMPANY. CIS SHALL PASS THROUGH TO CUSTOMER THE
BENEFITS OF ANY EXPRESS WARRANTIES RELATING TO THE EQUIPMENT, AND SHALL ASSIST
CUSTOMER WITH ANY SUCH WARRANTY CLAIMS.
CIS makes no warranty or guaranty, and hereby expressly disclaims all
warranties, expressed or implied, as to the Equipment and/or Systems at the
Facilities being Year 2000 compliant. CIS, however, acknowledges the need for
all Software to be Year 2000 compliant and is currently making efforts in a
professional, timely and workmanlike manner that it deems reasonable to address
the Year 2000 compliance issues with the Software. Addressing specific Year
2000 compliance issues may result in software product replacement, or
termination of the software product, service and support per the provisions of
this Agreement. How to address Year 2000 issues will be determined by CIS in
its sole discretion.
CUSTOMER ACKNOWLEDGES THAT IT IS CUSTOMER'S SOLE OBLIGATION TO ENSURE THAT
ALL EQUIPMENT AND SYSTEMS AT THE FACILITIES USED TO PROCESS CUSTOMER DATA IS
YEAR 2000 COMPLIANT AND THAT TO THE EXTENT ANY ASSISTANCE IS PROVIDED BY CIS TO
OBTAIN YEAR 2000 COMPLIANCE, SUCH SERVICE IS PROVIDED WITHOUT ANY WARRANTY
WHATSOEVER. CUSTOMER AGREES TO RELEASE CIS FROM ANY CLAIMS OR ACTIONS IT MAY
HAVE NOW OR IN THE FUTURE AGAINST CIS RELATING TO YEAR 2000 COMPLIANCE WITH
RESPECT TO SUCH EQUIPMENT OR SYSTEMS OR ANY COMPUTER SOFTWARE OR HARDWARE USED
BY CUSTOMER, AND CUSTOMER AGREES TO DEFEND, INDEMNIFY AND HOLD CIS AND ITS
AFFILIATES HARMLESS FROM ANY CLAIM OR ACTION BASED ON ANY INJURY OR DAMAGES
SUFFERED BY CUSTOMER OR ANY THIRD PARTY AS A RESULT OF ANY COMPUTER SOFTWARE OR
HARDWARE USED BY CUSTOMER NOT BEING YEAR 2000 COMPLIANT. A product is Year 2000
compliant/ready when it can accurately and unambiguously process (including,
without limitation, compare, calculate, manipulate, sequence, display and
exchange data with other systems) data containing time and/or dates prior to, at
and
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<PAGE>
after the Year 2000 without error or interruption, and the product operates
properly and in conformance with applicable specifications, without any
detrimental effect on patient care, continuously, before, at and after the Year
2000.
10. Limitation of Liability.
-----------------------
(a) Neither party shall be liable to the other for any failure or
delay in the performance of its obligations under this Agreement if such failure
or delay arises out of a cause beyond the reasonable control of such party. Such
causes may include, without limitation, acts of God, a public enemy, civil or
military authority, fires or other catastrophes, strikes, delays in
transportation, riots or war. Failure to comply with the terms of this Agreement
or the Hospital Resource Guide may result in serious damage to Customer's
Equipment, Software and Facilities. CIS shall have no liability for damage
resulting from Customer's failure to comply with the terms of this Agreement,
any Hospital Resource Guide or any other instructions provided by CIS to
Customer. Should the Software be made the subject of any claim alleging
infringement of any patent, copyright, trade secret, trademark or other
intellectual property rights of any third person, CIS's sole liability shall be,
at its option, to procure the right to use the Software free of such liability
or to replace or modify the Software to make it non-infringing while maintaining
equivalent functionality. No person providing data or programs in the Software
shall be deemed thereby to be engaging in the practice of medicine or dispensing
medical services.
IN THE EVENT OF DELAYS, ERRORS OR OMISSIONS IN PROCESSING OR IN PROVIDING
OR FAILING TO PROVIDE ANY OTHER SERVICES PROVIDED BY CIS HEREUNDER, CIS SHALL
USE ITS REASONABLE BEST EFFORTS TO CORRECT SUCH ERRORS OR OMISSIONS, TO MAKE
SUCH SERVICES AVAILABLE AND/OR RESUME PERFORMING SUCH SERVICES AS PROMPTLY AS
REASONABLY PRACTICABLE AND AT NO ADDITIONAL CHARGE, PROVIDED THAT NOTICE OF SUCH
ERROR OR OMISSION IS GIVEN WITHIN SEVENTY TWO (72) HOURS AFTER PRODUCTION OF ANY
REPORT. OTHERWISE, CIS SHALL HAVE NO OTHER OBLIGATIONS OR LIABILITY FOR SUCH
ERRORS, DELAYS OR OMISSIONS. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND ARISING OUT OF THE PERFORMANCE OR BREACH OF THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOSS OF DATA OR BUSINESS
INTERRUPTION. FURTHERMORE, EACH PARTY'S LIABILITY TO THE OTHER FOR ANY OTHER
DAMAGES CAUSED BY OR RESULTING FROM THE PERFORMANCE OR BREACH OF THIS AGREEMENT,
WHETHER IN TORT, CONTRACT OR OTHERWISE, SHALL BE LIMITED IN EACH CASE TO $50,000
PER FACILITY AND $100,000 IN THE AGGREGATE, WHICH SUMS SHALL BE APPLIED AS A
CREDIT AGAINST FEES.
(b) Notwithstanding the foregoing, the limitations of liability shall
not apply to (i) the indemnification obligations set forth in this Section 10 or
(ii) breach of the confidentiality provisions set forth in Section 8 hereof.
(c) Customer shall indemnify and hold harmless CIS from and against
any loss, damage or liabilities (including, without limitation, attorneys' fees)
resulting from claims,
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<PAGE>
actions or lawsuits ("Losses") asserted by or on behalf of third parties or
which result from governmental action or are otherwise asserted against CIS only
to the extent that such Losses are determined by a judgment of a court that is
binding, final and not subject to review on appeal to have resulted primarily
from Customer's fraud, willful misconduct, negligence or breach of the
confidentiality provisions set forth in Section 8 hereof. CIS will indemnify and
hold harmless Customer from and against any Losses asserted by or on behalf of
third parties or which result from governmental action or are otherwise asserted
against Customer only to the extent that such Losses are determined by a
judgment of a court that is binding, final and not subject to review on appeal
to have resulted primarily from CIS's fraud, willful misconduct, negligence or
breach of the confidentiality provisions set forth in Section 8 hereof.
11. Term; Termination; Breach.
-------------------------
(a) This Agreement shall become effective as of the Effective Date
and shall continue during the Initial Term, unless earlier terminated pursuant
to the provisions of this Section 11, in which event this Agreement shall
terminate upon the effective date of termination, as described in paragraph (b)
below.
(b) This Agreement, and the Services and Systems provided hereunder,
may be terminated prior to the expiration of the Initial Term only as follows:
(1) with cause (as described in paragraph (c) below), by the
giving of written notice by either party, in which event such
termination shall be effective sixty (60) days after the giving of
such notice; or
(2) in the event either party files a proceeding, or has an
order for relief entered with respect to it, under any federal or
state bankruptcy laws now or hereafter in effect, by the giving of
written notice by the other party, in which event such termination
shall be effective sixty (60) days after the giving of such notice.
(c) In the event of a breach of any obligation or covenant under this
Agreement by Customer or CIS, other than the obligation to pay money (other than
payments disputed by Customer or CIS in good faith), the party not in breach may
give the party in breach written notice of the specifics of the breach and the
party in breach shall have thirty (30) days (the "Cure Period") in which to cure
such breach or cause the breach to be cured. If the breach is not cured, or
waived by the non-breaching party, within the Cure Period, then the non-
breaching party shall be entitled to pursue any remedies it may have by reason
of such breach. The non-breaching party's remedy with respect to any breach
which is not cured or waived within the Cure Period shall include, without
limitation, terminating this Agreement with cause or commencing legal action
against the other party for damages related to such breach. Failure to terminate
this Agreement shall not serve to waive any breach hereof. If either party
commences legal action alleging any breach of this Agreement, the non-prevailing
party shall pay all costs and reasonable attorneys' fees incurred by the
prevailing party in connection therewith.
(d) This Agreement shall automatically renew for successive
additional twelve (12) month terms, unless Customer notifies CIS of its
intention not to renew at least one hundred
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<PAGE>
and eighty (180) days prior to the expiration of the Initial Term or any renewal
term or unless CIS notifies Customer of its intention not to renew at least
twelve (12) months prior to the expiration of the Initial Term or any renewal
term. Such renewals shall be for the fees and prices then in effect for CIS's
services or such other amounts as the parties may negotiate, but in no event
less than the total fees charged by CIS to Customer during the preceding twelve
(12) months. If Customer elects not to continue receiving services, Customer
shall specify in writing within thirty (30) days thereafter, the period of time
Customer estimates will be necessary to complete the de-installation of the
Services and Systems (such period not to extend beyond eighteen (18) months
after the expiration of the Initial Term or the then current term). For purposes
of this Section 11, the period commencing after the expiration of the Initial
Term or any renewal term and ending on the date determined above shall be the
"Wind-Down Period." If Customer fails to specify the Wind-Down Period as
provided herein, the Wind-Down Period shall be eighteen (18) months, unless
otherwise agreed.
(e) During the Wind-Down Period, the parties will establish and
implement a mutually acceptable de-installation plan, having due regard for the
cost and quantity of Services provided by CIS during the Wind-Down Period.
During the Wind-Down Period, the remaining provisions of this Agreement shall
continue in effect, except as follows:
(i) CIS shall not be required to offer any Services or
Systems to Customer beyond those already purchased by Customer at
expiration of the Initial Term or any renewal term;
(ii) During any remaining portion of the Initial Term or
any renewal term, fees shall be charged as stated in this
Agreement, thereafter, all fees and other charges shall be
increased automatically by 25%; and
(iii) During the Wind-Down Period specified by Customer,
Customer shall also pay the greater of its actual monthly fees
incurred or a Minimum Monthly Processing Fees equal to one-
twelfth of seventy-five percent (75%) of the prior year's total
fees.
(f) In the event that this Agreement is terminated by Customer
without cause before the end of the Initial Term, Customer shall pay to CIS a
Termination Fee equal to the first month's total bill under the terms of this
Agreement, multiplied by the number of months remaining in the Initial Term.
(g) Following termination of this Agreement and upon CIS's request,
Customer shall deliver to CIS all Software and related documentation (including
copies thereof) or, at CIS's option, shall deliver to CIS a sworn statement
certifying that all Software and related documentation have been destroyed.
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<PAGE>
12. Miscellaneous
-------------
(a) Assignment. Except as set forth herein, neither this Agreement,
----------
nor any of the rights, licenses or duties set forth herein, may be assigned by
Customer without the prior written consent of CIS. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the parties hereto
and their respective successors and permitted assigns.
(b) Access to Books and Records. Upon written request of the
---------------------------
Secretary of Health and Human Services or the Comptroller General or any of
their duly authorized representatives, CIS shall make available to the
requesting party those contracts, books, documents and records necessary to
verify the nature and extent of the cost of providing its services. CIS shall
cause such materials to be available for inspection for at least four (4) years
after the rendering of such Services and Systems. If CIS carries out any of the
duties of this Agreement with a value of $10,000 or more over a twelve (12)
month period through a subcontract with a related individual organization, CIS
shall include this requirement in all such subcontracts. The parties agree that
any attorney-client, accountant/client or any other legal privilege shall not be
deemed waived by virtue of the provisions of this Section 12.
(c) Taxes. The prices and amounts specified to be payable by Customer
-----
hereunder do not, unless otherwise noted, include any sales, use, excise, value
added, utility or other similar tax or charge which may be or hereafter become
applicable to the Services and Systems provided hereunder. Consequently, in
addition to such prices and amounts, the amount of any such taxes or charges
which may be or hereafter become applicable shall also be payable by Customer to
CIS, except that Customer shall have no responsibility for payment of taxes on
CIS's income or for payment of franchise taxes related to authorization of CIS
to conduct business in any state. In lieu of paying any such taxes that may
otherwise be due, Customer may provide CIS with a tax exemption certificate
acceptable to the taxing authorities. Customer shall be given prompt written
notice of any tax assessment against CIS for which Customer is liable hereunder,
and Customer shall have the right, at its own expense, to contest any such
assessment prior to its payment by CIS. In the event Customer exercises such
right, it shall indemnify and hold harmless CIS from liability for all interest
and penalties relating to such contest. Customer shall control any such contest
and CIS shall provide information and assistance in connection with such contest
to the extent reasonably requested by and at the expense of Customer.
(d) Divestiture of Facility. In the event that, during the term of
-----------------------
this Agreement, Customer divests any Facility receiving any Systems or Services
hereunder, then in such event, such Facility's rights and obligations under this
Agreement may be assigned to the purchaser of such Facility, provided that:
(1) The purchaser assumes in writing the obligations of Customer
hereunder with respect to such Facility; and
(2) No such assignment shall relieve Customer of its obligations
hereunder in respect of such Facility.
(3) In lieu of assigning this Agreement, CIS, Customer and the purchaser
may agree that CIS and the purchaser shall execute a new agreement for the
provision of
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<PAGE>
Services and Systems, at which time this Agreement shall terminate in respect to
such Divested Facility.
(4) Any legal or other expenses reasonably incurred by CIS in
connection with actions taken in relation to Customer's divestiture of a
Facility shall be paid by Customer.
(e) Hiring. During the term of this Agreement neither party shall
------
recruit, hire, offer employment to or refer for employment any of the agents or
employees of the other party, without such party's prior written permission.
(f) Disputes. In the event that a dispute arises between CIS and
--------
Customer which cannot be resolved in the normal course, the following dispute
resolution procedure shall be followed: (i) within ten (10) business days of a
written request by either party, that Facility's chief information officer (or
equivalent) and CIS' Director of Information Services shall meet and resolve the
issue; if these parties cannot resolve the issue within ten (10) business days
of the meeting, then (ii) the issue shall be submitted to Customer's CFO or
designee and CIS' Vice President for Client Services; if these parties cannot
resolve the issue within fifteen (15) business days of submission to them, then
(iii) the issue shall be submitted to Customer's CEO and CIS's President for
resolution. If, after fifteen (15) business days, Customer's CEO and CIS's
President cannot resolve the matter, the parties may seek whatever other
remedies are available.
(g) Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of Tennessee without regard to its
conflict of laws provisions. Any dispute hereunder shall be resolved in the
state or federal courts having jurisdiction located in Nashville, Tennessee. CIS
and Customer each hereby expressly submits and consents in advance the
jurisdiction of the United States District Court for the Middle District of
Tennessee and each hereby waives any objection which it may have based upon lack
of personal jurisdiction, improper venue or forum non conveniens.
13. Notices. All notices or other communications required or permitted
-------
under this Agreement shall be in writing and sufficient if sent by nationally
recognized overnight courier (for next business day delivery), facsimile
transfer device or certified mail, return receipt requested, to CIS or Customer
at the following addresses:
Columbia Information Systems, Inc.
2555 Park Plaza
P. O. Box 270
Nashville, Tennessee 37202
Facsimile: (615) 344-6777
ATTN: Data Center Contract Administrator
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<PAGE>
and
LifePoint Hospitals, Inc.
4525 Harding Road
Nashville, TN 37205
Facsimile: (615) 344-6276
ATTN: Mr. Scott L. Mercy
Chairman and Chief Executive Officer
Any party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
14. Entire Agreement; Amendment. This Agreement, together with the
---------------------------
exhibits hereto, sets forth the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings relating to the
subject matter hereof. No party hereto has relied upon any oral or written
statement, representation, warranty, covenant, condition, understanding or
agreement made by any other party or any representative, agent or employee
thereof, except for those expressly set forth in this Agreement or in the
exhibits or other documents delivered pursuant hereto. This Agreement may be
amended, modified, superseded or supplemented only by an instrument in writing
executed and delivered by CIS and Customer.
15. Headings. The section headings contained in this Agreement are
--------
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
16. Rights Cumulative; Waiver. All rights and remedies conferred under
-------------------------
this Agreement or by any other instrument or law shall be cumulative and may be
exercised singularly or concurrently. The failure by either party to enforce
any term shall not be deemed to be a waiver of future enforcement of that or any
other term of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall be deemed to constitute an original,
but which together shall constitute one and the same instrument.
18. Severability. In the event that any provision hereof is prohibited or
------------
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or unenforceability of such provision in any other
jurisdiction.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Computer and Data
Processing Transition Services Agreement to be executed by their duly authorized
representatives as of the day and date first referenced above.
COLUMBIA INFORMATION SYSTEMS, INC.
By: /s/ Noel Williams
------------------
Name: Noel Williams
Title: President
LIFEPOINT HOSPITALS, INC.
By: /s/ Kenneth C. Donahey
-----------------------
Name: Kenneth C. Donahey
Title: Senior Vice President & CFO
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<PAGE>
EXHIBIT 10.6
AGREEMENT TO SHARE TELECOMMUNICATIONS SERVICES
AGREEMENT TO SHARE TELECOMMUNICATIONS SERVICES, dated as of May 11, 1999,
by and between COLUMBIA INFORMATION SERVICES, INC., a Tennessee corporation
("CIS"), which is a wholly-owned subsidiary of Columbia/HCA Healthcare
Corporation, a Delaware corporation ("Columbia/HCA") and LifePoint Hospitals,
Inc., a Delaware corporation ("LifePoint" or "User").
W I T N E S S E T H:
--------------------
WHEREAS, Columbia/HCA has determined to distribute to its stockholders, on
a pro rata basis, all of the issued and outstanding shares of common stock of
LifePoint owned by Columbia/HCA (the "Distribution"), all as set forth in that
certain Distribution Agreement by and among Columbia/HCA, LifePoint and Triad
Hospitals, Inc., a Delaware corporation ("Triad") dated as of May 11, 1999 (the
"Distribution Agreement"); and
WHEREAS, CIS has entered into an arrangement with AT&T Corp. ("AT&T") under
which CIS purchases Virtual Telecommunications Network Services ("VTNS"), as
that term is defined in Tariff F.C.C. No. 12, as defined below (the "VTNS
Agreement"); and
WHEREAS, under the VTNS Agreement, CIS may designate unaffiliated entities
as authorized users of VTNS on a shared-use basis at the rates and charges set
forth in Tariff F.C.C. No. 12; and
WHEREAS, CIS desires to designate User as an authorized user under the VTNS
Agreement at all of User's locations identified in Exhibit A hereto (the
"Locations"), and User desires to be so designated, all on the terms and
conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, CIS and User agree as
follows:
1. Definitions.
-----------
(a) Unless otherwise defined in this Agreement, all terms used herein shall
have the meanings ascribed to them in Tariff F.C.C. No. 12.
(b) "Tariff F.C.C. No. 12" means the General Regulations and Option 162 of
AT&T's Tariff F.C.C. No. 12. A copy of the current version of Option 162 is
attached hereto as Exhibit B. CIS will make a copy of the General Regulations
available to User on request.
(c) "Annual Commitment" for each Contract Year shall have the meaning set forth
in Section 4(b) below.
<PAGE>
(d) "Contract Year" means a twelve (12) month period during the term of this
Agreement. The first Contract Year will begin immediately following execution of
this Agreement by both parties. Each subsequent Contract Year will begin on the
first day after the end of the prior Contract Year.
(e) "MAC" means the Minimum Annual Charge applicable to CIS's use of VTNS under
Option 162.
(f) The defined terms include the plural as well as the singular. Unless
otherwise expressly stated, the words "herein," "hereof" and "hereunder" and
similar words refer to this Agreement as a whole and not to any particular
section or subsection. The words "include" and "including" shall not be
construed as terms of limitation. The words "day," "month" and "year" mean,
respectively, calendar day, calendar month and calendar year unless otherwise
stated.
2. Initial Order and Management of Relationship.
--------------------------------------------
(a) User hereby orders and CIS hereby agrees to direct AT&T to provide VTNS to
User, at all of the Locations, subject to the terms and conditions of Tariff
F.C.C. No. 12 and this Agreement. User may modify the list of Locations by
providing written notice to the AT&T personnel referred to in Section 2(b) below
and to CIS in accordance with Section 17 below.
(b) Pursuant to the VTNS Agreement, AT&T will provide provisioning, maintenance
and customer care services to User at each Location on the terms and subject to
the conditions of the VTNS Agreement. Within thirty (30) days of the date of
this Agreement, CIS shall provide User with contact information for the AT&T
personnel who will perform such support services for User.
(c) The names of those representatives of User who are authorized to contact
AT&T with respect to VTNS are set forth in Exhibit C hereto. User may modify the
list of such representatives by providing written notice to the AT&T personnel
referred to in Section 2(b) above and to CIS in accordance with Section 17
below. User's representatives are not authorized to place orders, or otherwise
act as agents, for CIS in any matters relating to VTNS.
(d) User acknowledges that AT&T may deny or restrict CIS's and/or User's access
to VTNS in the event that User does not comply with one or more of the
requirements of Tariff F.C.C. No. 12, including, without limitation,
requirements relating to the payment of charges.
(e) User acknowledges that CIS with AT&T may review and revise Option 162, and
that in the event of a revision of Option 162, the rates and provisions in such
revisions will apply.
<PAGE>
3. Billing and Invoices.
--------------------
(a) Rates and Charges.
-----------------
(i) As consideration for CIS's designation of User as an authorized user under
Tariff F.C.C. No. 12, User agrees to pay AT&T for VTNS in accordance with the
rates and charges set forth in (A) Tariff F.C.C. No. 12, as it may be amended by
AT&T from time to time as permitted by law, or (B) in the event that Tariff
F.C.C. No. 12 is withdrawn or canceled, the successor documents governing AT&T's
provision of VTNS to CIS. (ii) User's share of the Basic Charge under Option 162
shall be calculated based upon the Service Elements installed at User's
Locations priced according to the rates set forth in Section 7.164.2.B of Tariff
F.C.C. No. 12. User acknowledges that the net effective rates for VTNS will be
based upon the aggregate monthly usage of VTNS by CIS, its affiliates and other
authorized users. User further acknowledges that, as a result of AT&T's
dependence upon aggregate usage by such parties, certain rates billed to User
may vary from month to month and that AT&T may occasionally assess a charge to
true-up the rates so that they reflect actual usage during any month. User
agrees to pay its share of any such true-up charge.
(b) Discounts, Waivers and Credits.
------------------------------
(i) User shall be entitled to participate in the Domestic Volume Pricing Plan
set forth in Section 7.164.2.G of Tariff F.C.C. No. 12 (subject to User's
acknowledgment in Section 3(a)(ii) above regarding possible fluctuations in the
applicable discount levels) and in the waivers set forth in Section 7.164.2.E, H
and L of Tariff F.C.C. No. 12.
(c) Taxes and Surcharges. User acknowledges that the rates set forth in Tariff
--------------------
F.C.C. No. 12 are exclusive of taxes and surcharges. User agrees to pay all
taxes and surcharges (including presubscribed interchange carrier charges and
universal service fund assessments) billed to User by AT&T pursuant to Tariff
F.C.C. No. 12.
(d) Billing and Payment. User will be billed for its use of VTNS by AT&T each
-------------------
month at the address set forth in Section 17 below (or at such other address as
User may designate pursuant to that section). Such invoices will be in AT&T's
standard format for VTNS billing. User shall pay all charges on each AT&T
invoice within thirty (30) days of User's receipt thereof.
(e) Billing Disputes. User shall attempt in good faith to resolve any billing
----------------
disputes with AT&T promptly and shall attempt in good faith to keep CIS fully
informed of its efforts to resolve such disputes. At CIS's request, User shall
permit CIS to intervene in any such dispute. Such intervention may include, at
CIS's sole discretion, the right to pay some or all of the disputed amounts to
AT&T, in which event User shall reimburse CIS for such amounts in full within
ten (10) days of User's receipt of CIS's written request therefor.
<PAGE>
4. User's Commitment.
-----------------
(a) User agrees that the Locations will use VTNS through this Agreement and the
VTNS Agreement exclusively for all services offered covered by VTNS Option 162
throughout the term of this Agreement.
(b) User's Annual Commitment during each Contract Year (prior to the
application of taxes, fees, surcharges or any one-time credits) shall be
$400,000 and will be based upon the average of the last two months of 1998 for
Users Locations as billed by AT&T, details included in Exhibit D.
(c) In the event that (i) User's Combined Charges for VTNS (as that term is
defined in Option 162) during any Contract Year fall short of its Annual
Commitment for such period, (ii) CIS's Combined Charges also fall short of its
MAC for any annual measurement period under Option 162 that includes a Contract
Year in which such a shortfall hereunder occurs, and (iii) CIS is required to
pay a charge to AT&T as a result of its failure to meet its MAC, then User shall
pay to CIS an amount equal to the difference between User's Annual Commitment
for such period and the actual combined charges paid by User for VTNS (exclusive
of taxes, fees, surcharges or any one-time credits) for such period.
(d) The parties agree that, if User experiences a business downturn or divests
itself of a subsidiary or affiliate, and, 1) AT&T agrees to reduce CIS's MAC as
consequence of such downturn or divestiture by User, then User's Annual
Commitment for the remainder of the term of this Agreement will be reduced by
the same amount as CIS's MAC is reduced; provided, however, that nothing herein
shall be deemed to require CIS to agree to any changes in its arrangements with
AT&T in order to secure AT&T's agreement to reduce the MAC, or 2) if User
divested subsidiary(s) or affiliate(s) executes a similar shared services
agreement with CIS, CIS agrees to reduce, through an amendment, User's Annual
Commitment for the remainder of the term of this agreement, using the most
recently available annual billing for that subsidiary(s) or affiliate(s) to
calculate the reduction in Annual Commitment for the remainder of the term of
this agreement.
5. Access to User Location. User shall provide AT&T with such access to the
-----------------------
Locations as is necessary for AT&T to provide VTNS to User at each such
Location. User may require any AT&T personnel seeking such access to abide by
User's reasonable security requirements at each such Location.
6. Unauthorized Use.
----------------
(a) User shall use its best efforts to prevent any unauthorized use of VTNS by
its employees, affiliates and third parties. In any event, User shall be solely
responsible for and shall indemnify CIS for and hold CIS harmless from all
expenses, charges and costs arising out of any such unauthorized use.
<PAGE>
(b) User shall promptly notify AT&T of any suspected abusive or unauthorized
use of VTNS, including, without limitation, notifying AT&T that a calling card
has been lost, stolen or compromised or is being used fraudulently or without
authorization. User shall require the surrender of a calling card upon the
termination or other departure of any calling card holder or upon the revocation
of calling card holder status. All notifications to AT&T shall be made as
directed by CIS.
(c) User shall make a contact available at each Location seven (7) days a week,
twenty-four (24) hours a day for receipt of notification from AT&T of suspected
unauthorized use of VTNS. User shall notify AT&T in writing of that contact,
including the phone, fax and pager numbers of such contact and may from time to
time designate another person to act as the contact or change a phone, fax or
pager number of a contact, by providing written notice to AT&T.
7. Term. The term of this Agreement shall begin on the date hereof and shall
----
continue through January 9, 2002, unless earlier terminated pursuant to Section
8 of this Agreement, in which event this Agreement shall terminate upon the
effective date of termination, as described in Section 8, or extended by mutual
agreement of the parties. This agreement will automatically renew for
consecutive three-year terms unless notice of non-renewal is provided 12 months
prior to expiration of initial term or renewal term.
8. Default and Termination.
-----------------------
(a) Subject to the notice and cure provisions set out below, User may terminate
this Agreement without liability in the event of a default by either CIS or
AT&T. CIS shall be in default of this Agreement if (i) CIS fails to perform or
comply with or violates any material term, condition or obligation of this
Agreement or (ii) any material representation, warranty or statement made by CIS
in this Agreement shall have been false or misleading in any material respect
when made. User's right to terminate the Agreement under this Section 8(a) shall
apply only on thirty (30) days' advance written notice to CIS and only if CIS
has failed to cure the default within such notice period.
(b) In the event that (i) User terminates this Agreement other than for CIS's
default under Subsection (a), (ii) CIS's Combined Charges fall short of its MAC
for any annual measurement period under Option 162 during which such termination
occurs, and (iii) CIS is required to pay a charge to AT&T as a result of its
failure to meet its MAC, then User shall pay to CIS an amount (which User agrees
is reasonable) equal to the unpaid portion of its remaining Annual Commitment(s)
as of the effective date of termination (the "Early Termination Charge").
(c) Subject to the notice and cure provisions set out below, CIS may terminate
this Agreement without liability and require AT&T to discontinue the VTNS
provided to User in the event of a default by User under this Agreement or the
termination for any reason of the VTNS Agreement between CIS and AT&T. User
shall be in default of this Agreement if (i) User fails to perform or comply
with or violates any material term, condition or obligation of this Agreement;
(ii) any material representation, warranty or statement made by User in this
Agreement shall have been false or misleading in any material respect when made;
(iii) User's
<PAGE>
payment of any AT&T invoice is past due (in whole or in part); or (iv) AT&T
asserts that CIS is in breach of the VTNS Agreement because of an act or
omission of User in connection with User's receipt or use of VTNS. CIS's rights
to terminate pursuant to clauses (i), (ii) and (iii) above shall apply only on
thirty (30) days' advance written notice and only if User has failed to cure the
default within such notice period; provided, however, that in the event of a
default under clause (iii) above, only two notices shall be required during the
term of this Agreement and following two occurrences of an event of default
described in clause (iii) and the giving of notices in each of those instances,
it shall thereafter be an event of default immediately upon occurrence of the
event described in clause (iii) above and no notice or cure period shall apply.
The notice and cure period applicable to any default under clause (iv) above
shall be as specified in Tariff F.C.C. No. 12, and any cure by User must be
satisfactory to AT&T. In the event that CIS terminates this Agreement as a
result of User's default as described in clause (i), (ii), (iii) or (iv) of the
preceding sentence, User shall pay CIS the Early Termination Charge.
9. Limitation of Liability.
-----------------------
(a) User agrees that CIS's sole responsibility under this Agreement is to
require AT&T to bill User in accordance with the terms and conditions of this
Agreement for VTNS, which services will be provided to User by AT&T and not by
CIS. User acknowledges that CIS has no responsibility to User and agrees that
CIS shall not be in default of this Agreement if AT&T ceases to provide VTNS to
User or if AT&T provides VTNS in a manner that is not acceptable to User.
(b) User further agrees that CIS shall have no liability whatsoever for delayed
installation or repair of VTNS or for interruptions in VTNS. Notwithstanding the
foregoing, CIS will instruct AT&T to apply to User's invoices any delay or
interruption credits to which CIS is entitled under Option 162 for delays,
service outages or other problems experienced by User at User's installation
sites.
(c) CIS shall not be liable for any lost profits or incidental, special or
consequential damages, or any other similar damages arising out of any claim of
breach of this Agreement. User agrees that in no event shall CIS's liability
under this Agreement exceed an amount equal to one (1) month's payments by User
for VTNS, based upon the average of the monthly payments made by User for VTNS
during the six (6) months preceding the month in which the event that gave rise
to such claim of breach occurred.
10. Acknowledgments, Representations and Warrants.
---------------------------------------------
(a) Each of CIS and User represents and warrants that it has the requisite
authority to enter into this Agreement.
(b) Each of CIS and User represents and warrants that it is in compliance with
and will, for the duration of this Agreement, continue to comply with all
foreign and domestic laws, statutes, ordinances, rules, regulations and orders
applicable and material to the sharing and use of VTNS.
<PAGE>
(c) User acknowledges that its execution of this Agreement in no way affects
any obligations that User may have to AT&T under any other contracts, and User
represents and warrants that it will fulfill its contractual obligations (if
any) to AT&T under any such other contracts.
11. Disclaimer of Warranties. EXCEPT AS SET FORTH HEREIN, THERE ARE NO
------------------------
WARRANTIES, ORAL OR WRITTEN, EXPRESS OR IMPLIED, WITH RESPECT TO ANY GOODS OR
SERVICES PROVIDED HEREUNDER, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
12. Confidentiality Obligations.
---------------------------
(a) During the term of this Agreement and for a period of three (3) years from
the date of the expiration or termination of the VTNS Agreement (including all
extensions thereto), each party agrees to maintain in strict confidence all
Confidential Information (as defined below) of the other party, including,
without limitation, preventing the disclosure of such Confidential Information
to any competitor of the other party (known to be such after reasonable
inquiry). No party shall, without obtaining the prior written consent of the
other party hereto, use such other party's Confidential Information for any
purpose other than for performance of its duties and obligations under this
Agreement and the provision of other services to such party. User agrees to
protect any Confidential Information of AT&T to which it may gain access in the
course of receiving VTNS under this Agreement.
(b) For purposes of this Section 12, "Confidential Information" means all
nonpublic information (i) with respect to the business, service or equipment of
CIS, AT&T, or any third party that may be doing business with either CIS or
AT&T, that may be obtained by User from any source in the course of receiving
VTNS under this Agreement ("CIS Confidential Information") and (ii) with respect
to the business, service or equipment of User, or any third party that may be
doing business with User, that may be obtained by CIS in connection with
directing AT&T to provide VTNS to User under this Agreement ("User Confidential
Information"). The terms of this Agreement and discussions, negotiations and
proposals related directly thereto shall be both CIS Confidential Information
and User Confidential Information.
(c) "Confidential Information" shall not include information that (i) is
already known by the receiving party at the time it is obtained by such party,
free from any obligation to keep such information confidential, (ii) is or
becomes publicly known through no wrongful act of the receiving party, (iii) is
rightfully received by the receiving party from a third party without
restriction and without breach of this Agreement or (iv) is independently
developed by the receiving party without using any Confidential Information of
the other party.
(d) The parties agree that, upon the request of a party having proprietary
rights to Confidential Information, the party in possession of such information
shall promptly return it (including any copies, extracts, descriptions and
summaries thereof) to the requesting party or, with the requesting party's prior
written consent, shall promptly destroy it (and any copies,
<PAGE>
extracts, descriptions and summaries thereof) and shall further provide the
requesting party with written certification of same.
13. Indemnification.
---------------
(a) User shall indemnify, defend and hold harmless CIS against, and shall
promptly reimburse CIS from and against, any and all Losses (as defined below)
associated with any of the following:
(i) a claim or action against CIS, AT&T or any director, officer, employee or
assignee of either CIS or AT&T for the actual or alleged infringement of any
patent, copyright, trademark, trade secret or similar intellectual property
right that arises from (A) User's unauthorized modification or use of VTNS; (B)
User's combination or use of VTNS with services, software or equipment where
AT&T did not provide, authorize, require or direct such combination or use or
where AT&T did not certify the compatibility of such service, equipment or
software with VTNS; (C) the reproduction, distribution or transmission of User-
supplied information or other content, except to the extent that the Loss arises
from negligence on the part of AT&T or CIS or (D) AT&T's compliance with User's
specifications, designs or instructions unless AT&T knew that such compliance
could result in a claim or action. CIS and User shall give each other prompt
written notice of any such claim;
(ii) (A) any material inaccuracy in any representation or warranty of User
contained in this Agreement; (B) any damage to tangible real or tangible
personal property (including damage to the property of CIS or User) or the
environment or (C) any injury to or death of any person (including, without
limitation, injury to or death of CIS's or User's respective subcontractors or
employees) associated with the services provided pursuant to this Agreement; and
(iii) any claim or action against CIS for breach of the VTNS Agreement or Tariff
F.C.C. No. 12.
(b) For purposes of this Section 13, "Losses" means all liabilities (including
royalties and license fees), losses, damages, costs and expenses (including,
without limitation, reasonable attorneys' fees and related expenses) arising or
resulting from any of the events set forth in Section 13(a) above to the extent
that such Loss was proximately caused by any act or omission by User, its
affiliate, agent, employee or subcontractor in connection with the use of VTNS.
14. Advertising and Publicity. User shall not make public reference to the
-------------------------
existence or terms of this Agreement without the prior written approval of CIS.
This prohibition includes use of CIS's name, trademarks, service marks, logos or
any other reference to CIS, directly or indirectly, in any advertising, sales
presentation, news release, release to any professional or trade publication or
for any other purpose.
<PAGE>
15. Detariffing. If, during the term of this Agreement, AT&T cancels or
-----------
withdraws any portion of Tariff F.C.C. No. 12 applicable to AT&T's provision of
VTNS to CIS as authorized or required by any statute, rule, regulation or order
of a governmental body of competent jurisdiction, then all references herein to
Tariff F.C.C. No. 12 shall mean the successor document or documents governing
the provision of VTNS to CIS.
16. Governing Law. This Agreement shall be deemed to be made in and in all
-------------
respects shall be interpreted, construed and governed by and in accordance with
the law of the State of Tennessee without regard to the conflict of law
principles thereof.
17. Notices. All notices or other communications required or permitted under
-------
this Agreement shall be in writing and sufficient if sent by nationally
recognized overnight courier (for next business day delivery), facsimile
transfer device or certified mail, return receipt requested, to the following
addresses
if to CIS, to:
Columbia Information Systems, Inc.
2555 Park Plaza
P. O. Box 270
Nashville, TN 37203
Phone: (615) 344-9551
ATTN: Vice President - IT Operations
& Communications
if to User, to:
LifePoint Hospitals, Inc.
4525 Harding Road
Nashville, TN 37205
Facsimile: (615) 344-6276
ATTN: Mr. Scott L. Mercy
Chairman & Chief Executive Officer
in each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
Any party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
18. Entire Agreement; Amendment. This Agreement, together with the exhibits
---------------------------
hereto, sets forth the entire agreement and understanding of the parties hereto
in respect of the matters
<PAGE>
addressed herein, and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof. No party hereto has relied
upon any oral or written statement, representation, warranty, covenant,
condition, understanding or agreement made by any other party or any
representative, agent or employee thereof, except for those expressly set forth
in this Agreement or in the exhibits or other documents delivered pursuant
hereto. This Agreement may be amended, modified, superseded or supplemented only
by an instrument in writing executed and delivered by CIS and User. Nothing
herein is intended to diminish any of the rights or obligations of either party
pursuant to the Distribution Agreement or pursuant to any of the Ancillary
Agreements (as defined in the Distribution Agreement).
19. Consent to Jurisdiction. CIS and User each hereby expressly (a) submits
------------------------
and consents in advance to the jurisdiction of any Tennessee State Court sitting
in Nashville, Tennessee or the United States District Court for the Middle
District of Tennessee with respect to any actions or proceedings arising out of
or relating to this Agreement, (b) waives any objection which it may have based
upon lack of personal jurisdiction, improper venue or forum non conveniens, (c)
agrees that all claims with respect to such actions or proceedings may be heard
and determined in any Tennessee State Court sitting in Nashville, Tennessee or
the United States District Court for the Middle District of Tennessee, (d)
agrees not to commence any action or proceeding relating to this Agreement other
than in a Tennessee State Court sitting in Nashville, Tennessee or the United
States District Court for the Middle District of Tennessee and (e) agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
20. Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
--------------------
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 20.
21. Headings. The section headings contained in this Agreement are inserted
--------
for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
22. Rights Cumulative; Waiver. All rights and remedies conferred under this
-------------------------
Agreement or by any other instrument or law shall be cumulative and may be
exercised singularly or
<PAGE>
concurrently. The failure by either party to enforce any term shall not be
deemed to be a waiver of future enforcement of that or any other term of this
Agreement.
23. Counterparts. This Agreement may be executed in any number of separate
------------
counterparts, each of which shall be deemed to constitute an original, but which
together shall constitute one and the same instrument.
24. Severability. In the event that any provision hereof is prohibited or
------------
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or unenforceability of such provision in any other
jurisdiction.
25. Assignment. Neither this Agreement nor any of the rights, licenses, or
----------
duties set forth herein, of User hereunder may be assigned by User without the
prior written consent of CIS. This Agreement shall be binding upon, insure to
the benefit of, and be enforceable by the parties hereto and their respective
successors and permitted assigns.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to Share
Telecommunications Services to be executed by their duly authorized
representatives as of the day and date first referenced above.
COLUMBIA INFORMATION SYSTEMS, INC.
By: /s/ Noel Williams
--------------------
Name: Noel Williams
Title: President
LIFEPOINT HOSPITALS, INC.
By: /s/ Kenneth C. Donahey
-------------------------
Name: Kenneth C. Donahey
Title: Senior Vice President & CFO
<PAGE>
EXHIBIT 10.7
YEAR 2000
PROFESSIONAL SERVICES AGREEMENT
This Professional Services Agreement (the "Agreement") is made and entered into
as of the 11th day of May, 1999 (the "Effective Date"), by and between CHCA
Management Services, L.P. a Delaware corporation with its principal place of
business located at One Park Plaza, Nashville, Tennessee, 37203 ("Provider"),
and Lifepoint Hospitals Holdings Inc., a Delaware corporation having its
principal place of business at 4525 Harding Road, Nashville, TN 37205
("Customer").
WHEREAS, Customer, prior to the date of this Agreement was owned by an affiliate
of Columbia/HCA Healthcare Corporation ("C/HCA"), parent corporation of
Provider;
WHEREAS, on May 11, 1999 Customer was spun-off from C/HCA as a separate legal
entity not owned or controlled by C/HCA;
WHEREAS, prior to the date hereof, Provider furnished certain year 2000
professional services related to "non-information technology" and "non-
information infrastructure technology subject matter" areas for C/HCA affiliated
healthcare provider entities, including those that are now owned by Customer;
WHEREAS, to assist it in the development and implementation of its own Y2K
Program, Customer desires to have Provider to continue to perform such year 2000
services on its behalf on the terms more fully set forth below, with Customer
obtaining year 2000 services for information technology and information
technology infrastructure subject matters pursuant to its Computer and Data
Processing Services Agreement with Columbia Information Systems, Inc., an
affiliate of Provider, dated May 11, 1999.
NOW, THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Definitions
-----------
1.1. "Y2K Services" shall be defined to mean the same services as those
year 2000 professional services that Provider provides to healthcare
provider entities owned or controlled by C/HCA or its affiliates,
including, but not limited to, the providing of year 2000 compliance
information, advice, guidance and recommendations (including the Y2K
Hotlines) concerning medical equipment, facility and physical plant
equipment year 2000, suppliers and service providers, A/R vendors and
payors and, related subjects. Y2K services shall also include payors,
organizational and training information on implementing a year 2000 program
at a facility level, contingency planning relating to potential failures
due
-1-
<PAGE>
to year 2000 compliance inadequacies, and other year 2000 related
information and instructions provided by Provider. Y2K Services shall not
include travel to any office or facility of Customer.
1.2. "Y2K Information" shall be defined to mean any data, specifications,
recommendations, communications instructions, and other information
provided by Provider to Customer as a result of performing Y2K Services or
Supplemental Y2K Services.
1.3. "Supplemental Y2K Services" shall be defined to mean those specific
year 2000 services Provider agrees to perform for Customer in a separate
work order which are over and above Y2K Services.
1.4. "Services" shall mean Y2K Services and/or Supplemental Y2K Services,
as the context requires.
1.5. "Year 2000" or "Y2K" as used herein refers to the proper processing of
date sensitive data and information containing prior to, at and for a
reasonable period of time after January 1, 2000.
1.6. "Y2K Program" shall be defined as Customer's internal program for
addressing Year 2000 issues with respect to its equipment and systems.
1.7. "Y2K A/R Vendor and Payor Track" shall be defined as the Y2K program
related to Accounts Receivable Vendors and Payors.
2. Professional Services.
----------------------
2.1 Provider agrees to provide Y2K Services to Customer during the term of
this Agreement for the fees listed in Section 5, for Customer and the
facilities owned or controlled by Customer as of the date of this
Agreement. Any additional facilities acquired by Customer shall be eligible
to receive Y2K Services hereunder upon written approval of Provider and
subject to the additional fees of paragraph 5.1.
2.2 Upon request from Customer from time to time, Provider may provide to
Customer Supplemental Y2K Services if specifically agreed to by the
parties. Supplemental Y2K Services may include (if agreed to by
Provider),project planning, data processing, software evaluation, software
installation, computer programming, training and/or similar professional
services relating to Year 2000 issues. Supplemental Y2K Services shall be
provided at the discretion of Provider under the terms, conditions and fees
set forth in this Agreement, and any schedule or exhibit hereto, and
pursuant to any work order executed hereunder which has been signed by Don
Workman or his successor or superior, with respect to any Y2K Services
other than those related to A/R Vendors and Payor Track services; with
respect to A/R Vendor and Payor Track related Y2K Services Work Orders,
such shall be required to be signed by Lisa Cobb or her successor or
superior.
2.3 Staffing for Provider's furnishing of Services shall be determined in
Provider's sole discretion. Provider may engage other subcontractors, or
discontinue the use of any subcontractor, in its reasonable discretion, for
the performance of Services.
-2-
<PAGE>
2.4 Customer shall reimburse Provider for its direct out-of-pocket
expenses specifically incurred in connection with Provider's performance of
Y2K Services and Supplement Y2K Services to Customer hereunder, including
without limitation consultant fees, long-distance toll charges, overnight
courier charges, fax charges, legal expenses and postage. If Provider (or
its agents, consultants or subcontractors) travels to Customer's site to
perform Services, then Customer shall reimburse Provider for Provider's
reasonable and necessary travel expenses (including air, travel, rental car
reimbursement, mileage, meals, and hotel).
2.5 The Supplemental Y2K Services furnished by Provider will be limited to
those specifically described in any work order hereunder and will include
only Year 2000 services regarding computer hardware, software issues,
medical equipment, or other services related to that listed in the
definition of Y2K Services. No representative, agent, employee, consultant
or subcontractor of Provider shall be authorized to commit Provider to
provide services outside the scope of those Services described herein and
in any Work Order hereunder, unless approved in writing by Don Workman or
his successor or superior , with respect to any Y2K Services other than
those related to A/R Vendors and Payor Track services; with respect to A/R
Vendor and Payor Track related Y2K Services Work Orders, such shall be
required to be signed by Lisa Cobb or her successor or superior.
2.6 Responsibility for achieving the objectives of the Customer's Y2K
Program will at all times remain with Customer. The sole basis upon which
Provider is willing to undertake the provision of the Services under this
Agreement is the express understanding and agreement that the risk of
adverse consequences in connection with Customer's Year 2000 Program and
date processing issues (including liability, noncompliance, "contamination"
after implementation of recommended solutions, failure of Customer's Year
2000 program in any respect, and untimely completion) is and will remain at
all times with Customer and will not shift to Provider in whole or in any
part by reason of Provider's entering into this Agreement or performance of
the Services under this Agreement or any Work Order.
2.7 In providing Services, Provider will be entitled to rely, without
audit, review or verification, on representations and other information
from OEMs and other vendors concerning the Year 2000 and other date
handling characteristics of their equipment, hardware, software, devices,
parts, and services, and their compliance/non-compliance or manner of
compliance/non-compliance with date processing requirements and standards.
Provider will not be responsible for the failure of any software, hardware,
peripherals or parts furnished by any such vendors to perform as required
by Customer.
2.8 Customer's executive management shall be responsible for determining
the proper use of the Y2K Information, and the overall direction of the Y2K
Supplemental Services, determining whether the Services to be performed
will satisfy Customer's needs, providing active sponsorship of Y2K Program
throughout the Customer's organization, properly staffing its Y2K Program,
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establishing priorities as may be necessary and consistent with the
Services and evaluating the findings resulting from performance of the
Services.
2.9 Provider and Provider's vendors or subcontractors (with respect to
proprietary property provided by such vendors or subcontractors) will have
and retain all right, title and interest, including ownership of
copyrights, patents, trade secrets and other intellectual property rights
in and to all tools, methodologies or other intellectual property
(including intellectual property embodied in software) that is supplied or
used by Provider or such third parties in the performance of the Services,
including any enhancements, improvements or other derivative works thereof
developed in the course of Provider's or its subcontractors' performance
under this Agreement. Provider and any of its subcontractors retain the
right to use their knowledge, experience, and know-how, including
processes, ideas, concepts and techniques developed in the course of
performing the Services hereunder, internally and in the course of
providing consulting services to other clients.
3. Limitations of Liability.
------------------------
3.1 Provider shall have no liability for the Services and Y2K Information
provided hereunder, including, but not limited to, consequential,
incidental, indirect, direct, punitive or special damages (including loss
of profits, loss or reconstruction of data, loss of business opportunities,
business or goodwill), regardless of whether such liability is based on
breach of contract, tort, strict liability, breach of warranties, failure
of essential purpose or otherwise, and even if advised of the likelihood of
such damages.
3.2 Provider's total liability to Customer for any claim, regardless of
whether such liability is based on breach of contract (such as non-
performance of Services), tort (such as negligence), strict liability,
breach of warranties, failure of essential purpose or otherwise, under this
Agreement or with respect to the Services, shall be limited to the total
amount of fees paid pursuant to paragraph 5.1.
4. Confidentiality.
----------------
4.1 "Confidential Information" is defined to include the identity of
patients, the content of medical records, financial and tax information,
information regarding Medicare, Medicaid, and any other claims submission
and reimbursements, the object and source codes and documentation for
proprietary software, Year 2000 compliance information (including that in
Provider's Knowledgebase System), and such other information to be
disclosed by either party that is confidential or proprietary business
information and delivered or disclosed pursuant to this Agreement.
4.2 The party receiving the Confidential Information (the "Receiving
Party") from the party who owns or holds in confidence such Confidential
Information
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<PAGE>
(the "Owning Party") may only use the Confidential Information (the "Owing
Party") may only use the Confidential Information solely for the purpose of
performing its obligations or enforcing its rights under this Agreement, or
utilizing the information for remediating its equipment and systems.
4.3 Each party shall take appropriate action, by instruction to or
agreement with its employees, agents and subcontractors, to identify,
label, and otherwise maintain the confidentiality of the Confidential
Information. Either party may disclose any Confidential Information on an
as-needed basis to its non-employee fiduciaries, including without
limitation attorneys, accountants, auditors, controlling persons, officers,
directors or trustees, without Provider's prior consent. The Receiving
Party shall promptly notify the Owning Party in the event that the
Receiving Party learns of unauthorized release of Confidential Information.
4.4 The Receiving Party shall have no obligation with respect to:
(a) Confidential Information made available to the general
public without restriction by the Owning Party or by an
authorized third party;
(b) Confidential Information rightfully known to the
Receiving Party independently of disclosure by the Owning Party
prior to this Agreement or under this Agreement;
(c) Confidential Information independently developed by the
Receiving Party; or
(d) Confidential Information that the Receiving Party may
be required to disclose pursuant to subpoena or other lawful
process; provided, however, that the Receiving Party notifies the
Owning Party in a timely manner to allow the Owning Party to
appear and protect its interests.
4.5 Upon the termination or expiration of this Agreement, each party shall
(i) immediately cease to use the other party's Confidential Information,
(ii) return to the other party such Confidential Information and all copies
thereof within ten (10) days of the termination, and (iii) upon request,
certify in writing to the other party that it has complied with its
obligations set forth in this Section 4, unless otherwise provided in this
Agreement.
4.6 Each party agrees to provide reasonable assistance and cooperation
upon the reasonable request of the other party in connection with any
litigation against third parties to protect the requesting party's
Confidential Information, provided that the party seeking such assistance
and cooperation shall reimburse the other party for its reasonable out-of-
pocket expenses.
5. Fees and Compensation.
----------------------
5.1 As compensation for providing Y2K Services, Customer agrees to pay
Provider fees of $20,205 per month for Y2K Services other than A/R Vendor
and Payor Track Services, plus $2,300 per month for A/R Vendor and Payor
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Track Services, from the Effective Date of this Agreement through December
31, 1999. The fee for the month of May, 1999 shall be prorated based on
the actual Effective Date of this Agreement. For the balance of the term
of this Agreement after December 31, 1999, the total monthly fees shall be
two percent (2%) of the amounts Provider estimates as its total costs for
providing Y2K Services to Columbia/HCA affiliated facilities, LifePoint
affiliated facilities and LifePoint affiliated facilities. If Customer
sells or divests any affiliated hospitals, or acquires any new hospitals,
which Provider agrees to add to this Agreement, upon receipt of written
notice of such by Provider, the fees stated in this paragraph shall be
reduced or increased on a prorata hospital to hospital basis (e.g., if the
number of hospitals is originally 10 and 2 hospitals are sold, then the
fees shall be reduced 20%).
5.2 Provider shall invoice Customer monthly, in arrears, for Services
rendered and expenses incurred under this Agreement. Customer shall submit
payment to Provider within thirty (30) days of the date of each invoice
from Provider. Customer will pay to Provider amounts equal to any taxes,
however designated or levied, based upon the charges payable by Customer
hereunder, or upon this Agreement or the Services or materials provided
hereunder, or their use, including state and local sales, use, privilege or
excise taxes, and any taxes paid or payable by Provider in respect of the
foregoing, but excluding any taxes based on the income of Provider.
Provider shall have the right to assess a fee equal to the lesser of 1.8%
per month or the maximum permitted by law or any amounts more than 30 days
past due.
5.3 Without prejudice to Provider's right to terminate this Agreement for
breach or any other rights and remedies, Provider shall have the right to
cease performing Services and/or terminate this Agreement if Customer's
failure to pay any amounts owed to Provider hereunder extends beyond a
period of 30 days; provided, however, that following such 30 day period,
Provider shall give at least 10 days' prior written notice to Customer of
its intent to cease performing the Services starting on the date specified
in said notice. Customer shall have the right to cure such defaults by
paying all amounts owed prior to the end of such ten day period. In the
event of termination of this Agreement for any reason, the Customer shall
pay Provider all accrued fees payable to Provider in accordance with this
Agreement for any and all Services rendered, and all expenses related
thereto, up to the effective date of the termination.
6. Warranties/Disclaimers
----------------------
6.1 The parties acknowledge that there may be certain inadequacies and
deficiencies in Customer's equipment, assets, hardware, software and
systems, with respect to Year 2000 and other date processing requirements,
which may have the potential to cause adverse consequences to Customer in
the form of business losses, claims, damages or liability to third parties.
Provider is willing to provide the requested assistance described in this
Agreement only if the risk of adverse consequences relating to or arising
out of Year 2000 and other date
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<PAGE>
processing requirements remains at all times with Customer, and will not
shift to Provider in whole or in any part by reason of Provider's entering
into this Agreement or performance of services under this Agreement.
Therefore, except as may be otherwise expressly specified in this
Agreement, Customer has agreed that Provider will disclaim any and all
warranties with respect to the Services provided under this Agreement, that
Provider's liabilities under this Agreement will be limited, as provided
hereunder, and that Provider will be indemnified by Customer for any loss
or liability arising out of this Agreement or the Services provided.
6.2 PROVIDER DISCLAIMS ALL WARRANTIES AND MAKES NO REPRESENTATIONS OF ANY
KIND OR NATURE WITH RESPECT TO THE SERVICES OR ANY OBLIGATION, LIABILITY,
PERFORMANCE, NONPERFORMANCE, OR ANY OTHER MATTER IN CONNECTION WITH THIS
AGREEMENT, WHETHER EXPRESSED OR IMPLIED, AND EXPRESSLY DISCLAIMS ANY
IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY,
NON-INFRINGEMENT, TITLE OR OTHERWISE. PROVIDER DOES NOT WARRANT OR
REPRESENT THAT ITS PERFORMANCE OF SERVICES HEREUNDER WILL BE ERROR-FREE,
FREE OF UNINTENDED CONSEQUENCES, TIMELY, OR FULLY COMPREHENSIVE. PROVIDER
WILL NOT BE RESPONSIBLE FOR ANY ERRORS, DEFECTS, OR DELAYS IN THE SERVICES
OR THE UNTIMELY PERFORMANCE THEREOF.
6.3 The parties acknowledge and agree that the disclaimers of warranties,
the limitations of liability, and the indemnities provided for herein
represent the agreed and bargained for understanding of the parties, and
that Provider's compensation hereunder reflects such allocations of risk.
Customer specifically acknowledges and agrees that Provider would not be
willing to enter into this Agreement or undertake the provision of the
Services described in this Agreement in the absence of such provisions.
6.4 All statements and information provided by Provider hereunder,
including Y2K Information, is hereby designated as a "YEAR 2000 READINESS
DISCLOSURE" under the Year 2000 Information and Readiness Disclosure Act
(Public Law 105-271).
7. Books, Records, and Compliance.
-------------------------------
7.1 Pursuant to the requirements of 42 CFR 420.300 et seq., Provider
agrees to make available to the Secretary of Health and Human Services
("HHS"), the Comptroller General of the Government Accounting Office
("GAO") or their authorized representatives, all contracts, books,
documents and records relating to the nature and extent of costs hereunder
for a period of four (4) years after the furnishing of services hereunder
for any and all services furnished under this Agreement. In addition,
Provider hereby agrees to require by contract that each subcontractor make
available to the HHS and GAO, or their authorized
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<PAGE>
representative, all contracts, books, documents and records relating to the
nature and extent of the costs thereunder for a period of four (4) years
after the furnishing of services thereunder.
7.2 Provider agrees to comply at all times with the regulations issued by
the Department of Health and Human Services, published at 42 CFR 1001, and
which relate to Provider's obligation to report and disclose discounts,
rebates and other reductions to Customer for products purchased by Customer
under this Agreement.
7.3 If Provider carries out the duties of this Agreement through a
subcontract worth $10,000 or more over a twelve month period with a related
organization, the subcontract will also contain a clause substantially
identical to the Sections 7.1 and 7.2 to permit access by the Secretary,
the United States Comptroller General and their representatives to the
related organization's book and records.
7.4 Customer's rights under this Section 7 shall survive for a period of
four (4) years after termination or expiration of this Agreement.
8. Customer Additional Responsibilities.
-------------------------------------
8.1 During the term of this Agreement, Customer agrees to do the following
at no charge to Provider:
(a) provide to Provider, unrestricted rights and licenses
to all the Customer's applications and, if necessary and to the
extent possible, sublicenses under third party licenses that are
necessary or desirable to permit Provider to provide the Services
as contemplated herein;
(b) provide Provider with all data, information, access to
the Customer's facilities (or make other arrangements as
necessary to such effect) and other resources and support as may
be appropriate to enable Provider to perform the Services in a
timely manner and otherwise fully cooperate with Provider in
connection therewith;
(c) timely participate in meetings and make its personnel
readily available for such meetings;
(d) assign personnel with relevant training and experience
to work as part of a project team with Provider or in
consultation with Provider's personnel, at corporate, facility,
and other appropriate levels within Customer.
9. Assignment. Customer shall not, directly or indirectly, by assignment or
-----------
change of control or otherwise, transfer this Agreement or any of its rights or
obligations hereunder without the prior written consent of the Provider, which
consent can be withheld at the sole discretion of Provider. This Agreement
shall inure to the benefit of and bind permitted successors and assigns of
Provider and Customer. Any assignment
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<PAGE>
that is not in accordance with that stated in this Paragraph shall be void and
have no effect.
10. Indemnification.
----------------
10.1 Customer shall indemnify and hold harmless Provider and its
affiliates, directors, officers, employees, attorneys, predecessors,
successors, agents and assigns (collectively, the "Indemnitee") from and
against any and all claims, demands, obligations, losses, liabilities,
judgments, awards and costs (including legal fees and expenses) arising
out of or related to any claim for loss, breach of contract, personal
injury, bodily injury, property damage or other claims for relief, whether
know or unknown, including any damages finally awarded attributable to
such claim and any reasonable expense incurred by Indemnitee in assisting
Customer in defending against such claim, that arises out of or is related
to this Agreement, Provider's furnishing of Services under this Agreement
or the Year 2000 Information . In the event Customer elects not to defend
any such claim, then Indemnitee shall have the option but not the duty to
reasonably defend or settle the claim and Customer shall indemnify
Indemnitee for such settlement or any damages finally awarded against
Indemnitee attributable to such claim, reasonable costs and expenses
(including attorneys' fees), and interest on such recoverable funds
advanced.
10.2 Customer shall indemnify, defend and hold harmless Provider from and
against all claims (from all causes of action of any kind, including
contract, tort or otherwise) related to or arising out of this Agreement
or the Services provided hereunder, and any losses, liabilities, damages
and expenses that are incurred as a result of any such claims.
11. Work Environment. When Provider's employees or agents are physically
-----------------
assigned to work on Customer's premises (which will only occur upon mutual
agreement of the Parties), Customer shall provide (free of charge) to Provider's
employees and/or agents a work environment suit for performance of Services,
including space and environment that is not less favorable than the work
environment provided to Customer's employees, including reasonable work space,
furniture, supplies and equipment, to enable Provider to perform its obligations
under this Agreement and any work order executed hereunder.
12. Insurance. As of the Effective Date of this Agreement, Customer shall have
----------
in force the following coverage with limits of liability of $10 million for each
and every occurrence:
. Healthcare Professional Liability
. Comprehensive General Liability
Customer will keep all such policies in effect (during the term of this
Agreement and for six (6) years thereafter) with at least such limit of
liability for covered claims arising out of events, errors, omission , or other
covered items which took place during the term of
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<PAGE>
this Agreement, at the expense of Customer. Customer will use its best efforts
to notify Provider in writing within five (5) days of Customer's receipt of any
notice of cancellation of, or any material change in, the policy. Customer will
cause Provider to be named as additional insureds under each such policy with
respect to the Services. Customer waives all rights of recovery against Provider
and its employees for property damage, bodily injury, personal injury and/or
other damages allegedly caused by Provider's performance of services hereunder
or otherwise, to the extent covered by Customer's insurance. All such coverage
must be maintained with an insurer reasonably acceptable to Provider. To the
extent Customer is required to maintain uninterrupted insurance as set forth
herein for covered claims arising out of events, errors, omissions, or other
covered prior acts endorsement, or an unlimited reporting endorsement when
applicable, upon request by Provider, Customer will provide Provider with
certificates of insurance or other adequate proof of such coverage and the
satisfaction of all requirements of this Section, and, upon request, Customer
agrees to furnish Provider with updated certificates of insurance upon the
renewal of such coverages.
13. Termination and Survival.
-------------------------
13.1 The term of this Agreement commences on the Effective Date and
continues through June 30, 2000. The term may be extended upon written
agreement of both parties, with signature by Don Workman, his successor or
superior required to bind Provider.
13.2 This Agreement may be terminated by either party upon the other
party's failure to cure a material breach of this Agreement, within thirty
(30) days of receipt of written notice describing the nature of the
alleged material breach. Termination for non-payment shall be pursuant to
paragraph 2.6.
13.3 Either party may terminate without cause upon 45 days prior written
notice.
13.4 Any provision of this Agreement related to confidentiality, publicity
and indemnification or which by its terms provides for survival shall
survive the termination of this Agreement.
14. Notice. All notice required or permitted under this Agreement shall be in
-------
writing and delivered via fax (with answer-back confirmation), overnight or
express mail or certified mail (return receipt requested), or in person to the
other Party at its address set forth below, or to such other address as either
Party may designate subsequently in writing.
If to Provider:
CHCA Management Services, L.P.
One Park Plaza
Nashville, TN 37203
Attention: VP, Operations Support
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<PAGE>
With a copy to:
CHCA Management Services, L.P.
Legal Department
One Park Plaza
Nashville, TN 37203
Attention: General Counsel
If to Customer:
LifePoint Hospitals Holdings, Inc.
13455 Noel Road
Dallas, TX 75240
Attention:
With a copy to:
LifePoint Hospitals Holdings, Inc.
13455 Noel Road
Dallas, TX
Attention: General Counsel
15. Governing Law. This Agreement shall be governed by and construed in all
--------------
respects in accordance with the laws of the State of Tennessee without regard to
that state's choice of law provisions. Any dispute hereunder shall be resolved
in the state or federal courts having jurisdiction located in Nashville,
Tennessee.
16. Severability. All agreements, clauses and covenants contained herein are
-------------
severable, and in the event any of them shall be held to be unconstitutional,
invalid, illegal, or unenforceable, the remainder of this Agreement shall be
interpreted as if such unconstitutional, invalid, illegal or unenforceable
agreements, clauses or covenants, were not contained herein. IT IS EXPRESSLY
UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF THIS AGREEMENT THAT
PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES OR EXCLUSION OF
DAMAGES IS INTENDED BY THE PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER
PROVISION AND TO BE ENFORCED AS SUCH. FURTHER, IT IS EXPRESSLY UNDERSTOOD AND
AGREED THAT IN THE EVENT THAT ANY REMEDY HEREUNDER IS DETERMINED TO HAVE FAILED
OF ITS ESSENTIAL PURPOSE, ALL LIMITATIONS OF LIABILITY AND EXCLUSIONS OF DAMAGES
SET FORTH HEREIN SHALL REMAIN IN EFFECT.
17. Waiver; Modification. The failure by either party to exercise any right
---------------------
provided hereunder shall not be deemed a waiver of such right. This Agreement
may be amended,
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<PAGE>
modified or supplemented only by a writing signed by the parties to this
Agreement, by Don Workman, his successor or superior required to bind Provider.
Such amendments, modifications or supplements shall be deemed as much a part of
this Agreement as if so incorporated herein.
18. Integration. The parties hereto acknowledge that they have read this
------------
Agreement in its entirety and understand and agree to be bound by all of its
terms and conditions, and further agree that this Agreement and any Work Order
executed hereunder and any exhibits or schedules hereto or thereto constitute a
complete and exclusive statement of the understanding between the parties with
respect to delivery of Services by Provider, which supersede any and all other
communications between the parties relating to the Services, whether written or
oral. Any prior agreements, promises, negotiations or representations related to
the delivery of the Services by Provider not expressly set forth in this
Agreement or in a Work Order executed hereunder, are of no force and effect.
19. Independent Contractor. Provider, in performance of this Agreement, is
-----------------------
acting as an independent contractor and shall have the exclusive control of the
manner and means of performing the work contracted for hereunder. Personnel
supplied by Provider hereunder, whether or not located on Customer's premises,
are not Customer's employees or agents. Nothing contained in this Agreement
shall be construed to create a joint venture or partnership between the parties.
20. Force Majeure. Neither party hereto shall be liable for any failure or
--------------
delay in performance of its obligations hereunder by reason of any event or
circumstance beyond its reasonable control, including without limitation acts of
God, war, riot, strike, labor disturbance, fire, explosion, flood, utility
outages, or shortage or failure of suppliers
21. Alternative Dispute Resolution; Attorneys fees. In the event of a dispute
-----------------------------------------------
between the parties that cannot be resolved between them, the parties shall
submit their dispute to non-binding mediation prior to initiating litigation.
Each party shall bear their own costs and expenses of participating in the
mediation (including without limitation, attorneys' fees) and each party shall
bear one-half (1/2) of the costs and expenses of the mediator. The matters
discussed or revealed in the mediation session shall not be revealed in any
subsequent litigation, except as expressly provided in this Section. In the
event the matter is not resolved in the mediation, suit may be brought. In
addition to recovering any damages or other relief awarded by the court, the
prevailing party may recover attorneys' fees, provided, however, any award of
attorneys' fees shall be limited as follows: (a) the award shall not exceed the
amount of monetary damages awarded to the prevailing party by the court, and (b)
no award shall be made if, within 30 days following the filing of an answer to a
complaint, the party made an offer to settle the dispute and the amount of
monetary damages awarded in the court proceeding was less than or equal to the
settlement offer. Nothing in this Section shall be deemed to limit a party's
access to the court system to pursue a remedy which is limited to injunctive
relief.
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<PAGE>
22. No Third Party Rights. This Agreement is entered solely by and between,
----------------------
and may be enforced only by, Provider, Customer, and their permitted assigns.
This Agreement shall not be deemed to create any rights in third parties,
including, without limitation, suppliers, customers, patients and affiliates of
either party, including without limitation Customer and its affiliates, or to
create any obligations of a party to any such third parties.
23. Counterparts. This Agreement may be executed in one or more counterparts,
-------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same document. In making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart
executed by the party against whom enforcement of this Agreement is sought.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their authorized representatives as of the date first set forth above.
CHCA Management Services, L.P. LifePoint Hospitals Holdings, Inc.
By its General Partner,
CMS GP, LLC
By: /s/ Ronald Lee Grubbs, Jr. By: /s/ William F. Carpenter III
----------------------------- ------------------------------
Name: Ronald Lee Grubbs, Jr. Name: William F. Carpenter III
Title: Manager Title: Senior Vice President,
General Counsel & Secretary
Date: May 11, 1999 Date: May 11, 1999
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<PAGE>
EXHIBIT 10.8
SUBLEASE AGREEMENT
THIS SUBLEASE is made as of the 11th day of May, 1999 by and between
HEALTHTRUST, INC. - THE HOSPITAL COMPANY, a Delaware corporation ("Sublessor"),
and LIFEPOINT HOSPITALS, INC., a Delaware corporation ("Sublessee"), under the
following circumstances:
A. Pursuant to a certain Lease Agreement, dated December 20, 1996
(the "Prime Lease"), a copy of which is attached hereto as Exhibit A,
Institutional Real Estate Fund II, a California limited partnership ("Prime
Lessor") has leased to Sublessor the premises described therein (the
"Premises").
B. Sublessee desires to lease a portion of the premises leased under
the Prime Lease from Sublessor and Sublessor desires to lease the same to
Sublessee, on the terms and conditions set forth in this Sublease, and
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties hereinafter set forth and other good and valuable consideration,
receipt of which is hereby acknowledged by the parties, Sublessor and Sublessee
hereby agree as follows:
1. Subleased Premises. Sublessor hereby subleases to the Sublessee a
------------------
portion of the premises described in the Prime Lease (hereinafter the "Subleased
Premises") consisting of approximately 20,297.06 rentable square feet of space
located at 4525 Harding Road, Nashville, Tennessee in Building B, Suite B-300
and a portion of Suite B-103, more particularly described on Exhibit A attached
hereto and by reference incorporated herein.
2. Term. The term of this Sublease shall commence on May 11, 1999
----
and terminate on February 28, 2002 (the "Term"). Sublessor and Sublessee shall
each have the right to terminate this Sublease by notice to the other party
specifying the termination date which must not be earlier than six (6) months
from the date of such notice.
3. Rent. Sublessee shall pay to Sublessor rent for the Subleased
----
Premises equal to all rent payable by Sublessor under the Prime Lease (excluding
rent payable pursuant to Rider No. 2 of the Prime Lease) multiplied by a
fraction with the numerator being the number of rentable square feet in the
Subleased Premises and the denominator being the total number of rentable square
feet of the Premises under the Prime Lease (excluding space leased pursuant to
Rider No. 2 of the Prime Lease) ("Sublessee's Share"). Sublessee's Share of base
rent payable to Sublessor shall be the monthly sum of $31,291.30 payable in
advance on the first day of each month, commencing with the first payment on
_____________, 1999 and continuing on the first day of each calendar month
thereafter until September 1, 1999, on which date such monthly sum shall be
increased to $32,982.72 and such sum shall be payable to Sublessor on the first
day of each calendar month thereafter without demand so long as this Sublease
remains in effect. The rent due for any fractional month during the term of this
Sublease shall be prorated based on the number of days in such month. Sublessee
shall pay as additional rent Sublessee's Share of operating expenses and any
other payment of rent or other payments required to be made by Sublessor under
the terms of the Prime Lease. Additionally, Sublessee agrees to pay to Sublessor
an amount equal to Sublessee's Share of Sublessor's total expenses for security
<PAGE>
services incurred with respect to the Premises under the Prime Lease. The
initial monthly payment for security services shall be $2,841.59. Such sum shall
be payable on the due date of the first monthly installment of rent payable to
Sublessor under this Sublease and security expenses for fractional months shall
be prorated. Upon any change in the cost of security services, Sublessor shall
notify Sublessee of such change and Sublessee shall pay Sublessee's Share of
such revised amount from the date of change in the cost of such services and
Sublessee shall pay to Sublessor the revised monthly amount for security
services. All sums payable by Sublessee to Sublessor pursuant to this Paragraph
3 are hereinafter referred to as "rent."
4. Assignment/Further Subletting. Sublessee shall not, either
-----------------------------
voluntarily or by operation of law, directly or indirectly sell, hypothecate,
assign or transfer this Sublease, in whole or in part, or further sublet all or
any part of the Subleased Premises, or permit the Subleased Premises to be
occupied by any other person, without the prior written consent of Sublessor and
Prime Lessor in each instance.
Notwithstanding the provisions of the first paragraph of this
Paragraph 4, after first obtaining the prior written consent of Prime Lessor,
Sublessee may assign or sublet the Subleased Premises, or any portion thereof,
without Sublessor's consent, to any corporation which controls, is controlled
by, or is under common control with Sublessee or to any corporation resulting
from the merger or consolidation with Sublessee, or to any person or entity
which acquires all the assets of Sublessee as a going concern of the business
that is being conducted on the Subleased Premises, provided that before such
assignment or sublease shall be effective, (i) said assignee or sublessee shall
assume, in full, the obligations of Sublessee under this Sublease, and (ii)
Sublessor shall be given written notice of such assignment and assumption. Any
such assignment or subletting shall not, in any way, affect or limit the
liability of Sublessee under the terms of this Sublease even if after such
assignment or subletting the terms of this Sublease are materially changed or
altered without the consent of Sublessee, the consent of whom shall not be
necessary.
Any sale, assignment, mortgage, transfer or subletting of this
Sublease, which is not in compliance with the provisions of this Paragraph 4
shall be void and at the option of Sublessor, Sublessor may terminate this
Sublease. Each such permitted assignment, transfer or further subletting of the
Subleased Premises, shall be subject and subordinate to the Prime Lease and this
Sublease and each such assignee or sublessee shall be bound to perform, observe
and comply with all of the covenants, agreements and terms and conditions of
this Sublease, all of which shall be specifically assumed in writing by such
assignee or sublessee. Upon the consummation of any such transfer, assignment or
sublease, Sublessee shall deliver to Sublessor promptly thereafter, a copy of
the fully executed assignment, sublease or other instrument of transfer. The
consent of Sublessor or Prime Lessor to any one assignment or sublease shall not
relieve Sublessee or its assignee or subtenants from obtaining the prior written
consent of Prime Lessor and Sublessor to any further assignment or subletting
and shall not release Sublessee from any liability or obligation hereunder,
whether or not then accrued.
5. Prime Lease. Sublessor represents that a true and complete copy
-----------
of the Prime Lease, as amended, supplemented and modified, is attached hereto as
Exhibit B and Sublessee acknowledges receipt thereof. Sublessor represents and
warrants that the Prime Lease is in full force and effect and Sublessor has no
knowledge of any defaults under the Prime Lease.
2
<PAGE>
This Sublease is subject and subordinate to the Prime Lease, all of the terms
and conditions thereof and the performance by Prime Lessor of all of its
obligations thereunder, and to the extent approved by Sublessee, which approval
will not be unreasonably withheld, all amendments and supplements hereafter
entered into. All terms contained in this Sublease shall have the same meanings
and definitions ascribed to them in the Prime Lease, unless any such term is
expressly defined in this Sublease or the context requires otherwise. Sublessee
shall not commit or permit to be committed on the Subleased Premises any act or
omission which violates any term or condition of the Prime Lease. In the event
of the termination of the Sublessor's interest as Sublessee under the Prime
Lease for any reason other than a default by Sublessor under the Prime Lease
which occurs for any reason other than a breach or a default by Sublessee under
this Sublease, then this Sublease shall terminate coincidentally therewith
without any liability of Sublessor to Sublessee. Sublessee shall only have such
rights with respect to the Leased Premises which Sublessor has pursuant to the
Prime Lease. Except as specifically exempted as provided below in this Paragraph
5, Sublessee shall assume, perform and observe all of the obligations of
Sublessor as Lessee under the Prime Lease, to the extent that such terms and
conditions are applicable to the Subleased Premises, including without
limitation thereto payment (or in the case of payment in the first instance by
Sublessor, reimbursement of Sublessor for payment) of Sublessee's Share of all
rent which becomes due under the Prime Lease. Sublessee's performance and
observance of all such obligations shall be effected so that, whenever time
periods are specified in the Prime Lease for Sublessor's compliance as Lessee
thereunder, Sublessee shall have so complied on or prior to such date, unless
otherwise specifically provided herein. Except as otherwise provided in this
Sublease, all of the terms and conditions contained in the Prime Lease, except
for the provisions of 1.2, 1.5, 1.6, 1.7, 1.10, 2.2, 3, 4, 12, 15, Rider No. 1,
and Rider No. 2, are incorporated herein as terms and conditions of this
Sublease (with each reference in the Prime Lease to "Lessor" being deemed to
refer to Sublessor and Prime Lessor, with each reference to "Lessee" therein
being deemed to refer to Sublessee and with each reference to the Premises being
deemed to refer to the Subleased Premises); and all such provisions along with
all of the provisions specifically set forth in this Sublease, shall be the
complete terms and conditions of this Sublease.
If Prime Lessor shall be in default of any of its obligations under
the Prime Lease, Sublessee shall be entitled to all rights and remedies against
Prime Lessor which Sublessor would otherwise be entitled to under the Prime
Lease as a result of such default; subject, however, to the following provisions
and procedures: Insofar as Prime Lessor is or may be obligated to construct or
make any alterations or improvements to the Subleased Premises, to furnish any
services to the Leased Premises, to repair or rebuild the same, to insure the
Subleased Premises, to perform any other act whatsoever with respect to the
Premises or the Subleased Premises or to perform any obligation or satisfy any
condition under the Prime Lease, Sublessee expressly acknowledges that
notwithstanding anything to the contrary provided in this Paragraph 5, Sublessor
does not undertake the performance or observance of such obligations, but is
only obligated to use reasonable efforts to obtain Prime Lessor's performance
for Sublessee's benefit and without obligating itself to institute legal action
or incur any out of pocket expense. If after receipt of written request from
Sublessee, Sublessor fails or refuses to take appropriate action for the
enforcement of Sublessor's rights against Prime Lessor with respect to the
Leased Premises, Sublessee shall have the right to take such action in
Sublessee's own name and for that purpose
3
<PAGE>
and only to such extent, Sublessor's rights under the Prime Lease shall be and
hereby are conferred upon and assigned to Sublessee. Sublessee shall be
subrogated to such rights to the extent that the same shall apply to the
Subleased Premises. If any such action against Prime Lessor in Sublessee's name
shall be barred by reason of lack of privity, nonassignability or otherwise,
Sublessor shall permit Sublessee to take such action in Sublessor's name;
provided, however, that Sublessee shall indemnify, defend and hold Sublessor
harmless from and against all liability, expense, loss or damage which Sublessor
may incur or suffer by reason of any such action, and that copies of all papers,
and notices of all proceedings, shall be given to Sublessor.
6. Late Charges. Sublessee hereby acknowledges that late payment by
------------
Sublessee to Sublessor of Rent and other sums due hereunder will cause Sublessor
to incur costs not contemplated by this Sublease, the exact amount of which will
be extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Sublessor. Accordingly, if any installment of Rent or any other sum due from
Sublessee shall not be received by Sublessor within 10 days after such amount
shall be due, Sublessee shall pay to Sublessor a late charge equal to 3% of such
overdue amount. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Sublessor will incur by reason of late
payment by Sublessee.
7. Defaults and Remedies. The following events of default and
---------------------
remedies shall govern this Sublease:
(a) Defaults. The following events shall constitute a material
--------
default under this Sublease:
(i) The failure by Sublessee to make any payment of rent or
any other payment required to be made by Sublessee hereunder, as and when due,
where such failure shall continue for a period of 10 days after written notice
thereof from Sublessor or Prime Lessor.
(ii) The failure by Sublessee to observe or perform any of
the covenants, conditions or provisions of this Sublease to be observed or
performed by Sublessee other than those described in Section (i) above, where
such failure shall continue for a period of 30 days after written notice thereof
from Sublessor or Prime Lessor, provided that if the cure of such breach shall
reasonably require more than 30 days, then Sublessee shall not be in default if
Sublessee commenced such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.
(iii) The making by Sublessee of any general assignment, or
general arrangement for the benefit of creditors; the filing by or against
Sublessee of a petition to have Sublessee adjudged a bankrupt or a petition for
reorganization or arrangement under any bankruptcy law (unless the petition
filed against Sublessee is dismissed within 90 days); the appointment of a
trustee or receiver to take possession of substantially all of Sublessee's
assets located at the Subleased Premises or of Sublessee's interest in this
Sublease, where possession is not restored to Sublessee within 30 days; or the
attachment, execution or other judicial seizure of substantially all of
Sublessee's assets located at the Subleased Premises or of Sublessee's interest
in this Sublease, where such seizure is not discharged within 60 days.
4
<PAGE>
(b) Remedies. In the event of any such material default,
--------
Sublessor may at any time thereafter, and without limiting Sublessee in the
exercise of any right or remedy which Sublessor may have by reason of such
default:
(i) Terminate Sublessee's right to possession of the
Subleased Premises by any lawful means, in which case this Sublease shall
terminate and Sublessee shall immediately surrender possession of the Subleased
Premises to Sublessor. In which event Sublessor shall be entitled to recover
from Sublessee all damages incurred by Sublessor by reason of Sublessee's
default including, but not limited to, the cost of recovering possession of the
Subleased Premises; expenses of reletting, including renovation and alteration
of the Subleased Premises, reasonable attorney's fees, and any real estate
commissions actually paid; the worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Sublessee proves could
be reasonably avoided; and that portion of any leasing commission paid by
Sublessor applicable to the unexpired term of this Sublease. Unpaid installments
of Rent or other sums shall bear interest from the date due at the "prime rate"
of interest as announced from time to time in the Wall Street Journal plus 2%,
but in no event more than the maximum interest allowed by law (which rate is
hereinafter referred to as the "Interest Rate"). If Sublessee abandons the
Subleased Premises, Sublessor shall have the option of retaking possession of
the Subleased Premises and recovering from Sublessee the amount as specified in
this paragraph.
(ii) Maintain Sublessee's right to possession in which case
this Sublease shall continue in effect whether or not Sublessee shall have
abandoned the Subleased Premises. In such event, Sublessor shall be entitled to
enforce all of Sublessor's rights and remedies under this Sublease, including
the right to recover the rent as it becomes due hereunder.
(iii) Sublessor may remove any or all items of Sublessee's
property from the Subleased Premises and dispose of them in any commercially
reasonable manner, and Sublessee shall pay upon demand to Sublessor the actual
expense of such removal and disposition together with interest at the Interest
Rate, but in no event more than the maximum interest allowed by law, from the
date of payment by Sublessor until repayment by Sublessee.
(iv) Pursue any other remedy now or hereafter available to
Sublessor under the laws or judicial decisions of the State of Tennessee.
8. Notices. Any notice or other communication required or permitted
-------
to be given under this Sublease shall be in writing and shall be deemed to have
been effectively given if delivered personally or if mailed certified mail,
postage prepaid, return receipt requested, or sent by nationally recognized
overnight carrier as follows:
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<PAGE>
If to Sublessor:
Healthtrust, Inc. - The Hospital Company
c/o Columbia/HCA Healthcare Corporation
One Park Plaza
Building 2, 5th Floor
Nashville, TN 37203
If to Sublessee:
LifePoint Hospitals, Inc.
4525 Harding Road
Suite B-300
Nashville, TN 37205
Attn. Neil Hemphill
Any party may change the address to which notices and other
communications are to be directed to it by giving notice of such change to the
other party in the manner provided in this section.
9. Parking. Sublessee shall have the use of 57 parking spaces in
-------
the Office Building Project on an unreserved basis.
10. Headings. The use of headings, captions and numbers in this
--------
Sublease is solely for the convenience of identifying and indexing the various
paragraphs, and shall in no event be considered otherwise in construing or
interpreting any provision of this Sublease.
11. Severability. If any term, covenant, conditions or provision of
------------
this Sublease, or the application thereof to any person or circumstance shall
ever be held to be invalid or unenforceable, then, in each such event, the
remainder of this Sublease or the application of such term, covenant, condition
or provision to any other person or any other circumstances (other than those as
to which it shall be invalid or unenforceable) shall not be thereby affected,
and each term, covenant, condition and provision hereof shall remain valid and
enforceable to the fullest extent provided by law.
12. Entire Agreement. This Sublease (including the Exhibits, the
----------------
Prime Lease and all supplementary agreements provided for herein, if any)
contains the entire agreement of the Sublessor and the Sublessee and no
representations, warranties, inducements, promises or agreements, oral or
otherwise, between the parties not described in this Sublease shall be of any
force or effect.
13. Modifications. This Sublease shall not be modified or amended in
-------------
any respect except by a written agreement executed by the Sublessor and the
Sublessee in the same manner as this Sublease is executed.
6
<PAGE>
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this
instrument as of the day and year first written above.
SUBLESSOR:
HEALTHTRUST, INC. - THE HOSPITAL
COMPANY
By: /s/ Howard Patterson
-----------------------
Title: Vice President
SUBLESSEE:
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Title: Senior Vice President, General Counsel and
Secretary
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EXHIBIT A
DESCRIPTION OF SUBLEASED PREMISES
Approximately 20,297.06 rentable square feet known as B Building, Suite B-300
and a portion of Suite B-103 at 4525 Harding Road, Nashville, Tennessee as more
particularly described on the floor plans attached to this Exhibit A.
<PAGE>
EXHIBIT 10.9
LIFEPOINT HOSPITALS, INC.
1998 LONG-TERM INCENTIVE PLAN
<PAGE>
LIFEPOINT HOSPITALS, INC.
1998 LONG-TERM INCENTIVE PLAN
Table of Contents
<TABLE>
<S> <C>
1. Purpose of the Plan.................................... 1
2. Definitions............................................ 1
(a) Award........................................... 1
(b) Award Agreement................................. 1
(c) Board........................................... 1
(d) Change in Control............................... 1
(e) Code............................................ 1
(f) Columbia/HCA.................................... 1
(g) Committee....................................... 1
(h) Common Stock.................................... 2
(i) Corporation..................................... 2
(j) Date of Grant................................... 2
(k) Dividend Equivalent Award....................... 2
(l) Effective Date.................................. 2
(m) Eligible Person................................. 2
(n) Employee........................................ 2
(o) Fair Market Value............................... 2
(p) Incentive Stock Option.......................... 2
(q) Non-qualified Stock Option...................... 2
(r) Option.......................................... 2
(s) Participant..................................... 3
(t) Phantom Stock Award............................. 3
(u) Plan............................................ 3
(v) Performance Award............................... 3
(w) Restricted Stock Award.......................... 3
(x) Section 162(m).................................. 3
(y) Section 162(m) Award............................ 3
(z) Stock Appreciation Right or SAR................. 3
(aa) Subsidiary 3
3. Shares of Common Stock Subject to the Plan............. 3
3.1. Number of Shares.................................. 3
3.2. Adjustments....................................... 4
4. Administration of the Plan............................. 4
4.1. Committee Members................................. 4
4.2. Discretionary Authority........................... 4
4.3. Changes to Awards................................. 4
5. Eligibility and Awards................................. 5
6. Stock Options.......................................... 5
</TABLE>
i
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<TABLE>
<S> <C>
6.1. Grant of Option................................... 5
6.2. Exercise Price.................................... 5
6.3. Vesting; Term of Option........................... 5
6.4. Option Exercise; Withholding...................... 5
6.5. Limited Transferability of Non-qualified Options.. 6
6.6. Additional Rules for Incentive Stock Options...... 6
(a) Annual Limits................................ 6
(b) Termination of Employment.................... 6
(c) Other Terms and Conditions;
Nontransferability........................... 6
(d) Disqualifying Dispositions................... 7
6.7. Restrictions on Transfer of Stock................. 7
7. Stock Appreciation Rights.............................. 7
7.1. Grant of SARs...................................... 7
7.2. Tandem SARs........................................ 7
7.3. Freestanding SARs.................................. 7
7.4. Payment of SARs.................................... 8
8. Restricted Stock Award............................. 8
8.1. Grant of Restricted Stock Awards................... 8
8.2. Vesting Requirements............................... 8
8.3. Restrictions....................................... 8
8.4. Rights as Shareholder.............................. 9
8.5. Section 83(b) Election............................. 9
9. Performance Awards................................. 9
9.1. Grant of Performance Awards........................ 9
9.2. Payment of Performance Awards...................... 9
9.3. Performance Criteria............................... 9
9.4. Section 162(m) Requirements........................ 10
10. Phantom Stock Award.................................... 10
10.1. Grant of Phantom Stock Awards...................... 10
10.2. Payment of a Phantom Stock Awards.................. 10
11. Dividend Equivalent Award.............................. 11
11.1. Grant of a Dividend Equivalent Awards............... 11
11.2. Payment of Dividend Equivalent Awards............... 11
12. Change in Control...................................... 11
12.1. Effect of Change in Control......................... 11
12.2. Definition of Change in Control..................... 11
13. Award Agreements....................................... 13
13.1. Form of Agreement................................... 13
13.2. Forfeiture Events................................... 13
14. General Provisions..................................... 14
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
14.1. No Assignment or Transfer; Beneficiaries........... 14
14.2. Deferrals of Payment................................ 14
14.3. Rights as Shareholder............................... 14
14.4. Employment or Service............................... 14
14.5. Securities Laws..................................... 14
14.6. Tax Withholding..................................... 14
14.7. Unfunded Plan....................................... 15
14.8. Other Compensation and Benefit Plans................ 15
14.9. Plan Binding on Transferees......................... 15
14.10. Construction and Interpretation..................... 15
14.11. Severability........................................ 15
14.12. Governing Law....................................... 15
15. Effective Date, Termination and Amendment.............. 15
15.1. Establishment of the Plan........................... 15
15.2. Effective Date; Shareholder Approval................ 16
15.3. Termination......................................... 16
15.4. Amendment........................................... 16
Appendix A.................................................. 17
</TABLE>
iii
<PAGE>
LIFEPOINT HOSPITALS, INC.
1998 LONG-TERM INCENTIVE PLAN
1. Purpose of The Plan
The purpose of the LifePoint Hospitals, Inc. 1998 Long-Term Incentive Plan
is to promote the interests of the Corporation and its shareholders by
strengthening the Corporation's ability to attract, motivate, and retain
personnel upon whose judgment, initiative, and efforts the financial success and
growth of the business of the Corporation largely depend, to offer such
personnel additional incentives to put forth maximum efforts for the success of
the business, and to afford them an opportunity to acquire a proprietary
interest in the Corporation through stock ownership and other rights.
2. Definitions
Wherever the following capitalized terms are used in this Plan, they shall
have the meanings specified below:
(a) "Award" means an award of an Option, Restricted Stock Award, Stock
Appreciation Right, Performance Award, Phantom Stock Award or Dividend
Equivalent Award granted under the Plan.
(b) "Award Agreement" means an agreement entered into between the
Corporation and a Participant setting forth the terms and conditions of an
Award granted to a Participant.
(c) "Board" means the Board of Directors of the Corporation; provided,
--------
however, that with regard to any action to be taken prior to the first meeting
- -------
of the Board of Directors of the Corporation, Board shall mean the Board of
Directors of Columbia/HCA.
(d) "Change in Control" shall have the meaning specified in Section 12
hereof.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Columbia/HCA" means the Columbia/HCA Healthcare Corporation, a
Delaware corporation.
(g) "Committee" means the committee appointed to administer the Plan and
shall consist of two or more directors of the Corporation (i) none of whom shall
be officers or employees of the Corporation, and (ii) all of whom, to the extent
deemed necessary or appropriate by the Board, shall satisfy the requirements for
an "outside director" under Section 162(m) and a "non-employee director" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934. The members of
the Committee shall be appointed by and serve at the pleasure of the Board.
Notwithstanding the foregoing, prior to the date Columbia/HCA distributes all of
its shares of the Corporation to the shareholders of Columbia/HCA, Committee
shall mean a committee of two or more Directors of Columbia/HCA appointed to
administer the plan (i) none of whom shall be officers or employees of
Columbia/HCA, and (ii) all of whom, to the extent deemed necessary or
appropriate by the Board of Columbia/HCA, shall satisfy the requirements for an
"outside
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director" under Section 162(m) and a "non-employee director" within the meaning
of Rule 16b-3 of the Securities Exchange Act of 1934. If the applicable Board
shall so direct, designated members of the applicable Committee shall act as a
separate subcommittee, which shall administer the Plan as to all Section 162(m)
Awards. In such event, all references herein to the applicable Committee
relating to Section 162(m) Awards shall be considered to refer only to the
applicable separate subcommittee.
(h) "Common Stock" means the common stock of the Corporation.
(i) "Corporation" means LifePoint Hospitals, Inc., a Delaware corporation.
(j) "Date of Grant" means the date on which an Award under the Plan is
made by the Committee, or such later date as the Committee may specify to be the
effective date of the Award.
(k) "Dividend Equivalent Award" means an Award under Section 11 hereof
entitling the Participant to receive payments with respect to dividends declared
on the Common Stock.
(l) "Effective Date" means the Effective Date of this Plan, as defined in
Section 15.2 hereof.
(m) "Eligible Person" means any person who is an Employee of the
Corporation or any of its Subsidiaries and, in the case of Awards other than
Incentive Stock Options, any consultant or other independent contractor (not
including any non-employee outside director) providing services to the
Corporation or a Subsidiary.
(n) "Employee" means any person who is employed as a common-law employee.
(o) "Fair Market Value" of a share of Common Stock as of a given date
shall mean the closing sales price of the Common Stock on the Nasdaq Stock
Market on the trading day immediately preceding the date as of which the Fair
Market Value is to be determined, or, in the absence of any reported sales of
Shares on such date, on the first preceding date on which any such sale shall
have been reported (in either case, as reported in the Two Star Edition of The
Wall Street Journal). If the Common Stock is not listed on the Nasdaq Stock
Market on the date as of which Fair Market Value is to be determined, the
Committee shall in good faith determine the Fair Market Value in whatever manner
it considers appropriate.
(p) "Incentive Stock Option" means an option to purchase Common Stock that
is intended to qualify as an incentive stock option under section 422 of the
Code and the Treasury Regulations thereunder.
(q) "Non-qualified Stock Option" means an option to purchase Common Stock
that is not an Incentive Stock Option.
(r) "Option" means an Incentive Stock Option or a Non-qualified Stock
Option granted under Section 6 hereof.
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<PAGE>
(s) "Participant" means any Eligible Person who holds an outstanding Award
under the Plan.
(t) "Phantom Stock Award" means an Award under Section 10 hereof entitling
a Participant to a payment at the end of a vesting period of a unit value based
on the Fair Market Value of a share of Common Stock.
(u) "Plan" means the LifePoint Hospitals, Inc. 1998 Long-Term Incentive
Plan as set forth herein, as it may be amended from time to time.
(v) "Performance Award" means an Award under Section 9 hereof entitling a
Participant to a payment based on the Fair Market Value of a share of Common
Stock (a "Performance Share") or based on specified dollar units (a "Performance
Unit") at the end of a performance period, if certain conditions established by
the Committee are satisfied.
(w) "Restricted Stock Award" means an Award under Section 8 hereof
entitling a Participant to shares of Common Stock that are nontransferable and
subject to forfeiture until specific conditions established by the Committee are
satisfied.
(x) "Section 162(m)" means section 162(m) of the Code and the Treasury
Regulations thereunder.
(y) "Section 162(m) Award" means any Award that is intended to qualify for
the performance-based compensation exemption under Section 162(m).
(z) "Stock Appreciation Right" or "SAR" means an Award under Section 7
hereof entitling a Participant to receive an amount, representing the difference
between the base price per share of the right and the Fair Market Value of a
share of Common Stock on the date of exercise.
(aa) "Subsidiary" means an entity (whether or not a corporation) that is
wholly or majority owned or controlled, directly or indirectly, by the
Corporation, or any other affiliate of the Corporation that is so designated,
from time to time, by the Committee; provided, however, that with respect to
-------- -------
Incentive Stock Options, the term "Subsidiary" shall include only
an entity that qualifies under section 424(f) of the Code as a "subsidiary
corporation" with respect to the Corporation.
3. Shares of Common Stock Subject to the Plan
3.1. Number of Shares. Subject to the following provisions of this
----------------
Section 3, the aggregate number of shares of Common Stock that may be issued
pursuant to all Awards under the Plan is 5,425,000 shares of Common Stock. The
shares of Common Stock to be delivered under the Plan will be made available
from authorized but unissued shares of Common Stock or issued shares that have
been reacquired by the Corporation. To the extent that any Award payable in
Common Stock is forfeited, cancelled, returned to the Corporation for failure to
satisfy vesting requirements or upon the occurrence of other forfeiture events,
or otherwise terminates without payment being made thereunder, shares of Common
Stock covered thereby
3
<PAGE>
will no longer be charged against the foregoing maximum share limitations and
may again be made subject to Awards under the Plan pursuant to such limitations.
3.2. Adjustments. If there shall occur any recapitalization,
-----------
reclassification, stock dividend, stock split, reverse stock split, or other
distribution with respect to the shares of Common Stock, or other change in
corporate structure affecting the Common Stock, the Committee may, in the manner
and to the extent that it deems appropriate and equitable to the Participants
and consistent with the terms of this Plan, cause an adjustment to be made in
(i) the maximum number and kind of shares provided in Section 3.1 hereof, (ii)
the maximum number and kind of shares set forth in Sections 6.1, 7.1, 8.1 and
9.4 hereof, (iii) the number and kind of shares of Common Stock, share units, or
other rights subject to then outstanding Awards, (iv) the price for each share
or unit or other right subject to then outstanding Awards, (v) the performance
targets or goals applicable to any outstanding Performance Awards (subject to
such limitations as are considered appropriate for Section 162(m) Awards), or
(vi) any other terms of an Award that are affected by the event. Notwithstanding
the foregoing, in the case of Incentive Stock Options, any such adjustments
shall be made in a manner consistent with the requirements of section 424(a) of
the Code and, to the extent considered advisable by the Committee, in a manner
consistent with the requirements of Section 162(m).
4. Administration of the Plan
4.1. Committee Members. The Plan shall be administered by the
-----------------
Committee. The Committee shall have such powers and authority as may be
necessary or appropriate for the Committee to carry out its functions as
described in the Plan. No member of the Committee shall be liable for any action
or determination made in good faith by the Committee with respect to the Plan or
any Award thereunder.
4.2. Discretionary Authority. Subject to the express limitations of the
-----------------------
Plan, the Committee shall have authority in its discretion to determine the
Eligible Persons to whom, and the time or times at which, Awards may be granted,
the number of shares, units or other rights subject to each Award, the exercise,
base or purchase price of an Award (if any), the time or times at which an Award
will become vested, exercisable or payable, the performance criteria,
performance goals and other conditions of an Award, the duration of the Award,
and all other terms of the Award. The Committee shall also have discretionary
authority to interpret the Plan, to make all factual determinations under the
Plan, and to make all other determinations necessary or advisable for Plan
administration. The Committee may prescribe, amend, and rescind rules and
regulations relating to the Plan. All interpretations, determinations, and
actions by the Committee shall be final, conclusive, and binding upon all
parties.
4.3. Changes to Awards. The Committee shall have the authority to
-----------------
effect, at any time and from time to time, (i) the cancellation of any or all
outstanding Awards and the grant in substitution therefor of new Awards covering
the same or different numbers of shares of Common Stock and having an exercise
or base price which may be the same as or different than the exercise or base
price of the cancelled Awards, or (ii) the amendment of the terms of any and all
outstanding Awards; provided, however, that no such action by the Committee may
adversely impair the rights of a Participant (or any permitted
transferee) under any outstanding Award without the consent of the Participant
(or transferee). The Committee may in its discretion
4
<PAGE>
accelerate the vesting or exercisability of an Award at any time or on the basis
of any specified event.
5. Eligibility and Awards
All Eligible Persons are eligible to be designated by the Committee to
receive an Award under the Plan. The Committee has authority, in its sole
discretion, to determine and designate from time to time those Eligible Persons
who are to be granted Awards, the types of Awards to be granted and the number
of shares or units subject to the Awards that are granted under the Plan. Each
Award will be evidenced by an Award Agreement between the Corporation and the
Participant that shall include such terms and conditions (consistent with the
Plan) as the Committee may determine; provided, however, that failure to issue
-------- -------
an Award Agreement shall not invalidate an Award.
6. Stock Options
6.1. Grant of Option. An Option may be granted to any Eligible Person
---------------
selected by the Committee; provided, however, that only Employees of the
-------- -------
Corporation or a Subsidiary shall be eligible to receive Incentive Stock
Options. Subject to the applicable provisions of section 422 of the Code, each
Option shall be designated, in the discretion of the Committee, as an Incentive
Stock Option or a Non-qualified Stock Option. The maximum number of shares of
Common Stock that may be granted under Options to any Participant during any
calendar year shall be limited to 700,000 shares (subject to adjustment as
provided in Section 3.2 hereof).
6.2. Exercise Price. The exercise price under any Option shall be
--------------
determined by the Committee; provided, however, that the exercise price per
-------- -------
share under an Option shall not be less than 100 percent of the
Fair Market Value per share of the Common Stock on the Date of Grant.
6.3. Vesting; Term of Option. The Committee, in its sole discretion,
-----------------------
shall prescribe the time or times at which, or the conditions upon which, an
Option or portion thereof shall become vested and exercisable, and may
accelerate the exercisability of any Option at any time. The period during which
a vested Option may be exercised shall be ten years from the Date of Grant,
unless a shorter exercise period is specified by the Committee in an Award,
subject to such limitations as may apply under an Award relating to the
termination of a Participant's employment or other service with the Corporation
or any Subsidiary.
6.4. Option Exercise; Withholding. Subject to such terms and conditions
----------------------------
as shall be specified in an Award, an Option may be exercised in whole or in
part at any time during the term thereof by written notice to the Corporation,
together with payment of the aggregate exercise price therefor. Payment of the
exercise price shall be made (i) in cash or by cash equivalent, (ii) at the
discretion of the Committee, in shares of Common Stock acceptable to the
Committee, valued at the Fair Market Value of such shares on the date of
exercise, (iii) at the discretion of the Committee, by a delivery of a notice
that the Participant has placed a market sell order (or similar instruction)
with a broker with respect to shares of Common Stock then issuable upon exercise
of the Option, and that the broker has been directed to pay a sufficient portion
of the net proceeds of the sale to the Corporation in satisfaction of the Option
exercise price (conditioned upon the payment of such net proceeds), (iv) at the
discretion of the Committee, by
5
<PAGE>
a combination of the methods described above, or (v) by such other method as may
be approved by the Committee and set forth in the Award. In addition to and at
the time of payment of the exercise price, the Participant shall pay to the
Corporation the full amount of any and all applicable income tax and employment
tax amounts required to be withheld in connection with such exercise, payable
under such of the methods described above for the payment of the exercise price
of the Options as may be approved by the Committee.
6.5. Limited Transferability of Non-qualified Options. All Options shall be
------------------------------------------------
nontransferable except (i) upon the Participant's death, by the Participant's
will or the laws of descent and distribution or (ii) in the case Non-qualified
Stock Options only, on a case-by-case basis as may be approved by the Committee
in its discretion, in accordance with the terms provided below. An Award
Agreement for a Non-qualified Stock Option may provide that the Participant
shall be permitted to, during his or her lifetime and subject to the prior
approval of the Committee at the time of proposed transfer, transfer all or part
of the Option to the Participant's family member (as defined in the Award
Agreement in a manner consistent with the requirements for the Form S-8
registration statement, if applicable). Any such transfer shall be subject to
the condition that it is made by the Participant for estate planning, tax
planning, donative purposes or pursuant to a domestic relations order, and no
consideration (other than nominal consideration) is received by the Participant
therefor. The transfer of a Non-qualified Stock Option may be subject to such
other terms and conditions as the Committee may in its discretion impose from
time to time, including a condition that the portion of the Option to be
transferred be vested and exercisable by the Participant at the time of the
transfer. Subsequent transfers of an Option shall be prohibited other than by
will or the laws of descent and distribution upon the death of the transferee.
6.6. Additional Rules for Incentive Stock Options.
--------------------------------------------
(a) Annual Limits. No Incentive Stock Option shall be granted to a
-------------
Participant as a result of which the aggregate Fair Market Value (determined as
of the Date of Grant) of the stock with respect to which Incentive Stock Options
are exercisable for the first time in any calendar year under the Plan and any
other stock option plans of the Corporation, any Subsidiary, or any parent
corporation, would exceed the maximum amount permitted under section 422(d) of
the Code. This limitation shall be applied by taking Options into account in the
order in which granted.
(b) Termination of Employment. An Award of an Incentive Stock Option may
-------------------------
provide that such Option may be exercised not later than 3 months following
termination of employment of the Participant with the Corporation and all
Subsidiaries, subject to special rules relating to death and disability, as and
to the extent determined by the Committee to be appropriate with regard to the
requirements of section 422 of the Code and Treasury Regulations thereunder.
(c) Other Terms and Conditions; Nontransferability. Any Incentive Stock
----------------------------------------------
Option granted hereunder shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as are deemed necessary or desirable
by the Committee, which terms, together with the terms of this Plan, shall be
intended and interpreted to cause such Incentive Stock Option to qualify as an
"incentive stock option" under section 422 of the Code. Such terms shall
include, if applicable, limitations on Incentive Stock Options granted to ten-
percent owners of the Corporation. An Award Agreement for an Incentive Stock
Option may provide that such Option
6
<PAGE>
shall be treated as a Non-qualified Stock Option to the extent that certain
requirements applicable to "incentive stock options" under the Code shall not be
satisfied. An Incentive Stock Option shall by its terms be nontransferable
otherwise than by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of a Participant only by such Participant.
(d) Disqualifying Dispositions. If shares of Common Stock acquired by
--------------------------
exercise of an Incentive Stock Option are disposed of within two years following
the Date of Grant or one year following the transfer of such shares to the
Participant upon exercise, the Participant shall, promptly following such
disposition, notify the Corporation in writing of the date and terms of such
disposition and provide such other information regarding the disposition as the
Committee may reasonably require.
6.7. Restrictions on Transfer of Stock. The Committee may, in its sole
---------------------------------
discretion, impose in any Award of an Option restrictions on the transferability
of the shares of Common Stock issued upon exercise of such Option. If any such
restrictions are imposed, the Committee may require the Participant to enter
into an escrow agreement providing that the certificates representing the shares
subject to such transfer restrictions will remain in the physical custody of an
escrow holder until such restrictions are removed or have expired. The Committee
may require that certificates representing the shares subject to such
restrictions bear a legend making appropriate reference to the restrictions
imposed. Subject to any restrictions imposed in accordance with this Section
6.7, the Participant will have all rights of a shareholder with respect to any
such shares acquired upon an Option exercise, including the right to vote the
shares and receive all dividends and other distributions paid or made with
respect thereto.
7. Stock Appreciation Rights
7.1. Grant of SARs. A Stock Appreciation Right granted to a Participant
-------------
is an Award in the form of a right to receive, upon surrender of the right but
without other payment, an amount based on appreciation in the Fair Market Value
of the Common Stock over a base price established for the Award, exercisable at
such time or times and upon conditions as may be approved by the Committee. The
maximum number of shares of Common Stock that may be subject to SARs granted to
any Participant during any calendar year shall be limited to 700,000 shares
(subject to adjustment as provided in Section 3.2 hereof).
7.2. Tandem SARs. A Stock Appreciation Right may be granted in connection
-----------
with an Option, either at the time of grant or at any time thereafter during the
term of the Option. An SAR granted in connection with an Option will entitle the
holder, upon exercise, to surrender such Option or any portion thereof to the
extent unexercised, with respect to the number of shares as to which such SAR is
exercised, and to receive payment of an amount computed as described in Section
7.4 hereof. Such Option will, to the extent and when surrendered, cease to be
exercisable. An SAR granted in connection with an Option hereunder will have a
base price per share equal to the per share exercise price of the Option, will
be exercisable at such time or times, and only to the extent, that a related
Option is exercisable, and will expire no later than the related Option expires.
7.3. Freestanding SARs. A Stock Appreciation Right may be granted without
-----------------
any related Option, and in such case, will be exercisable as determined by the
Committee, but in no event
7
<PAGE>
after 10 years from the Date of Grant. The base price of an SAR granted without
any related Option shall be determined by the Committee in its sole discretion;
provided, however, that the base price per share of any such freestanding SAR
shall not be less than 100 percent of the Fair Market Value of the Common Stock
on the Date of Grant.
7.4. Payment of SARs. An SAR will entitle the holder, upon exercise of
---------------
the SAR, to receive payment of an amount determined by multiplying: (i) the
excess of the Fair Market Value of a share of Common Stock on the date of
exercise of the SAR over the base price of such SAR, by (ii) the number of
shares as to which such SAR is exercised. Payment of the amount determined under
the foregoing may be made, in the discretion of the Committee, in cash, in
shares of Common Stock valued at their Fair Market Value on the date of
exercise, or in a combination of cash and shares of Common Stock.
8. Restricted Stock Award
8.1. Grant of Restricted Stock Awards. Award of Restricted Stock to a
--------------------------------
Participant represents shares of Common Stock that are issued subject to such
restrictions on transfer and other incidents of ownership and such forfeiture
conditions as the Committee may determine. The Committee may, in connection with
any Restricted Stock Award, require the payment of a specified purchase price.
The Committee may grant a Restricted Stock Award that is a Section 162(m) Award
(as described in Section 8.2 below), as well as Restricted Stock Awards that are
not Section 162(m) Awards; provided, however, that the maximum number of shares
-------- -------
of Common Stock that may be subject to a Restricted Stock Award granted to a
Participant during any one calendar year shall be separately limited to 280,000
shares (subject to adjustment as provided in Section 3.2 hereof).
8.2. Vesting Requirements. The restrictions imposed on shares granted
--------------------
under a Restricted Stock Award shall lapse in accordance with the vesting
requirements specified by the Committee in the Award Agreement. Such vesting
requirements may be based on the continued employment of the Participant with
the Corporation or its Subsidiaries for a specified time period or periods,
provided that any such restriction shall not be scheduled to lapse in its
entirety earlier than the first anniversary of the Date of Grant. Such vesting
requirements may also be based on the attainment of specified business goals or
measures established by the Committee in its sole discretion. In the case of any
Restricted Stock Award that is a Section 162(m) Award, any such performance-
based vesting requirements shall be based upon the performance criteria
identified in Section 9.3 below, and the terms of the Award shall otherwise
comply with the Section 162(m) requirements described in Section 9.4 hereof.
8.3. Restrictions. Shares granted under any Restricted Stock Award may not
------------
be transferred, assigned or subject to any encumbrance, pledge, or charge until
all applicable restrictions are removed or have expired, unless otherwise
allowed by the Committee. The Committee may require the Participant to enter
into an escrow agreement providing that the certificates representing the shares
granted or sold under a Restricted Stock Award will remain in the physical
custody of an escrow holder until all restrictions are removed or have expired.
Failure to satisfy any applicable restrictions shall result in the subject
shares of the Restricted Stock Award being forfeited and returned to the
Corporation, with any purchase price paid by the Participant to be refunded,
unless otherwise provided by the Committee. The Committee may
8
<PAGE>
require that certificates representing the shares granted under a Restricted
Stock Award bear a legend making appropriate reference to the restrictions
imposed.
8.4. Rights as Shareholder. Subject to the foregoing provisions of this
---------------------
Section 8 and the applicable Award Agreement, the Participant will have all
rights of a shareholder with respect to the shares granted to him under a
Restricted Stock Award, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto, unless the
Committee determines otherwise at the time the Restricted Stock Award is
granted.
8.5. Section 83(b) Election. The Committee may provide in an Award
----------------------
Agreement that the Restricted Stock Award is conditioned upon the Participant's
refraining from making an election with respect to the Award under section 83(b)
of the Code. Irrespective of whether an Award is so conditioned, if a
Participant makes an election pursuant to section 83(b) of the Code with respect
to a Restricted Stock Award, the Participant shall be required to promptly file
a copy of such election with the Corporation.
9. Performance Awards.
9.1. Grant of Performance Awards. The Committee may grant Performance
---------------------------
Awards under the Plan, which shall be represented by units denominated on the
Date of Grant either in shares of Common Stock (Performance Shares) or in
dollars (Performance Units). The Committee may grant Performance Awards that are
Section 162(m) Awards, as well as Performance Awards that are not Section 162(m)
Awards. At the time a Performance Award is granted, the Committee shall
determine, in its sole discretion, one or more performance periods and
performance goals to be achieved during the applicable performance periods, as
well as such other restrictions and conditions as the Committee deems
appropriate. In the case of Performance Units, the Committee shall also
determine a target unit value or a range of unit values for each Award. No
performance period shall exceed ten years from the Date of Grant. The
performance goals applicable to a Performance Award grant may be subject to such
later revisions as the Committee shall deem appropriate to reflect significant
unforeseen events, such as changes in law, accounting practices or unusual or
nonrecurring items or occurrences. The Committee's authority to make such
adjustments shall be subject to such limitations as the Committee deems
appropriate in the case of a Performance Award that is a Section 162(m) Award.
9.2. Payment of Performance Awards. At the end of the performance period,
-----------------------------
the Committee shall determine the extent to which performance goals have been
attained, or a degree of achievement between minimum and maximum levels, in
order to establish the level of payment to be made, if any, and shall determine
if payment is to be made in the form of cash or shares of Common Stock (valued
at their Fair Market Value at the time of payment) or a combination of cash and
shares of Common Stock. Payments of Performance Awards shall generally be made
as soon as practicable following the end of the performance period.
9.3. Performance Criteria. The performance criteria upon which the payment
--------------------
or vesting of a Performance Award that is a Section 162(m) Award may be based
shall be limited to one or more of the following business measures, which may be
applied with respect to the Corporation, any Subsidiary or any business unit,
and which may be measured on an absolute or relative to
9
<PAGE>
peer-group basis: (i) total shareholder return, (ii) stock price increase, (iii)
return on equity, (iv) return on capital, (v) earnings per share, (vi) EBIT
(earnings before interest and taxes), and (vii) cash flow (including operating
cash flow, free cash flow, discounted cash flow return on investment, and cash
flow in excess of costs of capital). In the case of Performance Awards that are
not Section 162(m) Awards, the Committee shall designate performance criteria
from among the foregoing or such other business criteria as it shall determine
in its sole discretion.
9.4. Section 162(m) Requirements. In the case of a Performance Award that
---------------------------
is a Section 162(m) Award, the Committee shall make all determinations necessary
to establish the terms of the Award within 90 days of the beginning of the
performance period (or such other time period as is required under Section
162(m)), including, without limitation, the designation of the Participant to
whom the Performance Award is to be made, the performance criteria or criterion
applicable to the Award and the performance goals that relate to such criteria,
and the dollar amounts or number of shares of Common Stock payable upon
achieving the applicable performance goals. As and to the extent required by
Section 162(m), the terms of a Performance Award that is a Section 162(m) Award
must state, in terms of an objective formula or standard, the method of
computing the amount of compensation payable under the Award, and must preclude
discretion to increase the amount of compensation payable under the terms of the
Award (but may give the Committee discretion to decrease the amount of
compensation payable). The maximum amount of compensation that may be payable to
a Participant during any one calendar year under a Performance Unit Award shall
be $4.2 million. The maximum number of Common Stock units that may be subject to
a Performance Share Award granted to a Participant during any one calendar year
shall be 280,000 share units (subject to adjustment as provided in Section 3.2
hereof).
10. Phantom Stock Award
10.1. Grant of Phantom Stock Awards. A Phantom Stock Award is an
-----------------------------
Award to a Participant of a number of hypothetical share units with respect to
shares of Common Stock, with an initial value based on the Fair Market Value of
the Common Stock on the Date of Grant. A Phantom Stock Award shall be subject to
such restrictions and conditions as the Committee shall determine. On the Date
of Grant, the Committee shall determine, in its sole discretion, the installment
or other vesting period of the Phantom Stock Award and the maximum value of the
Phantom Stock Award, if any. No vesting period shall exceed 10 years from the
Date of Grant. A Phantom Stock Award may be granted, at the discretion of the
Committee, together with a Dividend Equivalent Award covering the same number of
shares.
10.2. Payment of a Phantom Stock Awards. Upon the vesting date or dates
---------------------------------
applicable to the Phantom Stock Award granted to a Participant, an amount equal
to the Fair Market Value of one share of Common Stock upon such vesting dates
(subject to any applicable maximum value) shall be paid with respect to each
Phantom Stock Award unit granted to the Participant. Payment may be made, at the
discretion of the Committee, in cash or in shares of Common Stock valued at
their Fair Market Value on the applicable vesting dates, or in a combination
thereof.
10
<PAGE>
11. Dividend Equivalent Award
11.1. Grant of a Dividend Equivalent Awards. A Dividend Equivalent Award
-------------------------------------
granted to a Participant is an Award in the form of a right to receive cash
payments determined by reference to dividends declared on the Common Stock from
time to time during the term of the Award, which shall not exceed 10 years from
the Date of Grant. Dividend Equivalent Awards may be granted on a stand-alone
basis or in tandem with other Awards. Dividend Equivalent Awards granted on a
tandem basis shall expire at the time the underlying Award is exercised or
otherwise becomes payable to the Participant, or expires.
11.2. Payment of Dividend Equivalent Awards. Dividend Equivalent Awards
-------------------------------------
shall be payable in cash or in shares of Common Stock, valued at their Fair
Market Value on either the date the related dividends are declared or the date
the Dividend Equivalent Awards are paid to a Participant, as determined by the
Committee. Dividend Equivalent Awards shall be payable to a Participant as soon
as practicable following the time dividends are declared and paid with respect
to the Common Stock, or at such later date as the Committee shall specify in the
Award Agreement. Dividend Equivalent Awards granted with respect to Options
intended to qualify as a Section 162(m) Award shall be payable regardless of
whether the Option is exercised.
12. Change in Control
12.1. Effect of Change in Control. The Committee may, in an Award
---------------------------
Agreement, provide for the effect of a Change in Control on an Award. Such
provisions may include any one or more of the following: (i) the acceleration or
extension of time periods for purposes of exercising, vesting in, or realizing
gain from any Award, (ii) the elimination or modification of performance or
other conditions related to the payment or other rights under an Award, (iii)
provision for the cash settlement of an Award for an equivalent cash value, as
determined by the Committee, or (iv) such other modification or adjustment to an
Award as the Committee deems appropriate to maintain and protect the rights and
interests of Participants upon or following a Change in Control.
12.2. Definition of Change in Control. For purposes hereof, a "Change in
-------------------------------
Control" shall be deemed to have occurred upon the occurrence of any of the
following after the date on which the Corporation becomes a publicly-held
Corporation:
(i) An acquisition (other than directly from the Corporation) of
any voting securities of the Corporation (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 1934 Act) 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) the Corporation or (B)
any corporation or other Person of which a majority of the voting power or
the equity
11
<PAGE>
securities or equity interests is owned directly or indirectly by the
Corporation (a "Control Subsidiary"), or (ii) the Corporation or any
Control Subsidiary.
(ii) The individuals who, as of the date the Corporation issues any
class of equity securities required to be registered under Section 12 of
the 1934 Act, 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 the
-------
Corporation'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
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 1934 Act) 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 the Corporation to effect a transaction described in clause
(i) or (iii) of this Section 12.2; or
(iii) Consummation, after approval by stockholders of the
Corporation, of:
(1) A merger, consolidation or reorganization involving the
Corporation, unless,
(A) The stockholders of the Corporation, 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;
(B) The individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board
of directors of the Surviving Corporation; and
(C) No Person (other than the Corporation, any Control
Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by the Corporation, the
Surviving Corporation or any Control 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
12
<PAGE>
outstanding Voting Securities) has Beneficial Ownership of
twenty percent (20%) or more of the combined voting power
of the Surviving Corporation's then outstanding Voting
Securities.
(2) A complete liquidation or dissolution of the Corporation;
or
(3) The sale or other disposition of all or substantially all
of the assets of the Corporation to any Person (other than
a transfer to a Control 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 the Corporation which, by
reducing the number of Voting Securities outstanding, increased the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Corporation, and after
such share acquisition by the Corporation, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
13. Award Agreements
13.1. Form of Agreement. Each Award under this Plan shall be
-----------------
evidenced by an Award Agreement in a form approved by the Committee setting
forth the number of shares of Common Stock, units or other rights (as
applicable) subject to the Award, the exercise, base, or purchase price (if any)
of the Award, the time or times at which an Award will become vested,
exercisable or payable, the duration of the Award, and in the case of
Performance Awards, the applicable performance criteria and goals. The Award
Agreement shall also set forth other material terms and conditions applicable to
the Award as determined by the Committee consistent with the limitations of this
Plan. Award Agreements evidencing Awards that are Section 162(m) Awards shall
contain such terms and conditions as may be necessary to meet the applicable
requirements of Section 162(m). Award Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of section 422 of the Code.
13.2. Forfeiture Events. The Committee may specify in an Award that
-----------------
the Participant's rights, payments and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events shall include, but
shall not be limited to, termination of employment for cause, violation of
material Corporation or Subsidiary policies, breach of noncompetition,
confidentiality or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the
business or reputation of the Corporation or any Subsidiary.
13
<PAGE>
14. General Provisions
14.1. No Assignment or Transfer; Beneficiaries. Except as provided
----------------------------------------
in Section 6.5 hereof, Awards under the Plan shall not be assignable or
transferable, except by will or by the laws of descent and distribution, and
during the lifetime of a Participant, the Award shall be exercised only by such
Participant or by his guardian or legal representative. Notwithstanding the
foregoing, the Committee may provide in the terms of an Award Agreement that the
Participant shall have the right to designate a beneficiary or beneficiaries who
shall be entitled to any rights, payments or other specified under an Award
following the Participant's death.
14.2. Deferrals of Payment. Notwithstanding any other provisions of
--------------------
the Plan, the Committee may permit a Participant to defer the receipt of payment
of cash or delivery of shares of Common Stock that would otherwise be due to the
Participant by virtue of the exercise of a right or the satisfaction of vesting
or other conditions with respect to an Award. If any such deferral is to be
permitted by the Committee, the Committee shall establish the rules and
procedures relating to such deferral, including, without limitation, the period
of time in advance of payment when an election to defer may be made, the time
period of the deferral and the events that would result in payment of the
deferred amount, the interest or other earnings attributable to the deferral and
the method of funding, if any, attributable to the deferred amount.
14.3. Rights as Shareholder. A Participant shall have no rights as a
---------------------
holder of Common Stock with respect to any unissued securities covered by an
Award until the date the Participant becomes the holder of record of such
securities. Except as provided in Section 3.2 hereof, no adjustment or other
provision shall be made for dividends or other shareholder rights, except to the
extent that the Award Agreement is a Dividend Equivalent Award, or otherwise
provides for dividend payments or similar economic benefits.
14.4. Employment or Service. Nothing in the Plan, in the grant of
---------------------
any Award or in any Award Agreement shall confer upon any Eligible Person the
right to continue in the capacity in which he is employed by, or otherwise
serves, the Corporation or any Subsidiary.
14.5. Securities Laws. No shares of Common Stock will be issued or
---------------
transferred pursuant to an Award unless and until all then applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any stock
exchanges upon which the Common Stock may be listed, have been fully met. As a
condition precedent to the issuance of shares pursuant to the grant or exercise
of an Award, the Corporation may require the Participant to take any reasonable
action to meet such requirements. The Committee may impose such conditions on
any shares of Common Stock issuable under the Plan as it may deem advisable,
including, without limitation, restrictions under the Securities Act of 1933, as
amended, under the requirements of any stock exchange upon which such shares of
the same class are then listed, and under any blue sky or other securities laws
applicable to such shares.
14.6. Tax Withholding. The Participant shall be responsible for
---------------
payment of any taxes or similar charges required by law to be withheld from an
Award or an amount paid in satisfaction of an Award, which shall be paid by the
Participant on or prior to the payment or other event that results in taxable
income in respect of an Award. The Award Agreement shall
14
<PAGE>
specify the manner in which the withholding obligation shall be satisfied with
respect to the particular type of Award.
14.7. Unfunded Plan. The adoption of this Plan and any setting aside
-------------
of cash amounts or shares of Common Stock by the Corporation with which to
discharge its obligations hereunder shall not be deemed to create a trust or
other funded arrangement. The benefits provided under this Plan shall be a
general, unsecured obligation of the Corporation payable solely from the general
assets of the Corporation, and neither a Participant nor the Participant's
permitted transferees or estate shall have any interest in any assets of the
Corporation by virtue of this Plan, except as a general unsecured creditor of
the Corporation. Notwithstanding the foregoing, the Corporation shall have the
right to implement or set aside funds in a grantor trust, subject to the claims
of the Corporation's creditors, to discharge its obligations under the Plan.
14.8. Other Compensation and Benefit Plans. The adoption of the Plan
------------------------------------
shall not affect any other stock incentive or other compensation plans in effect
for the Corporation or any Subsidiary, nor shall the Plan preclude the
Corporation from establishing any other forms of stock incentive or other
compensation for employees of the Corporation or any Subsidiary. The amount of
any compensation deemed to be received by a Participant pursuant to an Award
shall not constitute compensation with respect to which any other employee
benefits of such Participant are determined, including, without limitation,
benefits under any bonus, pension, profit sharing, life insurance or salary
continuation plan, except as otherwise specifically provided by the terms of
such plan.
14.9. Plan Binding on Transferees. The Plan shall be binding upon
---------------------------
the Corporation, its transferees and assigns, and the Participant, his executor,
administrator and permitted transferees and beneficiaries.
14.10. Construction and Interpretation. Whenever used herein, nouns
-------------------------------
in the singular shall include the plural, and the masculine pronoun shall
include the feminine gender. Headings of Articles and Sections hereof are
inserted for convenience and reference and constitute no part of the Plan.
14.11. Severability. If any provision of the Plan or any Award
------------
Agreement shall be determined to be illegal or unenforceable by any court of law
in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
14.12. Governing Law. The validity and construction of this Plan and
-------------
of the Award Agreements shall be governed by the laws of the State of Delaware.
15. Effective Date, Termination and Amendment
15.1. Establishment of the Plan. This Plan is being adopted by the
-------------------------
Board in connection with the anticipated formation of the Corporation as a
Subsidiary of Columbia/HCA and the distribution shortly thereafter by
Columbia/HCA of all of its shares of the Corporation to the shareholders of
Columbia/HCA.
15
<PAGE>
15.2. Effective Date; Shareholder Approval. The Effective Date of the
------------------------------------
Plan shall be November 5, 1998; provided, however, that no amounts may be paid
-------- -------
or shares issued under any Award granted on or after the first meeting of the
shareholders of the Corporation that shall occur more than twelve months after
the date on which the Corporation becomes a publicly held corporation, unless
the shareholders of the Corporation shall have approved the Plan. At the sole
discretion of the Board, in order to comply with the requirements of Section
162(m) for certain types of Awards under the Plan, the performance criteria set
forth in Section 9.3 shall be reapproved by the shareholders of the Corporation
no later than the first shareholder meeting that occurs in the fifth calendar
year following the calendar year of the initial shareholder approval of such
performance criteria.
15.3. Termination. The Plan shall terminate on the date immediately
-----------
preceding the tenth anniversary of the date the Plan is adopted by the Board.
The Board may, in its sole discretion and at any earlier date, terminate the
Plan. Notwithstanding the foregoing, no termination of the Plan shall adversely
affect any Award theretofore granted without the consent of the Participant or
the permitted transferee of the Award.
15.4. Amendment. The Board may at any time and from time to time and in
---------
any respect, amend or modify the Plan; provided, however, that no amendment or
-------- -------
modification of the Plan shall be effective without the consent of the
Corporation's shareholders that would (i) change the class of Eligible Persons
under the Plan, (ii) increase the number of shares of Common Stock reserved for
issuance under the Plan in accordance with Section 3.1 hereof, or (iii) allow
the grant of Options at an exercise price below Fair Market Value. In addition,
the Board may seek the approval of any amendment or modification by the
Corporation's shareholders to the extent it deems necessary or advisable in its
sole discretion for purposes of compliance with Section 162(m) or section 422 of
the Code, the listing requirements of the Nasdaq Stock Market or for any other
purpose. No amendment or modification of the Plan shall adversely affect any
Award theretofore granted without the consent of the Participant or the
permitted transferee of the Award.
16
<PAGE>
Appendix A
----------
Notwithstanding anything elsewhere in the Plan to the contrary, the following
rules shall apply in connection with the distribution of Common Stock to
Columbia/HCA stockholders (the "Spin-off").
(i) In the case of each Columbia/HCA Non-Qualified Option that is a
vested option and covers more than 1000 shares, the Committee may
grant an option which covers a number of shares of Common Stock
equal to the Original Number of Shares multiplied by the LifePoint
Share Multiple and which has a per share exercise price equal to the
per share exercise price of the original Columbia/HCA Non-Qualified
Option multiplied by the LifePoint Ratio.
(ii) In the case of each Columbia/HCA ISO that is held by a LifePoint
Employee or LifePoint Terminee (or his estate), the Committee may
grant an option which covers a number of shares of Common Stock
equal to the Original Number of Shares divided by the LifePoint
Ratio and (2) has a per share exercise price equal to the original
per share exercise price multiplied by the LifePoint Ratio.
(iii) In the case of any options granted by the Committee pursuant to this
Appendix, any resulting per share exercise price which is not equal
to a whole multiple of a cent shall be rounded up to the next whole
cent and any resulting number of shares covered by an option which
is not equal to a whole multiple of a share shall be rounded down to
the next whole share.
(iv) The Committee may provide that the terms of any option granted under
this Appendix are to be substantially the same as those of the
related Columbia/HCA Option, subject to such exceptions as the
Committee may provide. Any such option may, in the discretion of the
Committee, also provide that (a) any period of prior employment or
service with Columbia/HCA or any related entity is to be credited as
covered employment or service for purposes of determining the
vesting and exercisability of such option (to the same extent as
such period was credited for such purposes under the related
original Columbia/HCA Option), and (b) in the case of any
Columbia/HCA Non-Qualified Option, the optionee is to be considered
to be employed by or providing services to the Corporation so long
as he is employed by or providing services to Columbia/HCA or Triad
Hospitals, Inc. ("Triad") (or any Subsidiary thereof), for purposes
of determining when the option will cease to be exercisable on
account of termination of employment or service, and at such time as
the optionee ceases to be employed by or provide services to
Columbia/HCA or Triad (or any Subsidiary thereof), such cessation of
employment or service shall be treated as though it were a cessation
of employment or service with the Corporation under comparable
circumstances.
(v) For purposes hereof, the following definitions shall apply:
(a) "Affiliate" shall mean any entity required to be aggregated
with Columbia/HCA, LifePoint or Triad as appropriate,
pursuant to Code sections 414(b), 414(c), 414(m) or 414(o).
(b) "Columbia/HCA ISO" shall mean any option outstanding under a
17
<PAGE>
Columbia/HCA Option Plan on the date of the Spin-off that is
intended to qualify as an "Incentive Stock Option" under
section 422 of the Code.
(c) "Columbia/HCA Non-Qualified Option" shall mean any stock
option outstanding under a Columbia/HCA Option Plan on the
date of the Spin-off that is not a Columbia/HCA ISO. Any
such option shall be considered a "vested option" to the
extent that it is exercisable on the date in question and
shall be considered a "non-vested option" to the extent that
it is not yet exercisable on such date.
(d) "Columbia/HCA Option" shall mean a Columbia/HCA ISO or
Columbia/HCA Non-Qualified Option, as the context shall
indicate.
(e) "Columbia/HCA Option Plan" shall mean any plan maintained by
Columbia/HCA under which there are stock options outstanding
on the date of the Spin-off.
(f) "Ex-Dividend Date" shall mean the first trading date on
which the Columbia/HCA stock shall trade on an ex-dividend
basis with respect to the distribution of the Corporation's
Common Stock and Triad's stock.
(g) "LifePoint Business" shall mean any business conducted by
LifePoint, or its Subsidiaries, on the date of the Spin-off.
(h) "LifePoint Employee " shall mean an employee of the
Corporation, or any direct or indirect Subsidiary of the
Corporation that is an Affiliate thereof, on the date of the
Spin-off.
(i) "LifePoint Ratio" shall mean a fraction whose numerator is
the closing price of the Common Stock on the trading date
immediately preceding the Ex-Dividend Date and whose
denominator is the closing price of the Columbia/HCA stock
on such trading date immediately preceding the Ex-Dividend
Date.
(j) "LifePoint Share Multiple" shall mean the number of shares
of Common Stock to be distributed per share of Columbia/HCA
stock on the date of the Spin-off.
(k) "LifePoint Terminee " shall mean any individual who is no
longer employed by Columbia/HCA or any Affiliate thereof
immediately prior to the Spin-off but was employed by a
LifePoint Business immediately prior to his termination of
employment from Columbia/HCA and its Affiliates.
(l) "Original Number of Shares" shall mean, as to any
Columbia/HCA Option, the number of shares of Columbia/HCA
stock covered by such option immediately prior to the Spin-
off.
Notwithstanding anything elsewhere in the Plan to the contrary, the Committee
may grant Non-
18
<PAGE>
qualified Stock Options, effective as of the twenty-first trading date for the
Common Stock, at an exercise price equal to the Fair Market Value of the Common
Stock on such date, in accordance with the attached Schedule and in accordance
with such other terms as shall be established by the Committee.
19
<PAGE>
EXHIBIT 10.10
LIFEPOINT HOSPITALS, INC.
EXECUTIVE STOCK PURCHASE PLAN
<PAGE>
LIFEPOINT HOSPITALS, INC.
EXECUTIVE STOCK PURCHASE PLAN
Table of Contents
-----------------
<TABLE>
<S> <C>
1. Purpose of the Plan..................................................... 1
2. Definitions............................................................. 1
(a) Accrued Interest................................................... 1
(b) Board.............................................................. 1
(c) Cause.............................................................. 1
(d) Change in Control.................................................. 2
(e) Code............................................................... 4
(f) Committee.......................................................... 4
(g) Corporation........................................................ 4
(h) Disability......................................................... 4
(i) Distribution Date.................................................. 4
(j) Duties............................................................. 4
(k) Eligible Person.................................................... 4
(l) Employee........................................................... 5
(m) Fair Market Value.................................................. 5
(n) Good Reason........................................................ 5
(o) Loan Date.......................................................... 5
(p) Participant........................................................ 5
(q) Plan............................................................... 5
(r) Purchased Shares................................................... 5
(s) Right.............................................................. 5
(t) Share.............................................................. 6
(u) Share Purchase Date................................................ 6
(v) Share Purchase Loan................................................ 6
(w) Share Purchase Price............................................... 6
(x) Stock Purchase Agreement........................................... 6
(y) Subsidiary......................................................... 6
3. Shares Subject to the Plan.............................................. 6
3.1. Number of Shares..................................................... 6
3.2. Adjustments.......................................................... 6
4. Administration of the Plan.............................................. 7
4.1. Committee Members.................................................... 7
4.2. Discretionary Authority.............................................. 7
4.3. Changes to Rights.................................................... 7
5. Grant and Exercise of Rights............................................ 7
5.1. Grant of Rights...................................................... 7
5.2. Exercise of Rights................................................... 8
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
6. Share Purchase Loan............................................................. 8
6.1. Loan Amount.................................................................. 8
6.2. Interest Rate................................................................ 8
6.3. Maturity and Repayment....................................................... 8
(a) Repayment at Maturity...................................................... 8
(b) Payment of Additional Interest............................................. 9
6.4. Prepayments.................................................................. 9
(a) Mandatory Prepayments..................................................... 9
(b) Voluntary Prepayments..................................................... 9
7. Shareholder Rights.............................................................. 9
7.1. Security Interest............................................................ 9
7.2. Transfer Restrictions........................................................ 10
7.3. Section 83(b) Election....................................................... 10
7.4. Death or Disability Benefit.................................................. 10
8. General Provisions.............................................................. 11
8.1. No Assignment or Transfer.................................................... 11
8.2. Rights as Shareholder........................................................ 11
8.3. Employment or Service........................................................ 11
8.4. Securities Laws.............................................................. 11
8.5. Unfunded Plan................................................................ 11
8.6. Compensation and Benefit Plans............................................... 11
8.7. Plan Binding on Transferees.................................................. 11
8.8. Construction and Interpretation.............................................. 12
8.9. Severability................................................................. 12
8.10. Governing Law................................................................ 12
9. Effective Date; Shareholder Approval; Termination; Amendment..................... 12
9.1. Effective Date............................................................... 12
9.2. Shareholder Approval......................................................... 12
9.3. Termination.................................................................. 12
9.4. Amendment.................................................................... 12
10. Appendix........................................................................ A-1
</TABLE>
ii
<PAGE>
LIFEPOINT HOSPITALS, INC.
EXECUTIVE STOCK PURCHASE PLAN
1. Purpose of the Plan
The purpose of the LifePoint Hospitals, Inc. Executive Stock Purchase Plan
is to promote the interests of the Corporation and its shareholders by
strengthening the Corporation's ability to attract, motivate, and retain key
executives upon whose judgment, initiative, and efforts the financial success
and growth of the business of the Corporation largely depend, to offer such
personnel additional incentives to put forth maximum efforts for the success of
the business, and to afford them an opportunity to acquire a proprietary
interest in the Corporation through stock ownership.
2. Definitions
Wherever the following capitalized terms are used in this Plan, they shall
have the meanings specified below:
(a) "Accrued Interest" means, with respect to any Share Purchase Loan, the
----------------
accrued interest on the unpaid balance thereof for the period from the Share
Purchase Date to the Repayment Date (as defined in Section 6.3), determined
using an interest rate equal to the applicable Federal rate in effect, under
section 1274(d) of the Code, as of the date upon which the Share Purchase Loan
is made, compounded semi-annually.
(b) "Board" means the Board of Directors of the Corporation.
-----
(c) "Cause" means (i) 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 in good faith; (ii) the conviction of the
Participant for a violation of criminal law involving the Corporation and its
business that materially damages the Corporation as determined by the Board in
good faith; (iii) 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 to the Corporation, in either case which has a
material adverse effect on the Corporation as determined by the Board in good
faith; (iv) the willful fraud or material dishonesty of the Participant in
connection with his performance of his duties to the Corporation and involving
the finances of the Corporation as determined by the Board in good faith; (v)
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 Corporation, or the illegal
use, possession, or sale of, or impaired performance due to the illegal
<PAGE>
use of, controlled substances; or (vi) a violation of the Corporation's policies
on sexual or other illegal harassment of a Corporation 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
Corporation stating the acts or omissions constituting Cause and the Participant
has the opportunity to cure to the Corporation's satisfaction any such acts or
omissions (in the case of (iii), (v) or (vi) above) within 30 days of the
Participant's receipt of such notice.
(d) "Change in Control" means any of the following events following the
-----------------
date on which the Corporation becomes a publicly-held Corporation:
(i) An acquisition (other than directly from the Corporation) of any
voting securities of the Corporation (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 1934 Act) 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) the Corporation or (B)
any Corporation or other Person of which a majority of the voting power or
the equity securities or equity interests is owned directly or indirectly
by the Corporation (a "Control Subsidiary"), or (ii) the Corporation or any
Control Subsidiary.
(ii) The individuals who, as of the date the Corporation issues any
class of equity securities required to be registered under Section 12 of
the 1934 Act, 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 the
-------
Corporation'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 Stock Purchase Agreement, be considered as a member of the
Incumbent 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 1934 Act) 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 Stock
2
<PAGE>
Purchase 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 Stock Purchase Agreement with the Corporation to effect a
transaction described in clause (i) or (iii) of this Section 2(d); or
(iii) Consummation, after approval by stockholders of the
Corporation, of:
(1) A merger, consolidation or reorganization involving the
Corporation, unless,
(A) The stockholders of the Corporation, 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;
(B) The individuals who were members of the Incumbent
Board immediately prior to the execution of the
Stock Purchase Agreement providing for such
merger, consolidation or reorganization constitute
at least two-thirds of the members of the board of
directors of the Surviving Corporation; and
(C) No Person (other than the Corporation, any Control
Subsidiary, any employee benefit plan (or any
trust forming a part thereof) maintained by the
Corporation, the Surviving Corporation or any
Control 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 Corporation's then
outstanding Voting Securities.
(2) A complete liquidation or dissolution of the
Corporation; or
3
<PAGE>
(3) The sale or other disposition of all or substantially all of
the assets of the Corporation to any Person (other than a
transfer to a Control 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 the Corporation which, by
reducing the number of Voting Securities outstanding, increased the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Corporation, and after
such share acquisition by the Corporation, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
----
(f) "Committee" means the compensation committee appointed to
---------
administer the Plan and shall consist of two or more directors of the
Corporation, (i) none of whom shall be officers or employees of the Corporation,
and (ii) all of whom, to the extent deemed necessary or appropriate by the
Board, shall satisfy the requirements of a "non-employee director" within the
meaning of Rule 16b-3 of the Securities Exchange Act of 1934. The members of the
Committee shall be appointed by, and serve at the pleasure of, the Board.
(g) "Corporation" means LifePoint Hospitals, Inc., a Delaware
-----------
corporation.
(h) "Disability" means the inability of the Participant, after
----------
reasonable accommodation, to perform the duties required hereunder for a period
equal to or in excess of the waiting period under the Corporation's long term
disability insurance policy, as determined in good faith by the Board.
(i) "Distribution Date" means the date the Corporation's Shares were
-----------------
distributed to the stockholders of Columbia/HCA Healthcare Corporation (May 11,
1999).
(j) "Duties" means, as to any Participant, his duties as an Employee with
------
respect to the Corporation and its Subsidiaries (including his duties under any
employment agreement between him and the Corporation or a Subsidiary).
(k) "Eligible Person" means any person who is an Employee of the
---------------
Corporation or any of its Subsidiaries and is employed in an executive position.
4
<PAGE>
(l) "Employee" means any person who is employed as a common-law employee.
--------
(m) "Fair Market Value" of a Share as of a given date means the closing
-----------------
sales price of the common stock of the Corporation on the Nasdaq Stock Market on
the trading day immediately preceding the date as of which the Fair Market Value
is to be determined, or, in the absence of any reported sales of Shares on such
date, on the first preceding date on which any such sale shall have been
reported (in either case, as reported in the Two Star Edition of The Wall Street
Journal). If the Shares are not listed on the Nasdaq Stock Market on the date as
of which Fair Market Value is to be determined, the Committee shall in good
faith determine the Fair Market Value in whatever manner it considers
appropriate.
(n) "Good Reason" means, as to any Share Purchase Loan, (1) the assignment
-----------
to the Participant of any duties inconsistent with the Participant's position
(including status, offices, titles or reporting relationships), authority,
duties or responsibilities on the Loan Date, any adverse change in the
Participant's reporting responsibilities, or any action by the Corporation or a
Subsidiary 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 the Corporation or
Subsidiary (as the case may be) promptly after receipt of written notice thereof
by the Participant, (2) the relocation, without the consent of the Participant,
of the Corporation's principal executive offices or the office of the
Participant to a location more than 40 miles from the applicable location on the
Loan Date, (3) any diminution in the Participant's total compensation or
diminution in Participant's stock purchase rights in violation of any employment
agreement in effect between the Participant and the Corporation, or (4) a
termination of Participant's employment for any reason (other than his death)
within twelve months after a Change in Control.
(o) "Loan Date" means, as to any Share Purchase Loan, the date such loan
---------
is made.
(p) "Participant" means any Eligible Person who has been granted a Right
-----------
(that has not yet been fully exercised or otherwise terminated) under the Plan.
(q) "Plan" means this LifePoint Hospitals, Inc. Executive Stock Purchase
----
Plan as set forth herein, as it may be amended from time to time.
(r) "Purchased Shares" means Shares purchased by a Participant pursuant to
----------------
a Right granted under the Plan.
(s) "Right" means a right to purchase Shares under the Plan at their Fair
-----
Market Value on the Share Purchase Date.
5
<PAGE>
(t) "Share" means a share of common stock of the Corporation.
(u) "Share Purchase Date" means, as to any Purchased Shares, the date on
-------------------
which the purchase of such Shares occurs.
(v) "Share Purchase Loan" means any loan made by the Corporation to a
-------------------
Participant for the purchase of Shares pursuant to a Right.
(w) "Share Purchase Price" means the aggregate purchase price for
--------------------
Purchased Shares acquired at any time.
(x) "Stock Purchase Agreement" means an agreement entered into between the
------------------------
Corporation and a Participant setting forth the terms and conditions under which
the Participant may purchase Shares pursuant to a Right granted to him,
including but not limited to, the terms of the related Share Purchase Loan.
(y) "Subsidiary" means an entity (whether or not a corporation) that is
----------
wholly or majority owned or controlled, directly or indirectly, by the
Corporation, and any other affiliate of the Corporation that is so designated,
from time to time, by the Committee.
3. SHARES SUBJECT TO THE PLAN
3.1. Number of Shares. Subject to the following provisions of this Section,
----------------
the aggregate number of Shares that may be purchased pursuant to all Rights
granted under the Plan is 1,000,000 Shares. The Shares to be delivered under the
Plan shall be made available from authorized but unissued Shares or issued
Shares that have been reacquired by the Corporation. To the extent that any
Right is forfeited, cancelled, or otherwise terminated without the issuance of
all Shares covered thereunder, such Shares shall no longer be charged against
the foregoing maximum Share limitation and may again be made subject to Rights
under the Plan pursuant to such limitation.
3.2. Adjustments. If there shall occur any recapitalization,
-----------
reclassification, stock dividend, stock split, reverse stock split, or other
distribution with respect to Shares, or other change in corporate structure
affecting the Shares, the Committee may, in the manner and to the extent that it
deems appropriate and equitable to the Participants and consistent with the
terms of this Plan, cause an adjustment to be made in: (i) the maximum number
and kind of Shares provided in Section 3.1 hereof, (ii) the number and kind of
Shares subject to then outstanding Rights, or (iii) any other terms of a Right
that are affected by the event.
6
<PAGE>
4. ADMINISTRATION OF THE PLAN
4.1. Committee Members. The Plan shall be administered by the Committee.
-----------------
The Committee shall have such powers and authority as may be necessary or
appropriate for the Committee to carry out its functions as described in the
Plan. No member of the Committee shall be liable for any action or determination
made in good faith by the Committee with respect to the Plan or any Right
thereunder.
4.2. Discretionary Authority. Subject to the express provisions of the
-----------------------
Plan, including the provisions of Section 5.1, the Committee shall have
authority in its discretion to determine the Eligible Persons to whom, and the
time or times at which, Rights are granted, the number of Shares that may be
purchased under a Right, the date or period during which a Right may be
exercised and all other terms of a Right. The Committee shall also have
discretionary authority to interpret the Plan, to make all factual
determinations under the Plan, and to make all other determinations necessary or
advisable for Plan administration. The Committee may prescribe, amend, and
rescind rules and regulations relating to the Plan. All interpretations,
determinations, and actions by the Committee shall be final, conclusive, and
binding upon all parties.
4.3. Changes to Rights. The Committee shall have the authority to effect,
-----------------
at any time and from time to time, (i) the cancellation of any or all
outstanding Rights and the grant in substitution therefor of new Rights covering
the same or different numbers of Shares, or (ii) the amendment of the terms of
any and all outstanding Rights; provided, however, that no such action by the
-------- -------
Committee may adversely impair the rights of a Participant under any outstanding
Right without the consent of the Participant.
5. GRANT AND EXERCISE OF RIGHTS
5.1. Grant of Rights. Any Eligible Person may be designated by the
---------------
Committee, in its sole discretion, to receive a Right under the Plan.
Notwithstanding the foregoing, the initial Eligible Persons shall be as listed
in Appendix A and each such individual's Right shall cover the number of whole
Shares that can be purchased with the dollar amount listed for the individual on
Appendix A (based on the Fair Market Value of a Share on the Share Purchase
Date); provided, however, that such number of Shares shall in no event exceed
-------- -------
the number of Shares that could be purchased with such dollar amount if the
applicable Fair Market Value of a Share were $10.25; and, provided, further,
-------- -------
that no person may be granted more than one Right under the Plan, except that if
the Right of any initial Eligible Person to purchase Shares shall be limited
under the next preceding proviso (because the Fair Market Value of a Share is
below $10.25) and Shares remain available for issuance under the Plan at the
close of the exercise period for initial Eligible Persons under Section 5.2, the
Committee may, in its discretion, issue an additional Right to any
7
<PAGE>
such initial Eligible Person thus affected by the next preceding proviso. Each
Right shall be evidenced by a Stock Purchase Agreement between the Corporation
and the Participant.
5.2. Exercise of Rights. Right granted to a Participant may be exercised,
------------------
in whole or in part, by written notice to the Corporation on or prior to (a) the
exercise date selected in the notice in accordance with the terms of such Right,
or (b) the date specified in the related Stock Purchase Agreement as the
permissible exercise date; provided, however, that if a Right shall be thus
-------- -------
exercised by a Participant as to only a portion of the Shares covered thereby,
such Right shall thereupon terminate and shall not be exercisable with respect
to any additional Shares; and provided, further, that a Right may be exercised
-------- -------
by a Participant only if he is an Employee of the Corporation or a Subsidiary on
the exercise date and shall terminate in its entirety upon a Participant's
termination of employment. Notwithstanding the foregoing, in the case of an
initial Eligible Person receiving a Right in accordance with Appendix A, such
Right may be exercised in no more than three tranches on the dates elected by
such Participant during the period which starts on the date the Corporation's
Shares are distributed to Columbia/HCA Healthcare Corporation stockholders and
ends on the twenty-first trading day for the Corporation's Shares. Any
Participant giving such a notice of exercise shall be considered to have agreed
to pay the full Share Purchase Price through a Share Purchase Loan, except to
the extent the notice is accompanied by a cash payment.
6. Share Purchase Loan
6.1. Loan Amount. The Corporation shall loan each Participant 100% of
-----------
the Share Purchase Price of any Purchased Shares acquired by the Participant, on
a full recourse basis, to the extent the Participant shall not elect to pay such
Share Purchase Price in cash and contingent upon the Participant's executing
such promissory note and pledge documents relating to the security interest
described in Section 7.1 below as the Corporation shall reasonably require.
6.2. Interest Rate. Accrued Interest under any Share Purchase Loan will be
-------------
payable only upon maturity or upon prepayment of such Share Purchase Loan.
6.3. Maturity and Repayment.
----------------------
(a) Repayment at Maturity. A Share Purchase Loan will mature upon the
---------------------
earlier of (i) the fifth anniversary of such Share Purchase Loan's Share
Purchase Date, (ii) termination of the Participant's employment for any reason,
or (iii) bankruptcy of the Participant (the "Repayment Date"). Within 120 days
following the Repayment Date, the Participant shall be required to pay the
Corporation the full amount remaining due on such Share Purchase Loan, including
all unpaid Accrued Interest.
8
<PAGE>
(b) Payment of Additional Interest. In the event a Participant's
-------------------------------
employment terminates for Cause or the Participant voluntarily terminates
employment (other than for Good Reason) prior to the third anniversary of a
Share Purchase Loan's Share Purchase Date (or, in the case of initial Eligible
Persons, such anniversary of the Distribution Date), or if earlier, the date of
a Change in Control, in addition to any amounts due in repayment of the amount
of such Share Purchase Loan and Accrued Interest, the Participant shall pay the
Corporation an amount equal to the additional interest that would have been
payable in respect of such Share Purchase Loan, if the regular interest rate on
such loan had been the prime rate (as reported in the Two Star Edition of The
Wall St. Journal in effect on the Share Purchase Date), and interest on such
additional interest at such rate to the actual date of payment.
6.4. Prepayments.
-----------
(a) Mandatory Prepayments. Any cash dividends received on Purchased
---------------------
Shares prior to payment of the full amount due on a Share Purchase Loan
(including Accrued Interest), net of assumed Federal, State and Local income
taxes (as reasonably determined by the Participant based upon the highest
marginal tax rates then applicable income tax laws to which the Participant is
subject), shall be used to prepay such Share Purchase Loan. Prepayments shall be
applied first to Accrued Interest, then to principal.
(b) Voluntary Prepayments. A Share Purchase Loan may be prepaid, in whole
---------------------
or in part, at any time. Prepayments shall be applied first to Accrued Interest,
then to principal. Notwithstanding the provisions of Section 7.2, at any time
following the earlier of (i) the second anniversary of a Share Purchase Loan's
Share Purchase Date (or, in the case of initial Eligible Persons, such
anniversary of the Distribution Date), or (ii) a Change in Control, the
Purchased Shares may, at the Participant's election, be sold to prepay the loan,
in whole or in part, in addition to any transaction costs incurred by the
Participant' to effect such sale and all taxes resulting with respect to such
sale (as reasonably determined by the Participant based upon the highest
marginal tax rates then applicable income tax laws to which the Participant is
subject).
7. Shareholder Rights.
7.1. Security Interest. A Share Purchase Loan shall be secured by the
-----------------
related Purchased Shares. At the time the Participant purchases Purchased Shares
hereunder, a certificate representing such Purchased Shares shall be registered
in the name of the Participant. Such certificate shall be held by the
Corporation (or any custodian appointed by the Corporation) for the account of
the Participant, subject to the terms and conditions hereof, and shall bear a
legend setting forth the restrictions imposed thereon hereunder, in such form as
the Corporation,
9
<PAGE>
in its discretion, may determine. Notwithstanding the foregoing, as to initial
Eligible Persons with multiple Share Purchase Loans, each such loan shall be
secured by all Purchased Shares.
7.2. Transfer Restrictions. The Participant shall have all rights of a
---------------------
stockholder with respect to Purchased Shares, including the right to receive
dividends (subject to the provisions of Section 6.4(a)) and the right to vote
such Purchased Shares, except that the Participant shall not be entitled to
delivery of the stock certificates representing Purchased Shares and no
Purchased Shares may be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of (except by will or the applicable laws of
descent and distribution) until the later of (i) full repayment of the Share
Purchase Price for such Purchased Shares and any related Accrued Interest (and
any additional amount due under Section 6.3 ), and (ii) the earliest of (1) the
third anniversary of the Share Purchase Date for such Purchased Shares (or, in
the case of initial Eligible Persons, such anniversary of the Distribution
Date), (2) the Participant's termination of employment or bankruptcy and (3) a
Change in Control. Notwithstanding the foregoing, Purchased Shares may be sold
to pay the related Share Purchase Loan (including Accrued Interest) at maturity
or (to the extent provided in Section 6.4(b)) to voluntarily prepay such Share
Purchase Loan (including Accrued Interest). Any Shares, any other securities of
the Corporation and any other property (except cash dividends) distributed with
respect to Purchased Shares shall be subject to the same restrictions, terms and
conditions as such Purchased Shares.
7.3. Section 83(b) Election. The Committee may provide in a Stock
----------------------
Purchase Agreement that the Participant's rights with respect to the Purchased
Shares are conditioned upon the Participant's refraining from making an election
with respect to the related Right under section 83(b) of the Code. If a Right is
not so conditioned and a Participant makes an election pursuant to section 83(b)
of the Code with respect to the Purchased Shares, the Participant shall be
required to promptly file a copy of such election with the Corporation.
7.4. Death or Disability Benefit. In the event a Participant terminates
---------------------------
employment because of death or Disability, if the amount remaining due on a
Share Purchase Loan (including Accrued Interest) is greater than the Fair Market
Value of the related Purchased Shares as of the date of such death or
Disability, the Corporation shall pay a death or Disability benefit equal to (1)
the amount of such payment remaining due over (2) such Purchased Shares' Fair
Market Value as of the date of such death or Disability. Notwithstanding the
foregoing, in the case of initial Eligible Persons with multiple Share Purchase
Loans, such death or Disability benefit shall be calculated on a consolidated
basis, so that the benefit equals (1) the aggregate payments remaining due for
all such loans over (2) the aggregate related Purchased Shares' Fair Market
Value as of the date of such death or Disability.
10
<PAGE>
8. General Provisions
8.1. No Assignment or Transfer. Rights under the Plan shall not be
-------------------------
assignable or transferable and shall be exercised only by the Participant.
8.2. Rights as Shareholder. A Participant shall have no rights as a holder
---------------------
of Shares, with respect to any unissued Shares covered by a Right, until the
date the Participant becomes the holder of record of such Shares.
8.3. Employment or Service. Nothing in the Plan, in the grant of any Right
---------------------
or in any Stock Purchase Agreement shall confer upon any Eligible Person the
right to continue in the capacity in which he is employed by, or otherwise
serves, the Corporation or any Subsidiary.
8.4. Securities Laws. No Shares shall be issued or transferred pursuant to
---------------
a Right unless and until all then-applicable requirements imposed by federal and
state securities and other laws, rules and regulations and by any regulatory
agencies having jurisdiction, and by any stock exchanges upon which the Shares
may be listed, have been fully met. As a condition precedent to the issuance of
Shares pursuant to the exercise of a Right, the Corporation may require the
Participant to take any reasonable action to meet such requirements. The
Committee may impose such conditions on any Shares issuable under the Plan as it
may deem advisable, including, without limitation, restrictions designed to
satisfy the requirements of the Securities Act of 1933, as amended, the
requirements of any stock exchange upon which such Shares of the same class are
then listed, and the requirements of any blue sky or other securities laws
applicable to such Shares.
8.5. Unfunded Plan. The adoption of this Plan and any setting aside of cash
-------------
amounts or Shares by the Corporation with which to discharge its obligations
hereunder shall not be deemed to create a trust or other funded arrangement. The
Corporation's obligations under this Plan shall represent general, unsecured
obligations of the Corporation payable solely from the general assets of the
Corporation, and a Participant shall have no interest in any assets of the
Corporation by virtue of this Plan, except as a general unsecured creditor of
the Corporation.
8.6. Compensation and Benefit Plans. The adoption of the Plan shall not
------------------------------
affect any stock incentive or other compensation plans in effect for the
Corporation or any Subsidiary, nor shall the Plan preclude the Corporation from
establishing any form of stock incentive or other compensation for employees of
the Corporation or any Subsidiary.
8.7. Plan Binding on Transferees. The Plan shall be binding upon the
---------------------------
Corporation, its transferees and assigns, and each Participant, his executor or
administrator and beneficiaries. In
11
<PAGE>
the event a Participant's legal representative or legatee succeeds to his
interests under the Plan, all references to the Participant shall be considered
to refer to the applicable successor in interest (unless the context clearly
indicates otherwise).
8.8. Construction and Interpretation. Whenever used herein, nouns in the
-------------------------------
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.
8.9. Severability. If any provision of the Plan or any Stock Purchase
------------
Agreement shall be determined to be illegal or unenforceable by any court of law
in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
8.10. Governing Law. The validity and construction of this Plan and of the
-------------
Stock Purchase Agreements shall be governed by the laws of the State of
Delaware.
9. Effective Date; Shareholder Approval; Termination; Amendment
9.1. Effective Date. The Effective Date of the Plan shall be the date the
--------------
Corporation's common stock is distributed to Columbia/HCA Healthcare Corporation
stockholders.
9.2. Shareholder Approval. The Plan shall be approved by the shareholders
--------------------
of the Corporation within twelve (12) months before or after the Plan is
adopted.
9.3. Termination. The Plan shall terminate on the date immediately
-----------
preceding the tenth anniversary of the date the Plan is adopted by the Board.
The Board may, in its sole discretion and at any earlier date, terminate the
Plan. Notwithstanding the foregoing, no termination of the Plan shall adversely
affect any Right theretofore granted, without the consent of the Participant.
9.4. Amendment. The Board may at any time and from time to time, and in
---------
any respect, amend or modify the Plan; provided, however, that no amendment or
-------- -------
modification of the Plan shall adversely affect any Right theretofore granted
without the consent of the Participant.
____________________
* Note: After the Corporation is established but prior to the stock
----
distribution, Columbia/HCA should approve the Plan as the Corporation's
sole shareholder.
12
<PAGE>
_____________________________________
LIFEPOINT HOSPITALS, INC.
13
<PAGE>
APPENDIX A
INITIAL ELIGIBLE PERSONS
<TABLE>
<CAPTION>
-------------------------------------------------------------------
ELIGIBLE PERSON AGGREGATE SHARE PURCHASE PRICE
-------------------------------------------------------------------
<S> <C>
Scott Mercy $3,000,000
-------------------------------------------------------------------
Jim Fleetwood $1,500,000
-------------------------------------------------------------------
Ken Donahey $1,500,000
-------------------------------------------------------------------
Bill Carpenter $1,500,000
-------------------------------------------------------------------
Neil Hemphill $700,000
-------------------------------------------------------------------
Bill Gracey $750,000
-------------------------------------------------------------------
Dan Slipkovich $750,000
-------------------------------------------------------------------
Scott Raplee $300,000
-------------------------------------------------------------------
Mike Wiechart $250,000
-------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
EXHIBIT 10.11
LifePoint Hospitals, Inc.
Management Stock Purchase Plan
<PAGE>
LifePoint Hospitals, Inc.
Management Stock Purchase Plan
Table of Contents
-----------------
<TABLE>
<S> <C>
1. Introduction....................................................... 1
2. Definitions........................................................ 1
(a) Agreement.................................................... 1
(b) Average Market Value......................................... 1
(c) Base Salary.................................................. 1
(d) Board........................................................ 1
(e) Cause........................................................ 1
(f) Code......................................................... 2
(g) Committee.................................................... 2
(h) Company...................................................... 2
(i) Disability................................................... 2
(j) Exchange Act................................................. 2
(k) Fair Market Value............................................ 2
(l) Participant.................................................. 2
(m) Plan......................................................... 3
(n) Restricted Period............................................ 3
(o) Restricted Share or Restricted Shares........................ 3
(p) Restricted Share Unit or Restricted Share Units.............. 3
(q) Rule 16b-3................................................... 3
(r) Section 16 Person............................................ 3
(s) Shares....................................................... 3
(t) Subsidiary................................................... 3
3. Administration of the Plan......................................... 3
4. Stock Subject to Plan.............................................. 3
5. Eligibility........................................................ 4
6. Restricted Shares.................................................. 4
7. Termination of Employment.......................................... 6
8. Change in Control.................................................. 7
9. Dilution and Other Adjustments..................................... 9
10. Payment of Withholding and Payroll Taxes........................... 9
11. No Rights to Employment............................................ 9
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
12. Amendment and Termination of the Plan............................. 9
13. Term of the Plan.................................................. 10
14. Governing Law..................................................... 10
</TABLE>
ii
<PAGE>
LifePoint Hospitals, Inc.
Management Stock Purchase Plan
1. Introduction.
------------
The purposes of the LifePoint Hospitals, Inc. Management Stock Purchase
Plan are to attract and retain highly-qualified executives, to align executive
and stockholder long-term interests by creating a direct link between executive
compensation and stockholder return, to enable executives to develop and
maintain a substantial equity-based interest in LifePoint Hospitals, Inc., and
to provide incentives to such executives to contribute to the success of the
Company's business. The provisions of the Plan are intended to satisfy the
requirements of Section 16(b) of the Securities Exchange Act of 1934, as amended
from time to time, and shall be interpreted in a manner consistent with the
requirements thereof, as now or hereafter construed, interpreted and applied by
regulation, rulings and cases.
The terms of the Plan shall be as set forth below, effective as of the date
the Company's common stock is distributed to Columbia/HCA Healthcare Corporation
stockholders.
2. Definitions.
-----------
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Agreement" shall mean an agreement entered into between the Company
and a Participant in connection with a grant under the Plan.
(b) "Average Market Value" of a Share on any grant date shall mean the
average of the closing prices on the Nasdaq Stock Market (or its
equivalent if the Shares are not traded on the Nasdaq Stock Market) of
a Share for all trading days (including the grant date, if a trading
day) after the next preceding grant date.
(c) "Base Salary" shall mean the base salary of the Participant without
taking into account any bonuses or other special compensation
received.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Cause" shall mean (i) 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, (ii) the conviction of the Participant for a
violation of criminal law involving the Company or a Subsidiary and
its business, (iii) the willful misconduct of the Participant, or the
willful or continued failure by the Participant (except on account of
death or Disability) to substantially perform his employment duties,
which in either case has a material adverse effect on the Company,
(iv) the willful fraud or material dishonesty of the Participant in
connection with his performance of his employment duties, (v) the use
of alcohol in a manner which in the opinion
1
<PAGE>
of the Company materially impairs the ability of the Participant to
effectively perform his employment duties, or the use, possession, or
sale of, or impaired performance due to, controlled substances or (vi)
sexual or other illegal harassment of a Company or Subsidiary employee
by the Participant; 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 (iii) or (v) above) within
15 days of the Participant's receipt of such notice.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" shall mean the compensation committee appointed to
administer the Plan and shall consist of two or more directors of the
Company, (i) none of whom shall be officers or employees of the
Company, and (ii) all of whom, to the extent deemed necessary or
appropriate by the Board, shall satisfy the requirements of a "non-
employee director" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934. The members of the Committee shall be appointed
by, and serve at the pleasure of, the Board.
(h) "Company" shall mean LifePoint Hospitals, Inc., a Delaware
corporation.
(i) "Disability" shall mean a Participant's total and permanent inability
to perform his or her duties with the Company or any Subsidiary by
reason of any medically determinable physical or mental impairment,
within the meaning of Code section 22(e)(3).
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time and as now or hereafter construed,
interpreted and applied by regulations, rulings and cases.
(k) "Fair Market Value" of a Share, Restricted Share or Restricted Share
Unit as of a given date as of a given date shall mean the closing
sales price of the common stock on the Nasdaq Stock Market on the
trading day immediately preceding the date as of which the Fair Market
Value is to be determined, or, in the absence of any reported sales of
Shares on such date, on the first preceding date on which any such
sale shall have been reported (in either case, as reported in the Two
Star Edition of The Wall Street Journal). If the Shares are not listed
on the Nasdaq Stock Market on the date as of which Fair Market Value
is to be determined, the Committee shall in good faith determine the
Fair Market Value in whatever manner it considers appropriate.
(l) "Participant" shall mean a person who receives a grant of Restricted
Shares under the Plan.
2
<PAGE>
(m) "Plan" shall mean the LifePoint Hospitals, Inc. Management Stock
Purchase Plan, as in effect from time to time.
(n) "Restricted Period" shall have the meaning given in Section 6(b)
hereof.
(o) "Restricted Share" or "Restricted Shares" shall mean the common stock
purchased hereunder subject to restrictions.
(p) "Restricted Share Unit" or "Restricted Share Units" shall have the
meaning given in Section 6(f) hereof.
(q) "Rule 16b-3" shall mean Rule 16b-3, as in effect from time to time,
promulgated by the Securities and Exchange Commission under Section 16
of the Exchange Act, including any successor to such Rule.
(r) "Section 16 Person" shall mean a Participant who is subject to the
reporting and short-swing liability provisions of Section 16 of the
Exchange Act.
(s) "Shares" shall mean the common stock of the Company.
(t) "Subsidiary" shall have the meaning set forth in Section 8.
3. Administration of the Plan.
--------------------------
The Plan shall be administered by the Committee. The Committee shall have
plenary authority in its discretion, but subject to the express provisions of
the Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in
the administration of the Plan, including, without limitation, to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of the Agreements (which need not be
identical) and to make all other determinations deemed necessary or advisable
for the administration of the Plan. The Committee's determinations on the
foregoing matters shall be final and conclusive.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any grant
hereunder.
4. Stock Subject to Plan.
---------------------
The maximum number of Shares which shall be distributed as Restricted
Shares or in respect of Restricted Share Units under the Plan shall be 250,000
Shares, which number shall be subject to adjustment as provided in Section 9
hereof. Such Shares may be either authorized but unissued Shares or Shares that
shall have been or may be reacquired by the Company.
If any outstanding Restricted Shares or Restricted Share Units under the
Plan shall be forfeited, the related Shares shall (unless the Plan shall have
been terminated) again be available for use under the Plan.
3
<PAGE>
5. Eligibility.
-----------
All employees or groups of employees designated by the Committee in its
discretion shall be eligible to become Participants in the Plan.
Each Participant may elect, in writing, to reduce his Base Salary by a
specified percentage thereof up to a maximum percentage established by the
Committee with respect to his employment classification, as set forth in
Appendix A, and, in lieu of receiving such salary, receive a number of
Restricted Shares equal to the amount of such salary reduction divided by a
dollar amount equal to 75% of the Average Market Value of a Share on the date on
which such Restricted Shares are granted. Any such election shall be effective
beginning with the first pay period that ends after January 1 of the calendar
year next following the calendar year in which such election is made (and shall
become irrevocable on December 31 of the calendar year in which it is made);
provided, however, that any such election filed by May 31, 1999 shall be
- -------- -------
effective for the period beginning with the first pay period that ends after
June 1, 1999 and ending with the last pay period that ends in 1999. Any
cancellation of, or other change in, any such salary reduction election shall
become effective as of the first pay period ending after January 1 of the
calendar year next following the calendar year in which notice of such
cancellation or change is filed (and any such notice shall become irrevocable on
December 31 of the calendar year in which it is filed).
Any salary reduction hereunder shall apply ratably to the Participant's
salary for each pay period covered by such election. Restricted Shares shall be
granted in respect of such salary reductions on June 30 and December 31 of each
calendar year. The number of Restricted Shares granted on each such grant date
shall be based upon the aggregate salary reduction for pay periods ending since
the next preceding grant date (or, for 1999, since June 1, 1999) and 75% of the
Average Market Value of a Share on the grant date in question.
In the event that a Participant who has elected salary reductions hereunder
shall terminate employment before Restricted Shares are granted in respect of
all such salary reductions, any salary reduction amounts in respect of which
Restricted Shares have not been granted by the date of Participant's termination
of employment shall be paid to the Participant promptly in cash.
6. Restricted Shares.
-----------------
Each grant of Restricted Shares under the Plan shall be evidenced by a
written Agreement between the Company and Participant, which shall be in such
form as the Committee shall from time to time approve and shall comply with the
following terms and conditions (and with such other terms and conditions not
inconsistent with such terms as the Committee, in its discretion, may
establish):
(a) Number of Shares. Each Agreement shall state the number of Restricted
Shares to be granted thereunder.
4
<PAGE>
(b) Restricted Period. Subject to such exceptions as may be determined by
the Committee in its discretion, the Restricted Period for Restricted
Shares granted under the Plan shall be three years from the date of
grant.
(c) Ownership and Restrictions. At the time of grant of Restricted Shares,
a certificate representing the number of Restricted Shares granted
shall be registered in the name of the Participant. Such certificate
shall be held by the Company or any custodian appointed by the Company
for the account of the Participant subject to the terms and conditions
of the Plan, and shall bear such legend setting forth the restrictions
imposed thereon as the Committee, in its discretion, may determine.
The Participant shall have all rights of a stockholder with respect to
such Restricted Shares, including the right to receive dividends and
the right to vote such Restricted Shares, subject to the following
restrictions: (i) the Participant shall not be entitled to delivery of
the stock certificate until the expiration of the Restricted Period
and the fulfillment of any other restrictive conditions set forth in
this Plan or the Agreement with respect to such Restricted Shares;
(ii) none of the Restricted Shares may be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered or disposed of (except
by will or the applicable laws of descent and distribution) during
such Restricted Period or until after the fulfillment of any such
other restrictive conditions; and (iii) except as otherwise determined
by the Committee, all of the Restricted Shares shall be forfeited and
all rights of the Participant to such Restricted Shares shall
terminate, without further obligation on the part of the Company,
unless the Participant remains in the continuous employment of the
Company for the entire Restricted Period and unless any other
restrictive conditions relating to the Restricted Shares are met. Any
common stock, any other securities of the Company and any other
property (except cash dividends) distributed with respect to the
Restricted Shares shall be subject to the same restrictions, terms and
conditions as such Restricted Shares (and shall be similarly taken
into account in determining the amount of any cash payment to a
Participant upon termination of employment).
(d) Termination of Restrictions. At the end of the Restricted Period and
provided that any other restrictive conditions of the Restricted
Shares are met, or at such earlier time as shall be determined by the
Committee, all restrictions set forth in the Agreement relating to the
Restricted Shares or in the Plan shall lapse as to the Restricted
Shares subject thereto, and a stock certificate for the appropriate
number of Shares, free of the restrictions and restrictive stock
legend (other than as required under the Securities Act of 1933 or
otherwise), shall be delivered to the Participant or his or her
beneficiary or estate, as the case may be.
(e) Restricted Share Units. Notwithstanding anything elsewhere in the Plan
to the contrary, if during the Restricted Period relating to a
Participant's Restricted Shares the Committee shall determine that the
Company may lose its Federal income tax deduction in connection with
the future lapsing of the restrictions on such Restricted Shares
because of the deductibility cap of section 162(m) of the Code, the
Committee, in its discretion, may convert some or all of such
Restricted Shares into an equal number of Restricted Share Units, as
to which payment will
5
<PAGE>
be postponed until such time as the Company will not lose its Federal
income tax deduction for such payment under section 162(m). Until
payment of the Restricted Share Units is made, the Participant will be
credited with dividend equivalents on the Restricted Share Units,
which dividend equivalents will be converted into additional
Restricted Share Units. When payment of any Restricted Share Units is
made, it will be in the same form as would apply if the Participant
were then holding Restricted Shares instead of Restricted Share Units.
7. Termination of Employment
-------------------------
The following rules shall apply, in the event of a Participant's
termination of employment with the Company and its Subsidiaries, with respect to
Restricted Shares held by the Participant at the time of such termination:
(a) Termination of Employment During Restricted Period. Except as provided
herein, if during the Restricted Period for any Restricted Shares held
by a Participant the Participant's employment is terminated either (i)
for Cause by the Company or a Subsidiary or (ii) for any reason by the
Participant, the Participant shall forfeit all rights with respect to
such Restricted Shares, which shall automatically be considered to be
cancelled, and shall have only an unfunded right to receive from the
Company's general assets a cash payment equal to the lesser of (i) the
Fair Market Value of such Restricted Shares on the Participant's last
day of employment or (ii) the aggregate Base Salary foregone by the
Participant as a condition of receiving such Restricted Shares.
Except as otherwise provided herein, if a Participant's employment is
terminated by the Company or a Subsidiary without Cause during the
Restricted Period for any Restricted Shares held by the Participant,
the Participant shall forfeit all rights with respect to such
Restricted Shares, which shall automatically be considered to be
cancelled, and shall have only an unfunded right to receive from the
Company's general assets a cash payment equal to either (i) the Fair
Market Value of such Restricted Shares on the Participant's last day
of employment or (ii) the aggregate Base Salary foregone by the
Participant as a condition of receiving such Restricted Shares, with
the Committee to have the sole discretion as to which of such amounts
shall be payable.
If the employment of a Participant holding Restricted Share Units
terminates during the Restricted Period relating to such Restricted
Share Units, they shall be treated in a manner substantially
equivalent to the treatment of Restricted Shares.
(b) Accelerated Lapse of Restrictions. Upon a termination of employment
which results from a Participant's death or Disability, all
restrictions then outstanding with respect to Restricted Shares held
by such Participant shall automatically expire and be of no further
force and effect.
6
<PAGE>
(c) Retirement of Participant. Upon the retirement of a Participant, the
Committee shall determine, in its discretion, whether all restrictions
then outstanding with respect to Restricted Shares held by the
Participant shall expire or whether the Participant shall instead be
treated as though the Participant's employment had been terminated by
the Company without Cause, as described above.
8. Change in Control.
-----------------
Upon the occurrence of a "change in control" of the Company (as defined
below), the Restricted Period shall automatically terminate as to all Restricted
Shares awarded under the Plan (as to which such Restricted Period has not
previously terminated). For purposes hereof, "change in control" of the Company
shall be deemed to have occurred upon the occurrence of any of the following
after the date on which the Corporation becomes a publicly-held Corporation:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (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 1934 Act) 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) the Company 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
the Company (a "Subsidiary") or (ii) the Company or any
Subsidiary.
(b) The individuals who, as of the date the Company issues any class
of equity securities required to be registered under Section 12
of the 1934 Act, 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 the Company'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 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 1934 Act) 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
7
<PAGE>
Proxy Contest or (2) such individual was designated by a Person who
has entered into an agreement with the Company to effect a transaction
described in clause (a) or (c) of this Section 8; or
(c) Consummation, after approval by stockholders of the Company, of:
(1) A merger, consolidation or reorganization involving the Company,
unless,
(A) The stockholders of the Company, 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;
(B) The individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at
least two-thirds of the members of the board of directors of
the Surviving Corporation; and
(C) No Person (other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof)
maintained by the Company, 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 Corporation's then outstanding Voting
Securities.
(2) A complete liquidation or dissolution of the Company; or
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company 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 the Company which, by
reducing the number of Voting Securities outstanding, increased the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
change in control would occur (but for the operation of this sentence) as a
result of the
8
<PAGE>
acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
change in control shall occur.
9. Dilution and Other Adjustments.
------------------------------
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, or other change in corporate
structure affecting the Shares, such substitution or adjustment shall be made in
the aggregate number of Shares that may be distributed as Restricted Shares or
in respect of Restricted Share Units under the Plan, and the number of
Restricted Shares and/or Restricted Share Units outstanding under the Plan, as
may be determined to be appropriate by the Committee in its sole discretion;
provided, however, that the number of Shares thus subject to the Plan shall
- -------- -------
always be a whole number.
In addition, in the event of any such change in corporate structure, the
calculation of the Average Market Value of a Share for the grant date coincident
with or next following such event may be adjusted by the Committee in such
manner as it considers to be appropriate.
10. Payment of Withholding and Payroll Taxes.
----------------------------------------
Subject to the requirements of Section 16(b) of the Exchange Act, the
Committee shall have discretion to permit or require a Participant, on such
terms and conditions as it determines, to pay all or a portion of any taxes
arising in connection with a grant of Restricted Shares hereunder, or the lapse
of restrictions with respect thereto, by having the Company withhold Shares or
by the Participant's delivering other Shares having a then-current Fair Market
Value equal to the amount of taxes to be withheld. In the absence of such
withholding or delivery of Shares, the Company shall otherwise withhold from any
payment under the Plan all amounts required by law to be withheld.
11. No Rights to Employment.
-----------------------
Nothing in the Plan or in any grant made or Agreement entered into pursuant
hereto shall confer upon any Participant the right to continue in the employ of
the Company or any Subsidiary or to be entitled to any remuneration or benefits
not set forth in the Plan or such Agreement, or interfere with, or limit in any
way, the right of the Company or any Subsidiary to terminate such Participant's
employment. Grants made under the Plan shall not be affected by any change in
duties or position of a Participant as long as such Participant continues to be
employed by the Company or a Subsidiary.
12. Amendment and Termination of the Plan.
-------------------------------------
The Board, at any time and from time to time, may suspend, terminate,
modify or amend the Plan; provided, however, that an amendment which requires
-------- -------
stockholder approval for the
9
<PAGE>
Plan to continue to comply with any law, regulation or stock exchange
requirement shall not be effective unless approved by the requisite vote of
stockholders. No suspension, termination, modification or amendment of the Plan
may adversely affect any grants previously made, unless the written consent of
the Participant is obtained.
13. Term of the Plan.
----------------
The Plan shall terminate ten years from the date that the Plan was approved
by the Board. No other grants may be made after such termination, but
termination of the Plan shall not, without the consent of any Participant who
then holds Restricted Shares or to whom Restricted Share Units are then
credited, alter or impair any rights or obligations in respect of such
Restricted Shares or Restricted Share Units.
14. Governing Law.
-------------
The Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Delaware
without giving effect to the choice of law principles thereof, except to the
extent that such laws are preempted by Federal law.
***
_____________________________
LIFEPOINT HOSPITALS, INC.
10
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Employee Classification Maximum Salary Percentage
- ----------------------------------------------------------------------------
<S> <C>
Corporate Managers, Directors, Vice 15%
Presidents and other Officers who
otherwise do not participate in the
LifePoint Executive Stock Purchase Plan
- ----------------------------------------------------------------------------
Hospital CEOs, CFOs, CNOs and COOs 15%
- ----------------------------------------------------------------------------
</TABLE>
A-i
<PAGE>
EXHIBIT 10.12
LIFEPOINT HOSPITALS, INC.
OUTSIDE DIRECTORS STOCK AND INCENTIVE COMPENSATION PLAN
<PAGE>
LIFEPOINT HOSPITALS, INC.
OUTSIDE DIRECTORS STOCK AND INCENTIVE COMPENSATION PLAN
Table of Contents
-----------------
<TABLE>
<S> <C>
1. Introduction....................................................... 1
2. Definitions........................................................ 1
(a) Agreement.................................................... 1
(b) Annual Option................................................ 1
(c) Annual Retainer.............................................. 1
(d) Black-Scholes Evaluation Method.............................. 1
(e) Board........................................................ 1
(f) Board Term................................................... 2
(g) Code......................................................... 2
(h) Common Stock................................................. 2
(i) Company...................................................... 2
(j) Deferred Stock Unit.......................................... 2
(k) Deferred Stock Unit Account.................................. 2
(l) Deferred Stock Unit Award.................................... 2
(m) Disability................................................... 2
(n) Discretionary Option......................................... 2
(o) Election Notice.............................................. 2
(p) Exchange Act................................................. 2
(q) Fair Market Value............................................ 2
(r) Initial Option............................................... 3
(s) Option....................................................... 3
(t) Option Price................................................. 3
(u) Outside Director............................................. 3
(v) Participant.................................................. 3
(w) Realization Date............................................. 3
(x) Shares....................................................... 3
(y) Stock Election............................................... 3
(z) Subsidiary................................................... 3
3. Administration of the Plan......................................... 3
3.1 General Authority............................................ 3
4. Stock Subject to Plan.............................................. 4
4.1 Number of Shares............................................. 4
4.2 Reuse of Shares.............................................. 4
5. Options............................................................ 4
5.1 Grant of Annual Options...................................... 4
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.2 Grant of Initial Options..................................... 4
5.3 Discretionary Options........................................ 4
5.4 Option Price................................................. 5
5.5 Term......................................................... 5
5.6 Option Exercise.............................................. 5
5.7 Limited Transferability of Options........................... 5
5.8 Death of Optionee............................................ 6
5.9 Disability................................................... 7
5.10 Other Termination of Service................................. 7
6. Deferred Stock Unit Awards......................................... 7
6.1 Stock Elections.............................................. 7
6.2 Deferred Stock Unit Awards................................... 7
6.3 Award Terms.................................................. 7
7. Change in Control.................................................. 8
7.1 Effect of Change in Control.................................. 8
7.2 Definition................................................... 8
8. Antidilution Adjustments........................................... 10
9. Conditions of Issuance of Stock Certificates....................... 11
9.1 Applicable Conditions........................................ 11
9.2 Legends...................................................... 11
10. No Rights to Continued Service..................................... 11
11. No Rights to Assets of the Company................................. 12
12. Amendment and Termination of the Plan.............................. 12
13. Term of the Plan................................................... 12
14. Governing Law...................................................... 12
</TABLE>
ii
<PAGE>
LIFEPOINT HOSPITALS, INC.
OUTSIDE DIRECTORS STOCK AND INCENTIVE COMPENSATION PLAN
1. Introduction.
------------
This Plan shall be known as the "LifePoint Hospitals, Inc. Outside
Directors Stock and Incentive Compensation Plan" and is hereinafter
referred to as the "Plan." The purposes of the Plan are to encourage
ownership of stock in the Company by Outside Directors, through the
granting of non-qualified stock options and deferred stock unit awards, to
provide an incentive to such directors to continue to serve the Company and
to aid the Company in attracting qualified director candidates in the
future. Options granted under the Plan will not be incentive stock options
within the meaning of section 422 of the Code.
The provisions of the Plan are intended to satisfy any applicable
requirements of Section 16(b) of the Exchange Act, and shall be interpreted
in a manner consistent with any such requirements thereof, as now or
hereafter construed, interpreted and applied by regulation, rulings and
cases.
The terms of the Plan shall be as set forth below, effective as of the
date the Company's Common Stock is distributed to Columbia/HCA Healthcare
Corporation stockholders.
2. Definitions.
-----------
As used in the Plan, the following words and phrases shall have the
meanings indicated:
(a) "Agreement" shall mean a written agreement entered into between the
Company and a Participant in connection with an Option granted under
the Plan.
(b) "Annual Option" shall mean an Option granted pursuant to Section 5.1
hereof.
(c) "Annual Retainer" shall mean the annual fee earned by the Participant
for his service on the Board.
(d) "Black-Scholes Evaluation Method" shall mean the generally accepted
option pricing model based on the Black-Scholes valuation model as
adapted for use in valuing stock options and using such assumptions as
are determined and adopted from time to time by the Board.
(e) "Board" shall mean the Board of Directors of the Company.
<PAGE>
(f) "Board Term" shall mean each Board year beginning on the date of an
annual meeting of the Company's shareholders and ending on the date
immediately preceding the next annual meeting of the Company's
shareholders.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(h) "Common Stock" shall mean the common stock of the Company.
(i) "Company" shall mean LifePoint Hospitals, Inc., a Delaware
corporation, or any successor corporation.
(j) "Deferred Stock Unit" shall mean a bookkeeping unit entitling a
Participant to a Share on the Realization Date applicable under the
Plan (and shall include fractional units).
(k) "Deferred Stock Unit Account" shall mean a bookkeeping account
maintained by the Company reflecting the number of Deferred Stock
Units credited to a Participant pursuant to Section 6.2 hereof as a
result of the Participant's Stock Election.
(l) "Deferred Stock Unit Award" shall mean an award under Section 6.2
hereof of Deferred Stock Units as a result of a Participant's Stock
Election for a Board Term.
(m) "Disability" shall mean a Participant's total and permanent inability
to perform his or her duties with the Company or any Subsidiary by
reason of any medically determinable physical or mental impairment,
within the meaning of Code section 22(e)(3).
(n) "Discretionary Option" shall mean an Option granted pursuant to
Section 5.3.
(o) "Election Notice" shall mean a written election, in such form as the
Board shall prescribe, submitted by a Participant to the Company in
connection with a Stock Election under the Plan.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time and as now or hereafter construed,
interpreted and applied by regulations, rulings and cases.
(q) "Fair Market Value" per Share or per Deferred Stock Unit as of a given
date shall mean the closing sales price of the Common Stock on the
Nasdaq Stock Market on the trading day immediately preceding the date
as of which the Fair Market Value is to be determined, or, in the
absence of any reported sales of Shares on such date, on the first
preceding date on which any such sale shall have been reported (in
either case, as reported in the Two Star Edition of The Wall Street
Journal). If the Shares are not listed on the Nasdaq Stock Market on
the date as of
2
<PAGE>
which Fair Market Value is to be determined, the Committee shall in
good faith determine the Fair Market Value in whatever manner it
considers appropriate
(r) "Initial Option" shall mean an Option granted pursuant to Section 5.2
hereof.
(s) "Option" shall mean an Annual Option, Initial Option or Discretionary
Option, as the case may be.
(t) "Option Price" shall mean the price at which each Share subject to an
Option may be purchased, determined in accordance with Section 5.4
hereof.
(u) "Outside Director" shall mean any member of the Board who is not also
an employee of the Company (or any Subsidiary thereof).
(v) "Participant" shall mean any Outside Director who has received an
Option or other award (or credit) hereunder that has not yet
terminated.
(w) "Realization Date" shall mean, as elected by the Participant, with
respect to any Deferred Stock Unit allocated to a Participant's
Deferred Stock Unit Account, the first business day following (i) the
second anniversary of the date such Deferred Stock Unit is credited to
the Participant's Deferred Stock Unit Account, or (ii) the date the
Participant ceases to be a member of the Board.
(x) "Shares" shall mean shares of Common Stock of the Company.
(y) "Stock Election" shall mean an election of the Participant to receive,
in lieu of all or part (in multiples of 25%) of his Annual Retainer, a
Deferred Stock Unit Award pursuant to Section 6.2 hereof.
(z) "Subsidiary" shall have the meaning set forth in Section 7.2.
3. Administration of the Plan.
--------------------------
3.1 General Authority.
-----------------
The Plan shall be administered by the Board. The Board shall have
plenary authority in its discretion, but subject to the express provisions
of the Plan, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or necessary
or advisable in the administration of the Plan, including, without
limitation, to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the details and
provisions of the Election Notices and Agreements and to make all other
determinations deemed necessary or advisable for the administration of the
Plan. The Board's determinations on the foregoing matters shall be final
and conclusive. No member of the Board shall be liable for any action taken
or determination made in good faith with respect to the Plan or any grant
hereunder.
3
<PAGE>
4. Stock Subject to Plan.
---------------------
4.1 Number of Shares.
----------------
The maximum number of Shares which may be issued pursuant to Options
and other awards under the Plan shall be 175,000 Shares, which number shall
be subject to adjustment as provided in Section 8 hereof. Such Shares may
be either authorized but unissued Shares, or Shares that shall have been or
may be reacquired by the Company.
4.2 Reuse of Shares.
---------------
If an Option or a Deferred Stock Unit Award under the Plan is
canceled, terminates, expires unexercised or is exchanged for a different
award without the issuance of Shares, the covered Shares shall, to the
extent of such termination or non-use, again be available for awards
thereafter granted during the term of the Plan.
5. Options.
-------
5.1 Grant of Annual Options.
-----------------------
Each person who is an Outside Director on the first business day of
any Board Term shall be granted an Annual Option on such date as shall be
selected by the Board which shall cover a number of Shares determined by
the Board. Such Annual Option shall become exercisable in three cumulative
installments, each of which shall relate to 33 1/3 % of the Shares covered
by the Annual Option, on the date of grant and the two next succeeding
anniversary dates thereof, respectively.
5.2 Grant of Initial Options.
------------------------
In addition to Annual Options granted under Section 5.1, upon
commencement of service as an Outside Director, each Outside Director shall
be granted an Initial Option, as of such date as shall be selected by the
Board which shall cover a number of shares determined by the Board. Such
Initial Option shall become fully exercisable on the third anniversary of
the date of grant.
5.3 Discretionary Options.
---------------------
The Board may, from time to time, in its sole discretion, designate
Outside Directors who are to be granted Discretionary Options and determine
the number of shares subject to such Discretionary Options. The Board, in
its sole discretion, shall prescribe the time or times at which, or the
conditions upon which, a Discretionary Option or portion thereof shall
become vested and exercisable, and may accelerate the exercisability of any
Discretionary Option at any time.
4
<PAGE>
5.4 Option Price.
------------
The Option Price of each Share subject to an Annual Option or Initial
Option shall be 100 percent of the Fair Market Value of a Share on the date
of grant. The Option Price of each Share under a Discretionary Option shall
be determined by the Board; provided, however, that the Option Price of
-------- -------
each Share under such Discretionary Option shall not be less than 100
percent of the Fair Market Value of a Share on the date of grant.
5.5 Term.
----
The term of any Option issued pursuant to the Plan shall be ten years
from the date of grant and may extend beyond the date of termination of the
Plan; provided, however, that the Board may, in the case of a Discretionary
-------- -------
Option, provide for a shorter exercise period in the Agreement.
5.6 Option Exercise.
---------------
An Option may be exercised in whole or in part at any time, with
respect to whole Shares only, within the period permitted thereunder for
the exercise thereof, and shall be exercised by written notice of intent to
exercise the Option with respect to a specified number of Shares, delivered
to the Company at its principal office, and payment in full to the Company
at said office of the amount of the Option Price for the number of Shares
with respect to which the Option is then being exercised. Payment of the
Option Price shall be made (i) in cash or cash equivalents, (ii) in whole
Shares valued at the closing sales price of the Common Stock on the Nasdaq
Stock Market on the date of exercise (or next succeeding trading date, if
the date of exercise is not a trading date, in which case the exercise date
shall instead be considered to be such next trading date) or (iii) by a
combination of such cash (or cash equivalents) and such Stock; provided,
--------
however, that the optionee shall not be entitled to tender Shares pursuant
-------
to successive, substantially simultaneous exercises of an Option or any
other stock option of the Company. Subject to applicable securities laws,
an Option may also be exercised by delivering a notice of exercise of the
Option and simultaneously selling the Shares thereby acquired pursuant to a
brokerage or similar agreement approved in advance by proper officers of
the Company, using the proceeds of such sale as payment of the exercise
price. Subject to the provisions of Section 9 hereof, the Company shall
issue a stock certificate for the Shares purchased by exercise of an
Option, in the name of the optionee (or other person exercising the Option
in accordance with the provisions of the Plan), as soon as practicable
after due exercise and payment of the aggregate Option Price for such
Shares.
5.7 Limited Transferability of Options.
----------------------------------
All Options shall be nontransferable except (i) upon the optionee's
death, by the optionee's will or the laws of descent and distribution or
(ii) on a case-by-case basis, as may be approved by the Board in its
discretion, in accordance with the terms provided below. Each Agreement
shall provide that the optionee may, during his or her lifetime and subject
to the prior approval of the Board at the time of proposed transfer,
transfer all
5
<PAGE>
or part of the Option to a Family Member (as defined below), provided that
such transfer is made for estate planning, tax planning, donative purposes
or pursuant to a domestic relations order, and no consideration (other than
nominal consideration) is received by the Optionee. The transfer of an
Option shall be subject to such other terms and conditions as the Board may
in its discretion impose from time to time, including (without limitation)
a condition that the portion of the Option to be transferred be vested and
exercisable by the optionee at the time of the transfer and a requirement
that the terms of such transfer be documented in a written agreement (in
such form as the Board may prescribe). Subsequent transfers of an Option
transferred under this Section 5.7 shall be prohibited, other than by will
or the laws of descent and distribution upon the death of the transferee.
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 fifty
percent 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 fifty percent of the
voting interests.
No transfer of an Option by the optionee 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 an
optionee, except as provided above, the Option shall be exercisable only by
the optionee, except that, in the case of an optionee who is legally
incapacitated, the Option shall be exercisable by the optionee'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 Section 5.7, such
Family Member shall thereafter have all rights that would otherwise be held
by such optionee (or by such optionee's guardian, legal representative or
beneficiary), except as otherwise provided herein. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the
Option contrary to the provisions hereof, and the levy of any execution,
attachment or similar process upon the Option, shall be null and void and
without effect.
5.8 Death of Optionee.
-----------------
If an optionee dies while he is an Outside Director, the executor or
administrator of the estate of the decedent (or the person or persons to
whom an Option shall have been validly transferred in accordance with
Section 5.7) shall have the right, during the period ending six months
after the date of the optionee's death (subject to the provisions of
Section 5.5 hereof concerning the maximum term of an Option), to exercise
the Option to the extent that it was exercisable at the date of such
optionee's death and shall not have been previously exercised.
6
<PAGE>
5.9 Disability.
----------
If an optionee's service as an Outside Director shall be terminated as
a result of Disability, the optionee (or in the case of an optionee who is
legally incapacitated, his guardian or legal representative) shall have the
right, during a period ending six months after the date of his disability
(subject to the provisions of Section 5.5 hereof concerning the maximum
term of an Option), to exercise the Option to the extent that it was
exercisable at the date of such optionee's Disability and shall not have
been previously exercised.
5.10 Other Termination of Service.
----------------------------
If an optionee's service as an Outside Director shall be terminated
for any reason other than death or Disability, the optionee shall have the
right, during the period ending ninety days after such termination (subject
to the provisions of Section 5.5 hereof concerning the maximum term of an
Option), to exercise the Option to the extent that it was exercisable on
the date of such termination of service and shall not have been previously
exercised.
6. Deferred Stock Unit Awards.
--------------------------
6.1 Stock Elections.
---------------
For each Board Term during which the Plan is in effect, a Participant
may elect to receive, in lieu of all or any portion (in multiples of 25%)
of his Annual Retainer payable for such Board Term, a Deferred Stock Unit
Award pursuant to Section 6.2 hereof. Such an election shall be made for a
Board Term by filing an Election Notice with the Company, in accordance
with procedures adopted by the Board, prior to the commencement of the
Board Term for which such Annual Retainer is to be paid; provided, however,
-------- -------
that in the case of the Board Term beginning in 1999, such Election Notice
must be filed on or before May 31, 1999.
6.2 Deferred Stock Unit Awards.
--------------------------
A Participant shall receive a Deferred Stock Unit Award for each Board
Term in respect of which he makes a Stock Election. Such Deferred Stock
Unit Award shall be granted as of the first business day of the Board Term
(except that in the case of the Board Term beginning in 1999, such grant
date shall be the twenty-first (21) trading date of the Company's Common
Stock) and shall be for a number of Deferred Stock Units determined by
dividing (A) the additional Annual Retainer amount that would have been
payable to the Participant in cash in the absence of his Stock Election, by
(B) the Fair Market Value of a Share on the date of grant.
6.3 Award Terms.
-----------
Each Deferred Stock Unit Award granted under the Plan shall have the
following terms:
7
<PAGE>
(a) Vesting. All Deferred Stock Units credited to a Participant's
Deferred Stock Unit Account shall immediately be 100% vested.
(b) Dividend Equivalents. A Participant shall be credited with
dividend equivalents on all Deferred Stock Units credited to his
Deferred Stock Unit Account at the time of any payment of
dividends on Shares to stockholders. The amount of any such
dividend equivalents shall equal the amount that would have been
payable to the Participant as a stockholder in respect of a
number of Shares equal to the number of Deferred Stock Units then
credited to him. Any such dividend equivalent shall be credited
to the Participant's Deferred Stock Unit Account as of the date
on which such dividend would have been payable and shall be
converted into additional Deferred Stock Units (which shall be
immediately vested) based upon the Fair Market Value of a Share
on the date of such crediting.
(c) Payment of Awards. A Participant shall be entitled to payment,
in respect of Deferred Stock Units credited to him, on the
Realization Date for such Deferred Stock Units indicated by
Participant in the applicable Election Notice. Subject to the
provisions of Section 9, such payment in respect of any Deferred
Stock Units shall be made through the issuance to the Participant
of a stock certificate for a number of Shares equal to the number
of such Deferred Stock Units.
7. Change in Control.
-----------------
7.1 Effect of Change in Control.
---------------------------
Upon a "change in control" of the Company (as defined below), each
outstanding Option, to the extent that it shall not otherwise have become
exercisable, shall become fully and immediately exercisable (without regard
to the otherwise applicable provisions of Sections 5.1, 5.2 and 5.3 hereof
concerning exercisability).
7.2 Definition.
----------
For purposes of Section 7.1 hereof, "change in control" of the Company
shall be deemed to have occurred upon the occurrence of any of the
following after the date on which the Corporation becomes a publicly-held
Corporation:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (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 1934 Act) 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
8
<PAGE>
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) the
Company 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 the Company (a
"Subsidiary") or (ii) the Company or any Subsidiary.
(b) The individuals who, as of the date the Company issues any class
of equity securities required to be registered under Section 12
of the 1934 Act, 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 the Company'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 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 1934 Act) 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 the Company to effect a
transaction described in clause (a) or (c) of this Section 7.2;
or
(c) Consummation, after approval by stockholders of the Company, of:
(1) A merger, consolidation or reorganization involving the
Company, unless,
(A) The stockholders of the Company, 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;
(B) The individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization
9
<PAGE>
constitute at least two-thirds of the members of the
board of directors of the Surviving Corporation; and
(C) No Person (other than the Company, any Subsidiary,
any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, 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 Corporation's then outstanding Voting
Securities.
(2) A complete liquidation or dissolution of the Company; or
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company 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 the Company which, by reducing the number of Voting
Securities outstanding, increased the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a change in
control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a change in control
shall occur.
8. Antidilution Adjustments.
-------------------------
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger or consolidation, or the sale,
conveyance, lease or other transfer by the Company of all or substantially
all of its property, or any other change in the corporate structure or
shares of the Company, pursuant to any of which events the then outstanding
Shares are split up or combined, or are changed into, become exchangeable
at the holder's election for, or entitle the holder thereof to, other
shares of stock, or in the case of any other transaction described in
section 424(a) of the Code, the Board may make such adjustment or
substitution (including by substitution of shares of another corporation)
as it may determine to be appropriate, in its sole discretion, in (i) the
aggregate number and kind of shares that may be distributed in respect of
Option exercises and/or awards under the Plan, (ii) the number and kind of
shares subject to
10
<PAGE>
outstanding Options and/or the Option Price of such shares and (iii) the
number and kind of shares represented by Deferred Stock Units outstanding
under the Plan.
9. Conditions of Issuance of Stock Certificates.
--------------------------------------------
9.1 Applicable Conditions.
---------------------
The Company shall not be required to issue or deliver any certificate
for Shares under the Plan prior to fulfillment of all of the following
conditions:
(a) the completion of any registration or other qualification of such
Shares, under any federal or state law, or under the rulings or
regulations of the Securities and Exchange Commission or any
other governmental regulatory body, that the Board shall, in its
sole discretion, deem necessary or advisable;
(b) the obtaining of any approval or other clearance from any federal
or state governmental agency that the Board shall, in its sole
discretion, determine to be necessary or advisable;
(c) the lapse of such reasonable period of time following the event
triggering the obligation to distribute shares as the Board from
time to time may establish for reasons of administrative
convenience; and
(d) if required by the Board, in its sole discretion, the receipt by
the Company from a Participant of (i) a representation in writing
that the Shares received pursuant to the Plan are being acquired
for investment and not with a view to distribution and (ii) such
other representations and warranties as are deemed necessary by
counsel to the Company.
9.2 Legends.
-------
The Company reserves the right to legend any certificate for Shares,
conditioning sales of such shares upon compliance with applicable federal
and state securities laws and regulations.
10. No Rights to Continued Service.
------------------------------
Nothing in the Plan, in any grant made, or in any Election Notice or
Agreement entered into pursuant hereto shall confer upon any Participant
the right to continue service as a member of the Board or to be entitled to
any remuneration or benefits not set forth in the Plan, Election Notice or
Agreement.
11
<PAGE>
11. No Rights to Assets of the Company.
----------------------------------
Nothing in the Plan, in any grant made, or in any Election Notice or
Agreement entered into pursuant hereto shall confer upon any Participant
any right to any particular assets of the Company. A Participant's rights
under the Plan are limited to those rights of an unsecured creditor except
to the extent Shares are actually issued to such Participant.
12. Amendment and Termination of the Plan.
-------------------------------------
The Board, at any time and from time to time, may suspend, terminate,
modify or amend the Plan; provided, however, that an amendment which
-------- -------
requires stockholder approval for the Plan to continue to comply with any
law, regulation or stock exchange requirement shall not be effective unless
approved by the requisite vote of stockholders. No suspension, termination,
modification or amendment of the Plan shall adversely affect any grants
previously made, unless the written consent of the Participant is obtained.
13. Term of the Plan.
----------------
The Plan shall have a term of ten years. No grants or awards may be
made after such termination, but termination of the Plan shall not, without
the consent of any Participant who then holds Options or Deferred Stock
Units, alter or impair any rights or obligations in respect of such Options
or Deferred Stock Units.
14. Governing Law.
-------------
The Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of
Delaware without giving effect to the choice of law principles thereof,
except to the extent that such laws are preempted by Federal law.
***
___________________________________
LIFEPOINT HOSPITALS, INC.
12
<PAGE>
EXHIBIT 10.13
_________________________________________________________
CREDIT AGREEMENT
among
HEALTHTRUST, INC. - THE HOSPITAL COMPANY,
as Borrower,
The Lenders
from Time to Time Parties Hereto,
FLEET NATIONAL BANK,
as Arranger,
FLEET NATIONAL BANK,
DEUTSCHE BANK SECURITIES INC.
and
SCOTIABANC, INC.,
as Co-Arrangers,
SCOTIABANC, INC.,
as Documentation Agent,
DEUTSCHE BANK SECURITIES INC.
as Syndication Agent,
SUNTRUST BANK, NASHVILLE, N.A., as Co-Agent,
and
FLEET NATIONAL BANK,
as Administrative Agent
Dated as of May 11, 1999
_________________________________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS.................................................... 2
1.1 Defined Terms........................................................ 2
1.2 Other Definition Provisions.......................................... 30
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................................ 30
2.1 Term Commitments..................................................... 30
2.2 Procedure for Term Loan Borrowing.................................... 30
2.3 Repayment of Term Loans.............................................. 31
2.4 Revolving Commitments................................................ 34
2.5 Procedure for Revolving Loan Borrowing............................... 35
2.6 Commitment Fees, etc................................................. 36
2.7 Termination or Reduction of Revolving Commitments.................... 36
2.8 Optional Prepayments................................................. 36
2.9 Mandatory Prepayments and Commitment Reductions...................... 37
2.10 Conversion and Continuation Options................................. 39
2.11 Limitations on LIBOR Loans.......................................... 40
2.12 Interest Rates and Payment Date..................................... 40
2.13 Computation of Interest and Fees.................................... 40
2.14 Inability to Determine Interest Rate................................ 41
2.15 Pro Rata Treatment and Payments..................................... 41
2.16 Legal Requirements.................................................. 43
2.17 Taxes............................................................... 44
2.18 Indemnity........................................................... 46
2.19 Change of Lending Office............................................ 46
2.20 Replacement of Lenders.............................................. 46
SECTION 3. LETTERS OF CREDIT.............................................. 47
3.1 L/C Commitment....................................................... 47
3.2 Procedure for Issuance of Letter of Credit........................... 47
3.3 Fees and Other Charges............................................... 48
3.4 L/C Participations................................................... 48
3.5 Reimbursement Obligation of the Borrower............................. 49
3.6 Obligations Absolute................................................. 49
3.7 Letter of Credit Payments............................................ 50
SECTION 4. CONDITIONS PRECEDENT............................................ 50
4.1 Conditions to Initial Extension of Credit............................ 50
4.2 Conditions to Each Extension of Credit............................... 53
SECTION 5. REPRESENTATIONS AND WARRANTIES.................................. 54
5.1 Financial Condition.................................................. 54
5.2 Existence; Compliance with Law....................................... 55
5.3 Power; Authorization; Enforceable Obligations........................ 55
5.4 No Legal Impediment.................................................. 55
5.5 Litigation........................................................... 56
5.6 No Default........................................................... 56
5.7 Ownership of Property; Liens......................................... 56
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
5.8 Licenses; Accreditations; Intellectual Property...................... 57
5.9. Taxes............................................................... 57
5.10 Federal Regulations................................................. 58
5.11 Labor Matters....................................................... 58
5.12 ERISA............................................................... 58
5.13 Investment Company Act; Other Regulations........................... 59
5.14 Subsidiaries........................................................ 59
5.15 Use of Proceeds..................................................... 59
5.16 Environmental Matters............................................... 59
5.17 Accuracy of Information, etc........................................ 60
5.18 Security Documents.................................................. 61
5.19 Solvency............................................................ 62
5.20 Year 2000 Matters................................................... 62
5.21 Flood Zone.......................................................... 62
5.22 Delaware Code....................................................... 63
SECTION 6. AFFIRMATIVE COVENANTS........................................... 63
6.1 Financial Statements................................................. 63
6.2 Certificates; Other Information...................................... 64
6.3 Payment of Obligations............................................... 65
6.4 Maintenance of Existence; Compliance................................. 65
6.5 Maintenance of Property.............................................. 66
6.6 Inspection of Property; Books and Records; Discussions............... 66
6.7 Notices.............................................................. 66
6.8 Environmental Laws................................................... 67
6.9 Rate Hedging Agreements.............................................. 68
6.10 Insurance........................................................... 68
6.11 Spinoff; Release of HTI; Collateral................................. 68
6.12 Leasehold Interests; Additional Collateral, etc..................... 70
6.13 Appraisals; Surveys; Environmental Reports; etc..................... 72
6.14 Existing Joint Ventures............................................. 73
SECTION 7. NEGATIVE COVENANTS.............................................. 74
7.1 Financial Covenants.................................................. 74
7.2 Indebtedness......................................................... 75
7.3 Liens................................................................ 75
7.4 Fundamental Changes.................................................. 76
7.5 Disposition of Property.............................................. 76
7.6 Restricted Payments.................................................. 77
7.7 Capital Expenditures................................................. 79
7.8 Investments.......................................................... 79
7.9 Transactions with Affiliates......................................... 81
7.10 Sales and Leasebacks................................................ 81
7.11 Changes in Fiscal Periods........................................... 82
7.12 Negative Pledge Clauses............................................. 82
7.13 Restrictive Clauses................................................. 82
7.14 Lines of Business................................................... 82
7.15 Amendment of Certain Agreements..................................... 82
SECTION 8. EVENTS OF DEFAULT............................................... 83
SECTION 9. THE AGENTS...................................................... 86
9.1 Appointment.......................................................... 86
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
9.2 Delegation of Duties................................................ 86
9.3 Exculpatory Provisions.............................................. 86
9.4 Reliance by Administrative Agent.................................... 87
9.5 Notice of Default................................................... 87
9.6 Non-Reliance on Agents and Other Lenders............................ 88
9.7 Indemnification..................................................... 88
9.8 Agent in Its Individual Capacity.................................... 89
9.9 Successor Administrative Agent...................................... 89
9.10 Authorization to Release Guarantees and Liens...................... 89
9.11 Documentation Agent, Syndication Agent and Arrangers............... 89
SECTION 10. REPRESENTATIONS AND COVENANTS OF HTI.......................... 90
10.1 Financial Condition and Financial Reporting........................ 90
10.2 Notices............................................................ 91
10.3 Existence and Authority............................................ 91
10.4 Compliance with Legal Requirements................................. 91
10.5 Legal Proceedings.................................................. 92
10.6 No Default......................................................... 92
10.7 Purpose of Loans................................................... 92
10.8 No Material Misstatements.......................................... 92
10.9 Indebtedness....................................................... 92
10.10 Liens............................................................. 93
10.11 Mergers; Acquisitions and Asset Sales............................. 93
10.12 Investments....................................................... 93
10.13 Restricted Payments............................................... 93
10.14 Transactions with Affiliates...................................... 93
SECTION 11. MISCELLANEOUS................................................. 93
11.1 Amendments and Waivers............................................. 93
11.2 Notices............................................................ 94
11.3 No Waiver; Cumulative Remedies..................................... 95
11.4 Survival of Representations and Warranties......................... 95
11.5 Payment of Expenses and Taxes...................................... 96
11.6 Successors and Assigns; Participations and Assignments............. 97
11.7 Adjustments; Set-off............................................... 99
11.8 Counterparts....................................................... 99
11.9 Severability....................................................... 99
11.10 Integration....................................................... 100
11.11 Governing Law..................................................... 100
11.12 Submission To Jurisdiction; Waivers............................... 100
11.13 Confidentiality................................................... 100
11.14 WAIVERS OF JURY TRIAL............................................. 101
</TABLE>
-iii-
<PAGE>
SCHEDULES:
A America Group Division Hospitals
1.1A Commitments
1.1B Mortgaged Property
1.1C Pricing Grid
5.3 Consents, Authorizations, Filings and Notices
5.5 Litigation
5.7 Locations of Assets
5.14(a) Organizational Chart
5.14(b) Subsidiaries, Ownership
5.18 UCC Filing Jurisdictions
7.8 Investments
EXHIBITS:
A Form of Assignment and Acceptance
B Form of Compliance Certificate
C Form of Guarantee and Security Agreement
D-1 Form of HCA Guaranty
D-2 Form of HTI Guaranty
E Form of LifePoint Guaranty
F Form of LifePoint Parent Security Agreement
G Form of LifePoint Security Agreement
H Form of Mortgage
I Form of Acquisition Compliance Checklist
J Form of Tranche A Term Note
K Form of Tranche B Term Note
L Form of Revolving Note
M-1 Form of Borrowing Notice
M-2 Form of Interest Rate Option Notice
N Form of Prepayment Option Notice
O Form of Exemption Certificate
P Form of Closing Certificate
Q Form of Assumption Agreement
R Form of Borrower Release
S Form of HTI Release
-iv-
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT, dated as of May 11, 1999, among HEALTHTRUST, INC. -
THE HOSPITAL COMPANY, a Delaware corporation ("HTI"), FLEET NATIONAL BANK, as
---
arranger (in such capacity, the "Arranger") and as administrative agent (in such
--------
capacity, the "Administrative Agent"), the financial institutions or entities
--------------------
from time to time parties to this Agreement as lenders (the "Lenders"),
-------
SCOTIABANC, INC., as documentation agent (in such capacity, the "Documentation
-------------
Agent"), DEUTSCHE BANK SECURITIES INC., as syndication agent (in such capacity,
- -----
the "Syndication Agent"), SUNTRUST BANK, NASHVILLE, N.A., as Co-Agent (in such
-----------------
capacity, "Co-Agent"), and FLEET NATIONAL BANK, SCOTIABANC, INC. and DEUTSCHE
--------
BANK SECURITIES INC., as co-arrangers (in such capacity, the "Co-Arrangers" and
------------
each a "Co-Arranger").
-----------
RECITALS
A. In connection with the reorganization of 23 Hospitals listed on
Schedule A and related assets of a division of Columbia/HCA Healthcare
- ----------
Corporation ("Columbia/HCA") and its Subsidiaries known as the America Group
------------
("America Group"), HTI desires senior bank financing and senior subordinated
---------------
debt financing (such senior bank financing and senior subordinated debt
financing being sometimes collectively referred to herein as the "Financings").
----------
B. HTI has advised the Administrative Agent and the Lenders that, in
connection with such reorganization, substantially all of the assets of
Columbia/HCA will be transferred to HTI on or prior to the Closing Date (as
defined herein).
C. HTI has further advised the Administrative Agent and the Lenders that,
following the Closing Date, HTI may cause the following transactions to occur in
the following order: (1) HTI would transfer such America Group division assets
to LifePoint Hospitals, Inc. ("LifePoint Parent") (including without limitation
----------------
all of HTI's rights under the Financings) and, simultaneously therewith,
LifePoint Parent would assume all of HTI's obligations under the Financings and
become the "Borrower" hereunder and under the other Loan Documents (and HTI in
connection therewith would be released from its primary obligations hereunder
and would guarantee the obligations of LifePoint Parent hereunder), (2) (a)
LifePoint Parent would contribute all of its assets to LifePoint Hospitals
Holdings, Inc. ("LifePoint"), and, simultaneously therewith, LifePoint would
---------
assume all obligations under the Financings and become the "Borrower" hereunder
and under the other Loan Documents (and LifePoint Parent in connection therewith
would be released from its primary obligations hereunder and would guarantee the
obligations of LifePoint hereunder), (b) LifePoint would contribute a portion of
its assets (but none of its indebtedness) to a wholly-owned subsidiary,
LifePoint Holdings 2, LLC ("LifePoint II") and (c) LifePoint II would contribute
------------
a portion of its assets (but none of its indebtedness) to a wholly-owned
subsidiary, LifePoint Holdings 3, LLC ("LifePoint III"), (3) HTI would then make
-------------
a dividend distribution to Columbia/HCA of all outstanding stock of LifePoint
Parent, and (4) Columbia/HCA would then make a dividend distribution of all such
outstanding stock to its stockholders (steps (1) and (2), collectively, the
"Dropdown"; steps (3)
--------
<PAGE>
and (4), collectively, the "HCA Distributions"; and steps (1) through (4),
-----------------
collectively, the "Spinoff").
-------
D. HTI has further advised the Administrative Agent and the Lenders
that the Borrower will repay in full the Financings two days after the Closing
Date (or if not a Business Day, on the next succeeding Business Day) in the
event the Spinoff has not been completed within such period.
The parties hereto hereby agree as follows:
I. DEFINITIONS.
-----------
1.1 Defined Terms. As used herein, the terms listed in this Section 1.1
-------------
shall have the meanings assigned to them in this Section 1.1.
"Accreditation Body": all Persons having jurisdiction over the
------------------
accreditation, certification, evaluation or operation of any of the Hospitals,
including without limitation the Joint Commission on Accreditation of Healthcare
Organizations and applicable state licensing bodies having jurisdiction over the
licensing of acute care Hospitals as such.
"Acquisition": any acquisition of all or substantially all of the assets or
-----------
equity interests of any Person or any division thereof.
"Adjustment Date": as defined in the Pricing Grid.
---------------
"Administrative Agent": see the Preamble.
--------------------
"Affiliate": as to any Person, any other Person that, directly or
---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": collectively, the Administrative Agent, the Syndication Agent,
------
the Co-Agent and the Documentation Agent.
"Aggregate Exposure": with respect to any Lender at any time, an amount
------------------
equal to (a) until the Closing Date, the aggregate amount of such Lender's
Commitments at such time and (b) thereafter, the sum of (i) the aggregate then
unpaid principal amount of such Lender's Term Loans and (ii) the amount of such
Lender's Revolving Commitment then in effect or, if the Revolving Commitments
have been terminated, the amount of such Lender's Revolving Extensions of Credit
then outstanding.
-2-
<PAGE>
"Aggregate Exposure Percentage": with respect to any Lender at any time,
-----------------------------
the ratio (expressed as a percentage) of such Lender's Aggregate Exposure at
such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": this Agreement, as amended, supplemented or otherwise modified
---------
from time to time.
"America Group": see the Recitals.
-------------
"Applicable Margin": for each Type of Loan, the rate per annum set forth
-----------------
under the relevant column heading below:
<TABLE>
<CAPTION>
Base Rate Loans LIBOR Loans
--------------- -----------
<S> <C> <C>
Revolving Loans 2.00% 3.00%
Tranche A Term Loans 2.00% 3.00%
Tranche B Term Loans 2.50% 3.50%
</TABLE>
; provided, that on and after the first Adjustment Date occurring after the
--------
delivery of financial statements for the fiscal quarter of the Borrower ending
December 31, 1999, the Applicable Margin with respect to Loans will be
determined pursuant to the Pricing Grid.
"Arranger": see the preamble hereto.
--------
"Asset Sale": any sale, lease, sale and leaseback, assignment, conveyance,
----------
transfer or other disposition ("Disposition") of property or a series of any
-----------
such related Dispositions of property (excluding any such Disposition permitted
by clause (a), (b) or (c) of Section 7.5) for which the Borrower or any of its
Subsidiaries receives (valued at the initial principal amount thereof in the
case of non-cash proceeds consisting of notes or other debt, securities and
valued at fair market value in the case of other non-cash proceeds) in excess of
$500,000.
"Assignee": as defined in Section 11.6(c).
--------
"Assignment and Acceptance": an Assignment and Acceptance, substantially in
-------------------------
the form of Exhibit A.
---------
"Assignor": as defined in Section 11.6(c).
--------
"Assumption Agreement": as defined in Section 6.11.
--------------------
"Available Revolving Commitment": as to any Revolving Lender at any time,
------------------------------
an amount equal to the excess, if any, of (a) such Lender's Revolving Commitment
then in effect over (b) such Lender's Revolving Extensions of Credit then
outstanding.
-3-
<PAGE>
"Bartow Contribution Agreement": that certain Contribution Agreement among
-----------------------------
Bartow Memorial Hospital, Inc., HCA of Florida, Inc. and Bartow Healthcare
System, Ltd., dated as of August 16, 1996, as originally executed or as amended
with the prior written consent of the Required Lenders.
"Base Rate": for any day, a rate per annum equal to the greater of (a) the
---------
Prime Rate in effect on such day or (b) the Federal Funds Effective Rate
(rounded upwards, if necessary, to the next 1/16th of 1%) in effect on such day
plus .50%.
"Base Rate Loans": Loans bearing interest based upon the Base Rate.
---------------
"Borrower": HTI; provided, however, in the event step (1) of the Dropdown
--------
occurs, LifePoint Parent shall become the "Borrower" hereunder and HTI shall
become a "Guarantor" hereunder pursuant to Section 6.11 and in the event step
(2) of the Dropdown occurs, LifePoint shall become and thereafter remain the
"Borrower" hereunder and LifePoint Parent shall become an additional "Guarantor"
with HTI hereunder pursuant to Section 6.11.
"Borrowing Date": any Business Day specified by the Borrower as a date on
--------------
which the Borrower requests the relevant Lenders to make Loans hereunder.
"Borrowing Notice": see Section 2.2.
----------------
"Business Day": a day on which commercial banks settle payments in (i) New
------------
York or London if the payment obligation is calculated by reference to any LIBOR
Rate, or (ii) New York, if the payment obligation is calculated by reference to
the Base Rate.
"Capital Expenditures": for any period, with respect to any Person, the
--------------------
aggregate of all payments by such Person and its Subsidiaries during such period
(including, without duplication, the aggregate amount of Capital Lease
Obligations incurred during such period) for the rental, lease, purchase,
construction, replacement, repair or use of any property, the value of which
should be capitalized under GAAP and Statement No. 13 of the Financial
Accounting Standards Board on such Person's consolidated balance sheet;
provided, that, for purposes hereof, Capital Expenditures shall not include (A)
expenditures of proceeds of insurance settlements, condemnation awards and other
settlements in respect of lost, destroyed, damaged or condemned assets,
equipment or other property to the extent such expenditures are made to replace
or repair such lost, destroyed, damaged or condemned assets, equipment or other
property or otherwise to acquire assets or properties useful in the business of
the Borrower or its Subsidiaries nor (B) any payment comprising part of the
Total Purchase Price for any Permitted Acquisition.
"Capital Lease Obligations": as to any Person, the obligations of such
-------------------------
Person and its Subsidiaries to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, to the extent such obligations are required to be
classified and accounted for as a capital lease on a balance sheet of such
Person
-4-
<PAGE>
under GAAP. For purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
"Cash Equivalents": (a) Investments (of one year or less) in direct or
----------------
guaranteed obligations of the United States, or any agency thereof; (b)
investments (of 270 days or less) in certificates of deposit of any Lender and
any other domestic commercial bank of recognized standing, in each case having
capital, surplus and undivided profits in excess of $100,000,000, and senior
debt rated carrying one of the two highest ratings of Standard & Poor's Ratings
Service, A Division of McGraw Hill, Inc., or Moody's Investors Service, Inc. (an
"Approved Institution"); (c) investments (of 270 days or less) in commercial
--------------------
paper given one of the two highest ratings by Standard and Poor's Ratings
Service, A Division of McGraw Hill, Inc., or by Moody's Investors Service, Inc.;
(d) investments redeemable at any time without penalty in money market
instruments placed through a Lender or an Approved Institution;(e) repurchase
agreements fully collateralized by United States government securities; and (f)
deposits insured by the Federal Deposit Insurance Corporation.
"Change of Control": for any reason (a) upon LifePoint Parent becoming a
-----------------
public company, any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 35% of
the total outstanding Equity Interests (on a fully-diluted basis) of LifePoint
Parent entitled to vote in the election of directors; (b) Columbia/HCA shall
cease to be listed as a public company traded on a nationally recognized
securities exchange or shall cease to own of record and beneficially 100% of the
issued and outstanding Equity Interests in HTI, in each case so long as HTI is a
Loan Party hereunder; (c) during any period of up to 24 consecutive months,
commencing after the Closing Date, individuals who at the beginning of such 24
month period were directors of LifePoint Parent (together with any new director
whose election by its Board of Directors or whose nomination for election by its
shareholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the directors of LifePoint Parent then in
office; (d) LifePoint Parent shall cease to own of record and beneficially 100%
of the issued and outstanding Equity Interests of LifePoint; (e) LifePoint shall
cease to own of record and beneficially, directly or indirectly through one or
more other Subsidiaries, all of the issued and outstanding Equity Interests of
all of its Subsidiaries (including all Subsidiary Guarantors) except the
Existing Joint Ventures or as permitted pursuant to Sections 7.4 or 7.5; (f)
LifePoint shall cease to own of record and beneficially, directly or indirectly
through one or more other Subsidiaries, at least 75% as of the Closing Date of
all of the issued and outstanding Equity Interests of Columbia/Bartow Healthcare
System, Ltd. (with such percentage to increase proportionately in accordance
with the Bartow Contribution Agreement and Organizational Documents as and when
HCA of Florida, Inc. makes any additional contribution thereto); or (g)
LifePoint shall cease to own of record and
-5-
<PAGE>
beneficially, directly or indirectly through one or more Subsidiaries, at least
70% of the issued and outstanding Equity Interests of Dodge City Healthcare
Group, L.P.
"Closing Certificate": see Section 4.1.
-------------------
"Closing Date": the date on which the conditions precedent set forth in
------------
Section 5.1 shall have been satisfied, which date is May 11, 1999.
"Co-Agent": see the preamble hereto.
--------
"Co-Arranger": see the preamble hereto.
-----------
"Code": the Internal Revenue Code of 1986, as amended from time to time.
----
"Collateral": all property of the Loan Parties, now owned or hereafter
----------
acquired, upon which a Lien is purported to be created by any Security Document.
"Columbia/HCA": see the Recitals.
------------
"Columbia/HCA Intercompany Receivable": the intercompany receivable held by
------------------------------------
Columbia/HCA in the principal amount of no more than $1,800,000,000, which may
be paid down with initial proceeds of the Financings and the Triad Financings in
accordance with Section 7.6(i) and thereafter shall have a principal balance of
no greater than $50,000,000.
"Commitment": as to any Lender, the sum of the Tranche A Term Commitment,
---------
the Tranche B Term Commitment and the Revolving Commitment of such Lender.
"Commonly Controlled Entity": an entity, whether or not incorporated, that
--------------------------
is under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group that includes the Borrower and that is treated as a
single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a Responsible
----------------------
Officer substantially in the form of Exhibit B.
---------
"Confidential Information Memorandum": the Confidential Information
-----------------------------------
Memorandum dated April, 1999 and furnished to the Lenders.
"Consolidated Annualized EBITDA": for the Reference Period ending June 30,
------------------------------
1999, Consolidated EBITDA for the two fiscal quarters ending on such date times
two; for the Reference Period ending September 30, 1999, Consolidated EBITDA for
the three fiscal quarters ending on such date times 4/3rds; and for the
Reference Period ending December 31, 1999, Consolidated EBITDA for the four
fiscal quarters ending on such date.
-6-
<PAGE>
"Consolidated Cash Flow": as to LifePoint Parent and its Subsidiaries,
----------------------
"Consolidated Cash Flow" shall mean: (a) For the Reference Periods ending on
Quarterly Dates falling during the period from June 30, 1999 through December
31, 1999: (i) Consolidated Annualized EBITDA for such Reference Period, minus
-----
(ii) cash taxes of LifePoint Parent and its Subsidiaries for such Reference
Period; (b) for the Reference Periods ending on Quarterly Dates falling during
the period from March 31, 2000 through December 31, 2000: (i) Consolidated
EBITDA for such Reference Period, minus (ii) cash taxes for such Reference
-----
Period; (c) for the Reference Period ending March 31, 2001: (i) Consolidated
EBITDA for such Reference Period, minus (ii) cash taxes for such Reference
-----
Period, minus (iii) Capital Expenditures for the fiscal quarter ending March 31,
-----
2001; (d) for the Reference Period ending June 30, 2001: (i) Consolidated EBITDA
for such Reference Period, minus (ii) cash taxes for such Reference Period,
-----
minus (iii) Capital Expenditures for the two fiscal quarters ending June 30,
- -----
2001; (e) For the Reference Period ending September 30, 2001: (i) Consolidated
EBITDA for such Reference Period, minus (ii) cash taxes for such Reference
-----
Period, minus (iii) Capital Expenditures for the three fiscal quarters ending
-----
September 30, 2001; and (f) for each Reference Period ending on or after
December 31, 2001: (i) Consolidated EBITDA for such Reference Period, minus (ii)
-----
cash taxes for such Reference Period, minus (iii) Capital Expenditures for such
-----
Reference Period.
"Consolidated EBITDA": for any period, as to LifePoint Parent and its
-------------------
Subsidiaries, Consolidated Net Income for such period plus, without duplication
----
and to the extent reflected as a charge in the statement of such Consolidated
Net Income for such period, the sum of (a) income tax expense, (b) Consolidated
Interest Expense, (c) depreciation and amortization expense (including deferred
loan cost amortization if a non-cash charge), (d) ESOP expense (if a non-cash
charge), (e) non-cash charges and non-cash adjustments for impairment of long-
lived assets not to exceed $10,000,000 in the aggregate for any Reference
Period, and (f) other non-cash items and extraordinary non-cash charges not to
exceed $10,000,000 for any Reference Period, all determined on a consolidated
basis in accordance with GAAP. For the purposes of calculating Consolidated
EBITDA for any Reference Period pursuant to any determination of the ratio of
Consolidated Total Debt to Consolidated EBITDA or the ratio of Consolidated Cash
Flow to Consolidated Fixed Charges, (i) if at any time during such Reference
Period such Person or any Subsidiary shall have made any Material Disposition
(other than any sale of the Three Sale Hospitals), the Consolidated EBITDA for
such Reference Period shall be reduced by an amount equal to the Consolidated
EBITDA (if positive) attributable to the property that is the subject of such
Material Disposition for such Reference Period or increased by an amount equal
to the Consolidated EBITDA (if negative) attributable thereto for such Reference
Period and (ii) if during such Reference Period such Person or any Subsidiary
shall have made a Material Acquisition, Consolidated EBITDA for such Reference
Period shall be calculated after giving pro forma effect thereto as if such
--- -----
Material Acquisition occurred on the first day of such Reference Period.
"Consolidated Fixed Charge Coverage Ratio": for any period, the ratio of
----------------------------------------
(a) Consolidated Cash Flow for such period to (b) Consolidated Fixed Charges for
such period.
-7-
<PAGE>
"Consolidated Fixed Charges": for any period, as to LifePoint Parent and
--------------------------
its Subsidiaries, the sum of (a) the cash portion of Consolidated Interest
Expense for such period (annualized for the first three fiscal quarters measured
hereunder), plus (b) the aggregate amount (determined on a consolidated basis in
----
accordance with GAAP) of principal and premium, if any, required to be paid
during such period with respect to all outstanding Indebtedness of LifePoint
Parent and its Subsidiaries.
"Consolidated Interest Expense": for any period, as to LifePoint Parent and
-----------------------------
its Subsidiaries, the aggregate amount (determined on a consolidated basis in
accordance with GAAP) of interest, commitment fees, letter of credit fees and
net payments under Rate Hedging Agreements accrued (whether such interest is
reflected as an item of expense or capitalized) during such period (including
without limitation the commitment fees and the Letters of Credit fees hereunder,
and the interest component of Capital Lease Obligations) in respect of all
Indebtedness of LifePoint Parent and its Subsidiaries (net of credits under Rate
Hedging Agreements) for such period; provided however, that if during any period
LifePoint Parent or any Subsidiary shall have made a Material Acquisition,
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect for the Indebtedness incurred or related to the Material
- --- -----
Acquisition as if such Material Acquisition occurred on the first day of such
period.
"Consolidated Net Income": for any period, as to LifePoint Parent and its
-----------------------
Subsidiaries, the net income (or loss) of LifePoint Parent and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth": at any date, as to any Person, (a) the total
----------------------
assets determined on a consolidated basis in accordance with GAAP of such Person
and its Subsidiaries minus (b) the sum of any amounts attributable to (i)
-----
goodwill, (ii) intangible items including unamortized debt discount and expense,
patents, trade and service marks and names, copyrights and research development
expenses except prepaid expenses, and (iii) any write-up in the book value of
assets resulting from any revaluation thereof, and minus (c) total liabilities
-----
determined on a consolidated basis in accordance with GAAP of such Person and
its Subsidiaries.
"Consolidated Total Debt": at any date, the aggregate principal amount of
-----------------------
all Indebtedness of such Person and its Subsidiaries at such date, determined on
a consolidated basis in accordance with GAAP.
"Default": any of the events specified in Section 8, whether or not any
-------
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Defaulting Lenders": Lenders who are in breach of any of their obligations
------------------
hereunder, as determined by the Administrative Agent in its reasonable
discretion.
"Disposition": see definition of "Asset Sale".
-----------
-8-
<PAGE>
"Distribution Agreement" the Distribution Agreement, dated on or about the
----------------------
date hereof, by and among Columbia/HCA, LifePoint Parent and Triad Hospitals,
Inc., as originally executed or hereafter amended with the prior written consent
of the Required Lenders.
"Documentation Agent": see the preamble hereto.
-------------------
"Dollars" and "$": dollars in lawful currency of the United States.
------- -
"Domestic Subsidiary": any Subsidiary of LifePoint organized under the laws
-------------------
of any jurisdiction within the United States.
"Dropdown": see the Recitals.
--------
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Legal Requirements
regulating, relating to or imposing liability or standards of conduct concerning
protection of the environment, as now or may at any time hereafter be in effect.
"Equity Interests": any and all shares, interests, participations or other
----------------
equivalents (however designated) of capital stock, partnership interests, member
interests and any and all equivalent ownership interests in a Person, and any
and all warrants, rights or options to purchase any of the foregoing, other than
equity interests or warrants, right or options issued in connection with
exercise by a present or former employee, officer or director under a stock
incentive plan, stock option plan or other equity-based compensation plan or
arrangement.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time.
"ESOP": the LifePoint Parent's Retirement Plan.
----
"Event of Default": any of the events specified in Section 8.
----------------
"Excess Cash Flow": for any period, as to LifePoint Parent (a) Consolidated
----------------
EBITDA for such period, minus (b) Consolidated Fixed Charges for such period,
-----
minus (c) voluntary prepayments of the Term Loans and voluntary prepayments of
- -----
the Revolving Loans made in connection with voluntary permanent reductions of
the Revolving Commitments during such period, minus (d) Capital Expenditures
------
(net of any proceeds of any related financings with respect to such Capital
Expenditures) for such period, minus (e) cash taxes for such Person and its
-----
Subsidiaries for such period.
"Existing Joint Ventures": Columbia/Bartow Healthcare System, Ltd. and
-----------------------
Dodge City Healthcare Group, L.P.
-9-
<PAGE>
"Facility": each of (a) the Tranche A Term Commitments and the Tranche
--------
A Term Loans made thereunder (the "Tranche A Term Facility"), (b) the Tranche B
-----------------------
Term Commitments and the Tranche B Term Loans made thereunder (the "Tranche B
---------
Term Facility") and (c) the Revolving Commitments and the extensions of credit
- -------------
made thereunder (the "Revolving Facility").
------------------
"Federal Funds Effective Rate": for any period, a fluctuating interest
----------------------------
rate per annum (based on a 360 day year) equal for each day during such period
to the weighted average of the rates of interest charged on overnight Federal
funds transactions with member banks of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for any day which is a Business
Day by the Federal Reserve Bank of New York (or, in the absence of such
publication, as reasonably determined by the Administrative Agent).
"Financings": see the Recitals.
----------
"Funding Office": the office of the Administrative Agent specified in
--------------
Section 11.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other entity as may be approved
by a significant segment of the accounting profession, provided, however, that
for purposes of compliance with Section 7.1 and the related definitions, "GAAP"
means such principles as in effect on December 31, 1998 as applied by
Columbia/HCA and LifePoint Parent and their respective Subsidiaries and the
Accountants in the preparation of the most recent audited annual statements
referred to in Section 5.1 and consistently followed, without giving effect to
any subsequent changes thereto. In the event that any accounting change of the
Financial Accounting Standards Board shall be promulgated resulting in a change
in the method of calculation of financial covenants, financial standards or
other terms in this Agreement, then the Borrower and the Administrative Agent
agree to enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such accounting changes to the effect that
the criteria for evaluating the Borrower's financial condition shall be the same
after such accounting changes as if such accounting changes had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required Lenders, all financial
covenants, financial standards and other terms in this Agreement shall continue
to be calculated or construed as if such accounting changes had not occurred.
"Governmental Authority": any nation or government, state or other
----------------------
political subdivision thereof, agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative functions or pertaining to
government, any securities exchange and any self-regulatory organization.
-10-
<PAGE>
"Guarantee and Security Agreement": the Guarantee and Security Agreement to
--------------------------------
be executed and delivered by each Subsidiary Guarantor, substantially in the
form of Exhibit C, as the same may be amended, supplemented or otherwise
---------
modified from time to time.
"Guarantee Obligation": with respect to any Person, (a) any guarantee by
--------------------
such specified Person of the payment or performance of, or any contingent
obligation of such Person in respect of any Indebtedness or other obligation of
any primary obligor, (b) any other arrangement whereby credit is extended to a
primary obligor on the basis of any promise or undertaking of such Person
including any binding "comfort letter" or "make well agreement" written by such
Person to a creditor or prospective creditor of such primary obligor, to (i) pay
the Indebtedness of such primary obligor, (ii) purchase an obligation owed by
such primary obligor, (iii) pay for the purchase or lease of assets or services
regardless of the actual delivery thereof or (iv) maintain the capital, working
capital, solvency or general financial condition of such primary obligor, (c)
any liability of such Person as a general partner of a partnership in respect of
Indebtedness or other obligations of such partnership, (d) any liability of such
Person as a joint venturer of a joint venture in respect of Indebtedness or
other obligations of such joint venture, and (e) any liability of such Person
with respect to the tax liability of others as a member of a group (other than a
group consisting solely of the Borrower and its Subsidiaries) that is
consolidated for tax purposes, and (f) reimbursement obligations, whether
contingent or matured, of such Person with respect to letters of credit, bankers
acceptances, surety bonds, other financial guarantees and Rate Hedging
Agreements; in each case whether or not any of the foregoing are reflected on
the balance sheet of such Person or in a footnote thereto; provided, however,
that the term "Guarantee Obligation" shall not include endorsements for
--------------------
collection or deposit in the ordinary course of business. The amount of any
Guarantee Obligation and the amount of Indebtedness resulting from such
Guarantee Obligation shall be the maximum amount that the guarantor may become
obligated to pay in respect of the obligations (whether or not such obligations
are outstanding at the time of computation).
"Guarantors": collectively, (a) HTI, in the event HTI is no longer the
----------
"Borrower" hereunder and has not been released as a Guarantor pursuant to
Section 6.11, (b) LifePoint Parent, in the event step (2) of the Dropdown occurs
and LifePoint Parent is no longer the "Borrower" hereunder pursuant to Section
6.11, and (c) the Subsidiary Guarantors, in the event HTI is released as a
"Borrower" and "Guarantor" hereunder pursuant to Section 6.11. (It is a
requirement of this Agreement that the Subsidiary Guarantors become "Guarantors"
hereunder prior to the occurrence of either of the HCA Distributions described
in steps (3) and (4) of the Spinoff and contemporaneously with any release of
HTI as a "Guarantor" pursuant to Section 6.11).
"HCA Asset Transfer Side Letter": see Section 4.1(l).
------------------------------
"HCA Distributions": see the Recitals.
-----------------
-11-
<PAGE>
"HCA Guaranty": the Guarantee Agreement of Columbia/HCA to be executed and
------------
delivered on the Closing Date substantially in the form attached as Exhibit D-1
-----------
as may be amended, supplemented or modified from time to time.
"HCA Other Side Letter": see Section 4.1(l).
---------------------
"HCA Senior Credit Facilities": Columbia/HCA's senior credit facilities in
----------------------------
effect on the date hereof.
"Hazardous Materials": (a) any petroleum or petroleum products,
-------------------
flammable materials, explosives, radioactive materials, asbestos, urea
formaldehyde foam insulation, and polychlorinated biphenyls, (b) any chemicals
or other materials or substances or wastes that are now or hereafter become
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants",
"pollutants" or words of similar import under any Environmental Law, and (c) any
other chemical or other material or substance, exposure to which is now or
hereafter prohibited, limited or regulated under any Environmental Law.
"High Yield Documents": the High Yield Notes and all other documents and
--------------------
agreements executed in connection therewith, each as originally executed or as
amended pursuant to Section 7.15.
"High Yield Offering Memorandum": the Offering Memorandum dated May 4, 1999
------------------------------
relating to the High Yield Notes.
"High Yield Notes": the $150,000,000 in 10.75% Senior Subordinated Notes
----------------
due 2009 issued by HTI on or about the Closing Date.
"High Yield Offering": see Section 4.1.
-------------------
"HTI": see the preamble.
---
"HTI Guaranty": collectively, the two Guarantee Agreements of HTI to be
------------
executed and delivered by HTI pursuant to Section 6.11, substantially in the
forms of Exhibit D-2, as the same may be amended, supplemented or otherwise
-----------
modified from time to time.
"HTI Release": see Section 6.11.
-----------
"Hospitals": any of the acute care hospitals owned or operated by any of
---------
the Loan Parties from time to time, of which 23 are owned and operated by
LifePoint and its Subsidiaries on the date hereof, as set forth on Schedule A
----------
hereto.
-12-
<PAGE>
"Indebtedness": of any Person at any date, without duplication, (a) all
------------
indebtedness of such Person for borrowed money, (b) obligations of such Person
for the deferred purchase price of property or services (other than trade
payables incurred in the ordinary course of such Person's business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property), (e) the principal portion of Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an
account party under acceptance, letter of credit or similar facilities, (g) all
Guarantee Obligations of such Person in respect of Indebtedness of another
Person, (h) all Indebtedness of another Person secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned by such Person, whether or not such
Person has assumed or become liable for the payment of such obligation, (i) all
obligations of such Person in respect of Rate Hedging Agreements, (j) all
obligations of such Person under take-or-pay or similar arrangements or under
commodities agreements, (k) all preferred Equity Interests issued by such Person
and which by the terms thereof could be (at the request of the holders thereof
or otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration (other than as a result of a Change of Control or an Asset Sale
that does not in fact result in a redemption of such preferred Equity Interests)
at any time during the term of this Agreement, (l) the principal portion of all
obligations of such Person under Synthetic Leases, (m) the Indebtedness of any
partnership or unincorporated joint venture in which such Person is a general
partner or a joint venturer, and (n) the outstanding attributed principal amount
under any Securitization Transaction.
"Initial Financial Statements": see Section 4.1.
----------------------------
"Insolvency" or "Insolvent": with respect to any Multiemployer Plan, the
---------- ---------
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Intellectual Property": collectively, all rights, priorities and
---------------------
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses,
technology, know-how and processes, and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of each
---------------------
March, June, September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any LIBOR Loan having an
Interest Period of three months or less, the last day of such Interest Period,
(c) as to any LIBOR Loan having an Interest Period longer than three months,
each day that is three months, or a whole multiple thereof, after the first day
of such Interest Period and the last day of such Interest Period and (d) as to
any Loan (other than any
-13-
<PAGE>
Revolving Loan that is an Base Rate Loan), the date of any repayment or
prepayment made in respect thereof.
"Interest Period": as to any LIBOR Loan, (a) initially, the period
---------------
commencing on the borrowing or conversion date, as the case may be, with respect
to such LIBOR Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such LIBOR Loan and ending one, two, three or six months thereafter, as selected
by the Borrower by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest Period
with respect thereto; provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not
a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period under a
particular Facility that would extend beyond the Scheduled Revolving
Termination Date or beyond the date final payment is due on the Tranche A
Term Loans or the Tranche B Term Loans, as the case may be;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to require
a payment or prepayment of any LIBOR Loan during an Interest Period for
such Loan.
"Investments": as defined in Section 7.8.
-----------
"Issuing Lender": Fleet National Bank or any of its Affiliates in their
--------------
capacity as issuer of any Letter of Credit.
"JCAHO": the Joint Commission on Accreditation of Healthcare
-----
Organizations, or any similar successor organization thereto.
"L/C Application": an application, in such form as the Issuing Lender may
---------------
specify from time to time, requesting the Issuing Lender to issue a Letter of
Credit.
"L/C Commitment": $12,000,000.
--------------
-14-
<PAGE>
"L/C Fee Payment Date": the last day of each March, June, September and
--------------------
December and the last day of the Revolving Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5.
"L/C Participants": all Revolving Lenders other than the Issuing Lender.
----------------
"Legal Requirement": as to any Person, the certificate of incorporation,
-----------------
by-laws, certificate of limited partnership, certificate of formation,
partnership agreement or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject, including without limitation ERISA,
Environmental Laws, the federal Medicare and Medicaid statutes, anti-kickback
and fraud and abuse laws and regulations, (including without limitation 42
U.S.C. (S)1320a-7b, 42 U.S.C. (S)1395nn or 31 U.S.C. (S)3729, or the regulations
promulgated thereunder), health and environmental protection laws, storm
drainage control laws, doing business and/or licensing laws, zoning and
subdivision laws and ordinances, and laws regarding access and facilities for
disabled persons including but not limited to the federal Architectural Barriers
Act, the Fair Housing Amendments Act of 1988, the Rehabilitation Act of 1973,
and the Americans with Disabilities Act of 1990.
"Lenders": as defined in the preamble hereto.
-------
"Letter of Credit Fees" see Section 3.3.
---------------------
"Letters of Credit": as defined in Section 3.1(a).
-----------------
"LIBOR Base Rate": with respect to each Interest Period for a LIBOR Loan,
---------------
that rate per annum (rounded upward, if necessary, to the nearest 1/32nd of one
percent) which represents the offered rate for deposits in U.S. Dollars, for a
period of time comparable to such Interest Period, which appears on the Telerate
page 3750 as of 11:00 a.m. (London time) on that day that is two Business Days
preceding the first day of such Interest Period; provided, however, that if the
rate described above does not appear on the Telerate System on any applicable
interest determination date, the LIBOR Base Rate for such Interest Period shall
be the rate (rounded upwards as described above, if necessary) for deposits in
dollars for a period substantially equal to such Interest Period shown on the
Reuters Page "LIBO" (or such other page as may replace the LIBO Page on that
service for the purpose of displaying such rates), as of 11:00 a.m. (London
Time) on that day that is two Business Days prior to the beginning of such
Interest Period. If both the Telerate and Reuters systems are unavailable, then
the LIBOR Base Rate for any Interest Period will be determined on the basis of
the offered rates for deposits in U.S. Dollars for a period of time comparable
to such Interest Period which are offered by four major banks in the London
-15-
<PAGE>
interbank market at approximately 11:00 a.m. (London time) on that day that is
two London Business Days preceding the first day of such Interest Period, as
selected by the Administrative Agent. The principal London office of each of
four major London banks will be requested to provide a quotation of its U.S.
Dollar deposit offered rate. If at least two such quotations are provided, the
rate for that date will be the arithmetic mean of the quotations. If fewer than
two quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in U.S. Dollars to leading
European banks for a period of time comparable to such Interest Period offered
by major banks in New York City at approximately 11:00 a.m. (New York City) time
on that day that is two Business Days preceding the first day of such Interest
Period. In the event that the Administrative Agent is unable to obtain any such
quotation as provided above, it will be deemed that the LIBOR Base Rate for the
proposed Interest Period cannot be determined. The Administrative Agent shall
give prompt notice to the Borrower of the LIBOR Base Rate as determined for each
LIBOR Loan and such notice shall be conclusive and binding, absent manifest
error.
"LIBOR Loans": Loans bearing interest at a rate determined on the basis of
-----------
the LIBOR Rate.
"LIBOR Rate": With respect to each day during each Interest Period
----------
pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward, if necessary, to the
nearest 1/16th of 1%):
LIBOR Base Rate
---------------
1.00 - LIBOR Reserve Requirements
"LIBOR Reserve Requirements": for any day as applied to a LIBOR Loan, the
--------------------------
aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of the
Federal Reserve System.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"LifePoint": see the Recitals.
---------
"LifePoint II": see the Recitals.
------------
-16-
<PAGE>
"LifePoint III": see the Recitals.
-------------
"LifePoint Parent": see the Recitals.
----------------
"LifePoint Parent Guaranty": the Guarantee Agreement of LifePoint Parent to
-------------------------
be executed and delivered by LifePoint Parent pursuant to Section 6.11,
substantially in the form of Exhibit E, as the same may be amended, supplemented
---------
or otherwise modified from time to time.
"LifePoint Parent Security Agreement": the Security Agreement of LifePoint
-----------------------------------
Parent to be executed and delivered by LifePoint Parent pursuant to Section
6.11, substantially in the form of Exhibit F, as the same may be amended,
---------
supplemented or otherwise modified from time to time.
"LifePoint Security Agreement": the Security Agreement of LifePoint to be
----------------------------
executed and delivered by LifePoint pursuant to Section 6.11, substantially in
the form of Exhibit G, as the same may be amended, supplemented or otherwise
---------
modified from time to time.
"Loan" any loan made by any Lender pursuant to this Agreement.
----
"Loan Documents": this Agreement, the Security Documents and the Notes.
--------------
"Loan Parties": (a) HTI (until the HTI Release has been executed and
------------
delivered), (b) LifePoint Parent, (c) LifePoint and each of its Subsidiaries,
and (d) any other Affiliate of LifePoint that is or becomes a party to a Loan
Document.
"Loan Party": any of the Loan Parties.
----------
"Majority Facility Lenders": with respect to the Tranche A Term and the
-------------------------
Revolving Facility, the holders (who are not Defaulting Lenders) of more than
50% of the aggregate unpaid principal amount of the Tranche A Term Loans or the
Total Revolving Extensions of Credit, as the case may be, outstanding under such
Facility (or, prior to any termination of the Tranche A Term Commitments or the
Revolving Commitments, the holders (who are not Defaulting Lenders) of more than
50% of the aggregate Tranche A Term Commitments or Total Revolving Commitments,
as the case may be), and with respect to the Tranche B Term Facility, the
holders (who are not Defaulting Lenders) of more than 50% of the aggregate
principal amount of the Tranche B Term Loans outstanding under the Tranche B
Term Facility.
"Majority Revolving Facility Lenders": the Majority Facility Lenders in
-----------------------------------
respect of the Revolving Facility.
"Majority Tranche A Term Lenders": the Majority Facility Lenders in respect
-------------------------------
of the Tranche A Term Facility.
-17-
<PAGE>
"Managed Care Plans": All health maintenance organizations, preferred
------------------
provider organizations, individual practice associations, competitive medical
plans and similar arrangements.
"Material Acquisition": any acquisition of property or series of related
--------------------
acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the Equity Interests of a Person and (b) involves the
payment of consideration by a Person and its Subsidiaries in excess of
$1,000,000 in the aggregate.
"Material Adverse Effect": a material adverse effect on (a) the business,
-----------------------
assets, property, operations, condition (financial or otherwise), liabilities or
prospects of Columbia/HCA (so long as HTI remains a Loan Party), HTI (so long as
it remains a Loan Party), LifePoint Parent, LifePoint, or LifePoint and its
Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform any
material obligation under any of the Loan Documents to which it is bound, (c)
any event or condition which would reasonably be likely to result in an Event of
Default (including any financial covenant Event of Default) after the passage of
time, or (d) the validity or enforceability of (i) this Agreement or (ii) any of
the other Loan Documents or (iii) any aspect of the Spinoff materially adverse
to any Loan Party or (iv) the rights or remedies of the Administrative Agent or
the Lenders hereunder or thereunder.
"Material Disposition": any Disposition of property or series of related
--------------------
Dispositions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the Equity Interests of a Person and (b) results in gross
proceeds to a Person or any of its Subsidiaries in excess of $1,000,000 in the
aggregate.
"Material Subsidiaries": each direct or indirect Subsidiary (or any
---------------------
combination thereof) of LifePoint existing on the date hereof or hereafter
acquired or created which (i) has a tangible net worth (calculated in accordance
with GAAP) equal to or greater than 10% of the Consolidated Net Worth of
LifePoint and its Subsidiaries (calculated as of the most recent fiscal period
with respect to which the Administrative Agent shall have received audited
financial statements) or (ii) has annual book net income (determined in
accordance with GAAP) equal to or greater than 5% of the annual Consolidated Net
Income of LifePoint and its Subsidiaries (calculated for the most recent fiscal
year of LifePoint for which the Administrative Agent has received audited
financial statements).
"Medical Facilities": any Hospital, outpatient clinic and long term care
------------------
facility and related medical office building or other facility owned or used by
any of the Loan Parties in its business.
"Mortgaged Properties": the real properties and improvements thereon listed
--------------------
on Schedule 1.1B and properties related thereto, as to which the Administrative
-------------
Agent for the benefit of the Lenders shall request and shall be granted a Lien
pursuant to the Mortgages.
-18-
<PAGE>
"Mortgages": each of the mortgages and deeds of trust made by any Loan
---------
Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit H (with such
---------
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded), as the same may be amended,
supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined in
------------------
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any Recovery
-----------------
Event, to the extent the aggregate proceeds thereof exceed $500,000 in any
fiscal year, such proceeds in the form of cash and Cash Equivalents (including
any such proceeds received by way of deferred payment of principal pursuant to a
note or installment receivable or purchase price adjustment receivable or
otherwise, but only as and when received) of such Asset Sale or Recovery Event,
net of attorney's fees, accountant's fees, investment banking fees, amounts
required to be applied to the repayment of Indebtedness (including principal,
interest, premium and penalties, if any) secured by a Lien expressly permitted
hereunder on any asset that is the subject of such Asset Sale or Recovery Event
(other than any Lien pursuant to a Security Document) and other customary fees
and expenses actually incurred in connection therewith and net of taxes paid or
reasonably estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements) and net reserves (which shall not exceed in any event 20% of such
cash and Cash Equivalents) for reasonable post-closing adjustments (to be
reserved until adjusted no later than nine months after such Asset Sale)
relating to settlement of receivables and other working capital adjustments in
the ordinary course of business, reasonably determined by LifePoint; (b) in
connection with any issuance or sale of equity securities or debt securities or
instruments or the incurrence of loans, the cash proceeds received from such
issuance or incurrence, net of attorney's fees, investment banking fees,
accountant's fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection therewith. Any excess net
reserve amounts netted out from Net Cash Proceeds shall be turned over to the
Administrative Agent as Net Cash Proceeds for mandatory prepayment at the end of
the reserve and adjustment period relating thereto.
"Non-Excluded Taxes": as defined in Section 2.17(a).
------------------
"Non-U.S. Lender": as defined in Section 2.17(d).
---------------
"Notes":the collective reference to the Tranche A Term Notes, the Tranche B
-----
Term Notes and the Revolving Notes.
"Notice of Reinvestment":a written notice executed by a Responsible Officer
----------------------
stating that no Event of Default has occurred and is continuing and that
LifePoint (directly or indirectly through a Subsidiary Guarantor) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an Asset
Sale or Recovery Event to acquire assets to be used and useful in its business.
-19-
<PAGE>
"Obligations": the unpaid principal of and interest on (including interest
-----------
accruing after the maturity of the Loans and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender (or, in
the case of Rate Hedging Agreements, any affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document, the Letters of Credit, any Rate
Hedging Agreement entered into with any Lender or any affiliate of any Lender or
any other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including all fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise.
"Organizational Documents": as to any Person, the certificate of
------------------------
incorporation, by-laws, certificate of limited partnership, certificate of
formation, partnership agreement or other organizational or governing document
of such Person.
"Participant": as defined in Section 11.6(b).
-----------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
----
Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisitions": an Acquisition by LifePoint or a Subsidiary
----------------------
Guarantor, subject to the fulfillment of the following conditions:
(i) LifePoint shall have obtained the prior written approval of the
Required Lenders, if (A) such Acquisition involves a Total Purchase Price of
$32,500,000 or more in the aggregate, or (B) the aggregate Total Purchase
Price of such Acquisition and all other Acquisitions consummated within the
calendar year of the date of the proposed Acquisition exceeds $40,000,000.
(ii) Target EBITDA of the Target for its most recently ended four
fiscal quarters shall exceed $1.00;
(iii) No later than (A) 15 days (or such shorter period as may be
reasonably practicable, if approved by the Required Lenders) prior to the
consummation of any such Acquisition or, if earlier, 10 Business Days after
the execution and delivery of the related Purchase Agreement, LifePoint
shall have delivered to the Administrative Agent, with sufficient copies
for all of the Lenders, copies of executed counterparts of such Purchase
Agreement, together with all schedules thereto, copies of the Target's
financial statements supplied to LifePoint, and any additional agreements
or instruments to be executed at the
-20-
<PAGE>
closing thereunder (to the extent available), (B) promptly following a
request therefor, copies of such other information or documents relating to
such acquisition as the Administrative Agent shall have reasonably
requested, and (C) if requested by the Administrative Agent, promptly
following the consummation of such Acquisition, certified copies of the
agreements, instruments and documents referred to above to the extent the
same has been executed and delivered at the closing under such Purchase
Agreement;
(iv) No Loan Party shall, in connection with any such Acquisition,
assume or remain liable with respect to any Indebtedness of the related
seller, except (A) to the extent permitted under Section 7.2 and (B)
obligations of such seller incurred in the ordinary course of business and
necessary or desirable to the continued operation of the underlying
properties; and any other such liabilities or obligations not permitted to
be assumed or otherwise supported hereunder shall be paid in full or
released as to the assets being so acquired on or before the consummation
of such Acquisition;
(v) All other assets and properties acquired in connection with
any such Acquisition shall be free and clear of any Liens other than as
permitted under Section 7.3;
(vi) The Loan Parties shall have complied as applicable with all of
the provisions in Sections 6.11 and 6.12, including the execution and
delivery of such additional agreements, instruments, certificates, opinions
and other papers as the Administrative Agent may reasonably require;
(vii) The Target must be engaged primarily in the business of
LifePoint and its Subsidiaries existing on the date hereof;
(viii) No Default shall have occurred and be continuing or reasonably
be expected to result from such Acquisition;
(ix) Without limiting the generality of the foregoing, after giving
effect to such Acquisition, LifePoint shall be in compliance with the
provisions of Section 7.1, calculated on a pro forma basis as of the end of
---------
and for the quarter most recently ended prior to the date of such
Acquisition. Without limiting the generality of the foregoing, both
before, and after giving effect to such Acquisition calculated on a pro
---
forma basis as of the end of and for the Reference Period most recently
-----
ended prior to the date of such Acquisition, the ratio of Consolidated
Total Debt to Consolidated Annualized EBITDA (for the most recently ended
Reference Periods ending on or before September 30, 1999) or to
Consolidated EBITDA (for Reference Periods ending thereafter) shall be less
than 4.00:1.00. At least eight Business Days prior to the closing of such
Acquisition, LifePoint shall provide to the Administrative Agent (with
sufficient copies for all of the Lenders) a certificate signed on behalf of
LifePoint by a Responsible Officer demonstrating such compliance in
reasonable detail; and
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<PAGE>
(x) LifePoint shall have submitted to the Administrative Agent a
properly completed Acquisition Compliance Checklist substantially in the
form of Exhibit I hereto which must be satisfactory to the Administrative
---------
Agent in form and substance.
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity.
"Plan": at a particular time, any employee benefit plan that is covered by
----
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Schedule 1.1C.
------------ -------------
"Pricing Leverage Ratio": at any date, the ratio of (a) Consolidated Total
----------------------
Debt on such date to (b) Consolidated EBITDA for the most recently ended
Reference Period.
"Prime Rate": The variable per annum rate of interest so designated from
----------
time to time by the Reference Lender at its head office as its Prime Rate. The
Prime Rate is not necessarily intended to be the lowest rate of interest charged
by the Reference Lender in connection with extensions of credit.
"Pro Forma Financial Statements": as defined in Section 4.1(a).
------------------------------
"Projections": as defined in Section 6.2(a).
-----------
"Properties": as defined in Section 4.17(a).
----------
"Purchase Agreement": any of the asset and/or equity purchase agreements
------------------
relating to a Permitted Acquisition between LifePoint or any Subsidiary and the
seller of such assets and/or equity.
"Rate Hedging Agreements": all interest rate swaps, caps or collar
-----------------------
agreements or similar arrangements providing for protection against fluctuations
in interest rates or currency exchange rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.
"Recovery Event": any settlement of or payment in respect of any property or
--------------
casualty insurance claim or any condemnation proceeding relating to any asset of
the Borrower or any of its Subsidiaries in excess of $500,000.
"Reference Lender": Fleet National Bank.
----------------
-22-
<PAGE>
"Reference Period": any period of four consecutive fiscal quarters of the
----------------
Borrower.
"Register": as defined in Section 11.6(d).
--------
"Regulation U": Regulation U of the Board as in effect from time to time.
------------
"Reimbursement Obligation": the obligation of the Borrower to reimburse the
------------------------
Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of
Credit.
"Reinvestment Deferred Amount": with respect to any Asset Sale or Recovery
----------------------------
Event for which a Notice of Reinvestment has been delivered, the aggregate Net
Cash Proceeds received by LifePoint or any of its Subsidiaries in connection
therewith that are not applied to prepay the Term Loans pursuant to Section
2.9(b) as a result of the delivery of a Reinvestment Notice,
"Reinvestment Prepayment Amount": with respect to any Asset Sale or Recovery
------------------------------
Event for which a Notice of Reinvestment has been delivered, the Reinvestment
Deferred Amount relating thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date to acquire assets to be used and useful in the
business of LifePoint and the Subsidiary Guarantors.
"Reinvestment Prepayment Date": with respect to any Asset Sale or Recovery
----------------------------
Event for which a Notice of Reinvestment has been delivered, the earlier of (a)
the date occurring nine months after such Asset Sale or Recovery Event and (b)
the date on which the Borrower shall have determined not to, or shall have
otherwise ceased to, acquire assets to be used and useful in the business of
LifePoint and the Subsidiary Guarantors with all or any portion of the
applicable Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the condition that
--------------
such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of ERISA,
----------------
other than those events as to which the thirty day notice period is waived under
subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. (S) 4043.
"Required Lenders": at any time, the holders (who are not Defaulting
----------------
Lenders) of more than 50% of (a) until the Closing Date, the Commitments then in
effect and (b) thereafter, the sum of (i) the aggregate unpaid principal amount
of the Term Loans then outstanding, (ii) the aggregate undrawn Tranche A Term
Commitments then in effect, and (iii) the Total Revolving Commitments then in
effect or, if the Revolving Commitments have been terminated, the Total
Revolving Extensions of Credit then outstanding.
"Required Prepayment Lenders": the Majority Facility Lenders in respect of
---------------------------
each Facility.
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<PAGE>
"Responsible Officer": as to any Loan Party, the chief executive officer,
-------------------
chief operating officer, president, chief financial officer or general counsel
of such Loan Party, but in any event, with respect to financial matters, the
chief financial officer of the Borrower.
"Restricted Payment": any distribution or payment of cash or property, or
------------------
both, directly or indirectly (a) in respect of any Subordinated Debt, or (b) to
the holder of any Equity Interest in any Loan Party or to any Affiliates of any
Loan Party for any reason whatsoever, including without limitation, salaries,
loans, debt repayment, consulting fees, expense reimbursements and dividends,
distributions, put, call or redemption payments and any other payments in
respect of Equity Interests; provided, however, that Restricted Payments shall
not include transactions that comply with Section 7.9.
"Revolving Commitment": as to any Lender, the obligation of such Lender, if
--------------------
any, to make Revolving Loans and participate in Letters of Credit in an
aggregate principal and/or face amount not to exceed the amount set forth under
the heading "Revolving Commitment" opposite such Lender's name on Schedule 1.1A
-------------
or in the Assignment and Acceptance pursuant to which such Lender became a party
hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original aggregate amount of the Total Revolving Commitments is
$65,000,000.
"Revolving Commitment Period": the period from and including the Closing
---------------------------
Date to the Scheduled Revolving Termination Date.
"Revolving Extensions of Credit": as to any Revolving Lender at any time, an
------------------------------
amount equal to the sum of (a) the aggregate principal amount of all Revolving
Loans held by such Lender then outstanding and (b) an amount equal to such
Lender's Revolving Percentage of the L/C Obligations then outstanding.
"Revolving Lender": each Lender that has a Revolving Commitment or that
----------------
holds Revolving Loans.
"Revolving Loans": as defined in Section 2.4(a).
---------------
"Revolving Note": as defined in Section 2.4(c).
--------------
"Revolving Percentage": as to any Revolving Lender at any time, the
--------------------
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments (or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Loans then outstanding).
"Scheduled Revolving Termination Date": November 11, 2004.
------------------------------------
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<PAGE>
"Scheduled Tranche A Termination Date": the first anniversary of the date
------------------------------------
of this Agreement.
"SEC": the Securities and Exchange Commission, and any successor thereto.
---
"Securitization Transaction": means a financing transaction or series of
--------------------------
financing transactions that have been or may be entered into by a member of the
Borrower's consolidated group pursuant to which such member may sell, convey or
otherwise transfer to (i) a Subsidiary or affiliate, or (ii) any other Person,
or may grant a security interest in, any accounts receivable, notes receivable,
rights to future lease payments or residuals or other similar rights to payment
(the "Securitization Receivables") (whether such Securitization Receivables are
--------------------------
then existing or arising in the future) of such member, and any assets related
thereto, including without limitation, all security interests in merchandise or
services financed thereby, the proceeds of such Securitization Receivables, and
other assets which are customarily sold or in respect of which security
interests are customarily granted in connection with securitization transactions
involving such assets.
"Security Documents": the collective reference to the HTI Guaranty (so long
------------------
as HTI remains a Loan Party), the HCA Asset Transfer Side Letter (so long as HTI
remains a Loan Party), the HCA Other Side Letter, the HCA Guaranty, the
LifePoint Parent Guaranty, the LifePoint Parent Security Agreement, the
LifePoint Security Agreement, the Guarantee and Security Agreement, the
Assumption Agreements, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any property of any
Person to secure the obligations and liabilities of any Loan Party under any
Loan Document.
"Single Employer Plan": any Plan that is covered by Title IV of ERISA, but
--------------------
that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of any date
-------
of determination, (a) the amount of the "present fair saleable value" of the
assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
-25-
<PAGE>
"Spinoff": see the Recitals.
-------
"Subordinated Debt": any Indebtedness of the Borrower or any of its
-----------------
Subsidiaries subordinated on terms satisfactory to the Administrative Agent and
the Required Lenders pursuant to written agreements in form and substance
satisfactory to the Administrative Agent, including the High Yield Offering and
the Columbia/HCA Intercompany Receivable.
"Subordination Agreement": see Section 4.1.
-----------------------
"Subsidiary" as to any Person, a corporation, partnership, limited liability
----------
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. The definition of "Subsidiaries" of LifePoint Parent
and LifePoint shall include the Existing Joint Ventures. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a direct or indirect Subsidiary or Subsidiaries of
LifePoint Parent or LifePoint; provided that no Plan (including the ESOP) shall
be considered a Subsidiary of LifePoint Parent or LifePoint.
"Subsidiary Guarantor": each direct or indirect Subsidiary of LifePoint.
--------------------
"Syndication Agent": as defined in the preamble hereto.
-----------------
"Synthetic Lease": means any synthetic lease, tax retention operating lease,
---------------
off-balance sheet loan or similar off-balance sheet financing product where such
transaction is considered borrowed money Indebtedness for tax purposes but is
classified as an operating lease under GAAP.
"Target": any Person or any division of a Person, all or substantially all
------
of the outstanding Equity Interests or all or substantially all of the assets of
which, are proposed to be acquired by LifePoint or any of its Subsidiaries in
connection with a Permitted Acquisition.
"Target EBITDA": for any period, as to the Target, net income for such
-------------
period plus, without duplication and to the extent reflected as a charge in the
----
statement of such net income for such period, the sum of (a) income tax expense,
(b) interest expense, and (c) depreciation and amortization expense, all
calculated in accordance with generally accepted accounting principles
consistently applied.
"Tax Sharing Agreement": the Tax Sharing and Indemnification Agreement,
---------------------
dated on or about the date hereof, by and among Columbia/HCA, LifePoint Parent
and Triad Hospitals, Inc. as originally executed or hereafter amended with the
prior written consent of Required Lenders.
-26-
<PAGE>
"Term Lenders": the collective reference to the Tranche A Term Lenders and
------------
the Tranche B Term Lenders.
"Term Loans": the collective reference to the Tranche A Term Loans and
----------
Tranche B Term Loans.
"Third Party Payor Programs": All third party payor programs in which
--------------------------
LifePoint and its Subsidiaries currently or in the future may participate,
including, without limitation, Medicare, Medicaid, Blue Cross and/or Blue
Shield, Managed Care Plans, other private insurance programs and employee
assistance programs, including without limitation all Third Party Payor Programs
in which the America Group division of Columbia/HCA participated immediately
prior to the Spinoff.
"Three Sale Hospitals": the following three Hospitals, Trinity Hospital,
--------------------
Erin, Tennessee, Barrow Medical Center, Winder, Georgia and Halstead Hospital,
Halstead, Kansas.
"Total Purchase Price": the "purchase price" for any Acquisition including,
--------------------
without limitation, but without duplication, (a) all cash payable by any Loan
Party to the seller or Affiliate of the seller at the closing of the
Acquisition; (b) all equity securities of any Loan Party, and warrants, options
and other rights to acquire equity securities of any Loan Party, issued at the
closing of the Acquisition valued in accordance with the fair market value of
such securities; (c) all Indebtedness incurred by LifePoint Parent or LifePoint
or any of its Subsidiaries in favor of any seller or Affiliate of any seller;
(d) all Indebtedness and other liabilities of or related to the Target that are
assumed by any Loan Party, or subject to which the acquired assets are acquired,
or (in the case of an equity security purchase or merger) that remain unpaid at
the closing of the Acquisition; (e) amounts payable under noncompetition
agreements; (f) the maximum amount of all compensation (other than base salary
and customary bonuses) during the 12-month period following the closing of the
acquisition under all employment agreements entered into in connection with the
Acquisition; (g) amounts payable under consulting or other similar agreements
entered into in connection with the Acquisition, the payment and amount of which
are not conditioned on the performance of a specified amount of services or
which are in excess of a reasonable amount for the specified services; and (h)
the maximum amount of all contingent future payments or other consideration
(including any Equity Interests and warrants, options and other rights to
acquire Equity Interests, valued in accordance with the fair market value of
such securities but excluding employee benefit plans) not otherwise described in
this definition, including without limitation "earn-out" payments and amounts
payable upon disposition of the acquired business (unless the Required Lenders
shall otherwise agree), and (i) all other payments and obligations which
constitute in substance purchase price rather than payment for services. For
purposes of clauses (f) and (h) of the preceding sentence, the maximum amount of
any payment or other consideration specified therein shall be the maximum amount
provided for in the relevant agreement, or, if no maximum amount is so provided,
the amount reasonably estimated by LifePoint on the basis of assumptions and
calculations provided in writing to the Agent and approved by them. Such
assumptions shall include reasonable projections of any measure of financial or
other performance that enters into the calculation of the amount of any
-27-
<PAGE>
such payment or other consideration but shall not include any assumption that
any other future event that is a condition to such payment or consideration
(such as the later disposition of the acquired business or a public or private
offering of securities) will not occur. Any amounts included in clauses (e), (g)
or (h) payable after the 12-month period following the closing of the
acquisition shall be calculated on a net present value basis discounted at the
then current U.S. treasury rate with a maturity substantially the same as the
final payment thereunder (or such other rate as is then acceptable to the
Administrative Agent).
"Total Revolving Commitments": at any time, the aggregate amount of the
---------------------------
Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the aggregate amount of
------------------------------------
the Revolving Extensions of Credit of the Revolving Lenders outstanding at such
time.
"Tranche A Term Commitment": as to any Lender, the obligation of such
-------------------------
Lender, if any, to make a Tranche A Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading "Tranche A
Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
-------------
aggregate amount of the Tranche A Term Commitments is $60,000,000.
"Tranche A Term Lender": each Lender that has a Tranche A Term Commitment or
---------------------
holds a Tranche A Term Loan.
"Tranche A Term Loan": as defined in Section 2.1.
-------------------
"Tranche A Term Note": as defined in Section 2.3(c).
-------------------
"Tranche A Term Percentage": as to Tranche A Term Lender at any time, the
-------------------------
percentage which such Lender's Tranche A Term Commitment then constitutes of the
aggregate Tranche A Term Commitments (or, at any time after the Closing Date,
the percentage which the sum of the aggregate principal amount of such Lender's
Tranche A Term Loans then outstanding plus such Lender's undrawn Tranche A Term
Commitment constitutes of the sum of the aggregate principal amount of the
Tranche A Term Loans then outstanding plus the aggregate principal amount of the
undrawn Tranche A Term Commitments).
"Tranche B Term Commitment": as to Tranche B Term Lender, the obligation of
-------------------------
such Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder in
a principal amount not to exceed the amount set forth under the heading "Tranche
B Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
-------------
aggregate amount of the Tranche B Term Commitments is $85,000,000.
"Tranche B Term Lender": each Lender that has a Tranche B Term Commitment or
---------------------
holds a Tranche B Term Loan.
-28-
<PAGE>
"Tranche B Term Loan": as defined in Section 2.1.
-------------------
"Tranche B Term Note": as defined in Section 2.3(d).
-------------------
"Tranche B Term Percentage": as to any Lender at any time, the percentage
-------------------------
which such Lender's Tranche B Term Commitment then constitutes of the aggregate
Tranche B Term Commitments (or, at any time after the Closing Date, the
percentage which the aggregate principal amount of such Lender's Tranche B Term
Loans then outstanding constitutes of the aggregate principal amount of the
Tranche B Term Loans then outstanding); provided, that solely for purposes of
--------
calculating the amount of each installment of Tranche B Term Loans (other than
the last installment) payable to a Tranche B Term Lender, such Term Lender's
Tranche B Term Percentage shall be calculated without giving effect to any
portion of any prior mandatory or optional prepayment attributable to such Term
Lender's Tranche B Term Loans that shall have been declined by such Term Lender
(or, in the case of any Term Lender that shall have acquired its Tranche B Term
Loans by assignment from another Person, by such other Person).
"Transferee": any Assignee or Participant.
----------
"Transition Agreements": collectively, (a) the Distribution Agreement; (b)
---------------------
the Tax Sharing Agreement; (c) the benefits and employment matters agreement
among Columbia/HCA, Triad Hospitals, Inc. and LifePoint Parent; (d) the
insurance allocation and administration agreement among Columbia/HCA, Triad
Hospitals, Inc. and LifePoint Parent; (e) the computer and data processing
services agreement between Columbia Information Systems, Inc. ("CIS") and
---
LifePoint Parent; (f) subleases between certain subsidiaries of Columbia/HCA and
LifePoint Parent relating to LifePoint Parent's principal executive offices; (g)
the transitional services agreement between Columbia/HCA and LifePoint Parent;
(h) agreement to share telecommunications services between CIS and LifePoint
Parent; (i) agreements between Columbia/HCA and LifePoint Parent relating to the
provision of account collection services and relating to LifePoint Parent's
participation in a group purchasing organization with Columbia/HCA; and (j) Year
2000 professional services agreement between CIS and LifePoint Parent.
"Triad Financings": the credit facilities provided under the Credit
----------------
Agreement dated as of May 11, 1999 among Healthtrust, Inc.-The Hospital Company,
Bank of America National Trust and Savings Association, as administrative agent,
and the lenders who become parties thereto from time to time (the "Triad Credit
------------
Agreement") and the financing under the Senior Subordinated Notes (as defined in
- ---------
the Triad Credit Agreement).
"Type": as to any Loan, its nature as a Base Rate Loan or a LIBOR Loan.
----
"United States" or "U.S.": the United States of America.
------------- ----
"U.S. Taxes": as defined in Section 11.6(d).
----------
-29-
<PAGE>
1.2 Other Provisions. Unless otherwise specified therein, all terms
----------------
defined in this Agreement shall have the defined meanings when used in the other
Loan Documents or any certificate or other document made or delivered pursuant
hereto or thereto. As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (a)
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP, (b)
the words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation", and (c) the words "incur" and "borrow" shall
be construed to mean incur, create, issue, assume, become liable in respect of
or suffer to exist (and the words "incurred" and "incurrence" and "borrowings"
shall have correlative meanings).
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Commitments. (a) Subject to the terms and conditions hereof,
----------------
each Tranche A Term Lender severally agrees to make up to three term loans
(each, a "Tranche A Term Loan") to the Borrower from time to time as provided
-------------------
below until the Scheduled Tranche A Termination Date; with the initial Tranche A
Term Loan of such Tranche A Term Lender to be made on the Closing Date in an
amount not exceeding such Tranche A Term Lender's Tranche A Term Percentage of
$25,000,000. Subject to the terms and conditions hereof, the Borrower may
borrow the aggregate undrawn Tranche A Term Commitments in two advances after
the Closing Date until the Scheduled Tranche A Termination Date.
(b) Subject to the terms and conditions hereof, each Tranche B Term Lender
severally agrees to make a term loan (a "Tranche B Term Loan") to the Borrower
-------------------
on the Closing Date in an amount not to exceed the amount of the Tranche B Term
Commitment of such Lender.
(c) The Term Loans may from time to time be LIBOR Loans or Base Rate Loans,
as determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.10.
2.2 Procedure for Term Loan Borrowing. (a) The Borrower shall give the
---------------------------------
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, one Business Day
prior to the anticipated Closing Date and shall be confirmed in writing pursuant
to the Borrowing Notice attached as Exhibit M-1, a "Borrowing Notice")
----------- ----------------
requesting that the Term Lenders make the initial Tranche A Term Loans (in an
aggregate amount not to exceed $25,000,000) and make the Tranche B Term Loans on
the Closing Date and specifying the amount to be borrowed. The Term Loans made
on the Closing Date shall initially be Base Rate Loans. Upon receipt of such
notice the Administrative Agent shall promptly notify each Term Lender thereof.
Not later than 12:00 Noon, New York City time, on the Closing Date each Term
Lender shall make available to the Administrative Agent at the Funding Office an
amount in immediately available funds equal to the Term Loan or Term Loans to be
made by such Lender on the Closing Date. The Administrative Agent shall credit
the account of the Borrower on the books of such office of the
-30-
<PAGE>
Administrative Agent by the Term Lenders in immediately available funds.
Thereafter, the Borrower may borrow under the remaining undrawn Tranche A Term
Commitment in two advances until the Scheduled Tranche A Termination Date on any
Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (received by the Administrative Agent prior to 12:00 Noon,
New York City time) (a) three Business Days prior to the requested Borrowing
Date, in the case of LIBOR Loans, or (b) one Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans), specifying (i) the amount and
Type of Tranche A Loans to be borrowed, (ii) the requested Borrowing Date and
(iii) in the case of LIBOR Loans, the respective amounts of each such Type of
Loan and the respective lengths of the initial Interest Period therefor. Each
such advance shall be in an amount equal to (x) in the case of Base Rate Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
aggregate undrawn Tranche A Term Commitment is less than $1,000,000, such lesser
amount) and (y) in the case of LIBOR Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof. Upon receipt of any such notice from the Borrower,
the Administrative Agent shall promptly notify each Tranche A Term Lender
thereof. Each Tranche A Term Lender or Tranche B Term Lender, as applicable,
will make the amount of its pro rata share of each borrowing available to the
--- ----
Administrative Agent for the account of the Borrower at the Funding Office prior
to 12:00 Noon, New York City time, on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent crediting the account of the Borrower on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the
Tranche A Term Lenders and in like funds as received by the Administrative
Agent.
2.3 Repayment of Term Loans. (a) Subject to Section 2.3(c) below, the
-----------------------
Tranche A Term Loan of each Tranche A Lender shall mature in 19 consecutive
quarterly installments, commencing on June 30, 2000, each of which shall be paid
on the payment dates set forth below and shall be in an amount equal to such
Lender's Tranche A Term Percentage multiplied by the amount equal to the
percentage of aggregate outstanding principal of Tranche A Term Loans as of the
Scheduled Tranche A Termination Date set forth below opposite such payment date:
<TABLE>
<CAPTION>
Payment Date Principal Amount
----------------- ----------------------
<S> <C>
06/30/00 2.75%
09/30/00 2.75%
12/31/00 2.75%
03/31/01 4.1875%
06/30/01 4.1875%
09/30/01 4.1875%
12/31/01 4.1875%
03/31/02 6.25%
06/30/02 6.25%
09/30/02 6.25%
12/31/02 6.25%
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
Payment Date Principal Amount
------------------- -----------------------
<S> <C>
03/31/03 6.25%
06/30/03 6.25%
09/30/03 6.25%
12/31/03 6.25%
03/31/04 6.25%
06/30/04 6.25%
09/30/04 6.25%
11/11/04 6.25%
</TABLE>
(b) Subject to Section 2.3(c) below, the Tranche B Term Loan of each
Tranche B Lender shall mature in 24 consecutive quarterly installments,
commencing on March 31, 2000, each of which shall be in an amount equal to such
Lender's Tranche B Term Percentage multiplied by the amount set forth below
opposite such installment.
<TABLE>
<CAPTION>
Payment Date Principal Amount
------------------- -----------------------
<S> <C>
03/31/00 $ 212,500
06/30/00 $ 212,500
09/30/00 $ 212,500
12/31/00 $ 212,500
03/31/01 $ 212,500
06/30/01 $ 212,500
09/30/01 $ 212,500
12/31/01 $ 212,500
03/31/02 $ 212,500
06/30/02 $ 212,500
09/30/02 $ 212,500
12/31/02 $ 212,500
03/31/03 $ 212,500
06/30/03 $ 212,500
09/30/03 $ 212,500
12/31/03 $ 212,500
03/31/04 $ 212,500
06/30/04 $ 212,500
09/30/04 $ 212,500
12/31/04 $ 212,500
03/31/05 $20,187,500
06/30/05 $20,187,500
09/30/05 $20,187,500
11/11/05 $20,187,500
</TABLE>
-32-
<PAGE>
(c) Notwithstanding anything in this Agreement or any other Loan
Document to the contrary, all of the Term Loans shall be immediately due and
payable, without demand or notice of any kind, and the Tranche A Term
Commitments and the Tranche B Term Commitments shall immediately terminate,
without demand or notice of any kind, on the second calendar day after the
Closing Date (or if not a Business Day, on the next succeeding Business Day) in
the event the Spinoff has not been completed in its entirety (including all
steps (1) through (4) thereof) in accordance with the terms of this Agreement
(including without limitation Section 6.11).
(d) The Borrower agrees that, upon the request to the Administrative
Agent by any Tranche A Term Lender, which request is communicated to the
Borrower, the Borrower will execute and deliver to such Tranche A Term Lender a
promissory note of the Borrower dated the Closing Date evidencing the Tranche A
Term Loans made by such Tranche A Term Lender, substantially in the form of
Exhibit J (a "Tranche A Term Note"), payable to the order of such Tranche A Term
- --------- -------------------
Lender and in a principal amount equal to, in the case of Tranche A Term Notes
issued on the Closing Date, the lesser of (A) the initial Tranche A Term
Commitment of such Tranche A Term Lender or (B) the unpaid principal amount of
the Tranche A Term Loans made by such Tranche A Term Lender plus the undrawn
amount of the Tranche A Term Commitment, if not terminated, and, in the case of
Tranche A Term Notes issued after the Closing Date, the unpaid principal amount
of the Tranche A Term Loan made by such Tranche A Term Lender plus the undrawn
amount of the Tranche A Term Commitment, if not terminated. Each Tranche A Term
Lender is hereby authorized to record the date, Type and amount of each Tranche
A Term Loan made by such Tranche A Term Lender, the date and amount of each
payment or prepayment of principal thereof, each continuation thereof, each
conversion of all or a portion thereof to another Type and, in the case of LIBOR
Loans, the length of each Interest Period and LIBOR Rate with respect thereto,
on the schedule (or any continuation of the schedule) annexed to and
constituting a part of its Tranche A Term Note, and any such recordation shall,
absent manifest error and to the extent permitted by applicable law, constitute
prima facie, evidence of the accuracy of the information so recorded, provided,
- -----------
that the failure to make any such recordation (or any error therein) shall not
affect the obligation of the Borrower to repay (with applicable interest) the
Tranche A Term Loans made to the Borrower in accordance with the terms of this
Agreement. A Tranche A Term Note and the Obligations evidenced thereby may be
assigned or otherwise transferred in whole or in part only in accordance with
Section 11.6 and by registration of such assignment or transfer of such Tranche
A Term Note and the Obligations evidenced thereby in the Register.
(e) The Borrower agrees that upon the request to the Administrative
Agent by any Tranche B Term Lender, which request is communicated to the
Borrower, the Borrower will execute and deliver to such Tranche B Term Lender a
promissory note of the Borrower dated the Closing Date evidencing the Tranche B
Term Loans made by such Tranche B Term Lender, substantially in the form of
Exhibit K (a "Tranche B Term Note"), payable to the order of such Tranche B Term
- --------- -------------------
Lender and in a principal amount equal to, in the case of Tranche B Term Notes
issued on the Closing Date, the lesser of (A) the initial Tranche B Term
Commitment of such Tranche B Term Lender or (B) the unpaid principal amount of
the Tranche B Term Loan made by such Tranche B Term Lender, and, in the case of
Tranche B Term Notes issued after the
-33-
<PAGE>
Closing Date, the unpaid principal amount of the Tranche B Term Loan made by
such Tranche B Term Lender. Each Tranche B Term Lender is hereby authorized to
record the date, Type and amount of each Tranche B Term Loan made by such
Tranche B Term Lender, the date and amount of each payment or prepayment of
principal thereof, each continuation thereof, each conversion of all or a
portion thereof to another Type and, in the case of LIBOR Loans, the length of
each Interest Period and LIBOR Rate with respect thereto, on the schedule (or
any continuation of the schedule) annexed to and constituting a part of its
Tranche B Term Note, and any such recordation shall, absent manifest error and
to the extent permitted by applicable law, constitute prima facie evidence of
-----------
the accuracy of the information so recorded, provided, that the failure to make
any such recordation (or any error therein) shall not affect the obligation of
the Borrower to repay (with applicable interest) the Tranche B Term Loans made
to the Borrower in accordance with the terms of this Agreement. A Tranche B Term
Note and the Obligations evidenced thereby may be assigned or otherwise
transferred in whole or in part only in accordance with Section 11.6 and by
registration of such assignment or transfer of such Tranche B Term Note and the
Obligations evidenced thereby in the Register.
2.4 Revolving Commitments. (a) Subject to the terms and conditions
---------------------
hereof, each Revolving Lender severally agrees to make revolving credit loans
("Revolving Loans") to the Borrower from time to time during the Revolving
- -----------------
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Percentage of the L/C Obligations
then outstanding does not exceed the amount of such Lender's Revolving
Commitment. During the Revolving Commitment Period the Borrower may use the
Revolving Commitments by borrowing, prepaying and reborrowing, all in accordance
with the terms and conditions hereof. The Revolving Loans may from time to time
be LIBOR Loans or Base Rate Loans, as determined by the Borrower and notified to
the Administrative Agent in accordance with Sections 2.5 and 2.10.
(b) Subject to Section 2.4(c) below, the Borrower shall repay all
outstanding Revolving Loans on the Scheduled Revolving Termination Date.
(c) Notwithstanding anything in this Agreement or in any other Loan
Document to the contrary, all outstanding Revolving Loans shall be immediately
due and payable, without demand or notice of any kind, and the Revolving
Commitments shall immediately terminate, without demand or notice of any kind,
on the second calendar day (or, if not a Business Day, the next succeeding
Business Day) after the Closing Date in the event the Spinoff has not been
completed in its entirety (including all steps (1) through (4) thereof) in
accordance with the terms of this Agreement (including without limitation
Section 6.11).
(d) The Borrower agrees that, upon the request to the Administrative
Agent by any Revolving Lender, which request is communicated to the Borrower,
the Borrower will execute and deliver to such Revolving Lender a promissory note
of the Borrower dated the Closing Date evidencing the Revolving Commitment of
such Revolving Lender, substantially in the form of Exhibit L with appropriate
---------
insertions as to date and principal amount (a "Revolving Note"). Each Revolving
--------------
Lender is hereby authorized to record the date, Type and amount of each
Revolving
-34-
<PAGE>
Loan made by such Revolving Lender, the date and amount of each payment or
prepayment of principal thereof, each continuation thereof, each conversion of
all or a portion thereof to another Type and, in the case of LIBOR Loans, the
length of each Interest Period and LIBOR Rate with respect thereto, on the
schedule (or any continuation of the schedule) annexed to and constituting a
part of its Revolving Note, and any such recordation shall, absent manifest
error and to the extent permitted by applicable law, constitute prima facie
-----------
evidence of the accuracy of the information so recorded, provided that the
--------
failure to make any such recordation (or any error therein) shall not affect the
obligation of the Borrower to repay (with applicable interest) the Revolving
Loans made to the Borrower in accordance with the terms of this Agreement. A
Revolving Note and the Obligations evidenced thereby may be assigned or
otherwise transferred in whole or in part only in accordance with Section 11.6
and by registration of such assignment or transfer of such Revolving Note and
the Obligations evidenced thereby in the Register (and each Revolving Note shall
expressly so provide). Upon receipt of an affidavit of an officer of any Lender
or the Administrative Agent as to the loss, theft, destruction or mutilation of
any Note or any other security document which is not of public record, and, in
the case of any such loss, theft, destruction or mutilation, upon surrender and
cancellation of such Note or other security document, and execution and delivery
of an appropriate indemnification agreement by such Lender or the Administrative
Agent, as applicable, in form and substance reasonably satisfactory to the
Borrower in favor of the Borrower relating thereto, the Borrower will issue, in
lieu thereof, a replacement Note or other security document in the same
principal amount thereof and otherwise of like tenor.
2.5 Procedure for Revolving Loan Borrowing. The Borrower may borrow
--------------------------------------
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice (received by the Administrative Agent prior to 12:00 Noon,
New York City time and confirmed in writing by delivery of a Borrowing Notice),
(a) three Business Days prior to the requested Borrowing Date, in the case of
LIBOR Loans, or (b) one Business Day prior to the requested Borrowing Date, in
the case of Base Rate Loans, specifying (i) the amount and Type of Revolving
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of
LIBOR Loans, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Period therefor. Any Revolving Loans made on the
Closing Date shall initially be Base Rate Loans. Each borrowing under the
Revolving Commitments shall be in an amount equal to (x) in the case of Base
Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then aggregate
Available Revolving Commitments are less than $1,000,000, such lesser amount)
and (y) in the case of LIBOR Loans, $5,000,000 or a whole multiple of $1,000,000
in excess thereof. Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Revolving Lender thereof. Each
Revolving Lender will make the amount of its pro rata share of each borrowing
--------
available to the Administrative Agent for the account of the Borrower at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the
-35-
<PAGE>
Administrative Agent by the Revolving Lenders and in like funds as received by
the Administrative Agent.
2.6 Commitment Fees, etc. (a) The Borrower agrees to pay to the
--------------------
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from and including the Closing Date to the last day of the
Revolving Commitment Period, equal to 1/2 of 1.00% per annum on the average
daily amount of the Available Revolving Commitment of such Revolving Lender,
payable quarterly in arrears on the last day of each March, June, September and
December and on the Scheduled Revolving Termination Date, commencing on the
first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each Tranche A Term Lender a commitment fee for the period from and
including the Closing Date through the Scheduled Tranche A Termination Date
equal to 1/2 of 1.00% per annum on the average daily amount of the undrawn
Tranche A Term Commitment of such Tranche A Term Lender, payable quarterly in
arrears on the last day of each March, June, September and December and on the
Scheduled Tranche A Termination Date, commencing on the first of such dates to
occur after the date hereof.
(c) The Borrower agrees to pay to each Agent the fees in the amounts
and on the dates previously agreed to in writing by the Borrower and such Agent.
2.7 Termination or Reduction of Revolving Commitments. The Borrower
-------------------------------------------------
shall have the right, upon not less than seven Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided that no such
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would exceed
the Total Revolving Commitments. Any such reduction shall be in an amount equal
to $1,000,000, or a whole multiple thereof, and shall reduce permanently the
Revolving Commitments then in effect.
2.8 Optional Prepayments. (a) The Borrower may at any time and
--------------------
from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto in the case of LIBOR Loans and at least one
Business Day prior thereto in the case of Base Rate Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of LIBOR
Loans or Base Rate Loans; provided, that if a LIBOR Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 2.18, and, provided,
further, that if any portion or all of any Tranche B Term Loan is prepaid
pursuant to this Section 2.8 on or before the second anniversary of the Closing
Date, the Borrower shall also pay any amounts owing pursuant to Section 2.8(c).
Upon receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof. If any such notice is given, the amount specified
in such notice shall be due and payable on the
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date specified therein, together with (except in the case of Revolving Loans
that are Base Rate Loans) accrued interest to such date on the amount prepaid.
Partial prepayments of Term Loans and Revolving Loans shall be in an aggregate
principal amount of $1,000,000 or a whole multiple thereof.
(b) Optional prepayments of the Term Loans shall be applied pro rata
--- ----
to the Tranche A and Tranche B Term Loans, and, ratably to the respective
installments thereof. Optional prepayments of Term Loans may not be reborrowed.
(c) In connection with, and at the time of, any optional prepayment of
all or any portion of the Tranche B Term Loans (i) at any time from the Closing
Date until the first anniversary thereof, the Borrower shall also pay a
prepayment penalty equal to 2.00% of the principal amount so prepaid, or (ii) at
any time from the first anniversary of the Closing Date until the second
anniversary thereof, the Borrower shall also pay a prepayment penalty equal to
1.00% of the principal amount so prepaid.
(d) Notwithstanding anything to the contrary in Section 2.8(b) or
2.15, with respect to the amount of any prepayment described in Section 2.8 that
is allocated to Tranche B Term Loans (such amounts, the "Tranche B Prepayment
--------------------
Amount"), at any time when Tranche A Term Loans remain outstanding, the Borrower
- ------
will, in lieu of applying such amount to the prepayment of Tranche B Term Loans
as provided in paragraph (b) above, on the date of such prepayment, give the
Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the Administrative Agent prepare and provide to each Tranche B
Lender a notice (each, a "Prepayment Option Notice") as described below. As
------------------------
promptly as practicable after receiving such notice from the Borrower, the
Administrative Agent will send to each Tranche B Lender a Prepayment Option
Notice, which shall be in the form of Exhibit N, and shall include an offer by
---------
the Borrower to prepay on the date (each an "Optional Prepayment Date") that is
------------------------
10 Business Days after the date of the Prepayment Option Notice, the relevant
Term Loans of such Lender by an amount equal to the portion of the prepayment
amount indicated in such Lender's Prepayment Option Notice as being applicable
to such Lender's Tranche B Term Loans. On the Optional Prepayment Date, (i) the
Borrower shall pay to the relevant Tranche B Lenders the aggregate amount
necessary to prepay that portion of the outstanding relevant Term Loans in
respect of which such Lenders have accepted prepayment as described above (such
Lenders, the "Accepting Lenders"), (ii) the Borrower shall pay to the Tranche A
-----------------
Lenders an amount equal to the portion of the Tranche B Prepayment Amount not
accepted by the Accepting Lenders, and such amount shall be applied to the
prepayment of the Tranche A Term Loans.
2.9 Mandatory Prepayments and Commitment Reductions.: (a) Unless
------------------------------------------------
the Required Prepayment Lenders shall otherwise consent in writing, if any
Equity Interests shall be issued or Indebtedness incurred (excluding any
Indebtedness incurred in accordance with Section 7.2 of this Agreement) by the
Borrower or any of its Subsidiaries, an amount equal to 100% of the Net Cash
Proceeds thereof shall be delivered to the Administrative Agent within three
Business Days after the date of such issuance or incurrence to be applied
towards the prepayment of the Loans as set forth in Section 2.9(d).
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(b) Unless the Required Prepayment Lenders shall otherwise consent in
writing, if the Borrower or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event, an amount equal to such Net Cash
Proceeds shall be delivered to the Administrative Agent within three Business
Days after such date of receipt to be applied towards the prepayment of the Term
Loans as set forth in Section 2.9(d), unless a Notice of Reinvestment has been
delivered relating thereto; provided, that (i) the aggregate Net Cash Proceeds
of Asset Sales and Recovery Events that may be excluded from the foregoing
mandatory prepayment requirement pursuant to Notices of Reinvestment shall not
exceed $5,000,000 in any fiscal year of the Borrower, and (ii) on each
Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Asset Sale or Recovery Event shall be
applied toward the prepayment of the Term Loans as set forth in Section 2.9(d).
(c) Unless the Required Prepayment Lenders shall otherwise consent in
writing, if, for any fiscal year of the Borrower in which its ratio of
Consolidated Total Debt to Consolidated EBITDA is greater than or equal to
4.00:1.00, commencing with the fiscal year ending December 31, 1999, there shall
be Excess Cash Flow, the Borrower shall pay an amount equal to 75% of such
Excess Cash Flow to prepay the Term Loans as set forth in Section 2.9(d).
Unless the Required Lenders shall otherwise consent in writing, if, as at the
end of and for any fiscal year of the Borrower in which its ratio of
Consolidated Total Debt to Consolidated EBITDA is less than 4.00:1.00 on the
last day thereof, commencing with the fiscal year ending December 31, 1999,
there shall be Excess Cash Flow, the Borrower shall pay an amount equal to 50%
of such Excess Cash Flow to prepay the Term Loans as set forth in Section
2.9(d). Such prepayment out of Excess Cash Flow shall be made no later than
five Business Days after the earlier of (i) the date on which the financial
statements of the Borrower referred to in Section 6.1(a) for the fiscal year
with respect to which such prepayment is made, are required to be delivered to
the Lenders and (ii) the date such financial statements are actually delivered.
(d) Amounts to be applied in connection with prepayments made pursuant
to Section 2.9 shall be applied (i) first to the prepayment of the Term Loans
pro rata to Tranche A Term Loans and Tranche B Term Loans and ratably to
- --- ----
scheduled installments thereof, provided, however, prepayments of Term Loans
resulting from the incurrence of Indebtedness shall be applied to installments
of Term Loans in inverse order of maturity, and (ii) second, to the prepayment
of Revolving Loans and, in such event, such prepayment will permanently reduce
the Revolving Commitments in the amount thereof. The application of any
prepayment pursuant to Section 2.9 shall be made, first, to Base Rate Loans and,
-----
second, to LIBOR Loans. Each prepayment of the Loans under Section 2.9 (except
- ------
in the case of Revolving Loans that are Base Rate Loans) shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid.
(e) Notwithstanding anything to the contrary in Section 2.9(d) or
2.15, with respect to the amount of any mandatory prepayment described in
Section 2.9 that is allocated to Tranche B Term Loans (such amounts, the
"Tranche B Prepayment Amount"), at any time when Tranche A Term Loans remain
- ----------------------------
outstanding, the Borrower will, in lieu of applying such amount to the
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prepayment of Tranche B Term Loans as provided in paragraph (d) above, on the
date specified in Section 2.9 for such prepayment, give the Administrative Agent
telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Tranche B Lender a Prepayment
Option Notice. As promptly as practicable after receiving such Prepayment Option
Notice from the Borrower, the Administrative Agent will send it to each Tranche
B Lender and shall include an offer by the Borrower to prepay on the date (each
a "Mandatory Prepayment Date") that is 10 Business Days after the date of the
-------------------------
Prepayment Option Notice, the relevant Term Loans of such Lender by an amount
equal to the portion of the prepayment amount indicated in such Lender's
Prepayment Option Notice as being applicable to such Lender's Tranche B Term
Loans. On the Mandatory Prepayment Date, (i) the Borrower shall pay to the
relevant Tranche B Lenders the aggregate amount necessary to prepay that portion
of the outstanding relevant Term Loans in respect of which such Lenders have
accepted prepayment as described above (such Lenders, the "Accepting Lenders"),
-----------------
(ii) the Borrower shall pay to the Tranche A Lenders an amount equal to the
portion of the Tranche B Prepayment Amount not accepted by the Accepting
Lenders, and such amount shall be applied to the prepayment of the Tranche A
Term Loans.
2.10 Conversion and Continuation Options. (a) The Borrower may
-----------------------------------
elect from time to time to convert LIBOR Loans to Base Rate Loans by giving the
Administrative Agent prior irrevocable notice of such election, confirmed in
writing pursuant to the Interest Rate Option Notice attached as Exhibit M-2,
-----------
provided that any such conversion of LIBOR Loans may only be made on the last
- --------
day of an Interest Period with respect thereto. The Borrower may elect from time
to time to convert Base Rate Loans to LIBOR Loans by giving the Administrative
Agent at least three Business Days' prior irrevocable notice of such election
(which notice shall specify the length of the initial Interest Period therefor),
provided, that no Base Rate Loan under a particular Facility may be converted
into a LIBOR Loan when any Event of Default has occurred and is continuing and
the Administrative Agent or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any LIBOR Loan may be continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no LIBOR Loan under a particular Facility may be continued as such when any
Event of Default has occurred and is continuing and the Administrative Agent has
or the Majority Facility Lenders in respect of such Facility have determined in
its or their sole discretion not to permit such continuations, and provided,
further, that if the Borrower shall fail to give any required notice as
described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted to
Base Rate Loans on the last day of such then expiring Interest Period. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
relevant Lender thereof.
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<PAGE>
2.11 Limitations on LIBOR Loans. Notwithstanding anything to the
--------------------------
contrary in this Agreement, all borrowings, conversions and continuations of
LIBOR Loans hereunder and all selections of Interest Periods hereunder shall be
in such amounts and be made pursuant to such elections so that, (a) after giving
effect thereto, the aggregate principal amount of the LIBOR Loans having the
same Interest Period beginning and ending on the same date shall be equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more
than ten LIBOR Loans shall be outstanding for any Lender at any one time.
2.12 Interest Rates and Payment Date. (a) Each LIBOR Loan shall
-------------------------------
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the LIBOR Rate determined for such day plus the
Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus
----
2.00% or (y) in the case of Reimbursement Obligations, the rate applicable to
Base Rate Loans under the Revolving Facility plus 2.00%. If all or a portion of
----
any interest payable on any Loan or Reimbursement Obligation or any commitment
fee or other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate then applicable to Base Rate
Loans under the relevant Facility plus 2.00% (or, in the case of any such other
----
amounts that do not relate to a particular Facility, the rate then applicable to
Base Rate Loans under the Revolving Facility plus 2.00%), in each case, with
----
respect to clauses (i) and (ii) above, from the date of such non-payment until
such amount is paid in full.
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
2.13 Computation of Interest and Fees. Interest on LIBOR Loans
--------------------------------
shall be calculated on the basis of a 360 day year for the actual days elapsed.
Other interest (including on Base Rate Loans) and fees payable pursuant hereto
shall be calculated on the basis of a 365-366 day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of each determination of a LIBOR Rate. Any
change in the interest rate on a Loan resulting from a change in the Base Rate
or the LIBOR Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of the effective date and the amount of each such change in interest rate. Each
determination of an interest rate by the Administrative Agent pursuant to any
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<PAGE>
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error.
2.14 Inability to Determine Interest Rate. If prior to the first
------------------------------------
day of any Interest Period:
(a) the Administrative Agent shall have determined
(which determination shall be conclusive and binding upon the
Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist
for ascertaining the LIBOR Rate for such Interest Period, or
(b) the Administrative Agent shall have received
notice from the Majority Facility Lenders in respect of the
relevant Facility that the LIBOR Rate determined or to be
determined for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (i) any LIBOR Loans under the relevant Facility requested to be
made on the first day of such Interest Period shall be made as Base Rate Loans,
(ii) any Loans under the relevant Facility that were to have been converted on
the first day of such Interest Period to LIBOR Loans shall be continued as Base
Rate Loans and (iii) any outstanding LIBOR Loans under the relevant Facility
shall be converted, on the last day of the then current Interest Period, to Base
Rate Loans. Until such notice has been withdrawn by the Administrative Agent,
no further LIBOR Loans under the relevant Facility shall be made or continued as
such, nor shall the Borrower have the right to convert Loans under the relevant
Facility to LIBOR Loans.
2.15 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee or Letter of Credit Fee and any reduction of the Commitments
of the Lenders shall be made pro rata according to the respective Tranche A Term
--- ----
Percentages, Tranche B Term Percentages or Revolving Percentages, as the case
may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made pro rata
--- ----
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Lenders (except as otherwise provided in Section 2.9(e)). The
amount of each principal prepayment of the Term Loans shall be applied to reduce
the then remaining installments of the Tranche A Term Loans and Tranche B Term
Loans, as the case may be, based upon the then remaining principal amount
thereof. Amounts prepaid on account of the Term Loans may not be reborrowed.
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<PAGE>
(c) Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Revolving Loans shall be made according to the
respective outstanding principal amounts of the Revolving Loans then held by the
Revolving Lenders.
(d) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the LIBOR Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a LIBOR Loan becomes due and payable
on a day other than a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day unless the result of such extension would be to
extend such payment into another calendar month, in which event such payment
shall be made on the immediately preceding Business Day. In the case of any
extension of any payment of principal pursuant to the preceding two sentences,
interest thereon shall be payable at the then applicable rate during such
extension.
(e) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a borrowing that such Lender will not make the amount that
would constitute its share of such borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the Administrative Agent submitted to any Lender with respect
to any amounts owing under this Section shall be conclusive in the absence of
manifest error. If such Lender's share of such borrowing is not made available
to the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to Base Rate Loans
under the relevant Facility, on demand, from the Borrower.
(f) Unless the Administrative Agent shall have been notified in writing by
the Borrower prior to the date of any payment being made hereunder that the
Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
--- -----
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made
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<PAGE>
available pursuant to the preceding sentence, such amount with interest thereon
at the rate per annum equal to the daily average Federal Funds Effective Rate.
Nothing herein shall be deemed to limit the rights of the Administrative Agent
or any Lender against the Borrower.
2.16 Legal Requirements. (a) If the adoption of or any change in any Legal
------------------
Requirement or in the interpretation or application thereof or compliance by any
Lender with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority made subsequent to the
date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any L/C Application or any
LIBOR Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by Section
2.17 and changes in the rate of tax on the overall net income of such
Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the LIBOR Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining LIBOR Loans or any Commitment hereunder or issuing or
participating in Letters of Credit, or to reduce any amount receivable hereunder
in respect thereof, then, in any such case, the Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such actual increased cost or reduced amount receivable. If any
Lender becomes entitled to claim any additional amounts pursuant to this
paragraph, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any change
in any Legal Requirement regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on such
Lender's or such corporation's capital as a consequence of its obligations
hereunder or under or in respect of any Letter of Credit to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such
Lender to the Borrower (with a copy to the Administrative Agent) of a written
request
-43-
<PAGE>
therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.17 Taxes. (a) All payments made by the Borrower under this Agreement
-----
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender as a result of a present or
former connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-
----
Excluded Taxes") or other stamp or documentary taxes or excise or property taxes
- --------------
charges or similar levies arising from any payment made hereunder or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document ("Other Amounts") are required to be
-------------
withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes and Other Amounts)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the Borrower shall
not be required to increase any such amounts payable to any Lender with respect
to any Non-Excluded Taxes (i) that are attributable to such Lender's failure to
comply with the requirements of paragraph (d) or (e) of this Section or (ii)
that are United States withholding taxes imposed on amounts payable to such
Lender at the time the Lender becomes a party to this Agreement, except to the
extent that such Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
Non-Excluded Taxes pursuant to this Section.
(b) In addition, the Borrower shall pay any Other Amounts to the relevant
Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Amounts are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the
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<PAGE>
Borrower fails to pay any Non-Excluded Taxes or Other Amounts when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, the Borrower shall
indemnify the Administrative Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Administrative Agent or any
Lender as a result of any such failure.
(d) Each Lender (or Transferee) that is not a citizen or resident of the
United States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a "Non-U.S. Lender") shall
---------------
deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form
4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 88 1 (c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit O (an "Exemption Certificate") and a Form W-8, or any subsequent
- --------- ---------------------
versions thereof or successors thereto, properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant, on or before the date such Participant purchases
the related participation). In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section, a Non-U.S. Lender shall not
be required to deliver any form pursuant to this Section that such Non-U.S.
Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of non-
U.S. withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.
(f) If the Administrative Agent or any Lender determines that it has
recovered or used as a credit any amount withheld on its account pursuant to
Section 2.16 or 2.17(a) above, it shall reimburse the Borrower to the extent of
such amount so determined to have been recovered or used as a credit, provided
that nothing contained in this paragraph (f) shall require the
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Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems to be confidential).
(g) The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
2.18 Indemnity. The Borrower agrees to indemnify each Lender and to hold
---------
each Lender harmless from any loss or expense that such Lender may sustain or
incur as a consequence of (a) failure by the Borrower to make a borrowing of,
conversion into or continuation of LIBOR Loans after the Borrower has given a
notice requesting the same in accordance with the provisions of this Agreement,
(b) failure by the Borrower to make any prepayment of or conversion from LIBOR
Loans after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of LIBOR Loans on
a day that is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest that would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that
- ----
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.19 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 2.16 or 2.17(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.16 or 2.17(a).
2.20 Replacement of Lenders. The Borrower shall be permitted to replace
----------------------
any Lender that (a) requests reimbursement for amounts owing pursuant to Section
2.16 or 2.17(a) or (b) defaults in its obligation to make Loans hereunder, with
a replacement financial institution; provided that (i) such replacement does not
conflict with any Legal Requirement, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) prior to any
such replacement, such Lender shall not have taken action under Section 2.19 so
as to eliminate the continued need for payment of amounts owing pursuant to
Section 2.16 or 2.17(a), (iv) the
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replacement financial institution shall purchase, at par, all Loans and other
amounts owing to such replaced Lender on or prior to the date of replacement,
(v) the Borrower shall be liable to such replaced Lender under Section 2.18 if
any LIBOR Loan owing to such replaced Lender shall be purchased other than on
the last day of the Interest Period relating thereto, (vi) the replacement
financial institution, if not already a Lender, shall be reasonably satisfactory
to the Administrative Agent, (vii) the replaced Lender shall be obligated to
make such replacement in accordance with the provisions of Section 11.6
(provided that the Borrower shall be obligated to pay the registration and
processing fee referred to therein), (viii) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.16 or 2.17(a), as the case may be, and (ix) any
such replacement shall not be deemed to be a waiver of any rights that the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.
SECTION 3. LETTERS OF CREDIT.
3.1 L/C Commitment. Subject to the terms and conditions hereof, the
--------------
Issuing Lender, in reliance on the agreements of the other Revolving Lenders set
forth in Section 3.4(a), agrees to issue standby letters of credit ("Letters of
----------
Credit") for the account of the Borrower on any Business Day during the
- ------
Revolving Commitment Period in such form as may be approved from time to time by
the Issuing Lender; provided that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the
Available Revolving Commitments would be less than zero. Each Letter of Credit
shall (i) be denominated in Dollars and (ii) expire no later than the earlier of
(x) the first anniversary of its date of issuance and (y) the date that is 15
calendar days prior to the Scheduled Revolving Termination Date, provided that
any Letter of Credit with a one-year term may provide for the renewal thereof
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above). Each Letter of Credit shall be subject to the
International Standby Practices (1998). The Issuing Lender shall not at any
time be obligated to issue any Letter of Credit hereunder if such issuance would
conflict with, or cause the Issuing Lender or any L/C Participant to exceed any
limits imposed by, any applicable Legal Requirement.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may from
------------------------------------------
time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
L/C Application therefor, completed to the satisfaction of the Issuing Lender,
and such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any L/C Application, the Issuing
Lender will process such L/C Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and, subject to the terms and
conditions hereof, shall promptly issue the Letter of Credit requested thereby
(but in no event shall the Issuing Lender be required to issue any Letter of
Credit earlier than three Business Days after its receipt of the L/C Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed to by the Issuing
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Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter
of Credit to the Borrower promptly following the issuance thereof. The Issuing
Lender shall promptly furnish to the Administrative Agent, which shall in turn
promptly finish to the Lenders, notice of the issuance of each Letter of Credit
(including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
----------------------
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to LIBOR Loans under the Revolving Facility, shared
ratably among the Revolving Lenders (the "Letter of Credit Fees"). In addition,
---------------------
the Borrowers shall pay to the Issuing Lender for its own account a fronting fee
of .25% per annum on the face amount of each Letter of Credit, payable quarterly
in arrears on each L/C Fee Payment Date after the Issuance Date.
(b) In addition to the foregoing fees, the Borrower shall pay or reimburse
the Issuing Lender for such normal and customary costs and expenses as are
incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees
------------------
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Percentage in the Issuing Lender obligations and rights
under each Letter of Credit issued hereunder and the amount of each draft paid
by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's Revolving
Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans under the
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Revolving Facility. A certificate of the Issuing Lender submitted to any L/C
Participant with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
--- ----
share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
--- ----
provided, however that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees
----------------------------------------
to reimburse the Issuing Lender with respect to each draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft
so paid and (b) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment, such reimbursement (i) on
the same date as such draft if oral notice thereof is given to Borrower by 1:00
p.m. (New York time) on such date, or (ii) on next Business Day if such oral
notice thereof is given to the Borrower after 1:00 p.m. (New York time). Each
such payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States and in immediately
available funds. Interest shall be payable on any and all amounts remaining
unpaid by the Borrower under this Section from the date such amounts become
payable (whether at stated maturity, by acceleration or otherwise) until payment
in full at the rate set forth in (i) until the second Business Day following the
date of the applicable drawing, Section 2.12(b) and (ii) thereafter, Section
2.12(c).
3.6 Obligations Absolute. The Borrower's obligations under this Section 3
--------------------
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that the Borrower
may have or have had against the Issuing Lender, any beneficiary of a Letter of
Credit or any other Person. The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in
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connection with any Letter of Credit or the related drafts or documents, if done
in the absence of gross negligence or willful misconduct, shall be binding on
the Borrower and shall not result in any liability of the Issuing Lender to the
Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
SECTION 4. CONDITIONS PRECEDENT.
4.1 Conditions to Initial Extension of Credit. The agreement of each
-----------------------------------------
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date of the following conditions precedent:
(a) Credit Agreement; Notes. The Administrative Agent shall have received
-----------------------
(i) this Agreement, executed and delivered by the Administrative Agent, HTI and
each Person listed on Schedule 1.1A, and (ii) the Revolving Notes, the Tranche A
-------------
Term Notes and the Tranche B Term Notes, executed and delivered by HTI.
(b) Financial Information; Projections. The Lenders shall have received
----------------------------------
all of the following in form and substance satisfactory to Lenders: (i) the
audited combined balance sheets of the net assets and operations contributed to
the LifePoint Parent as at December 31, 1997 and 1998 and the related combined
statements of income (for fiscal years 1996 through 1998), and equity and cash
flow (for fiscal years 1997 through 1998) reported on and accompanied by an
unqualified report from Ernst & Young, (ii) the audited consolidated balance
sheets of Columbia/HCA as at December 31, 1996, 1997 and 1998 and the related
consolidated statements of income, equity and cash flow for such fiscal year
then ended, reported on and accompanied by an unqualified report from Ernst &
Young, (iii) the pro forma consolidated balance sheet of HTI as of March 31,
--- -----
1999 and LifePoint Parent as of March 31, 1999, giving effect, as to HTI, to the
transfers from Columbia/HCA into it and its Subsidiaries, and, as to LifePoint
Parent, to the Spinoff, and giving effect to the Loans to be made on the Closing
Date and the High Yield Offering and the payment of closing costs in connection
therewith, and (iv) unaudited interim consolidated financial statements of
Columbia/HCA and LifePoint Parent for each fiscal quarter ended subsequent to
the date of the latest applicable financial statements delivered pursuant to
clause (i) or (ii) of this paragraph as to which such financial statements are
available (collectively, the "Initial Financial Statements"). Such Initial
----------------------------
Financial Statements shall not, in the reasonable judgment of the Lenders,
reflect any material adverse change in the consolidated financial condition of
HTI or LifePoint Parent, as reflected in the financial statements or projections
contained in the Confidential Information Memorandum. The Lenders shall have
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received satisfactory statements of projected cash flow, projected changes in
financial position and projected income, each through December 31, 2005 for
LifePoint and its Subsidiaries, based on assumptions satisfactory to the
Administrative Agent.
(c) Approvals, etc. The Accreditations for the 23 Hospitals listed on
--------------
Schedule A from the JCAHO and state licensing authorities with respect to the
licensing of acute care hospitals shall be in full force and effect as of the
Closing Date and shall license such 23 Hospitals with at least the number of
beds designated therefor on Schedule A hereto. Such 23 Hospitals shall have the
----------
right to participate in Medicare, Medicaid and other existing material Third
Party Payor Programs to the extent necessary to ensure no material interruption
to cash flow which could reasonably be expected to result in a Material Adverse
Effect. The certificate of need necessary for the new Hospital contemplated for
Bartow, Florida has been obtained and is in full force and effect,
notwithstanding the Spinoff. Except as in the aggregate could not reasonably be
expected to result in a Material Adverse Effect, all other governmental and
material third party approvals and licenses (including accreditations from
Accreditation Bodies, approvals and licenses relating to licenses, permits and
certificates of need for the Hospitals, Medical Facilities, SEC approval and
other consents) necessary in connection with the Spinoff, the Financings and the
continuing operations of HTI, LifePoint Parent, LifePoint and their respective
Subsidiaries and the transactions contemplated hereby, and the consent for
LifePoint and its Subsidiaries to participate in Medicare, Medicaid and other
material Third Party Payor Programs shall have been obtained and be in full
force and effect, and all applicable waiting periods shall have expired without
any action being taken or threatened by any Person that would restrain, prevent
or otherwise impose adverse conditions with respect to the financing
contemplated hereby.
(d) Lien Searches. The Administrative Agent shall have received the
-------------
results of recent lien searches in each of the jurisdictions where assets of HTI
and its Subsidiaries purportedly holding any America Group assets are located,
such searches to be in their names and the names of transferors thereto within
the last seven years (including Columbia/HCA and sellers in connection with
acquisitions), and such searches shall reveal no Liens on any of the assets of
such Persons, except for Liens permitted by Section 7.3 or discharged on or
prior to the Closing Date pursuant to documentation satisfactory to the
Administrative Agent.
(e) Fees. The Lenders and the Administrative Agent shall have received all
----
fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), at
least one day before the Closing Date. All such amounts will be paid with
proceeds of Loans made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or before the
Closing Date.
(f) Closing Certificate. The Administrative Agent shall have received,
-------------------
with a counterpart for each Lender, a certificate of each Loan Party, dated the
Closing Date, substantially in the form of Exhibit P, with appropriate
---------
insertions and attachments (a "Closing Certificate").
-------------------
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(g) Legal Opinion. The Administrative Agent shall have received the
-------------
following executed legal opinions:
(i) the legal opinion of general counsel to the Borrower and its
Subsidiaries in form and substance satisfactory to Administrative Agent;
(ii) the legal opinion of local counsel in Tennessee, Kentucky and
Florida, and of such other special and local counsel as may be required by
the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(h) Transition Agreements. The Transition Agreements shall have been
---------------------
executed and delivered in form and substance (including the indemnification
provisions thereof) satisfactory to the Administrative Agent, and Columbia/HCA
shall have consented to the conditional assignment thereof by LifePoint Parent
to the Administrative Agent on behalf of the Lenders.
(i) Insurance. The Administrative Agent shall have received insurance
---------
certificates satisfying the requirements of this Agreement.
(j) High Yield Offering. HTI shall have completed a subordinated debt
-------------------
offering on terms satisfactory to the Administrative Agent (including the
subordination provisions thereof), and HTI shall have received the proceeds
thereof in an amount of no less than $150,000,000, less reasonable, customary
fees and expenses (the "High Yield Offering") pursuant to the High Yield
-------------------
Documents.
(k) Solvency Opinion. The Administrative Agent and the Lenders shall
----------------
have received a solvency opinion dated as of the Closing Date with respect to
LifePoint Parent and its Subsidiaries, each in form and substance satisfactory
to each Agent, in each case assuming such Loan Party becomes the "Borrower"
hereunder.
(l) HCA Guaranty and Columbia/HCA Side Letters. The Administrative Agent
------------------------------------------
shall have received from Columbia/HCA the HCA Guaranty, executed and delivered
by Columbia/HCA and two side letter agreements in form and substance
satisfactory to the Administrative Agent as follows: One side letter shall
contain a covenant, representation and warranty to the effect that, at all times
that HTI is the Borrower or a Guarantor hereunder (i) after giving effect to the
payment referred to in Section 7.6(j), the only material assets owned by
Columbia/HCA will be all of the Equity Interests of HTI and the Columbia/HCA
Intercompany Receivable in an amount not to exceed $50,000,000, which will be
subordinated to the Obligations pursuant to such letter and not paid so long as
HTI is a Loan Party, and (ii) all other material assets held by Columbia/HCA
reflected in its December 31, 1998 audited balance sheet shall have been
transferred to, and have been and will be retained by, HTI and its Subsidiaries
(the "HCA Asset Transfer Side Letter"); the other side letter shall contain
------------------------------
consent of Columbia/HCA to the limited conditional assignment to the
Administrative Agent of the rights
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of LifePoint Parent under the Transition Agreements, and shall contain a
representation and warranty that the Transition Agreements have been duly
authorized, executed and delivered and are enforceable in accordance with their
terms, subject to standard creditors' rights exceptions.
(m) Absence of Material Litigation, Etc. The Lenders shall be satisfied
------------------------------------
that no litigation or other legal proceeding, tax or accounting matters, ERISA
matters, environmental matters or other matters for which any Loan Party or any
of their respective Subsidiaries is or could become liable exists which could
reasonably be expected to result in a Material Adverse Effect or which restrains
or attempts to restrain the consummation of the Spinoff or any portion thereof.
(n) Other. Receipt by the Lenders of such other documents, instruments,
-----
agreements or information as reasonably requested by any Lender, including, but
not limited to, information regarding litigation, tax, accounting, labor,
insurance, pension liabilities (actual or contingent), real estate leases,
material contracts, debt agreements, property ownership, environmental matters,
contingent liabilities, corporate structure and management of HTI, LifePoint
Parent, LifePoint and their respective Subsidiaries.
4.2 Conditions to Each Extension of Credit. The agreement of each Lender
--------------------------------------
to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents shall be
true and correct in all material respects on and as of such date as if made on
and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date and the Loan Parties shall have
complied with all obligations to be performed by each of them prior to the date
of such Loan or Letter of Credit, including without limitation, if required
hereunder, delivery of Security Documents pursuant to Section 6.11 or 6.12 after
the Closing Date.
(c) No Material Adverse Change. As of the applicable Borrowing Date, and
--------------------------
since the dates covered by the most recent audited financial statements
delivered to the Administrative Agent, no event or circumstance shall have
occurred which had or would be reasonably likely to have a Material Adverse
Effect.
Each borrowing of a Loan by, and each request for issuance of a Letter of Credit
on behalf of, the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such extension of credit that the
conditions contained in this Section 4.2 have been satisfied.
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SECTION 5. REPRESENTATIONS AND WARRANTIES.
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, each of LifePoint Parent and LifePoint, and each of their respective
Subsidiaries which become Subsidiary Guarantors, by execution and delivery of
their respective Loan Documents, hereby represents and warrants to the
Administrative Agent and each Lender that:
5.1 Financial Condition.
-------------------
(a) The audited consolidated balance sheets of Columbia/HCA and its
Subsidiaries and the audited combined balance sheets of the net assets and
operations contributed to LifePoint Parent contained in the Initial Financial
Statements present fairly the consolidated financial condition of such Persons
and their Subsidiaries as at such date, and the consolidated results of
operations, equity and cash flows for the respective fiscal years then ended.
Such Initial Financial Statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved.
(b) The pro forma Initial Financial Statements of LifePoint Parent and HTI
--- -----
have been prepared giving effect (as if such events had occurred on such date)
to the Loans to be made on the Closing Date and the use of proceeds thereof and
the borrowing and proceeds of the High Yield Offering on the Closing Date and
the payment of fees and expenses in connection with the foregoing, and, with
respect to LifePoint Parent and HTI, giving effect to the Spinoff. Such pro
---
forma Initial Financial Statements have been prepared in good faith based on the
- -----
best information available to such Persons as of the date of delivery thereof,
and present fairly on a pro forma basis the estimated financial position of such
--- -----
Persons and their respective Subsidiaries as at the dates thereof, assuming that
the events specified in the preceding sentence had actually occurred at such
date.
(c) Neither Columbia/HCA, HTI, LifePoint Parent nor any of their
respective Subsidiaries has any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent Initial Financial
Statements. During the period from December 31, 1998 to and including the date
hereof there has been no Disposition by Columbia/HCA, HTI, LifePoint Parent or
LifePoint of any material part of its business or property, except that
substantially all of the assets of Columbia/HCA have been transferred to HTI,
other than the Columbia/HCA Intercompany Receivable. As of the Closing Date, all
of such asset transfers (including Equity Interest transfers) to HTI have been
consummated so that HTI holds, directly or indirectly, through its wholly-owned
Subsidiaries, all of the material assets of Columbia/HCA, with the exception of
the Columbia/HCA Intercompany Receivable and the assets held by HTI as of the
date hereof comprise substantially all of the assets of Columbia/HCA reflected
on its balance sheet dated December 31, 1998 (with the exception of the
Columbia/HCA Intercompany Receivable).
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(d) Since December 31, 1998 there has been no development or event that
has had or could reasonably be expected to have a Material Adverse Effect.
5.2 Existence; Compliance with Law. Each Loan Party and each of their
------------------------------
respective Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
requisite organizational power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, and (c) is duly qualified as a
foreign entity, if applicable, and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and is in compliance with all Legal
Requirements, in each case except to the extent that the failure to be so
qualified or to comply with such Legal Requirements could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.3 Power; Authorization; Enforceable Obligations. Each Loan Party has
---------------------------------------------
the requisite organizational power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of each Borrower, to borrow hereunder. Each Loan Party has taken all necessary
organizational action to authorize the execution, delivery and performance of
the Loan Documents to which it is a party and, in the case of each Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, or with the Spinoff, except (i) consents, authorizations, filings and
notices described on Schedule 5.3, which consents, authorizations, filings and
------------
notices have been obtained or made and are in full force and effect or where the
failure to so obtain could not be expected in the aggregate to result in a
Material Adverse Effect and (ii) the filings referred to in Section 5.18. (It
is agreed that the failure of any Loan Party to list a material consent,
authorization, filing or notice on Schedule 5.3 which has in any event been
------------
obtained and in full force and effect shall not constitute an Event of Default
hereunder.) Each Loan Document required to be delivered hereunder has been duly
executed and delivered on behalf of each Loan Party thereto. This Agreement
constitutes, and each other Loan Document executed and delivered constitutes, a
legally valid and binding obligation of each Loan Party thereto, enforceable
against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
5.4 No Legal Impediment. The execution, delivery and performance of this
-------------------
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Legal Requirement or any contractual obligation (other than any breach of
contractual obligations which, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect) binding on any Loan
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Party or any of their respective Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of their respective
properties or revenues pursuant to any Legal Requirement or any such contractual
obligation (other than the Liens created by the Security Documents). No Legal
Requirement or contractual obligation applicable to any Loan Party or any of
their respective Subsidiaries could reasonably be expected to have a Material
Adverse Effect.
5.5 Litigation. Except as set forth on Schedule 5.5, no unsealed
---------- ------------
litigation, or to the best of the Borrower's knowledge, sealed litigation,
investigation, or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the best of the Borrower's knowledge, threatened by
or against any Loan Party or any of their respective Subsidiaries or against any
of their respective properties or revenues (a) with respect to any of the Loan
Documents or any of the transactions contemplated hereby or thereby, (b) with
respect to any aspect of the Spinoff, or (c) after giving effect to any
applicable insurance and the obligations of Columbia/HCA under the Distribution
Agreement and the Tax Sharing Agreement, that could reasonably be expected to
have a Material Adverse Effect.
5.6 No Default. No Loan Party nor any of their respective Subsidiaries is
----------
in default under or with respect to any contractual obligations binding on it in
any respect that could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
5.7 Ownership of Property; Liens. Each Loan Party and its Subsidiaries has
----------------------------
title in fee simple to, or a valid leasehold interest in, all its real property
purported to be owned by it on the Initial Financial Statements, both historical
and pro forma, and good title to, or a valid leasehold interest in, all its
--- -----
other property, and none of such property is subject to any Lien except as
permitted by Section 7.3, provided, however, after the Spinoff the America Group
assets shall thereafter be held by LifePoint and its wholly-owned Subsidiaries.
After the Spinoff, each of LifePoint Parent and LifePoint and their respective
Subsidiaries will have title in fee simple to, or a valid leasehold interest in,
all of their real property purported to be owned by them on their respective pro
---
forma Initial Financial Statements and good title to, or a valid leasehold
- -----
interest in, all of their other property purported to be owned by them on their
respective pro forma Initial Financial Statements, and none of such property
--- -----
will be subject to any Lien except as permitted by Section 7.3. Set forth on
Schedule 5.7 is a complete and correct list of all real property located in the
- ------------
United States and owned by, and all leases material to the operation of
LifePoint Parent, LifePoint or any of their respective Subsidiaries with street
addresses and states where the same are located. Set forth on Schedule 5.7 is a
------------
list of all locations where any material tangible personal property of LifePoint
Parent, LifePoint or any of their respective Subsidiaries is located. The notice
address for the Borrower set forth in Section 11.2 is the location of the chief
executive office of LifePoint Parent, LifePoint and any of their respective
Subsidiaries. Schedule 5.7 sets forth a list of the principal place of business
------------
of each of LifePoint Parent, LifePoint and any of their respective Subsidiaries.
Each of the 23 Hospitals which are a part of the America Group division of
Columbia/HCA are and will be owned by one of the Subsidiary Guarantors
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delivering a Mortgage with respect thereto pursuant to Section 6.11, if HTI is
released from the HTI Guaranty as provided for therein.
5.8 Licenses; Accreditations; Intellectual Property. Except as in the
-----------------------------------------------
aggregate could not reasonably be expected to have a Material Adverse Effect,
each Loan Party and each of its Subsidiaries has all necessary licenses,
permits, franchises, certificates of need, rights to participate in, or the
benefit of valid agreements to participate in, Medicare, Medicaid and other
material Third Party Payor Programs and other rights necessary for the conduct
of its business and for the intended use of its properties and assets to the
extent necessary to ensure no material interruption in cash flow. No less than
90% of the Hospitals are accredited by JCAHO. Each Hospital is licensed as an
acute care hospital by such other Accreditation Bodies having jurisdiction over
it. Except as in the aggregate could not reasonably be expected to affect 10% or
more of all Hospitals and could not reasonably be expected to result in a
Material Adverse Effect, there are no deficiencies in any services provided at
any Hospital that would prevent the extension of any accreditation by JCAHO or
other applicable Accreditation Body as an acute care hospital. With respect to
such Hospitals which are not so accredited by JCAHO, the Loan Parties are taking
all reasonable steps necessary or advisable to obtain such accreditation
promptly and, in any event, within twelve months after the loss or failure to
obtain such accreditation. As of the Closing Date, all of the 23 Hospitals
listed on Schedule A are accredited by JCAHO and are licensed as acute care
----------
hospitals by the appropriate Accreditation Bodies for at least the number of
beds listed on Schedule A therefor. As of the Closing Date, each of such
----------
Hospitals has the right to participate in Medicare, Medicaid and other material
Third Party Payor Programs to the extent necessary to ensure no material
interruption in cash flow which would reasonably be expected to result in a
Material Adverse Effect. Except as in the aggregate could not be reasonably
expected to have a Material Adverse Effect: (a) there are no rate appeals
currently pending before any Government Authority or any administrator of any
Third Party Payor Program or referral source with respect to any Medical
Facility; (b) there are no recoupment claims made or contests pending or
threatened as a result of any audits by any Third Party Payor Programs or no
open or unsettled cost reports for which any Loan Party is financially
responsible or has not been indemnified with respect to any Medical Facility;
and (c) there are no material claims or assertions made in any utilization
review that any of the practices or procedures used at any Medical Facility are
improper or inappropriate. Each Loan Party and each of its Subsidiaries owns,
or is licensed to use, all Intellectual Property necessary for the conduct of
its business as currently conducted. No material claim has been asserted and is
pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
any Loan Party know of any valid basis for any such claim. The use of
Intellectual Property by each Loan Party and their respective Subsidiaries does
not infringe on the rights of any Person in any material respect.
5.9. Taxes. Each Loan Party and each of their respective Affiliates and
-----
Subsidiaries has filed or caused to be filed all Federal, state and other
material tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any the amount or
validity of
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which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on its
books). No tax Lien has been filed, and, to the knowledge of any Loan Party, no
claim is being asserted, with respect to any such tax, fee or other charge.
5.10 Federal Regulations. No part of the proceeds of any Loans will be use
-------------------
for "buying" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect or for
any purpose that violates the provisions of the Regulations of such Board. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of FR Form G-3 or FR Form U-1, as
applicable, referred to in Regulation U.
5.11 Labor Matters. Except as, in the aggregate could not reasonably be
-------------
expected to have a Material Adverse Effect: (a) there are no strikes or other
labor disputes against any Loan Party or any of their respective Affiliates or
Subsidiaries pending or, to the knowledge of any Loan Party, threatened; (b)
hours worked by and payment made to employees of any Loan Party or any of their
respective Affiliates or Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable Legal Requirement dealing with such
matters; and (c) all payments due from any Loan Party or any of their respective
Affiliates or Subsidiaries on account of employee health and welfare insurance
have been paid or accrued as a liability on the appropriate books.
5.12 ERISA. Except as, in the aggregate could not reasonably be expected
-----
to have a Material Adverse Effect: (a) neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation, is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, (b) no termination of a Single Employer Plan
has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period, (c) the present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by a material amount, (d) no Loan Party
nor, to the best of their knowledge, any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan that has resulted or
could reasonably be expected to result in a material liability under ERISA, and
no Loan Party nor, to the best of their knowledge, any Commonly Controlled
Entity would become subject to any material liability under ERISA if any Loan
Party or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made, and (e) no such
Multiemployer Plan is in Reorganization or Insolvent.
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5.13 Investment Company Act; Other Regulations. No Loan Party is an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Legal Requirement (other than
Regulation X of the Board of Governors of the Federal Reserve System) that
limits its ability to incur Indebtedness.
5.14 Subsidiaries. Attached hereto is Schedule 5.14(a) is an
------------ ----------------
organization chart of LifePoint Parent, LifePoint and their respective
subsidiaries as of the Closing Date, after giving effect to the Spinoff. Except
as disclosed to the Administrative Agent by the Borrower in writing from time to
time after the Closing Date, (a) Schedule 5.14(b) sets forth the name and
----------------
jurisdiction of incorporation of each Loan Party and each Subsidiary thereof
and, as to each such Person, the owners and percentages of each class of Equity
Interests therein, and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock
options granted to employees or directors and directors' qualifying shares) of
any nature relating to any Equity Interests of any Loan Party or any Subsidiary,
except as created by the Loan Documents. The only direct Subsidiary of
LifePoint Parent is LifePoint and all of the other Subsidiaries which are a part
of the consolidated group of LifePoint Parent are directly or indirectly owned
by LifePoint, with the exception of the Existing Joint Ventures (in which
LifePoint indirectly holds the majority interests set forth in Schedule
--------
5.14(b)), and all of the Subsidiaries which are a part of such consolidated
- ------
group are Subsidiary Guarantors.
5.15 Use of Proceeds. The proceeds of the Term Loans made to the
---------------
Borrower on the Closing Date which total in the aggregate up to $110,000,000,
along with the net proceeds of the High Yield Offering, shall be used by HTI,
directly or indirectly, to repay principal on the Columbia/HCA Intercompany
Receivable in the amount of $250,000,000 and up to $10,000,000 to pay for
closings costs in connection with the Financings and the Spinoff. The balance
of the Term Loans shall only be used if LifePoint becomes a Borrower and its
Subsidiaries become Subsidiary Guarantors hereunder for Capital Expenditures
(including up to $35,000,000 relating to the new Bartow, Florida Hospital) of
LifePoint and the Subsidiary Guarantors, subject to Section 7.8 as to Existing
Joint Ventures. The proceeds of the Revolving Loans shall only be used if
LifePoint becomes a Borrower hereunder for general corporate purposes of
LifePoint and the Subsidiary Guarantors, including working capital, Capital
Expenditures, Permitted Acquisitions and other lawful corporate purposes,
subject to Section 7.8 as to Existing Joint Ventures.
5.16 Environmental Matters. Except as, in the aggregate could not
---------------------
reasonably be expected to have a Material Adverse Effect:
(a) Each of the facilities and properties owned, leased or operated by
any Loan Party or any of their respective Subsidiaries (the "Properties") and
----------
all operations at the Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Properties or the businesses operated by any Loan Party or any of
its Subsidiaries (the "Businesses"), and there are no conditions relating to the
----------
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<PAGE>
Businesses or Properties that could give rise to liability under any applicable
Environmental Laws.
(b) None of the Properties contains, or has previously contained, any
Hazardous Materials at, on or under the Properties in amounts or concentrations
that constitute or constituted a violation of, or could give rise to liability
under, Environmental Laws.
(c) No Loan Party nor any of its Subsidiaries has received any written or
oral notice of, or inquiry from any Governmental Authority regarding, any
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Businesses, nor does any Loan Party or
any or its Subsidiaries have knowledge or reason to believe that any such notice
will be received or is being threatened.
(d) Hazardous Materials have not been transported or disposed of from the
Properties, or generated, treated, stored or disposed of at, on or under any of
the Properties or any other location, in each case by or on behalf any Loan
Party or any of its Subsidiaries in violation of, or in a manner that would be
reasonably likely to give rise to liability under, any applicable Environmental
Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of any Loan Party, threatened, under any
Environmental Law to which any Loan Party or any of its Subsidiaries is or will
be named as a party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
any Loan Party or its Subsidiaries, the Properties or the Businesses.
(f) There has been no release or, threat of release of Hazardous Materials
at or from the Properties, or arising from or related to the operations
(including, without limitation, disposal) of any Loan Party or any of its
Subsidiaries in connection with the Properties or otherwise in connection with
the Businesses, in violation of or in amounts or in a manner that could give
rise to liability under Environmental Laws.
(g) No Loan Party nor any of its Subsidiaries has assumed any liability of
any other Person under any Environmental Laws.
5.17 Accuracy of Information, etc. No statement or information
----------------------------
contained in this Agreement, any other Loan Document or any other document,
certificate or statement furnished by or on behalf of any Loan Party to the
Administrative Agent or the Lenders, or any of them, for use in connection with
the transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in
--- -----
the materials referenced above are based upon good faith
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<PAGE>
estimates and assumptions believed by management of each Loan Party to be
reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. There is no fact known to any Loan Party that could reasonably
be expected to have a Material Adverse Effect that has not been expressly
disclosed herein, in the other Loan Documents, in the Confidential Information
Memorandum or in any other documents, certificates and statements furnished to
the Administrative Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.
5.18 Security Documents. The LifePoint Parent Security Agreement, the
------------------
LifePoint Security Agreement and the Guarantee and Security Agreement, when and
at all times after it is executed and delivered pursuant to Section 6.11 hereto,
will be effective to create in favor of the Administrative Agent, for the
benefit of the Lenders, a legally valid and enforceable security interest in the
Collateral described therein and proceeds thereof. In the case of the Pledged
Stock described in any of the Security Documents (including without limitation
the capital stock of LifePoint and LifePoint III and each Subsidiary which is a
corporation and the member interests of LifePoint II and each Subsidiary which
is a limited liability company, all of which are certificated), when
certificates representing such Pledged Stock are delivered to the Administrative
Agent, and in the case of the other Collateral described in the Security
Documents (other than the Mortgages), when financing statements and other
filings specified on Schedule 5.18 in appropriate form are filed in the offices
-------------
specified on Schedule 5.18, the LifePoint Parent Security Agreement, the
-------------
LifePoint Security Agreement and the Guarantee and Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of LifePoint Parent, LifePoint and the Subsidiary Guarantors in
such Collateral and the proceeds thereof, as security for their respective
obligations (as set forth in the LifePoint Parent Security Agreement, LifePoint
Security Agreement and the Guarantee and Security Agreement), to the extent a
Lien in such Collateral (other than the Pledged Stock) can be perfected pursuant
to such financing statements and such other filings, in each case prior and
superior in right to any other Person (except, in the case of Collateral other
than Pledged Stock, Liens permitted by Section 7.3).
(b) Each of the Mortgages, when and at all times after it is executed and
delivered pursuant to Section 6.11 or Section 6.12 hereto, will be effective to
create in favor of the Administrative Agent, for the benefit of the Lenders, a
legally valid and enforceable Lien on the Mortgaged Properties described therein
and proceeds thereof, and when the Mortgages are filed in the appropriate
offices in the jurisdictions in which the Mortgaged Properties are located, each
such Mortgage shall constitute a fully perfected Lien on, and security interest
in, all right, title and interest of the Loan Parties in the Mortgaged
Properties and the proceeds thereof, as security for their respective
obligations (as set forth in the relevant Mortgage), in each case prior and
superior in right to any other Person subject to those matters listed on the
title insurance policies being issued to the Administrative Agent as of the date
hereof.
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5.19 Solvency. Each Loan Party is, both before and after giving
--------
effect to each step of the Spinoff, and to the incurrence of all Indebtedness
and obligations being incurred in connection with the Financings, will be and
will continue to be at all times, Solvent.
5.20 Year 2000 Matters. (a) The Loan Parties have considered the
-----------------
Year 2000 Risk and are taking such action as may be necessary to ensure that the
Year 2000 Risk will not have a Material Adverse Effect and that all of the Loan
Parties will be Year 2000 Compliant. The Loan Parties will provide by September
30, 1999 the Administrative Agent with a written plan detailing the actions
previously taken or to be taken to ensure that all of the Loan Parties will be
Year 2000 Compliant. As used in this Section:
(i) the "Year 2000 Risk" shall mean the risk that computer
--------------
applications used by the Loan Parties and/or their suppliers, vendors and
customers (other than a Governmental Authority or any Lender) may be unable
to recognize and perform without error date-sensitive functions involving
certain dates prior to and any date after December 31, 1999;
(ii) "At-Risk Equipment" shall mean all computer systems and other
-----------------
equipment containing embedded microchips, in either case owned or operated
by the Loan Parties or any of them, or used or relied upon in the conduct
of any of their business, including any such computer systems and other
equipment supplied by others or with which any of their computer systems
interface; and
(iii) "Year 2000 Compliant" shall mean, with regard to the Loan
-------------------
Parties, that all At-Risk Equipment is able to interpret and manipulate
data on and involving all calendar dates correctly, including in relation
to dates on and after January 1, 2000, and without having a Material
Adverse Effect or resulting in a Default.
(b) Any and all reprogramming required to address the Year 2000 Risk
and assure the proper functioning (to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) on and after
January 1, 2000 of all At-Risk Equipment and the testing of all reprogrammed At-
Risk Equipment will be completed in a timely manner and in any event by
September 30, 1999.
(c) The costs which the Loan Parties will incur after the date hereof
to reprogram and test the At-Risk Equipment and to address the reasonably
foreseeable consequences to the Loan Parties of any improper functioning of
other At-Risk Equipment due to the Year 2000 Risk could not reasonably be
expected to result in a Default or to have a Material Adverse Effect. Except
for any reprogramming referred to above, their computer systems are and, with
ordinary course upgrading and maintenance, will continue for the term of this
Agreement to be, sufficient for the conduct of their businesses as currently
conducted in all material respects.
5.21 Flood Zone. To the knowledge of LifePoint, no Mortgage encumbers
----------
improved real property that is located in an area that has been identified by
the Secretary of Housing and
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Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
5.22 Delaware Code. None of the Organizational Documents of any of the
-------------
Loan Parties contain any provision similar to those set forth in Section
102(b)(2) of Title 8 of the Delaware Code.
SECTION 6. AFFIRMATIVE COVENANTS
Each of LifePoint Parent and LifePoint hereby agrees, so long as
Commitments remain in effect, any Letter of Credit remains outstanding or any
Loan or other amount is owing to any Lender or the Administrative Agent
hereunder, it shall and shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and each
--------------------
Lender:
(a) as soon as available, but in any event within 90 days after the end of
each fiscal year of LifePoint Parent, a copy of the audited consolidated balance
sheet of such Persons and its consolidated Subsidiaries as at the end of such
year and the related audited consolidated statements of income and of cash flows
for such year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like qualification
or exception, or qualification arising out of the scope of the audit, by Ernst &
Young or other independent certified public accountants of nationally recognized
standing (the "Accountants"); together with consolidating financial statements
-----------
and a management letter with respect to fiscal year 1999 and, if any, management
letters with respect to later fiscal years and other written reports for such
Persons prepared by such Accountants;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of Columbia/HCA (so long as HTI remains a Loan Party), HTI (as long as it
remains a Loan Party) and LifePoint Parent, the unaudited consolidated balance
sheet of such Person and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end of
such quarter, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45 days after
the end of each month occurring during each fiscal year of HTI (as long as it
remains a Loan Party) and LifePoint Parent, beginning with July 31, 1999 and
each month thereafter for which the leverage ratio under Section 7.1 for the
most recently ended Reference Period was greater than 4.00:1.00, the unaudited
consolidated balance sheets of such Persons and their respective Subsidiaries as
at the end of such month and the related unaudited consolidated statements of
income for such month and the portion of the fiscal year through the end of such
month, setting forth with respect to the monthly financials on or after June 30,
2000 in comparative form the figures for the
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previous year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal quarter-end reserve adjustments and normal
year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative Agent
-------------------------------
and each Lender:
(a) concurrently with the delivery of the financial statements referred to
in Section 6.1(a), a certificate of the Accountants reporting on such financial
statements stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default, except as specified
in such certificate;
(b) concurrently with the delivery of any financial statements pursuant to
Section 6.1(a) and (b), (i) a certificate of a Responsible Officer stating that,
to the best of each such Responsible Officer's knowledge, each Loan Party during
such period has observed or performed all of its covenants and other agreements,
and satisfied every condition, contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or satisfied by it,
and that such Responsible Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate and (ii) (x) a
Compliance Certificate containing all information and calculations necessary for
determining compliance by LifePoint and its Subsidiaries with the provisions of
this Agreement referred to therein as of the last day of the fiscal quarter or
fiscal year of LifePoint, as the case may be, and (y) to the extent not
previously disclosed to the Administrative Agent, a listing of any county or
state within the United States where any Loan Party keeps any material assets
acquired by LifePoint Parent, LifePoint or any of their Subsidiaries since the
date of the most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than the end of each
fiscal year of LifePoint, a detailed consolidated budget for the following
fiscal year (including a projected consolidated balance sheet of LifePoint and
its Subsidiaries as of the end of the following fiscal year, the related
consolidated statements of projected cash flow, projected changes in financial
position and projected income and a description of the underlying assumptions
applicable thereto), and, as soon as available, significant revisions, if any,
of such budget and projections with respect to such fiscal year (collectively,
the "Projections"), which Projections shall in each case be accompanied by a
-----------
certificate of a Responsible Officer stating that such Projections are based on
reasonable estimates, information and assumptions and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect;
(d) within five days after the same are sent, copies of all financial
statements , proxies and reports that LifePoint Parent or LifePoint or any of
its Subsidiaries sends to its material
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creditors (other than the Lenders) or to the holders of any class of its debt
securities or public equity securities; within five days after the same are
filed, copies of all registration statements, prospectuses and amendments and
supplements thereto, and any regular and periodic reports and financial
statements (including reports on Form 10K, Form 10Q and Form 8K) and other
reports relating to any Loan Party and made to or filed with any securities
exchange or with the SEC; and, within five days after the same are available,
letters of comment or correspondence sent to any Loan Party by any securities
exchange or the SEC; and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Except with respect to Subordinated Debt
----------------------
which may only be paid in accordance with Section 7.6, pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all its material obligations of whatever nature, except where the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of LifePoint Parent or its Subsidiaries,
as the case may be. As to the Borrower and each of its direct and indirect
Subsidiaries, cause their direct and indirect Subsidiaries to make dividends,
distributions and other payments to the Borrower from time to time as may be
necessary to ensure that the Borrower is able to pay the Obligations as and when
the same become due. As to HCA of Florida, Inc., Western Plains Regional
Hospital, LLC, Columbia HCA of Dodge City, Inc. and any other Subsidiary holding
any Equity Interests in either of the Existing Joint Ventures (or any other
joint ventures hereafter permitted by the Required Lenders pursuant to the terms
hereof), cause dividends, distributions and other payments to the full extent
possible to be made to such holders of Equity Interests in the Existing Joint
Ventures (and such other joint ventures) from time to time as soon and as often
as such dividends, distributions and other payments are permitted to be made, or
not prohibited from being made, in any fiscal year under the terms of the
applicable Organizational Documents of the Existing Joint Ventures (and such
other joint ventures).
6.4 Maintenance of Existence; Compliance. (a) (i) Preserve, renew and keep
------------------------------------
in full force and effect its existence as a corporation, partnership or limited
liability company, as applicable, (ii) take all reasonable action to maintain
all accreditations by JCAHO and licenses as acute care hospitals by
Accreditation Bodies of its Hospitals and the certificate of need for the new
Bartow, Florida Hospital so long as necessary for construction thereof, (iii)
take all reasonable action necessary to maintain its other accreditations,
licenses, permits, certificates of need, rights, privileges and franchises
necessary in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and Section 7.5 and except, in the case of
clause (iii) above, to the extent that failure to do so could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; and (b)
comply with all contractual obligations and Legal Requirements except to the
extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect. Maintain with respect to each
Hospital, the right to participate in Medicare, Medicaid and other material
Third Party Payor Programs with no material interruption in cash flow which
would reasonably be expected to
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result in a Material Adverse Effect. With respect to each Hospital, use its best
efforts and diligently pursue obtaining promptly after the date hereof Medicare
and Medicaid provider agreements relating specifically to each such Hospital to
the extent not already obtained. As to LifePoint Parent, within ten days after
the Closing Date, become a public company listed and in good standing on a
nationally recognized securities exchange, and thereafter remain a public
company (whether or not its common Equity Interests are so listed).
6.5 Maintenance of Property. Keep all material property useful and
-----------------------
necessary in its business in good working order and condition, ordinary wear and
tear excepted.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep
------------------------------------------------------
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Legal Requirements shall be made of all dealings
and transactions in relation to its business and activities, and (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records (in each case
excluding patient medical records and other patient material which is
confidential pursuant to any Legal Requirement) at any reasonable time (and upon
reasonable notice unless an Event of Default exists) and as often as may
reasonably be desired and to discuss its and its Subsidiaries' business,
operations, properties and financial and other condition with its officers and
employees and, subject to the right of a representative of the relevant Loan
Party to be present, with its independent certified public accountants.
6.7 Notices. Promptly after any Responsible Officer has knowledge thereof,
-------
give notice to the Administrative Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any default or event of default under any contract to which any Loan
Party or any of their respective Subsidiaries is bound or litigation,
investigation or proceeding that may exist at any time between any such Person
and any Governmental Authority, that in either case if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a Material
Adverse Effect;
(c) any litigation or proceeding involving Columbia/HCA (so long as any
Loan Party could be liable with respect thereto), HTI (so long as any Loan Party
could be liable with respect thereto), LifePoint Parent, LifePoint or any of
their respective Subsidiaries involving an amount of $5,000,000 or more and not
fully covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within 30
days after any Responsible Officer obtains knowledge thereof: (i) the occurrence
of any Reportable Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any
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other action by the PBGC or any Loan Party or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; and
(e) any development or event that has had or could reasonably be expected
to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the relevant Persons propose to take with
respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects with, and
------------------
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws, except where the failure to do so could not reasonably be expected to have
a Material Adverse Effect. Notwithstanding the foregoing sentence, nothing in
this Credit Agreement shall prevent any Loan Party or any Subsidiary of any Loan
Party from exercising any rights to contest or appeal any order or directive
issued under Environmental Laws by a Governmental Authority prior to undertaking
any investigations, studies, sampling, or testing, or any remedial, removal or
other actions required thereunder, nor shall any provision of this Credit
Agreement limit any rights of any Loan Party or any Subsidiary of any Loan Party
under any Environmental Laws or other Legal Requirements to seek to require
third parties to conduct, complete, or pay for any investigations, studies,
sampling, testing, or remedial, removal, or other actions required under
Environmental Laws or under lawful orders and directives issued under
Environmental Laws by Governmental Authorities.
(c) Jointly and severally indemnify, defend and hold the Lenders and the
Administrative Agent harmless from and against any claim, cost, damage
(including without limitation consequential damages), expenses (including
without limitation attorneys' fees and expenses), loss, liability, and judgment
now or hereafter arising as a result of any claim for environmental clean-up
costs, any resulting damage to the environment and any other environmental
claims against any Loan Party, the Administrative Agent, any Lender, or the
Properties. The provisions of this subparagraph (c) shall continue in effect and
shall survive (among other events) any termination of this Agreement,
foreclosure, a deed in lieu of transaction, payment and satisfaction of the
Notes and release of any Collateral.
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6.9 Rate Hedging Agreements. As to the Borrower, enter into one or more
-----------------------
Rate Hedging Agreements so that interest is fixed on no less than 50% of its
Consolidated Total Debt within three months after the Closing Date on terms and
conditions mutually satisfactory to the Administrative Agent and the Borrower.
6.10 Insurance. Comply at all times with all insurance provisions of the
---------
Security Documents. Keep all of its insurable properties now or hereafter owned
adequately insured at all times against loss or damage by fire or other casualty
to the extent customary with respect to like properties of companies conducting
similar businesses and to the extent required by Administrative Agent; maintain
public liability, professional liability, business interruption and workers'
compensation insurance insuring each Loan Party and each Subsidiary thereof to
the extent customary with respect to companies conducting similar businesses,
all by financially sound and reputable insurers and furnish to the Lenders
satisfactory evidence of the same (including certification by a Responsible
Officer of LifePoint of the timely renewal of, and timely payment of all
insurance premiums payable under, all such policies, which certification shall
be included in the next succeeding Compliance Certificate delivered pursuant to
hereto); notify each of the Lenders of any material change in the insurance
maintained on its properties after the date hereof and furnish each of the
Lenders satisfactory evidence of any such change; maintain insurance with
respect to its real estate improvements and tangible personal property in an
amount equal to the full replacement cost thereof; and provide that each
insurance policy upon the HTI Release pursuant to Section 6.11 pertaining to any
of its insurable properties shall (a) name the Administrative Agent, on behalf
of the Lenders, (i) as loss payee pursuant to a so-called "standard mortgagee
clause" or "Lender's loss payable endorsement", with respect to property
coverage, and shall name the Administrative Agent on behalf of the Lenders as an
additional insured, with respect to general liability coverage; (b) provide that
no action of any Loan Party or any Subsidiary or any other Person shall void any
such policy as to the Administrative Agent or the Lenders, and (c) provide that
the insurer(s) shall notify the Administrative Agent of any proposed
cancellation of such policy at least 30 days in advance thereof (unless such
proposed cancellation arises by reason of non-payment of insurance premiums in
which case such notice shall be given at least 10 days in advance thereof) and
that the Administrative Agent or the Lenders will have the opportunity to
correct any deficiencies justifying such proposed cancellation. Deliver to the
Administrative Agent a policy of flood insurance that covers any parcel of
improved real property that is encumbered by any Mortgage pursuant to Section
6.11 or 6.12, is written in an amount not less than the fair market value
thereof or the maximum limit of coverage made available with respect to the
particular type of property under the National Flood Insurance Act of 1968,
whichever is less, and has a term ending not later than the maturity of the
Notes.
6.11 Spinoff; Release of HTI; Collateral. (a) Prior to the making of
-----------------------------------
either of the HCA Distributions, complete both steps of the Dropdown. Prior to
being released pursuant to the HTI Release, do all things required pursuant to
Section 6.11(b) hereof to effect the release of HTI from the HTI Guaranty,
including without limitation the execution and delivery of the Security
Documents required hereunder and financing statements relating thereto, and the
delivery of such Mortgages to the Title Insurance Companies for recording and
the filing of financing statements
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sufficient to create in the Administrative Agent a perfected security interest
and mortgage in the Collateral with the priority required thereunder.
Contemporaneously with step (1), cause LifePoint Parent to become the "Borrower"
hereunder pursuant to an assumption agreement in form attached as Exhibit Q (an
---------
"Assumption Agreement") executed and delivered to the Administrative Agent and
--------------------
deliver to the Administrative Agent replacement Notes executed by LifePoint
Parent and the HTI Guaranty relating to LifePoint Parent executed by HTI; and,
in such event, HTI shall thereafter be a "Guarantor" and shall be released as a
"Borrower" hereunder pursuant to the form of release attached hereto as Exhibit
-------
R, provided no Event of Default then exists. Contemporaneously with step (2) of
- -
the Spinoff, cause LifePoint to become a "Borrower" hereunder pursuant to an
Assumption Agreement executed and delivered to the Administrative Agent and
deliver to the Administrative Agent replacement Notes executed by LifePoint and
the HTI Guaranty relating to LifePoint executed by HTI and the LifePoint Parent
Guaranty executed by LifePoint Parent; and, in connection therewith, LifePoint
Parent shall thereafter be a "Guarantor" and shall be released as a "Borrower"
hereunder pursuant to the form of release attached as Exhibit R, provided no
---------
Event of Default then exists.
(b) Each HTI Guaranty, and HTI as a Loan Party, shall be released by the
Administrative Agent pursuant to the form of release attached as Exhibit S (the
---------
"HTI Release") in the event all of the following conditions are fulfilled:
-----------
(i) no Event of Default shall have occurred and be continuing.
(ii) HCA Distributions shall not have been made.
(iii) the Administrative Agent shall have received the LifePoint
Parent Security Agreement executed and delivered by LifePoint Parent, the
LifePoint Security Agreement executed and delivered by LifePoint, the
Guarantee and Security Agreement executed and delivered by each Subsidiary
Guarantor, and an Acknowledgment and Consent in the form attached to the
Guarantee and Security Agreement, executed and delivered by each Issuer (as
defined therein), if any, that is not a Loan Party.
(iv) the Administrative Agent shall have received (A) the
certificates representing the certificated Equity Interests pledged
pursuant to the Security Documents, together with an undated stock power
for each such certificate executed in blank by a duly authorized officer of
the pledgor thereof and (B) each promissory note (if any), other
instruments and chattel paper pledged to the Administrative Agent pursuant
to the Security Documents endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank) by the pledgor thereof.
(v) each document (including any Uniform Commercial Code financing
statement) required by the Security Documents or under law or reasonably
requested by the Administrative Agent to be filed, registered or recorded
in order to create in favor of the Administrative Agent, for the benefit of
the Lenders, a perfected Lien on the Collateral described therein, prior
and superior in right to any other Person (other than
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with respect to Liens expressly permitted by Section 7.3), shall be in
proper form for filing, registration or recordation.
(vi) (A) The Administrative Agent shall have received a Mortgage with
respect to each Mortgaged Property, executed, notarized and delivered by a
duly authorized officer of each party thereto; provided, however, Mortgages
(and related items set forth in (B) and (C) below) with respect to the
Three Sale Hospitals are not required to be delivered with respect to the
Mortgaged Property relating thereto until May 11, 2000 with respect to any
of the Three Sale Hospitals which have not been sold pursuant to Section
7.5(f) by such date, and Mortgages (and related items set forth in (B) and
(C) below) with respect to leasehold interests constituting Mortgaged
Property are not required to be delivered until July 31, 1999. Such
Mortgages on the Three Sale Hospitals and leasehold interests shall not be
a condition to the HTI Release.
(B) The Administrative Agent shall have received in respect of
each Mortgaged Property a mortgagee's title insurance policy (or
policies) or marked up unconditional binder for such insurance. Each
such policy shall: be in an amount satisfactory to the Administrative
Agent; be issued at ordinary rates; insure that the Mortgage insured
thereby creates a valid first Lien on such Mortgaged Property free and
clear of all defects and encumbrances, except as disclosed therein;
name the Administrative Agent for the benefit of the Lenders as the
insured thereunder; be in the form of ALTA Loan Policy - 1970 (Amended
10/17/70 and 10/17/84) (or equivalent policies); contain such
endorsements and affirmative coverage as the Administrative Agent may
reasonably request; and be issued by title insurance companies
satisfactory to the Administrative Agent ("Title Insurance
---------------
Companies"). The Administrative Agent shall have received evidence
---------
satisfactory to it that all premiums in respect of each such policy,
all charges for mortgage recording tax, and all related expenses, if
any, have been paid.
(C) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in,
the title policy or policies referred to above and a copy of all other
material documents affecting the Mortgaged Properties.
(vii) The Administrative Agent shall have received certificates of
insurance satisfying the requirements of the Security Documents.
6.12 Leasehold Interests; After-Acquired Collateral, etc. (a) In the case
----------------------------------------------------
of each real property leasehold interest constituting Mortgaged Property, the
Administrative Agent shall receive in conjunction with execution and delivery of
the Mortgage (i) such estoppel letters, consents and waivers from the landlords
on such real property as may be obtained by the Loan Parties on a reasonable
best efforts basis, which estoppel letters shall be in the form and substance
reasonably satisfactory to the Administrative Agent, and (ii) evidence that the
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applicable lease, a memorandum of lease with respect thereto, or other
evidence of such lease in form and substance reasonably satisfactory to the
Administrative Agent, has been or will be recorded in all places to the extent
necessary or desirable, in the reasonable judgment of the Administrative Agent,
so as to enable the Mortgage encumbering such leasehold interest to effectively
create a valid and enforceable first priority lien (subject to Liens permitted
hereunder) on such leasehold interest in favor of the Administrative Agent (or
such other Person as may be required or desired under local law) for the benefit
of the Lenders.
(b) With respect to any property acquired after the Closing Date and the
Spinoff by LifePoint Parent or LifePoint or any of their respective Subsidiaries
(other than any property described in paragraph (b) or (c) below, or any
property subject to a Lien expressly permitted by Section 7.3(f)) as to which
the Administrative Agent, for the benefit of the Lenders, does not have a
perfected Lien, promptly (i) execute and deliver to the Administrative Agent
such amendments to the Security Documents or such other documents as the
Administrative Agent deems necessary or advisable to grant to the Administrative
Agent for the benefit of the Lenders, a security interest in such property and
(ii) take all actions necessary or advisable to grant to the Administrative
Agent, for the benefit of the Lenders, a perfected first priority security
interest in such property, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Security Agreement or by law or as may be reasonably requested by the
Administrative Agent.
(c) With respect to any leased or owned fee interest in any real property
having a value (together with improvements thereof) of at least $1,000,000
acquired after the Closing Date and the Spinoff by LifePoint Parent or LifePoint
or any of their respective Subsidiaries, promptly (i) execute and deliver a
first priority Mortgage, in favor of the Administrative Agent, for the benefit
of the Lenders, covering such real property, (ii) provide the Lenders with (x)
title and extended coverage insurance covering such real property in an amount
at least equal to the purchase price of such real property as well as a current
ALTA survey thereof, together with a surveyor's certificate and (y) any consents
or estoppels reasonably deemed necessary or advisable by the Administrative
Agent in connection with such mortgage or deed of trust, each of the foregoing
in form and substance reasonably satisfactory to the Administrative Agent and
(iii) if requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described above, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(d) With respect to any new Subsidiary created or acquired after the
Closing Date by LifePoint Parent, LifePoint or any of their respective
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Security Agreement as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in the
Equity Interests of such new Subsidiary that is owned by such Loan Party, (ii)
deliver to the Administrative Agent the certificates representing such Equity
Interests, together with undated stock powers, in blank, executed and delivered
by a duly authorized officer of such Loan Party, as the case may be, (iii) cause
such new Subsidiary (A) to become a party as a "Grantor" to the Guarantee and
Security
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Agreement, (B) to take such actions necessary or advisable to grant to
the Administrative Agent for the benefit of the Lenders a perfected first
priority security interest in the Collateral described in the Guarantee and
Security Agreement with respect to such new Subsidiary, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Security Agreement or by law or as may be
requested by the Administrative Agent and (C) to deliver to the Administrative
Agent a Closing Certificate of such Subsidiary with appropriate insertions and
attachments, and (iv) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
6.13 Appraisals; Surveys; Environmental Reports; etc. (a) From time to
-----------------------------------------------
time after the Closing Date, at the request of the Administrative Agent (but no
more than once per property if the Administrative Agent reasonably deems it
necessary or advisable under applicable Legal Requirements, unless an Event of
Default exists and is continuing), permit the Administrative Agent to obtain
appraisals at the Borrower's expense of the real property of LifePoint Parent,
LifePoint and its Subsidiaries required to be subject to a Mortgage hereunder by
an appraiser selected by the Administrative Agent in its reasonable discretion.
(b) No later than September 30, 1999, the Administrative Agent shall have
received, and the Title Insurance Company shall have received, at Borrower's
expense, maps or plats of an as-built survey of the sites of the Mortgaged
Properties certified to the Administrative Agent and the Title Insurance Company
in a manner reasonably satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative Agent and
the Title Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1992, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the following: the
locations on such sites of all the buildings, structures and other improvements
and the established building setback lines; the lines of streets abutting the
sites and width thereof; all access and other easements appurtenant to the
sites; all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; any encroachments on any adjoining property by the building structures
and improvements on the sites; if the site is described as being on a filed map,
a legend relating the survey to said map; and the flood zone designations, if
any, in which the Mortgaged Properties are located. LifePoint Parent, LifePoint
and their respective Subsidiaries agree that after receipt of the surveys for
such properties, at the request of the Administrative Agent, each owner of the
Mortgaged Properties will execute such amendments to the Mortgages and/or such
new Mortgages as the Administrative Agent shall require, shall cause such
amendments/Mortgages to be recorded, shall supply such title insurance policies
and/or endorsements, and other items relating to the Mortgaged Properties as the
Administrative Agent shall reasonably require, and shall pay such recording
charges, recording
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taxes, title insurance premiums, attorneys' fees for the Administrative Agent,
and related expenses in connection therewith.
(c) Upon the reasonable written request of the Administrative Agent
following the occurrence of an Event of Default or any event or the discovery of
any condition which the Administrative Agent or the Required Lenders reasonably
believe has caused (or could be reasonably expected to cause) the
representations and warranties set forth in Section 5.16 to be untrue in any
material respect, furnish or cause to be furnished to the Administrative Agent,
at the Loan Parties' expense, a report of an environmental assessment of
reasonable scope, form and depth, (including, where appropriate, invasive soil
or groundwater sampling) by a consultant reasonably acceptable to the
Administrative Agent as to the nature and extent of the presence of any
Hazardous Materials on any Properties (as defined in Section 5.16) and as to the
compliance by any Loan Party and its respective Subsidiaries with Environmental
Laws at such Properties. If the Loan Parties fail to deliver such an
environmental report within 75 days after receipt of such written request (or
within 30 days if an Event of Default shall then exist) then the Administrative
Agent may arrange for same, and the Loan Parties and their respective
Subsidiaries hereby grant to the Administrative Agent and their representatives
access to the Properties to reasonably undertake such an assessment (including,
where appropriate, invasive soil or groundwater sampling). The reasonable cost
of any assessment arranged for by the Administrative Agent pursuant to this
provision will be payable by the Loan Parties on demand and added to the
Obligations.
6.14 Existing Joint Ventures. Use its reasonable best efforts to cause
-----------------------
the limitation contained in Section 8.4(e) of the Amended and Restated Limited
Partnership Agreement of Dodge City Healthcare Group, L.P., dated as of March 1,
1995, among Columbia/HCA of Dodge City, Inc., American Medicorp Development Co.,
Western Plains Regional Hospital, Inc. and Dodge City Outpatient Surgical
Facility, Inc. to be modified as soon as practicable to permit Dodge City
Healthcare Group, L.P. to guarantee the payment and performance of all Borrower
Obligations (as defined under the Guarantee and Security Agreement) without the
limitation contained in Section 2.8 of the Guarantee and Security Agreement and
to permit Dodge City Healthcare, L.P. to encumber all of its assets to secure
the Borrower Obligations (but subject in any event to Section 2.1(b) thereof);
and use its reasonable best efforts to cause the limitation contained in Section
8.4(f) of the Amended and Restated Limited Partnership Agreement of Bartow
Healthcare System, Ltd. (a Florida Limited Partnership) dated as of August 19,
1996, among HCA of Florida, Inc. and Bartow Memorial Hospital, Inc. to be
modified as soon as practicable to permit Bartow Healthcare System, Ltd. to
guarantee the payment and performance of all Borrower Obligations (as defined
under the Guarantee and Security Agreement) and all Grantor Obligations (as
defined in the Guarantee and Security Agreement) of the general partner of
Bartow Healthcare System, Ltd., Bartow Healthcare Partner, Inc. without the
limitation contained in Section 2.8 of the Guarantee and Security Agreement (but
subject in any event to Section 2.1(b) thereof) and to permit Bartow Healthcare
System, Ltd. to encumber all of its assets to secure the obligations of Bartow
Healthcare System, Ltd. and such general partner under the Guarantee and
Security Agreement.
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SECTION 7. NEGATIVE COVENANTS.
Each of LifePoint Parent and LifePoint hereby agrees, so long as
Commitments remain in effect, any Letter of Credit remains outstanding or any
Loan or other amount is owing to any Lender or the Administrative Agent
hereunder, it shall not, and shall cause each of its Subsidiaries to not:
7.1 Financial Covenants.
-------------------
(a) Leverage Ratios.
---------------
(i) Permit the ratio of Consolidated Total Debt of LifePoint Parent at
any date from June 30, 1999 through March 30, 2000 to Consolidated Annualized
EBITDA of LifePoint Parent for the most recently ended Reference Period to
exceed 4.25:1.00.
(ii) Permit the ratio of Consolidated Total Debt of LifePoint Parent at
any date thereafter falling during any period set forth below to Consolidated
EBITDA of LifePoint Parent for the most recently ended Reference Period to
exceed the ratio set forth below opposite such period:
Period Ratio
------ -----
March 31, 2000 through June 29, 2000 4.25:1.00
June 30, 2000 through December 30, 2000 4.00:1.00
December 31, 2000 through June 29, 2001 3.75:1.00
June 30, 2001 and at all times thereafter 3.50:1.00
(b) Consolidated Fixed Charge Coverage Ratio. Permit the ratio of
----------------------------------------
Consolidated Cash Flow of LifePoint Parent for any Reference Period ending on
any Quarterly Date falling during the periods set forth below to Consolidated
Fixed Charges of LifePoint Parent for such Reference Period to be less than the
rate set forth below opposite such period:
Quarterly Dates Ratio
--------------- -----
June 30, 1999 through December 31, 1999 2.00:1.00
March 31, 2000 through September 30, 2000 1.75:1.00
December 31, 2000 1.50:1.00
March 31, 2001 through September 30, 2001 1.10:1.00
December 31, 2001 through December 31, 2002 1.05:1.00
March 31, 2003 and each Quarterly Date 1.10:1.00
thereafter
(c) Consolidated Net Worth. Permit Consolidated Net Worth of LifePoint
-----------------------
Parent at any time from and after the Spinoff through June 30, 1999 to be less
than $18,800,000, subject to
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Spinoff adjustments. Permit Consolidated Net Worth of LifePoint Parent at any
time thereafter to be less than the sum of (a) 100% of Consolidated Net Worth of
LifePoint Parent required hereunder with respect to the fiscal quarter most
recently ended, plus (b) 75% of Consolidated Net Income of LifePoint Parent for
the fiscal quarter most recently ended (without any reduction for losses), plus
----
(c) 100% of the Net Cash Proceeds of any offering of Equity Interests of any
Loan Party consummated after the Closing Date.
7.2 Indebtedness. Create, issue, incur, assume, become liable in
------------
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of LifePoint to any Subsidiary Guarantor and of any
Subsidiary Guarantor (other than the Existing Joint Ventures) to LifePoint or
any other Subsidiary Guarantor;
(c) Guarantee Obligations incurred in the ordinary course of business by
LifePoint or any of its Subsidiaries of obligations of any Subsidiary Guarantor
(other than the Existing Joint Ventures);
(d) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(f) in an aggregate
principal amount not to exceed $1,000,000 at one time outstanding as to all Loan
Parties;
(e) Indebtedness of LifePoint (and the related Guarantee Obligations)
under the High Yield Offering pursuant to the High Yield Documents;
(f) Indebtedness of LifePoint or any of its Subsidiaries under any Rate
Hedging Agreement entered into pursuant to Section 6.9; and
(g) additional Indebtedness of LifePoint or any of the Subsidiary
Guarantors (other than the Existing Joint Ventures) in an aggregate principal
amount (for LifePoint and all Subsidiary Guarantors) not to exceed $1,000,000 at
any time outstanding.
7.3 Liens. Create, incur, assume or suffer to exist any Lien upon any
-----
of its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or that are being contested in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
--------
are maintained on its books in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business that are not overdue
for a period of more than 30 days or that are being contested in good faith by
appropriate proceedings;
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(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, restrictions, defects or irregularities in
title, encroachments and other similar encumbrances incurred in the ordinary
course of business that, in the aggregate, are not substantial in amount and
that do not in any case materially detract from the value of any Mortgaged
Property or any other property material to the business of LifePoint and its
Subsidiaries subject thereto or materially interfere with the ordinary conduct
of the business of LifePoint and its Subsidiaries taken as a whole;
(f) Liens securing Indebtedness of the Loan Parties incurred pursuant to
Section 7.2(d) to finance the acquisition of new equipment; provided that (i)
such Liens shall be created substantially simultaneously with the acquisition of
such equipment (or within 45 days thereafter), (ii) such Liens do not at any
time encumber any property other than the property financed by such
Indebtedness, and (iii) the amount of Indebtedness secured thereby is not
increased;
(g) Liens created pursuant to the Security Documents; and
(h) any interest or title of a lessor under any true lease (not a Capital
Lease Obligation) entered into by any Loan Party in the ordinary course of its
business and covering only the assets so leased and the rights of the lessee
thereunder.
7.4 Fundamental Changes. Enter into any merger or consolidation, or
-------------------
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of, all or substantially all of its property or
business, except that: (a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Subsidiary Guarantor
other than the Existing Joint Ventures (provided that the Subsidiary Guarantor
shall be the continuing or surviving corporation); and (b) any Subsidiary of the
Borrower may Dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any Subsidiary Guarantor (other than to either of
the Existing Joint Ventures). Permit or suffer any amendment of its
Organizational Documents which could have a Material Adverse Effect (it being
expressly agreed that the inclusion in any such Organizational Documents of any
provision similar to those set forth in Section 102(b)(2) of Title 8 of the
Delaware Code is prohibited under this Section).
7.5 Disposition of Property. Dispose of any of its property, whether
-----------------------
now owned or hereafter acquired, or, issue or sell any Equity Interests to any
Person, except:
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(a) the Disposition of obsolete or worn out isolated items of equipment
in the ordinary course of business or isolated items of equipment which has been
replaced with equipment of equal or greater value in which the Administrative
Agent has a perfected first priority security interest;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Equity Interests to the
Borrower or any Subsidiary Guarantor (other than to either of the Existing Joint
Ventures);
(e) the Dispositions to LifePoint Parent and LifePoint pursuant to the
Spinoff, provided LifePoint Parent becomes the "Borrower" hereunder pursuant to
an Assumption Agreement at the time such Disposition is made to LifePoint
Parent and provided LifePoint becomes the "Borrower" hereunder pursuant to an
Assumption Agreement at the time of such Disposition is made to LifePoint;
(f) on or before 12 months following the Closing Date, the Asset Sales of
the Three Sale Hospitals; provided, that the Borrower and the Subsidiary
Guarantors receive not less than the fair market value of each of such Three
Sale Hospitals and (ii) notwithstanding the terms of Section 2.9, no mandatory
prepayment under Section 2.9(b) shall be required as a result of such Asset
Sales unless a Default then exists or could reasonably be expected to result
therefrom;
(g) provided no Default then exists or could be expected to result
therefrom, as to LifePoint and its Subsidiaries, the Disposition of other
property having a fair market value not to exceed $1,000,000 in the aggregate
for any of their fiscal years;
(h) the issuance by LifePoint Parent of its publicly traded common Equity
Interests, provided the mandatory prepayment required by Section 2.9 relating
thereto is made to the Administrative Agent; and
(i) the issuance by LifePoint Parent of no greater than 9% of its common
stock in connection with the ESOP (and the Disposition by LifePoint Parent,
LifePoint, and LifePoint II to any Loan Party of their interests in the
promissory note of the ESOP in connection therewith).
7.6 Restricted Payments. Directly or indirectly declare, order, pay or
-------------------
make any Restricted Payment or set aside any sum or property therefor except as
follows:
(a) The Subsidiaries of any Loan Party (other than LifePoint Parent's
Subsidiary, LifePoint, unless LifePoint Parent is the "Borrower" hereunder) may
(A) pay dividends and make distributions to such Loan Party once it becomes and
so long as it remains a "Borrower" or a "Subsidiary Guarantor" hereunder, (B)
repay indebtedness owed to any Loan Party once it becomes and so long as it
remains a "Borrower" or a "Guarantor" hereunder and (C) make
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intercompany loans to LifePoint or to any Subsidiary Guarantor (other than to
either Existing Joint Venture) if and as permitted under Section 7.2(b);
(b) LifePoint may make distributions to LifePoint Parent to the extent
necessary to pay its operating and administrative expenses incurred in the
ordinary course of business, including, without limitation, payroll expenses,
directors' fees, legal and audit expenses, SEC compliance expenses and corporate
franchise and federal, state and local income taxes, in an aggregate amount not
to exceed $2,500,000 in any fiscal year;
(c) LifePoint may make distributions to LifePoint Parent to permit it to
pay expenses incurred under the corporate integrity program referenced in the
Distribution Agreement;
(d) LifePoint may make distributions to LifePoint Parent to permit it to
pay expenses incurred under the Transition Agreements;
(e) LifePoint may make distributions to LifePoint Parent or the ESOP, or
directly, to be used to repurchase, redeem, acquire or retire for value any
Equity Interests of LifePoint Parent pursuant to any stockholder's agreement,
management equity subscription plan or agreement, stock option plan or agreement
or employee benefit plan as may be adopted by LifePoint or LifePoint Parent from
time to time in an aggregate amount not to exceed $2,000,000 in any fiscal year;
(f) LifePoint may make distributions to LifePoint Parent to permit
LifePoint Parent to make purchases permitted under Section 7.8(1);
(g) The Borrower may make regularly scheduled payments (but not
prepayments) of interest under the High Yield Notes unless, on the date of any
such proposed payment or after giving effect thereto, an Event of Default shall
have occurred and be continuing;
(h) HTI may make the HCA Distributions in connection with the Spinoff;
provided (i) on the date of any such proposed HCA Distribution or after giving
effect thereto, an Event of Default shall not have occurred and be continuing
and (ii) HTI has been released from the HTI Guaranty pursuant to Section 6.11
hereof and the LifePoint Parent, LifePoint and the Subsidiary Guarantors shall
have executed and delivered the Security Documents required under Section 6.11
as a condition for such release and shall have obtained, in connection
therewith, perfected security interests required hereunder in the Collateral
described therein; and
(i) HTI may pay up to $250,000,000 in principal of the Columbia/HCA
Intercompany Receivable on the Closing Date with proceeds of the High Yield
Offering, the initial advance under the Tranche A Term Commitments, and the
Tranche B Term Loans and up to $650,000,000 in principal of the Columbia/HCA
Intercompany Receivable with proceeds of the Triad Financings.
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7.7 Capital Expenditures. Make or commit to make any Capital
--------------------
Expenditure, except Capital Expenditures may be made by LifePoint and the
Subsidiary Guarantors as follows (a) provided no Event of Default exists or
could reasonably be expected to result therefrom and the Administrative Agent
has a first priority Mortgage relating thereto, Columbia/Bartow Healthcare
System, Ltd. may make Capital Expenditures for the construction and equipping of
the new Bartow, Florida Hospital out of two cash contributions of no greater
than $35,000,000 made by HCA of Florida, Inc. pursuant to Section 2.8.2 of the
Bartow Contribution Agreement, if the Equity Interests of HCA of Florida, Inc.
in Columbia/Bartow Healthcare System, Ltd. have increased correspondingly at the
time of each such cash contribution and (b) other Capital Expenditures in the
ordinary course of business not exceeding the following aggregate amounts
(excluding such Bartow, Florida Capital Expenditures) plus the Carryforward
Amount in the fiscal years (and fiscal quarters, as applicable) set forth below:
Fiscal Year Amount
----------- ------
1999 $60,000,000 total for calendar year 1999
(but no more than $20,000,000 in any fiscal
quarter therein, after giving effect to Capital
Expenditures made by the America Group since
January 1, 1999)
2000 $47,000,000 total (but no more than $15,700,000
in any fiscal quarter therein)
2001 $35,000,000 total
2002 $37,000,000 total
2003 $38,000,000 total
Any such amounts referred to above (excluding carryforwards from prior years),
if not spent in any applicable fiscal year, may be carried forward to the
immediately succeeding fiscal year (the "Carryforward Amount") to be applied
-------------------
first to Capital Expenditures in such immediately succeeding fiscal year, prior
to the application of the amount reserved for such fiscal year.
7.8 Investments. Make any advance, loan, extension of credit (by way of
guaranty or otherwise) or capital contribution to, or purchase any Equity
Interests, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person or
form any Subsidiary (all of the foregoing, "Investments"), except:
-----------
(a) extensions of trade credit by LifePoint and its Subsidiaries in the
ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) as to LifePoint and the Subsidiary Guarantors, loans and advances to
employees, physicians, medical office buildings and other current accounts
receivables and long term notes
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receivables as identified on LifePoint's balance sheet (which will include,
without limitation, loans and advances to physicians and employees and
receivables on medical office building leases) in an aggregate amount for
LifePoint and its Subsidiaries not to exceed $1,000,000 at any one time
outstanding;
(e) existing Investments by LifePoint and its Subsidiaries in the
Existing Joint Ventures as described on Schedule 7.8 and existing Investments by
------------
the Loan Parties in other Subsidiaries and Affiliates existing on the Closing
Date (with all Investments other than Investments in Subsidiary Guarantors also
being described on Schedule 7.8);
------------
(f) as to LifePoint and its Subsidiaries, additional investments in joint
ventures, partnerships and other equity investments (including any investments
in existing joint ventures or partnerships) in an aggregate amount for LifePoint
and such Subsidiaries not to exceed $1,000,000 at any one time outstanding;
(g) Capital Expenditures to the extent permitted under this Agreement;
(h) Investments by the Borrower or any of its Subsidiaries in the
Borrower or any Person that, prior to such Investment, is a Subsidiary Guarantor
(other than additional Investments in the Existing Joint Ventures);
(i) Permitted Acquisitions;
(j) The formation of and Investments in new Subsidiaries of LifePoint in
connection with Permitted Acquisitions or otherwise, provided that (i) such
Subsidiary is wholly-owned by LifePoint or a Subsidiary Guarantor, (ii)
LifePoint shall have notified the Administrative Agent at least ten Business
Days prior to the formation or acquisition of any such Subsidiary, (iii) such
Subsidiary shall be engaged in a permitted business of the Borrower or its
Subsidiaries hereunder and (iv) as of the date of the formation or acquisition
of any such Subsidiary and the Investment therein, and after giving effect
thereto, (A) such new Subsidiary and its parent shall have entered into any and
all agreements (in form and substance satisfactory to the Administrative Agent)
necessary to comply with the provisions of Sections 6.11 and 6.12, and the
Administrative Agent shall be satisfied that all Liens required to be granted in
the assets and ownership interests of such new Subsidiary under such Sections
6.11 and 6.12 have been granted or pledged and have been perfected and are
subject only to permitted Liens hereunder, and (B) without limiting the
generality of the foregoing, no Default shall exist and be continuing or
reasonably be expected to result therefrom;
(k) additional Investments by HCA of Florida, Inc. in Columbia/Bartow
Healthcare System, Ltd. pursuant to Section 2.8.2 of the Bartow Contribution
Agreement for the purpose of the construction of the new Bartow, Florida
Hospital pursuant thereto; provided, that, (i) no Event of Default then exists
or could reasonably be expected to result therefrom, (ii) the Administrative
Agent holds a first priority perfected Mortgage on the real estate and
improvements relating thereto, subject to no Liens except those permitted under
Section 7.3
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hereof, (iii) such additional Investments are made only out of proceeds of the
two additional advances of the Tranche A Term Loans, and (iv) at the time of
each of such two additional Investments, the Equity Interests of HCA of Florida,
Inc. in Columbia/Bartow Healthcare System, Ltd. shall, as a result thereof, be
increased proportionately in accordance with the terms of the Bartow
Contribution Agreement and applicable Organizational Documents;
(l) provided no Default then exists or could reasonably be expected to
result therefrom, stock repurchases by LifePoint Parent of odd lots of its
publicly traded common Equity Interests for purchase prices which in the
aggregate do not exceed $5,000,000 during the term of this Agreement;
(m) Investments consisting of Equity Interests, obligations, securities or
other property received in settlement of accounts receivable (created in the
ordinary course of business) from bankrupt obligors;
(n) advances or loans to customers and suppliers in the ordinary course of
business that do not exceed $1,000,000 in the aggregate at any time outstanding;
(o) the Investment evidenced by the promissory note of the ESOP issued in
exchange for the purchase by the ESOP of newly issued shares of Equity Interests
in LifePoint Parent in an amount equal to 8.3% of the outstanding shares of
LifePoint Parent, as described in the High Yield Offering Memorandum;
(p) the Investments evidenced by promissory notes from executives of
LifePoint Parent in an aggregate principal amount not exceeding $12,000,000
during the term of this Agreement received by LifePoint Parent in exchange for
Equity Interests in LifePoint Parent issued at fair market value pursuant to the
Executive Stock Purchase Plan described in the High Yield Offering Memorandum;
and
(q) Investments (but not Acquisitions) of a nature not contemplated in the
foregoing subsections in an amount not to exceed $1,000,000 in the aggregate at
any time outstanding.
7.9 Transactions with Affiliates. Enter into any transaction, including
-----------------------------
any purchase, sale, lease or exchange of property, the rendering of any service
or the payment of any management, advisory or similar fees, with any Affiliate
unless such transaction is (a) otherwise permitted under this Agreement or (b)
in the ordinary course of business of such Loan Party and upon fair and
reasonable terms no less favorable to such Loan Party than it would obtain in a
comparable arm's length transaction with a Person that is not an Affiliate.
7.10 Sales and Leasebacks. Enter into any arrangement with any Person
--------------------
providing for the leasing by any Loan Party of real or personal property that
has been or is to be sold or transferred by the Borrower or such Subsidiary to
such Person or to any other Person to whom funds have been or are to be advanced
by such Person on the security of such property or rental obligations of the
Borrower or such Subsidiary.
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7.11 Changes in Fiscal Periods. Permit the fiscal year of any Loan Party
-------------------------
to end on a day other than December 31 or change any Loan Party's method of
determining fiscal quarters.
7.12 Negative Pledge Clauses. Enter into or suffer to exist or become
-----------------------
effective any agreement that prohibits or limits the ability of any Loan Party
to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, to secure its obligations
under the Loan Documents to which it is a party other than (a) this Agreement
and the other Loan Documents and (b) any agreements governing any purchase money
Liens or Capital Lease Obligations otherwise permitted hereby (in which case,
any prohibition or limitation shall only be effective against the assets
financed thereby).
7.13 Restrictive Clauses. Enter into or suffer to exist or become
-------------------
effective any consensual encumbrance or restriction on the ability of any
Subsidiary of any Loan Party to (a) make Restricted Payments in respect of any
Equity Interests of such Subsidiary held by, or pay any Indebtedness owed to,
such Loan Party or any other Subsidiary of such Loan Party, (b) make loans or
advances to, or other Investments in, any Loan Party or any other Subsidiary of
any Loan Party or (c) transfer any of its assets to any Loan Party or any other
Subsidiary of any Loan Party, except for such Liens or restrictions existing
under or by reason of any restrictions existing under the Loan Documents or the
High Yield Documents. Enter into any agreement (excluding this Agreement, any
other Loan Document or the High Yield Documents) prohibiting (a) any Loan Party
from amending or otherwise modifying this Agreement or any other Loan Document
or (b) the creation or assumption of any Lien upon the properties, revenues or
assets of any Loan Party, whether now owned or hereafter acquired. Enter into
any agreement to effect a transaction that is prohibited under this Agreement or
any other Loan Document, unless such agreement is expressly subject to the
written consent of the Lenders hereunder.
7.14 Lines of Business. As to any Borrower, enter into any business,
-----------------
either directly or through any Subsidiary, except for those businesses in which
such Borrower is engaged on the date of this Agreement or medical service
businesses relating thereto. As to any Subsidiary of any Borrower, enter into
any business, either directly or through any other Subsidiary, except for those
businesses in which the Subsidiaries of such Borrower are engaged on the date of
this Agreement. As to the LifePoint Parent, enter into any business other than
holding all of the Equity Interests of LifePoint , maintaining its existence as
a public company, and performing services and making payments as a party to, and
enforcing, the Transition Agreements . In connection therewith, the LifePoint
Parent shall have no liabilities other than its liabilities under the Loan
Documents, tax liabilities incurred in the ordinary course of business, and
administrative and Transition Agreement expenses incurred in the ordinary course
of business.
7.15 Amendment of Certain Agreements. Amend or modify the High Yield
-------------------------------
Documents, the Transition Agreements, the Bartow Contribution Agreement or any
documents, if any, evidencing the Columbia/HCA Intercompany Receivable or other
Subordinated Debt hereafter permitted. Amend or modify the Organizational
Documents of either Existing Joint Venture in a manner adverse to LifePoint's
direct or indirect partnership interest(s) therein.
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SECTION 8. VENTS OF DEFAULT.
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest or other amount payable hereunder or
under any other Loan Document within three days after such other amount becomes
due in accordance with the terms hereof; or
(b) any material representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) any Loan Party shall default in the observance or performance of
any agreement contained in 6.4(a)(i) as to LifePoint Parent, LifePoint or any
Material Subsidiary, 6.6, 6.10 (as to the failure to maintain at all times
casualty or liability insurance) or 6.11 or Section 7 or Section 10 of this
Agreement or any material agreement contained in the HTI Guaranty, the LifePoint
Parent Guaranty, the LifePoint Parent Security Agreement or the Guarantee and
Security Agreement (once any of the foregoing is executed and delivered
hereunder) or (ii) an "Event of Default" under and as defined in any Mortgage
shall have occurred and be continuing (once any of the same is executed and
delivered hereunder); or
(d) any Loan Party shall default in the observance or performance of any
agreement contained in Section 6.1(a) or (b) or 6.2(b), and such default shall
continue unremedied for a period of five days after the earlier of the date a
Responsible Officer becomes aware of such default or the date notice thereof is
given to the Borrower from the Administrative Agent or the Required Lenders; any
Loan Party shall default in the observance or performance of any other agreement
contained in this Agreement or any other Loan Document (other than as provided
in paragraphs (a) through (c) of this Section or the foregoing sentence), and
such default shall continue unremedied for a period of 15 days after the earlier
of the date any Responsible Officer becomes aware of such default or the date
notice thereof is given to the Borrower from the Administrative Agent or the
Required Lenders; or
(e) any Loan Party shall (i) default in making any payment of any principal
of any Indebtedness (including any Guarantee Obligation, but excluding the
Loans) on the scheduled or original due date with respect thereto, and such
default has not been waived; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any, provided
in the instrument or agreement under which such Indebtedness was created and
such default has not been waived; or (iii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition
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exist, the effect of which default or other event or condition is to cause, or
to permit the holder or beneficiary of such Indebtedness (or a trustee or agent
on behalf of such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or (in
the case of any such Indebtedness constituting a Guarantee Obligation) to become
payable and such default has not been waived; provided, that a default, event or
condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not
at any time constitute an Event of Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii) and
(iii) of this paragraph (e) shall have occurred and be continuing with respect
to Indebtedness the outstanding principal amount of which exceeds in the
aggregate $5,000,000; or
(f) (i) any Loan Party or Columbia/HCA (so long as HTI is a Loan Party)
shall commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or any Loan Party or Columbia/HCA (so long as HTI is a Loan Party) shall
make a general assignment for the benefit of its creditors; or (ii) there shall
be commenced against any Loan Party or Columbia/HCA (so long as HTI is a Loan
Party) any case, proceeding or other action of a nature referred to in clause
(i) above that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or unbonded
for a period of 60 days; or (iii) there shall be commenced against any Loan
Party or Columbia/HCA (so long as HTI is a Loan Party) any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets that
results in the entry of an order for any such relief that shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv) any Loan Party or Columbia/HCA (so long as HTI is a Loan
Party) shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i), (ii),
or (iii) above; or (v) any Loan Party or Columbia/HCA (so long as HTI is a Loan
Party) shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii)
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of any Loan Party or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
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Borrower or any other Loan Party or any Commonly Controlled Entity shall, or in
the reasonable opinion of the Required Lenders is likely to, incur any liability
in connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i) through (vi) above, such
event or condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be expected to
have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against any Loan
Party involving in the aggregate a liability (not paid or fully covered by
insurance as to which the relevant insurance company has acknowledged coverage)
of $1,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 45 days from the
entry thereof; or
(i) once executed and delivered to Administrative Agent, any of the
Security Documents shall cease, for any reason, to be in full force and effect,
or any Loan Party or any Affiliate of any Loan Party shall so assert, or any
Lien created by any of the Security Documents shall cease to be enforceable and
of the same effect and priority purported to be created thereby; or
(j) the Distribution Agreement shall cease, for any reason, to be in full
force and effect, or Columbia/HCA shall so assert with respect to the LifePoint
Parent and its Subsidiaries; or any Security Document shall cease, for any
reason, to be in full force and effect, or any Loan Party who is a party thereto
shall so assert; or
(k) a Change of Control shall have occurred; or
(l) a default shall have occurred under the High Yield Documents;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement and the other Loan Documents by
the Borrower (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) shall immediately become due and payable, and (B)
if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Majority Revolving Facility
Lenders, the Administrative Agent may, or upon the request of the Majority
Revolving Facility Lenders, the Administrative Agent shall, by notice to the
Borrower declare the Revolving Commitments to be terminated forthwith, whereupon
the Revolving Commitments shall immediately terminate; (ii) with the consent of
the Majority Tranche A Term Lenders, the Administrative Agent may, upon the
request of the Majority Tranche A Term Lenders, the Administrative Agent shall,
by notice to the Borrower, declare the Tranche A Term Commitments to be
terminated forthwith, whereupon the Tranche A Term Commitments shall immediately
terminate; and (iii) with the consent of the Required
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Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower, declare the
Loans hereunder (with accrued interest thereon) and all other amounts owing by
the Borrower under this Agreement and the Loan Documents (including all amounts
of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) to be
due and payable forthwith, whereupon the same shall immediately become due and
payable. With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant to
this paragraph, the Borrower shall at such time deposit in a cash collateral
account opened by the Administrative Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held in such
cash collateral account shall be applied by the Administrative Agent to the
payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the other Loan Documents. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other obligations of the Borrower hereunder and
under the other Loan Documents shall have been paid in full, the balance, if
any, in such cash collateral account shall be returned to the Borrower (or such
other Person as may be lawfully entitled thereto). Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS.
9.1 Appointment. Each Lender hereby irrevocably designates and appoints
-----------
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any of its
--------------------
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of their respective
----------------------
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action
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lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except to the extent
that any of the foregoing are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from its or such Person's own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders, representations or warranties made by any Loan Party or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall be
--------------------------------
entitled to rely, and shall be fully protected in relying, upon any instrument,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including counsel to the Borrower), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request
of the Required Lenders (or, if so specified by this Agreement, all Lenders),
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed to
-----------------
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided that unless and until the Administrative Agent shall have
--------
received such directions, the Administrative Agent may (but
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shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
----------------------------------------
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in its
---------------
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with, any of the foregoing; provided that no Lender shall
--------
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent's gross negligence or
willful misconduct. The
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agreements in this Section shall survive the payment of the Loans and all other
amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates may
--------------------------------
make loans to, accept deposits from and generally engage in any kind of business
with any Loan Party as though such Agent was not an Agent. With respect to its
Loans made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, each Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Agent, and the terms "Lender" and "Lenders" shall
include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may resign
------------------------------
as Administrative Agent upon 10 days' notice to the Lenders and the Borrower. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
shall (unless an Event of Default under Section 8(a) or Section 8(f) with
respect to the Borrower shall have occurred and be continuing) be subject to
approval by the Borrower (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon such appointment and approval, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 10 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
9.10 Authorization to Release Guarantees and Liens. Notwithstanding
---------------------------------------------
anything to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each of the Lenders
(without requirement of notice to or consent of any Lender except as expressly
required by Section 11.1) to take any action requested by the Borrower having
the effect of releasing any Collateral or guarantee obligations to the extent
necessary to permit consummation of any transaction not prohibited by any Loan
Document or that has been consented to in accordance with Section 11.1.
9.11 Documentation Agent, Syndication Agent, Arrangers and Co-Agent.
--------------------------------------------------------------
Neither the Documentation Agent nor the Syndication Agent nor the Arranger nor
any Co-Arranger nor the Co-Agent shall have any duties or responsibilities
hereunder in its capacity as such.
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SECTION 10. REPRESENTATIONS AND COVENANTS OF HTI.
To induce the Lenders to enter into this Credit Agreement and to make Loans
hereunder to HTI, HTI hereby represents and warrants and covenants to the
Administrative Agent and to each Lender as follows:
10.1 Financial Condition and Financial Reporting. (a) The financial
-------------------------------------------
statements described below (copies of which have heretofore been provided to the
Administrative Agent for distribution to the Lenders) have been prepared in
accordance with GAAP consistently applied throughout the periods covered
thereby, are complete and correct in all material respects and present fairly
the financial condition (including disclosure of all material liabilities,
contingent and otherwise) and results from operation of the entities and for the
periods specified, subject in the case of interim company-prepared statements to
normal year-end adjustment and the absence of footnotes:
(i) audited consolidated balance sheets for Columbia/HCA and its
consolidated subsidiaries dated as of December 31, 1996, December 31,
1997 and December 31, 1998, together with related audited consolidated
statements of income and cash flows for the fiscal years then ending;
and
(ii) pro forma company-prepared consolidated balance sheet for
--- -----
HTI and its consolidated subsidiaries dated as of March 31, 1999.
As of the Closing Date and as of the date of any Loans to HTI hereunder, neither
Columbia/HCA nor HTI or their respective Subsidiaries has any known contingent
liabilities of any significant amount which are not referred to in said
financial statements or in the notes thereto which would have a Material Adverse
Effect. Substantially all of the material assets of Columbia/HCA reflected on
its audited balance sheet as of December 31, 1998 have been transferred to HTI
and its Subsidiaries, other than the Columbia/HCA Intercompany Receivable. As
of the Closing Date, all of such asset transfers (including Equity Interest
transfers) to HTI have been consummated so that HTI holds, directly or
indirectly, through its wholly-owned Subsidiaries, all of the material assets of
Columbia/HCA, with the exception of the Columbia/HCA Intercompany Receivable and
the assets held by HTI and its Subsidiaries as of the date hereof comprise
substantially all of the assets of Columbia/HCA reflected on its balance sheet
dated December 31, 1998 (with the exception of the Columbia/HCA Intercompany
Receivable). Since December 31, 1998 there has been no development or event
that has had or could reasonably be expected to have a Material Adverse Effect
on HTI. HTI is Solvent and is not a direct or contingent obligor on the HCA
Senior Credit Facilities. If HTI chooses to effect the Dropdown, HTI will
transfer the America Group division assets transferred to LifePoint Parent and
shall cause LifePoint Parent to transfer such assets to LifePoint.
(b) Unless and until released from its obligations as a Loan Party
hereunder, HTI will furnish, or cause to be furnished, to the Administrative
Agent and each of the Lenders audited annual and company-prepared quarterly
consolidated and consolidating financial
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statements, including a balance sheet and related income statement and statement
of cash flows, in each case including information from prior years in
comparative form, prepared in accordance with GAAP, in reasonable form and
detail reasonably acceptable to the Administrative Agent which in the case of
the annual audited financial statements, shall include an opinion of independent
certified accountants of recognized national standing without qualification as
to the scope of the audit or the status HTI or its subsidiaries as going
concerns, and which in the case of the company-prepared financial statements,
shall be subject only to changes resulting from normal audit and year-end
adjustments and shall be accompanied by a certificate of the chief financial
officer of HTI to the effect that the financial statements present fairly the
financial condition and performance of HTI and its subsidiaries as of such date
and for such periods and that no Default or Event of Default exists under this
Credit Agreement.
10.2 Notices. Unless and until released from its obligations as a Loan
-------
Party hereunder, HTI will furnish, or cause to be furnished, to the
Administrative Agent (i) notice of the occurrence of any event or condition
which would constitute a Default or Event of Default immediately upon discovery,
and (ii) notice of the pendency, commencement or material development in any
investigation, assertion of liability, arbitral, governmental or other legal
proceedings which might reasonably be expected to have a Material Adverse
Effect. (Notwithstanding the foregoing sentence, HTI shall not be liable for
the failure to give any such notice, after the execution and delivery of the HTI
Release, in the event the Administrative Agent and the Required Lenders had
knowledge of any event or condition which was required to be the subject of such
notice, or in the event such event or condition did not result in a Material
Adverse Effect.)
10.3 Existence and Authority. HTI is duly organized, validly existing in
-----------------------
good standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own and operate its property and conduct its
business as currently conducted and to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is or
will be a party, is duly qualified as a foreign entity in each jurisdiction
where failure to so qualify could have a Material Adverse Effect. HTI has duly
authorized, executed and delivered this Agreement and the other Loan Documents
to which it is a party, and this Agreement and the other Loan Documents to which
it is a party constitute the legal, valid and binding obligations of the HIT
enforceable against it in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). Unless and until released from its obligations as a Loan Party
hereunder, HTI will take action as necessary to maintain its and its Material
Subsidiaries existence and qualifications in force and effect.
10.4 Compliance with Legal Requirements. HTI is, and unless and until
----------------------------------
released from its obligations as a Loan Party hereunder, will continue to be, in
compliance with all Legal Requirements, except as disclosed in Columbia/HCA's
Annual Report for the fiscal year ended December 31, 1998 and any Current
Reports on Form 8-K filed with the SEC, or to the extent that failure to be in
compliance therewith could not reasonably be expected to have a Material
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Adverse Effect. Neither the execution, delivery or performance by HTI of its
obligations under the Loan Documents, will violate any Legal Requirement or
contractual obligation applicable to it. The Loans to HTI hereunder will not be
used, directly or indirectly, for the purpose of purchasing or carrying "margin
stock" in violation of the requirements of Regulation U.
10.5 Legal Proceedings. Except as disclosed in Columbia/HCA's Annual
-----------------
Report for the fiscal year ended December 31, 1998 and any Current Reports on
Form 8-K filed with the SEC prior to the date hereof, no investigation,
assertion of liability, unsealed litigation, arbitral, governmental or other
legal proceedings are pending, or to the best of HTI's knowledge, threatened,
against HTI or any of its Subsidiaries, or their properties or operations, which
(i) relate to the Loan Documents or the transactions contemplated herein, or
(ii) could reasonably be expected to have a Material Adverse Effect.
10.6 No Default. No Default or Event of Default has occurred and is
----------
continuing hereunder.
10.7 Purpose of Loans. The Loans to HTI hereunder will be used exclusively
----------------
to repay, directly or indirectly, inter-company indebtedness to Columbia/HCA
under the Columbia/HCA Intercompany Receivable, to pay for costs and expenses
incurred in connection with the transactions contemplated hereby and by the
Spinoff, and for no other purposes.
10.8 No Material Misstatements. HTI represents that it has acted in good
-------------------------
faith using reasonable assumptions and due care in the preparation of
information, reports and financial statements delivered to the Administrative
Agent in connection with this Agreement.
10.9 Indebtedness. Unless and until released from its obligations as a
------------
Loan Party hereunder pursuant to the HTI Release, HTI will not contract, create,
incur or assume, nor will it permit any of its subsidiaries to contract, create,
incur or assume, or permit to exist, any Indebtedness, except:
(i) Indebtedness existing or arising under this Credit
Agreement, the other Loan Documents and the High Yield Notes;
(ii) Indebtedness of up to $790,000,000 under the Triad
Financings;
(iii) the Columbia/HCA Intercompany Receivable;
(iv) existing Indebtedness set forth on the pro forma balance
--- -----
sheet of HTI as of March 31, 1999 delivered to the Administrative
Agent; and
(v) other Indebtedness not exceeding $5,000,000 in the
aggregate outstanding.
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10.10 Liens. Unless and until released from its obligations as a Loan
-----
Party hereunder, HTI will not contract, create, incur or assume any Lien, nor
will it permit any of its Subsidiaries to contract, create, incur or assume any
Liens other than Liens of the type and to the extent permitted under Section 7.3
and those existing as of the Closing Date and not created or incurred in
anticipation or contemplation of this Credit Agreement, as fully described in
the financial statements referenced in Section 10.1.
10.11 Mergers; Acquisitions and Asset Sales. Unless and until released
-------------------------------------
from its obligations as a Loan Party hereunder, except in connection with the
Spinoff or with respect to transactions under contract on the date hereof or
except as the following in the aggregate would involve an amount equal to or
less than $100,000,000, HTI will not, nor will it permit any of its Subsidiaries
(other than Health Care Indemnity, Inc., its malpractice insurance Subsidiary)
to, (i) enter into any transaction of merger, consolidation or combination, (ii)
dissolve, liquidate or wind-up its affairs, (iii) acquire all or substantially
all of the Equity Interests of any other Person or acquire any material assets,
property or operations from any other Person other than in the ordinary course
of business, or (iv) make any sale, lease or other disposition of assets or
property other than in the ordinary course of business.
10.12 Investments. Unless and until released from its obligations as a
-----------
Loan Party hereunder, HTI will not, nor will it permit any of its Subsidiaries
(other than Health Care Indemnity, Inc., its malpractice insurance Subsidiary)
to, make or permit to exist any Investment other than (i) cash and Cash
Equivalents, (ii) Investments of the types described in clauses (ii) and (iii)
of the definition of "Permitted Investments", (iii) Investments of the type
existing as of the Closing Date and not created or incurred in anticipation or
contemplation of this Agreement, as fully described in the financial statements
referenced in Section 10.1.
10.13 Restricted Payments. Unless and until released from its obligations
-------------------
as a Loan Party hereunder, HTI will not, nor will it permit any of its
Subsidiaries to, make or permit, any Restricted Payment other than the payment,
directly or indirectly, of up to $900 million on the Columbia/HCA Intercompany
Receivable; provided, however, HTI shall cause its Subsidiaries to make
distributions to it to enable it to pay its Obligations hereunder as and when
due and, provided no Event of Default then exists, the Subsidiaries of HTI may
make Restricted Payments amongst themselves.
10.14 Transactions with Affiliates. Except as contemplated for the
----------------------------
Spinoff, unless and until released from its obligations as a Loan Party
hereunder, HTI will not, nor will it permit any of its Subsidiaries to, have
dealing with any officer, director, shareholder, Subsidiary or Affiliate, unless
and to the extent that such dealings are made on terms as would be obtainable in
a comparable transaction made with an unrelated third party on an arms' length
basis.
SECTION 11. MISCELLANEOUS.
11.1 Amendments and Waivers. Neither this Agreement, any other Loan
----------------------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in
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accordance with the provisions of this Section 11.1. The Required Lenders and
each Loan Party to the relevant Loan Document may, or, with the written consent
of the Required Lenders, the Administrative Agent and each Loan Party to the
relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Loan
Parties hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Term Loan, reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any Commitment,
in each case without the consent of each Lender directly affected thereby; (ii)
amend, modify or waive any provision of this Section 11.1 or reduce any
percentage specified in the definition of Required Lenders or Required
Prepayment Lenders, consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan Documents,
release all or substantially all of the Collateral or release LifePoint Parent
from its obligations under the LifePoint Parent Guaranty or release all or
substantially all of the Subsidiary Guarantors from their obligations under the
Guarantee and Security Agreement, in each case without the written consent of
all Lenders; (iii) amend, modify or waive any condition precedent to any
extension of credit under the Revolving Facility set forth in Section 4.2
(including any waiver of an existing Default or Event of Default) without the
written consent of the Majority Revolving Facility Lenders; (iv) amend, modify
or waive any condition precedent to any advance under the Tranche A Term
Commitments set forth in Section 4.2 (including any waiver of an existing
Default or Event of Default) without the written consent of the Majority Tranche
A Term Lenders; (v) amend, modify or waive any provision of Section 2.17 without
the consent of the Majority Facility Lenders in respect of each Facility
adversely affected thereby; (vi) reduce the percentage specified in the
definition of Majority Facility Lenders with respect to any Facility without the
written consent of all Lenders under such Facility; (vi) amend, modify or waive
any provision of Section 9 without the written consent of the Administrative
Agent; or (viii) amend, modify or waive any provision of Section 3 without the
written consent of the Issuing Lender. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
11.2 Notices. All notices, requests and demands to or upon the respective
-------
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered, or three
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Business Days after being deposited in the mail, postage prepaid, or, in the
case of telecopy notice, when received, addressed as follows in the case of the
Borrower and the Administrative Agent, and as set forth in an administrative
questionnaire delivered to the Administrative Agent in the case of the Lenders,
or to such other address as may be hereafter notified by the respective parties
hereto:
The Borrower: c/o LifePoint Hospitals, Inc.
4525 Harding Road
Nashville, TN 37025
Attention: Kenneth Donahey
Telecopy: (615) 344-6276
Telephone: (615) 344-6124
with a copy to: William F. Carpenter III
c/o LifePoint Hospitals, Inc.
4525 Harding Road
Nashville, TN 37025
Telecopy: (615) 344-6276
Telephone: (615) 344-6272
The Administrative Agent: Fleet National Bank
One Federal Street
Mail Stop: MA OF D07B
Boston, MA 02110
Attention: Maryann S. Smith
Healthcare Division
Telecopy: (617) 346-4666
Telephone: (617) 346-4613
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders shall not be effective until received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
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11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
------------------------------
reimburse the Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including the reasonable fees and disbursements of counsel to the
Administrative Agent and filing and recording fees and expenses, with statements
with respect to the foregoing to be submitted to the Borrower prior to the
Closing Date (in the case of amounts to be paid on the Closing Date) and from
time to time thereafter on a quarterly basis or such other periodic basis as the
Administrative Agent shall deem appropriate, (b) to pay or reimburse each Lender
and the Administrative Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
reasonable fees and disbursements of counsel (including the allocated fees and
expenses of in-house counsel) to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Administrative Agent and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an "Indemnitee") harmless from and against any and all other
----------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including any
of the foregoing relating to the use of proceeds of the Loans or the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of the Borrower any of its Subsidiaries or any of the Properties
and the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against any Loan Party under any Loan
Document (all the foregoing in this clause (d), collectively, the "Indemnified
-----------
Liabilities"), provided, that the Borrower shall have no obligation hereunder to
- ----------- ----------
any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. Without limiting the foregoing, and to
the extent permitted by applicable law, the Borrower agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to so waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by Statute or
otherwise against any Indemnitee, unless such claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, are found by a
-96-
<PAGE>
final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Indemnitee. The
agreements in this Section 10.5 shall survive repayment of the Loans and all
other amounts payable hereunder.
11.6 Successors and Assigns; Participations and Assignments. (a) This
------------------------------------------------------
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender except pursuant to Section 6.11.
(b) Any Lender may, without the consent of the Borrower, in accordance with
applicable law, at any time sell to one or more banks, financial institutions or
other entities (each, a "Participant") participating interests in any Loan owing
-----------
to such Lender, any Commitment of such Lender or any other interest of such
Lender hereunder and under the other Loan Documents. In the event of any such
sale by a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. In no event shall any Participant under
any such participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Loans or any fees payable
hereunder, or postpone the date of the final maturity of the Loans, in each case
to the extent subject to such participation. The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.16, 2.17 and 2.18 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of Section 2.17, such Participant
shall have complied with the requirements of said Section and provided, further,
that no Participant shall be entitled to receive any greater amount pursuant to
any such Section than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable law, at
--------
any time and from time to time assign to any Lender or any affiliate thereof or,
with the consent of the
-97-
<PAGE>
Borrower and the Administrative Agent (which, in each case, shall not be
unreasonably withheld or delayed), to an additional bank, financial institution
or other entity (an "Assignee") all or any part of its rights and obligations
--------
under this Agreement pursuant to an Assignment and Acceptance, executed by such
Assignee, such Assignor and any other Person whose consent is required pursuant
to this paragraph, and delivered to the Administrative Agent for its acceptance
and recording in the Register; provided that no such assignment to an Assignee
(other than any Lender or any affiliate thereof) shall be in an aggregate
principal amount of less than $5,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement) unless otherwise
agreed by the Borrower and the Administrative Agent. Any such assignment need
not be ratable as among the Facilities. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with a Commitment and/or Loans as
set forth therein, and (y) the Assignor thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of an
Assignor's rights and obligations under this Agreement, such Assignor shall
cease to be a party hereto). Notwithstanding any provision of this Section 10.6,
the consent of the Borrower shall not be required for any assignment that occurs
when an Event of Default shall have occurred and be continuing with respect to
the Borrower.
(d) The Administrative Agent shall, on behalf of the Borrower, maintain at
its address referred to in Section 11.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the names
--------
and addresses of the Lenders and the Commitment of, and the principal amount of
the Loans owing to, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, each
other Loan Party, the Administrative Agent and the Lenders shall treat each
Person whose name is recorded in the Register as the owner of the Loans and any
Notes evidencing the Loans recorded therein for all purposes of this Agreement.
Any assignment of any Loan, whether or not evidenced by a Note, shall be
effective only upon appropriate entries with respect thereto being made in the
Register (and each Note shall expressly so provide). Any assignment or transfer
of all or part of a Loan evidenced by a Note shall be registered on the Register
only upon surrender for registration of assignment or transfer of the Note
evidencing such Loan, accompanied by a duly executed Assignment and Acceptance,
and thereupon one or more new Notes shall be issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
10.6(c), together with payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record the information contained therein
in the Register on the effective date determined pursuant thereto.
-98-
<PAGE>
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 11.6 concerning assignments of Loans and
Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law.
11.7 Adjustments; Set-off. (a) Except to the extent that this Agreement
--------------------
or the fee letter between the Borrower and the Administrative Agent provides
otherwise, if any Lender shall, at any time after and during the continuance of
a Default, receive any payment of all or part of the Obligations owing to it, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to insolvency proceedings or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of the Obligations owing to such other Lender, such Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, as shall be
necessary to cause all Lenders to share the excess payment or benefits of such
collateral ratably with each other; provided, however that if all or any portion
of such excess payment or benefits, is thereafter recovered from such Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower, as the case may be, and whether or not
such Lender is otherwise fully secured. Each Lender agrees promptly to notify
the Borrower and the Administrative Agent after any such setoff and application
made by such Lender, provided, that the failure to give such notice shall not
affect the validity of such setoff and application.
11.8 Counterparts. This Agreement may be executed by one or more of the
------------
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
11.9 Severability. Any provision of this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition
-99-
<PAGE>
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.10 Integration. This Agreement and the other Loan Documents represent
-----------
the agreement of the Borrower, the Administrative Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Loan Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably
-----------------------------------
and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
Commonwealth of Massachusetts, the courts of the United States for the Southern
District of New York and the District of Massachusetts, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid to the Borrower at its
address set forth in Section 11.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
11.13 Confidentiality. Each of the Administrative Agent and each Lender
---------------
agrees to keep (and to cause its employees, directors, agents, attorneys,
accounts and other professionals and those of its Affiliates to keep)
confidential all non-public information provided to it by any
-100-
<PAGE>
Loan Party pursuant to this Agreement; provided that nothing herein shall
prevent the Administrative Agent or any Lender from disclosing any such
information (a) to the Administrative Agent, any other Lender or any affiliate
of any Lender, (b) to any Transferee or prospective Transferee that agrees to
comply with the provisions of this Section, (c) to its employees, directors,
agents, attorneys, accountants and other professional advisors or those of any
of its affiliates, (d) upon the request or demand of any Governmental Authority,
(e) in response to any order of any court or oth er Governmental Authority or as
may otherwise be required pursuant to any Legal Requirement, (f) if requested or
required to do so in connection with any litigation or similar proceeding, (g)
that has been publicly disclosed, (h) to any organization or any nationally
recognized rating agency that requires access to information about a Lender's
investment portfolio in connection with ratings issued with respect to such
Lender, or (i) in connection with the exercise of any remedy hereunder or under
any other Loan Document. The agreements in this Section 11.13 shall survive
repayment of the Loans and termination of this Agreement (and shall survive for
the benefit of HTI after its release, if any, pursuant to Section 6.11).
11.14 WAIVERS OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
---------------------
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
-101-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered under seal by their proper and duly authorized
officers as of the day and year first above written.
HEALTHTRUST, INC. - THE HOSPITAL COMPANY
By: /s/ R. Milton Johnson
---------------------------------------
Name: R. Milton Johnson
Title: Vice President
FLEET NATIONAL BANK,
as Administrative Agent, Arranger, Co-Arranger
and a Lender
By: /s/ Maryann S. Smith
---------------------------------------
Name: Maryann S. Smith
Title: Vice President
DEUTSCHE BANK SECURITIES INC.,
as Syndication Agent and Co-Arranger
By: /s/ Ian Stewart
---------------------------------------
Name: /s/ Ian Stewart
Title: Vice President
By: /s/ Thomas A. Foley
---------------------------------------
Name: Thomas A. Foley
Title: Vice President
SCOTIABANC, INC.,
as Documentation Agent, Co-Arranger and a Lender
By: /s/ Carolyn A. Calloway
---------------------------------------
Name: Carolyn A. Calloway
Title: Relationship Manager
<PAGE>
SUNTRUST BANK, NASHVILLE, N.A.,
as Co-Agent and a Lender
By: /s/ Mark D. Mattson
-------------------------------------
Name: Mark D. Mattson
Title: Vice President
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS
BRANCHES, as a Lender
By: /s/ Susan L. Pearson
-------------------------------------
Name: Susan L. Pearson
Title: Director
By: /s/ Alexander Karon
-------------------------------------
Name: Alexander Karon
Title: Associate
MERRILL LYNCH CAPITAL CORPORATION, as a Lender
By: /s/ Julie Hallowell
-------------------------------------
Name: Julie Hallowell
Title: Vice President
ALLIANCE CAPITAL MANAGEMENT
CORPORATION, as a Lender
By:______________________________
Name:
Title:
NATIONSBANK, N.A., as a Lender
By: /s/ Kevin Wagley
-------------------------------------
Name: Kevin Wagley
Title: Vice President
<PAGE>
THE CHASE MANHATTAN BANK, as a Lender
By: /s/ Dawn Lee Lum
------------------------------------
Name: Dawn Lee Lum
Title: Vice President
FIRST AMERICAN NATIONAL BANK,
as a Lender
By: /s/ Sandy Hamrick
------------------------------------
Name: Sandy Hamrick
Title: Senior Vice Pesident
<PAGE>
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT, dated as of May 11, 1999 (the "Agreement"), is
---------
made and entered into by and among LIFEPOINT HOSPITALS, INC. ("LifePoint
---------
Parent") and FLEET NATIONAL BANK, in its capacity as Administrative Agent under
- ------
the Credit Agreement (as hereinafter defined). Terms capitalized herein but not
otherwise defined shall have the meanings set forth in the Credit Agreement.
WITNESSETH
WHEREAS, pursuant to that certain Credit Agreement dated as of May 11, 1999
(as amended, modified, extended, renewed or replaced from time to time, the
"Credit Agreement"), among Healthtrust, Inc. - The Hospital Company ("HTI"), as
---------------- ---
Borrower, the Lenders party thereto and Fleet National Bank, as Administrative
Agent, and others, the Lenders agreed to provide HTI with certain credit
facilities;
WHEREAS, in connection with the Spinoff (a) all of the right, title and
interest of HTI in and to certain assets owned by HTI prior to the Spinoff have
vested in LifePoint Parent, and (b) LifePoint Parent possesses all of the
rights, powers and privileges formerly held by HTI under the Loan Documents; and
WHEREAS, LifePoint Parent now desires to assume all of the rights,
obligations, duties and responsibilities of HTI under the Loan Documents;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Assumption. Effective as of the date hereof, LifePoint Parent
----------
hereby (i) assumes all of the rights, duties and obligations of HTI under the
Credit Agreement and other Loan Documents, (ii) irrevocably and unconditionally
agrees with the Administrative Agent and the Lenders to be bound by all of the
terms and conditions of the Credit Agreement and all other Loan Documents and to
perform all of the obligations and discharge all of the liabilities of HTI
existing at or accrued prior to the date hereof or hereafter arising under the
Credit Agreement and all other Loan Documents and (iii) without limiting any of
the foregoing, ratifies, and agrees to be bound by, (A) the representations and
warranties set forth in Section 5 of the Credit Agreement and (B) all of the
affirmative and negative covenants set forth in Sections 6 and 7 of the Credit
Agreement. Without limiting the generality of the foregoing terms of this
Section 1, LifePoint Parent hereby promises to pay to each Lender the principal
balance of, and accrued interest on, each Loan made under the Loan Documents.
SECTION 2. References in the Loan Documents. From and after the execution
--------------------------------
and delivery of this Agreement, (a) LifePoint Parent shall have succeeded HTI as
the "Borrower" under the Loan Documents, and all references to the "Borrower" in
the Credit Documents shall refer to LifePoint Parent and not to HTI and (b) all
references to the "Credit Agreement" in any
<PAGE>
Loan Documents shall refer to the Credit Agreement, as modified by this
Agreement. Except as expressly modified by this Agreement, all of the terms and
provisions of the Credit Agreement shall remain in full force and effect.
SECTION 3. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 5. Severability. If any provision of this Agreement is determined
------------
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed in without giving effect to the illegal, invalid or unenforceable
provisions.
SECTION 6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered under seal by their duly authorized officers as of the
date first above written.
LIFEPOINT HOSPITALS, INC.
By:/s/ William F. Carpenter III
-----------------------------
Name: William F. Carpenter III
Title: Senior Vice President
FLEET NATIONAL BANK
By:/s/ Maryann S. Smith
-----------------------------
Name: Maryann S. Smith
Title: Vice President
-2-
<PAGE>
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT, dated as of May 11, 1999 (the "Agreement"), is
---------
made and entered into by and among LIFEPOINT HOSPITALS HOLDINGS, INC.
("LifePoint")]and FLEET NATIONAL BANK, in its capacity as Administrative Agent
---------
under the Credit Agreement (as hereinafter defined). Terms capitalized herein
but not otherwise defined shall have the meanings set forth in the Credit
Agreement.
WITNESSETH
WHEREAS, pursuant to that certain Credit Agreement dated as of May 11, 1999
(as amended, modified, extended, renewed or replaced from time to time, the
"Credit Agreement"), among Healthtrust, Inc. - The Hospital Company ("HTI"), as
---------------- ---
Borrower, the Lenders party thereto and Fleet National Bank, as Administrative
Agent, and others, the Lenders agreed to provide HTI with certain credit
facilities;
WHEREAS, in connection with the Spinoff (a) all of the right, title and
interest of HTI in and to certain assets owned by HTI prior to the Spinoff
vested in LifePoint Parent, and (b) LifePoint Parent acquired all of the rights,
powers and privileges formerly held by HTI under the Loan Documents;
WHEREAS, LifePoint Parent assumed all of the rights, obligations, duties
and responsibilities of HTI under the Loan Documents pursuant to that certain
Assumption Agreement dated as of May 11, 1999 between LifePoint Parent and the
Administrative Agent;
WHEREAS, in connection with the Spinoff (a) all of the right, title and
interest of LifePoint Parent in and to all of the assets acquired by LifePoint
Parent from HTI in connection with the Spinoff have vested in LifePoint, and (b)
LifePoint possesses all of the rights, powers and privileges formerly held by
LifePoint Parent under the Loan Documents; and
WHEREAS, LifePoint now desires to assume all of the rights, obligations,
duties and responsibilities of LifePoint Parent under the Loan Documents.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Assumption. Effective as of the date hereof, LifePoint hereby
----------
(i) assumes all of the rights, duties and obligations of LifePoint Parent under
the Credit Agreement and other Loan Documents, (ii) irrevocably and
unconditionally agrees with the Administrative Agent and the Lenders to be bound
by all of the terms and conditions of the Credit Agreement and all other Loan
Documents and to perform all of the obligations and discharge all of the
liabilities of LifePoint Parent existing at or accrued prior to the date hereof
or hereafter arising under the Credit Agreement and all other Loan Documents and
(iii) without limiting any of the foregoing,
<PAGE>
ratifies, and agrees to be bound by, (A) the representations and warranties set
forth in Section 5 of the Credit Agreement and (B) all of the affirmative and
negative covenants set forth in Sections 6 and 7 of the Credit Agreement.
Without limiting the generality of the foregoing terms of this Section 1,
LifePoint hereby promises to pay to each Lender the principal balance of, and
accrued interest on, each Loan made under the Loan Documents.
SECTION 2. References in the Loan Documents. From and after the execution
--------------------------------
and delivery of this Agreement, (a) LifePoint shall have succeeded LifePoint
Parent as the "Borrower" under the Loan Documents, and all references to the
"Borrower" in the Credit Documents shall refer to LifePoint and not to LifePoint
Parent and (b) all references to the "Credit Agreement" in any Loan Documents
shall refer to the Credit Agreement, as modified by this Agreement. Except as
expressly modified by this Agreement, all of the terms and provisions of the
Credit Agreement shall remain in full force and effect.
SECTION 3. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 5. Severability. If any provision of this Agreement is determined
------------
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed in without giving effect to the illegal, invalid or unenforceable
provisions.
SECTION 6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered under seal by their duly authorized officers as of the
date first above written.
LIFEPOINT HOSPITALS HOLDINGS, INC.
By:/s/ William F. Carpenter III
------------------------------
Name: William F. Carpenter III
Title: Senior Vice President
FLEET NATIONAL BANK
By:/s/ Maryann S. Smith
------------------------------
Name: Maryann S. Smith
Title: Vice President
-3-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF INCOME AND BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 97,300,000
<ALLOWANCES> 48,500,000
<INVENTORY> 13,900,000
<CURRENT-ASSETS> 84,000,000
<PP&E> 453,200,000
<DEPRECIATION> 175,500,000
<TOTAL-ASSETS> 381,400,000
<CURRENT-LIABILITIES> 43,200,000
<BONDS> 188,000,000
0
0
<COMMON> 0
<OTHER-SE> 122,700,000
<TOTAL-LIABILITY-AND-EQUITY> 381,400,000
<SALES> 0
<TOTAL-REVENUES> 134,200,000
<CGS> 0
<TOTAL-COSTS> 73,500,000
<OTHER-EXPENSES> 28,500,000
<LOSS-PROVISION> 10,300,000
<INTEREST-EXPENSE> 4,700,000
<INCOME-PRETAX> 6,900,000
<INCOME-TAX> 2,900,000
<INCOME-CONTINUING> 4,000,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,000,000
<EPS-BASIC> 0.13<F1>
<EPS-DILUTED> 0.13<F2>
<FN>
<F1>EPS - Basic per SFAS No. 128
<F2>EPS - Diluted per SFAS No. 128
</FN>
</TABLE>
