SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT made as of the ___ day of
________________, by and between the "Company" (as
hereinafter defined) and _____________________ (the
"Executive").
WHEREAS, the Board of Directors of the Company (the
"Board") recognizes that the possibility of a Change in
Control (as hereinafter defined) exists and that the
threat or the occurrence of a Change in Control can
result in significant distractions of its key
management personnel because of the uncertainties
inherent in such a situation;
WHEREAS, the Board has determined that it is essential
and in the best interest of the Company and its
stockholders to retain the services of the Executive in
the event of a threat or occurrence of a Change in
Control and to ensure the Executive's continued
dedication and efforts in such event without undue
concern for the Executive's personal financial and
employment security; and
WHEREAS, in order to induce the Executive to remain in
the employ of the Company, particularly in the event of
a threat or the occurrence of a Change in Control, the
Company desires to enter into this Agreement with the
Executive to provide the Executive with certain
benefits in the event the Executive's employment is
terminated as a result of, or in connection with, a
Change in Control.
NOW, THEREFORE, in consideration of the respective
agreements of the parties contained herein, it is
agreed as follows:
1. Term of Agreement. This Agreement shall commence
as of October 1, 1994 and shall continue in effect
until October 1, 1996; provided, however, that the term
of this Agreement shall not expire prior to the
expiration of 24 months after the occurrence of a
Change in Control.
2. Definitions.
2.1 Accrued Compensation. For purposes of this
Agreement, "Accrued Compensation" shall mean an amount
which shall include all amounts earned or accrued
through the "Termination Date" (as hereinafter defined)
but not paid as of the Termination Date including (i)
base salary and (ii) vacation pay.
2.2 Base Amount. For purposes of this Agreement,
"Base Amount" shall mean the Executive's annual base
salary in effect as of the date of this Agreement,
determined without regard to any salary reduction
elections made by the Executive.
2.3 Cause. For purposes of this Agreement, a
termination of employment is for "Cause" if the
Executive has been convicted of a felony or the
Executive (a) failed substantially to perform
reasonably assigned duties with the Company (other than
a failure resulting from the Executive's incapacity due
to physical or mental illness), or (b) engaged in
conduct in connection with his or her employment which
is dishonest, fraudulent or unlawful or which
constitutes gross negligence or willful misconduct and
which results in economic harm to the Company.
2.4 Change in Control. For purposes of this
Agreement, a "Change in Control" shall mean any of the
following events:
(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
Company's 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 (1) an
employee benefit plan (or a trust forming a part
thereof) maintained by (x) the Company or (y) 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"), (2) the Company or any Subsidiary, or
(3) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined).
(b) The individuals who, as of October 1, 1994, 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 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
(c) Approval by stockholders of the Company of:
(1) A merger, consolidation or reorganization
involving the Company; unless
(i) 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
eighty percent (80%) of the combined voting power of
the outstanding voting securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the Voting Securities immediately before such merger,
consolidation or reorganization, and
(ii) 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 or the ultimate parent of the Surviving
Corporation, and
(iii) 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, and
(iv) a transaction described in clauses (i) through
(iii) shall herein be referred to as a "Non-Control
Transaction";
(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, increases 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.
2.5 Company. For purposes of this Agreement, the
"Company" shall mean Healthtrust, Inc. - The Hospital
Company.
2.6 Disability. For purposes of this Agreement,
"Disability" shall mean a physical or mental infirmity
which impairs the Executive's ability to substantially
perform his or her duties with the Company for a period
of one hundred twenty (120) consecutive days and the
Executive has not returned to his or her full time
employment prior to the Termination Date as stated in
the "Notice of Termination" (as hereinafter defined).
2.7 Good Reason. (a) For purposes of this Agreement,
"Good Reason" shall mean the occurrence after a Change
in Control of any of the events or conditions described
in subsections (1) through (4) hereof:
(1) a significant adverse change in the Executive's
duties or responsibilities as in effect at any time
within ninety (90) days preceding the date of a Change
in Control, it being understood that the failure of the
Executive to have duties or responsibilities for the
consolidated enterprise after the Change in Control
comparable to those in effect immediately prior to the
Change in Control shall constitute a significant
adverse change in duties or responsibilities;
(2) a material reduction in the Executive's base
salary;
(3) the failure by the Company to provide employee
benefits to the Executive which are comparable to those
provided to similarly situated employees of the Company
or its ultimate parent corporation;
(4) the relocation of the Executive's office at which
he or she is to perform his or her duties, to a
location more than fifty (50) miles from the location
at which the Executive performed his or her duties
immediately prior to the Change in Control, except for
required travel on the Company's business to an extent
substantially consistent with his or her business
travel obligations prior to the Change in Control;
(b) The Executive must notify the Company within
thirty (30) days of the occurrence of an event or
condition he or she believes constitutes "Good Reason"
and such event will not constitute Good Reason for
purposes of this Agreement if the Company, within a
reasonable period of time not to exceed thirty (30)
days after receipt of such notice, cures or remedies
the event or condition identified in such notice.
2.8 Notice of Termination. For purposes of this
Agreement, following a Change in Control, "Notice of
Termination" shall mean a written notice of termination
of the Executive's employment which indicates the
specific termination provision in this Agreement, if
any, relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment
under the provision so indicated.
2.9 Successors and Assigns. For purposes of this
Agreement, "Successors and Assigns" shall mean a
corporation or other entity acquiring all or
substantially all the assets and business of the
Company (including this Agreement) whether by operation
of law or otherwise.
2.10 Termination Date. For purposes of this Agreement,
"Termination Date" shall mean in the case of the
Executive's death, his or her date of death, in the
case of Good Reason, the last day of his or her
employment (which shall not be more than five (5) days
after the date the Notice of Termination is delivered),
and in all other cases, the date specified in the
Notice of Termination.
3. Termination of Employment.
3.1 If, during the term of this Agreement, the
Executive's employment with the Company and its
affiliates shall be terminated within twenty-four (24)
months following a Change in Control, the Executive
shall be entitled to the following compensation and
benefits:
(a) If the Executive's employment with the Company and
its affiliates shall be terminated (1) by the Company
for Cause or Disability, (2) by reason of the
Executive's death, or (3) by the Executive other than
for Good Reason, the Company shall pay to the Executive
the Accrued Compensation.
(b) If the Executive's employment with the Company and
its affiliates shall be terminated for any reason other
than as specified in Section 3.1(a), the Executive
shall be entitled to the following:
(i) the Company shall pay the Executive all Accrued
Compensation;
(ii) the Company shall pay the Executive as severance
pay and in lieu of any further compensation for periods
subsequent to the Termination Date, in a single payment
an amount in cash equal to [one, two or three, as the
case may be] times the Executive's Base Amount;
(iii) the Company shall maintain in full force and
effect for the benefit of the Executive and the
Executive's dependents and beneficiaries, at the
Company's expense (less the amount such individual
would have paid for such coverage had his or her
employment not terminated) until the earlier of (A) the
expiration of 18 months following the Termination Date
or (B) the effective date of the Executive's coverage
under a medical benefit plan of a new employer (which
is comparable in the aggregate to coverage under the
Company's medical benefit plan), all medical insurance,
under plans and programs in which the Executive and/or
the Executive's dependents and beneficiaries
participated immediately prior to the Termination Date,
provided that continued participation is possible under
the general terms and provisions of such plans and
programs. If participation in any such plan or program
is barred, the Company shall arrange at its own expense
(less the amount such individual would have paid for
such coverage had his or her employment not terminated)
to provide the Executive with benefits substantially
similar to those which he or she was entitled to
receive under such plans and programs;
(iv) the Company shall pay a pro rata bonus for the
fiscal year of employment in which the Termination Date
occurs, which shall equal the product obtained by
multiplying the Executive's target bonus percentage for
such year by (A) the monthly Base Salary rate in effect
at the Termination Date and (B) the number of complete
and partial calendar months that have elapsed in the
fiscal year through the Termination Date; provided,
however, that notwithstanding anything contained in
this Agreement to the contrary, to the extent that the
payments and benefits provided under this Agreement and
benefits provided to, or for the benefit of, the
Executive under any other Company plan or agreement
(such payments or benefits are collectively referred to
as the "Payments") would be subject to the excise tax
(the "Excise Tax") imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"),
the Payments shall be reduced (but not below zero) to
the extent necessary so that no Payment to be made or
benefit to be provided to the Executive shall be
subject to the Excise Tax. Unless the Executive shall
have given prior written notice specifying a different
order to the Company to effectuate the limitation in
the preceding sentence, the Company shall reduce or
eliminate the Payments, by first reducing or
eliminating those payments or benefits which are not
payable in cash and then by reducing or eliminating
cash payments, in each case in reverse order beginning
with payments or benefits which are to be paid the
farthest in time from the Executive's Termination Date.
(c) The amounts provided for in Sections 3.1(a) and
3.1(b)(i), (ii) and (iv) shall be paid in a single lump
sum cash payment within fifteen (15) days after the
Executive's Termination Date (or earlier, if required
by applicable law).
(d) The Executive shall not be required to mitigate
the amount of any payment provided for in this
Agreement by seeking other employment or otherwise and
no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the
Executive in any subsequent employment except as
provided in Section 3.1(b)(iii).
(e) The severance pay and benefits provided for in
this Section 3 shall be in lieu of any other severance
or termination pay to which the Executive may be
entitled.
4. Notice of Termination. Following a Change in
Control, any purported termination of the Executive's
employment by the Company and/or the Employer shall be
communicated by Notice of Termination to the Executive.
5. Successors; Binding Agreement.
(a) This Agreement shall be binding upon and shall
inure to the benefit of the Company, its Successors and
Assigns and the Company shall require any Successors
and Assigns to expressly assume and agree to perform
this Agreement in the same manner and to the same
extent that the Company would be required to perform it
if no such succession or assignment had taken place.
(b) Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the
Executive, his or her beneficiaries or legal
representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's
legal personal representative.
6. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement shall be
settled by arbitration, conducted before a panel of
three arbitrators sitting in a location selected by the
Executive within fifty (50) miles from the location of
his or her principal place of employment in accordance
with the commercial rules of the American Arbitration
Association then in effect. Judgment may be entered on
the award of the arbitrators in any court having
jurisdiction. The Company shall pay any fees and
expenses associated with the arbitration, including the
reasonable fees and disbursements of the Executive's
attorney. Any determination by such panel of
arbitrators shall be consistent with the provisions of
this Agreement as set forth herein.
7. Notice. For the purposes of this Agreement,
notices and all other communications provided for in
the Agreement (including the Notice of Termination)
shall be in writing and shall be deemed to have been
duly given when personally delivered or sent by
certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses last
given by each party to the other, provided that all
notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of
the Company. All notices and communications shall be
deemed to have been received on the date of delivery
thereof or on the third business day after the mailing
thereof, except that notice of change of address shall
be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and
signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the
other party hereto of, or compliance with, any
condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise,
express or implied, with respect to the subject matter
hereof have been made by either party which are not
expressly set forth in this Agreement.
9. Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the
laws of the State of Tennessee without giving effect to
the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought
and maintained in a court of competent jurisdiction in
Davidson County in the State of Tennessee.
10. Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the
validity or enforceability of the other provisions
hereof.
11. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and
supersedes all prior agreements, if any, understandings
and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer
and the Executive has executed this Agreement as of the
day and year first above written.
HEALTHTRUST, INC. - THE HOSPITAL COMPANY
By:___________________________
Name:
Title:
ATTEST:
______________________________
[Name]
Schedule to Exhibit 10.11
Form of Severance Protection Agreement
The following are the differences in the
Severance Protection Agreements authorized to be
executed with the Company's executive officers:
Executive Section 3.1(b)(ii)
R. Clayton McWhorter The Company shall pay the W.
Hudson Connery, Jr. Executive as severance pay
Michael A. Koban, Jr. and in lieu of any further
Richard E. Francis, Jr. compensation for periods
Kenneth C. Donahey subsequent to the Termination
Philip D. Wheeler Date, in a single payment an
amount in cash equal to three
times the Executive's Base
Amount.
Clifford G. Adlerz The Company shall pay the
O. Ernest Bacon Executive as severance pay
Yolanda D. Chesley and in lieu of any further
James M. Fleetwood, Jr. compensation for periods
William L. Hough subsequent to the Termination
Jone Law Koford Date, in a single payment an
Robert M. Martin amount in cash equal to two
Dana C. McLendon, Jr. times the Executive's Base
R. Parker Sherrill Amount.
David L. Smith
Robert A. Vraciu
Kent H. Wallace