Exhibit 10.1
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (the "Agreement"), dated as of this 25th day
of June, 2006, is by and between LifePoint CSGP, LLC, a Delaware limited
liability company with its principal place of business at 103 Powell Court,
Suite 200, Brentwood, Tennessee (the "Company"), and Kenneth C. Donahey, a
resident of Brentwood, Tennessee ("Executive").
RECITALS:
WHEREAS, the Company engaged Executive as its Chief Executive Officer
and President pursuant to that certain Employment Agreement effective June 25,
2001, as amended and restated effective December 31, 2004, and attached hereto
as Exhibit A (the "Employment Agreement"), and Executive currently serves as a
member and Chairman of the Board of Directors of the Company and as the Chairman
and Chief Executive Officer of LifePoint Hospitals, Inc.; and
WHEREAS, the Company and Executive have decided that Executive shall
terminate his employment with the Company (and with any of the Company's
subsidiaries and affiliates, including LifePoint Hospitals, Inc.) effective as
of the Separation Date (as defined below), and the Company and the Executive now
desire to enter into this Agreement to set forth the terms and conditions of
Executive's separation from the Company and its subsidiaries and affiliates.
AGREEMENT:
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants set forth below and other good and valuable consideration, receipt of
which is hereby acknowledged, the Company and Executive do hereby agree as
follows:
1. Termination of Employment. Executive's employment with the Company
(and with any of its subsidiaries and affiliates) and the Employment Agreement
shall both terminate effective 11:59 p.m., local time, on June 25, 2006 (the
"Separation Date"); provided, however, that the "Confidentiality/Trade Secrets"
provisions of Section 6(a) (Restrictive Covenants) of the Employment Agreement
shall survive such termination and the obligations of Executive thereunder shall
extend for a period of three (3) years following the Separation Date. Executive
further hereby resigns as a member and Chairman of the Board of Directors of
LifePoint Hospitals, Inc. and from any other positions, appointments or offices
he may hold with LifePoint Hospitals, Inc., the Company, and any of their
respective subsidiaries and affiliates, all effective as of the Separation Date.
As of the Separation Date, other than as expressly provided for in this
Agreement, and except for accrued vacation pay which shall be paid to Executive
within ten days following the Separation Date, the Company shall have no further
obligations to Executive under the provisions of the Employment Agreement, and
except as otherwise provided herein, all other agreements and arrangements
between the Company and Executive related to his employment shall be terminated
and be of no further force and effect; provided, however, that nothing in this
Agreement shall affect Executive's rights to indemnification as a former officer
or director under the Company's Certificate of Incorporation or Bylaws (or under
the constituent documents of any subsidiary or affiliate of the Company), any
contractual indemnification agreement(s) Executive may have with the Company, or
under applicable law. The terms, conditions, and agreements of the parties
hereunder shall supersede the terms, conditions, and agreements contained and
provided for in the terminated agreements.
2. Consideration; Benefits. The Company agrees to pay Executive the
sum of $3,500,000.00, subject to applicable tax withholding, payable in two
equal installments of $1,750,000 each, without interest: (a) the first on
December 27, 2006; and (b) the second on June 26, 2007. The Company further
agrees to provide Executive with insurance coverage (medical, life, and
disability) commensurate with the coverage provided to Executive immediately
prior to the Separation Date for a period of two (2) years following the
Separation Date.
Other than as set forth in this Agreement, as of the Separation Date,
Executive will no longer be entitled to participate in or receive any other
benefits available to employees of the Company; provided, however, that nothing
in this Agreement shall serve to diminish any benefits Executive has under the
provisions of the Company's 401(k), profit sharing or other similar qualified
plan(s) as of the Separation Date or any rights Executive may have under such
plan(s) thereafter as a former employee of the Company or any of its
subsidiaries or affiliates. Executive's rights with respect to stock options and
restricted stock granted to him by the Company shall be governed by the terms of
the respective plans and grant agreements pursuant to which such grants were
made. Executive and the Company acknowledge and agree that pursuant to the terms
of such plans and agreements (as amended or modified to date), any shares of
restricted stock and any stock options that have not vested as of the Separation
Date shall be forfeited and that any vested stock options that have vested as of
the Separation Date may be exercised within a period of thirty-six (36) months
after the Separation Date but shall be forfeited if not exercised within such
thirty-six (36) month period.
Executive acknowledges and agrees that the consideration and benefits
described in this Agreement constitute all amounts owed, due and/or payable to
Executive, that neither the Company nor any of its subsidiaries or affiliates
shall be liable to Executive for any additional consideration or benefits, and
that except as otherwise provided in this Agreement, Executive shall be
responsible for any and all taxes and other assessments payable by Executive as
the result of his receipt of the consideration and benefits provided under this
Agreement.
3. Taxes. If there is a determination that the payments and other
benefits called for under this Agreement, in combination with any other payments
or benefits to or for the benefit of Executive from the Company or any
predecessor or successor organization, will result in Executive's being subject
to an excise tax under Section 4999 of the Code and/or if such tax is assessed
against Executive as a result of such payments or other benefits, the Company
shall make a Gross Up Payment (as defined in this Section 3) to or on behalf of
Executive as and when such determination(s) and assessment(s), as appropriate,
are made, provided Executive takes such action as the Company reasonably
requests under the circumstances to mitigate or challenge, or to mitigate and
challenge, such tax and the Company complies with its obligations as described
in this Section 3.
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A "Gross Up Payment" means a payment to or on behalf of Executive which
shall be sufficient to pay (i) any such excise tax in full, (ii) any federal,
state and local income tax and social security and other employment tax on the
payment made to pay Executive's excise tax as well as any additional excise tax
on such payment and (iii) any interest or penalties assessed by the Internal
Revenue Service on Executive if such interest or penalties are attributable to
the Company's failure to comply with its obligations under this Section 3 or
applicable law. Any determination under this Section 3 by the Company or the
Company's accountants shall be made in accordance with Section 280G of the Code
and any applicable related regulations (whether proposed, temporary or final)
and any related Internal Revenue Service rulings and any related case law and,
if the Company reasonably requests that Executive take action to mitigate or
challenge, or to mitigate and challenge, any such tax or assessment and the
Executive complies with such request, the Company shall provide Executive with
such information and such expert advice and assistance from the Company's
accountants, lawyers and other advisors as he may reasonably request and shall
pay for all expenses incurred in effecting such compliance and any related
fines, penalties, interest and other assessments.
4. Indemnification; Insurance. The Company hereby agrees to indemnify
and hold harmless, and provide advancement of expenses to, Executive in his
capacity as either a director or executive officer of the Company to the fullest
extent permitted by law and by the Certificate of Incorporation and Bylaws of
the Company. For three years after the Separation Date, the Company shall, to
the extent commercially practicable, use its best efforts in good faith to
cause to be maintained in effect the current policies of directors' and
officers' liability insurance heretofore maintained by the Company (provided
that the Company may substitute therefor policies with reputable and financially
sound carriers of at least the same coverage and amounts containing the current
terms and conditions which are no less advantageous) covering acts or omissions
occurring at or prior to the Separation Date with respect to Executive in his
capacity as director or executive officer of the Company. Such policies shall
provide Executive with the same amount and coverage as is provided to the
incumbent chief executive officer and/or directors of the Company during the
three-year period following the Separation Date.
5. Releases. Executive, for himself, his heirs, successors,
administrators, and assigns, hereby releases and forever extinguishes all claims
that he may have had, may now have or may hereafter have against the Company and
its subsidiaries and affiliates and each of their respective predecessors,
subsidiaries, affiliates, directors, officers, managers, employees, agents,
successors, administrators, and assigns, including but not limited to any claims
or liabilities relating to Executive's employment with the Company and any of
its subsidiaries and affiliates or the termination of his employment
relationship with the Company and any of its subsidiaries and affiliates,
including, without limitation, any and all claims arising under Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967
(including the Older Workers Benefit Protection Act), the Civil Rights Acts of
1866 and 1871, the Civil Rights Act of 1991, the Fair Labor Standards Act, the
Equal Pay Act, the Employee Retirement Income Security Act of 1975, the
Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Tennessee Human Rights Act, and any and all other federal, state or local laws,
statutes, rules and regulations pertaining to employment, as well as any and all
claims under state contract or tort law; provided, that the foregoing release
shall not apply to (i) any actions to enforce rights arising from any
representations, covenants or agreements made by the Company under this
Agreement, and (ii) any claim by Executive for indemnification as a former
officer or director of the Company or any of its subsidiaries or affiliates.
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Executive further agrees that he waives any and all right to recover
any damages or compensation awarded as a result of any claim, charge or lawsuit
brought by any person or local, state or federal governmental agency on any
basis whatsoever related to his former employment, including, but not limited
to, the statutes, ordinances and laws set forth above.
The Company, for itself, its predecessors, successors, subsidiaries and
affiliates, hereby releases and forever extinguishes all claims that it or they
may have had, may now have, or may hereafter have against Executive, his heirs,
successors, administrators, and assigns, including, but not limited to, any
claims or liabilities relating to Executive's employment with the Company and
any of its subsidiaries and affiliates; provided, that the foregoing release by
the Company shall not apply to any claims or actions to enforce rights arising
from any representations, covenants or agreements made by Executive under this
Agreement.
6. Noncompetition; Nonsolicitation; Nondisparagement. In consideration
of the benefits to be received by Executive hereunder, Executive agrees that he
will not, at any time during the one (1) year period following the Separation
Date, without the explicit written consent of the Company (i) directly or
indirectly, whether as an officer, director, owner, investor, employee,
consultant, partner, affiliate or other participant, engage in either (A) the
acute care hospital business (either as an existing or start-up business) within
a non-urban service area located in the continental United States, (B) the
business of developing and/or operating surgery centers or diagnostic/imaging
centers within a twenty (20) mile radius of any location where the Company or
any of its subsidiaries or affiliates, as of July 1, 2006, (x) owns, leases,
manages or otherwise maintains an operating facility, or (y) engages in any
business, or (C) any business involved primarily in the physician recruitment
business that may, as part of its operation, be engaged in the recruitment of
physicians away from hospitals owned or operated by the Company or any of its
subsidiaries or affiliates (any of such businesses or activities described in
(A), (B) and (C) being hereinafter called a "Competing Business"), or (ii)
intentionally assist others, in any material way, in engaging in any Competing
Business in the manner described in the foregoing clause (i); provided, however,
(a) Executive may own stock in any publicly held company listed on a national
securities exchange or whose stock is regularly traded in the over the counter
market as long as such holding at no time exceeds five percent (5%) of the total
outstanding stock of such company: (b) Executive may own passive interests in a
fund that invests in a company conducting business in the health care industry
so long as such holding at no time exceeds a direct five percent (5%) of the
interests of the fund or an indirect five percent (5%) of the interests of such
company, in each case of (a) and (b), so long as Executive is not an officer,
director, owner, investor, employee, consultant, partner, affiliate or otherwise
a participant in, or associated with, (other than as a result of ownership in
such publicly held company, fund or portfolio company, as permitted above) such
fund or company: and (c) Executive may be employed by or retained as a
consultant to a company engaged in the acute care hospital business primarily in
urban areas that may also engage to a limited extent in Competing Businesses
operating within a twenty (20) mile radius of any location where the Company or
any of its subsidiaries or affiliates, as of July 1, 2006, (x) owns, leases,
manages or otherwise maintains an operating facility, or (y) engages in any
business so long as Executive has no involvement with the operation of the
Competing Businesses within such twenty (20) mile radius.
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In addition, Executive agrees that during the one (1) year period
following the Separation Date, Executive shall not directly or indirectly induce
or encourage any employee of the Company or any of its subsidiaries or
affiliates to leave the employ of the Company or any of its subsidiaries or
affiliates or otherwise hire any such employee in any business capacity.
Executive further agrees, now and in the future: (i) not directly or
indirectly to make or cause or assist to be made any statements or comments that
might reasonably be considered derogatory or defamatory or to harm the
reputation and good name of any of the Company or any of its subsidiaries and
affiliates; and (ii) to cooperate in all reasonable respects with regard to any
regulatory and litigation matters relating to the Company or any of its
subsidiaries or affiliates during the period of his employment with the Company.
The Company agrees, now and in the future, not directly or indirectly
to make or cause or assist to be made any statements or comments that might
reasonably be considered derogatory or defamatory or to harm the reputation and
good name of Executive. Nothing in this Section 6 shall restrict the Company (or
any officer, director, employee or agent thereof) or Executive from making any
true statements in connection with any legal proceeding or as required by
applicable law.
7. Representations of Executive. Executive represents to the Company
that to Executive's knowledge during the course of his employment with the
Company and its subsidiaries and affiliates, he complied in all material
respects with the provisions of the Common Ground Compliance Program of
LifePoint Hospitals, Inc., he has not engaged in any intentional misconduct,
violations of law, fraud, or breach of fiduciary duty, and he is not aware of
any possible material violations that are not otherwise known by one or more
other senior executive officers of LifePoint Hospitals, Inc., by any director,
officer, employee, agent of or consultant to the Company or of any of its
subsidiaries and affiliates of any federal or state laws or regulations,
including those related but not limited to health and welfare benefits,
retirement benefits, compensation and governmental reimbursement programs or the
"fraud and abuse" statutes and regulations. Executive further represents that he
has not reported any such possible violations to any court, attorney,
governmental entity or any other organization empowered to enforce such laws,
rules and regulations.
The senior officers of Lifepoint Hospitals, Inc. have no actual
knowledge that any of the foregoing representations are inaccurate in any
material respect.
8. Revocation; Acknowledgments. Following the date of Executive's
execution of this Agreement, Executive shall have seven (7) days within which to
revoke this Agreement, in which case it shall become null and void. To revoke
this Agreement, Executive must state that intention in writing and deliver the
writing to the Company before the close of regular business on the seventh (7th)
day. Should Executive not exercise his right to revoke this Agreement within
seven (7) days after the date of execution, this Agreement shall remain in full
force and effect.
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Executive expressly acknowledges that the Company has advised him that
he may consult with an attorney should he desire legal advice before executing
this Agreement. Executive further acknowledges that he has been given twenty-one
(21) days in which to consider entering into this Agreement. As evidenced by his
signature below, Executive agrees that he has taken such time as he feels is
necessary to read and review this Agreement and seek legal advice, and now
freely, voluntarily and without coercion agrees to and understands the
significance and consequences of its terms. Executive hereby knowingly and
voluntarily waives his right to the full twenty-one (21) day review period.
Executive acknowledges that this is a complete and permanent waiver release and
settlement of certain legal rights.
9. Breach. It is understood and agreed that the breach of any of the
covenants herein (including any breaches of Section 6(a) of the Employment
Agreement) by Executive would constitute a material breach of this Agreement by
Executive entitling the Company to obtain injunctive and/or other appropriate
relief in the event of said breach, including but not limited to, an action for
damages or specific performance.
10. Notices. Any notice required or desired to be given under this
Agreement shall be in writing and shall be delivered personally, transmitted by
facsimile or mailed by registered mail, return receipt requested, or delivered
by overnight courier service and shall be deemed to have been given on the date
of its delivery, if delivered, and on the third (3rd) full business day
following the date of mailing, if mailed, to each of the parties thereto at the
following respective addresses as may be specified in any notice delivered or
mailed as above provided:
(i) If to the Executive, to
Kenneth C. Donahey
5101 Country Club Drive
Brentwood, Tennessee 37027
Facsimile: (615) 376-0751
(ii) If to the Company, to
LifePoint Hospitals, Inc.
103 Powell Court, Suite 200
Brentwood, Tennessee
Attention: William F. Carpenter III
Facsimile: (615) 372-8572
11. Waiver of Breach; Severability. The waiver by either party of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by the other party. In the event any portion of this Agreement
is deemed illegal, unenforceable or void by a court of competent jurisdiction,
this Agreement shall continue in full force and effect without said portion
unless the absence of such materially alters the rights and obligations of the
parties to this Agreement.
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12. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company. This Agreement is personal to Executive, and he may
not assign any of his rights or delegate any of his duties or obligations under
this Agreement except that Executive's rights hereunder shall inure to the
benefit of, and be binding upon, his beneficiaries, heirs or personal
representative.
13. Entire Agreement. This instrument contains the entire agreement of
the parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
14. Choice of Law; Arbitration. This Agreement shall be governed and
interpreted under the laws of the State of Tennessee. Except with respect to the
Company's right to obtain injunctive relief or seek specific performance in
connection with Executive's breach of Sections 1 and 5 herein, the parties agree
that any dispute arising out of this Agreement, which they cannot in good faith
resolve, shall be submitted to binding arbitration in accordance with the rules
of the American Arbitration Association governing commercial arbitration. Such
arbitration shall be conducted in the Nashville, Tennessee metropolitan area.
The losing party in any such arbitration proceeding shall pay the costs of
arbitration including the arbitrator's fees, but each party will pay their own
legal fees.
15. Headings. The sections, subjects and headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. Guaranty of Obligations. LifePoint Hospitals, Inc. hereby
guarantees the payment obligations of the Company under Section 2 of this
Agreement.
17. Legal Expenses. The Company shall pay the reasonable legal expenses
of Executive incurred in connection with the negotiation, preparation and
execution of this Agreement.
18. Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first written.
EXECUTIVE:
___________________________________________
Kenneth C. Donahey
COMPANY:
LifePoint CSGP, LLC
By: ______________________________________
Its: ______________________________________
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EXHIBIT A
Employment Agreement