Document:

EXHIBIT 10.1

 

EXHIBIT 10.1

Execution Copy

CONSULTING AGREEMENT

     Consulting Agreement (the “Agreement”), dated as of August 15, 2004, by
and between LIFEPOINT HOSPITALS, INC., a Delaware corporation (the “Company”),
and MARTIN S. RASH (the “Consultant”).

     WHEREAS, the Consultant is employed by Province Healthcare Company, a
Delaware corporation (“Province”), as its Chief Executive Officer;

     WHEREAS, the Consultant is a party to the Executive Severance Agreement
between the Consultant and Province, dated October 18, 1999 (the “Severance
Agreement”) and the Senior Management Agreement between the Consultant,
Province, Golder, Thoma, Cressey, Rauner Fund IV, LP and Leeway & Company,
dated December 17, 1996, as amended (the “Management Agreement”);

     WHEREAS, the Company and Province have entered into an Agreement and Plan
of Merger, dated August 15, 2004 (the “Merger Agreement”); and

     WHEREAS, following the Closing Date, the parties desire to terminate the
employment relationship of the Consultant with Province, to settle the parties’
rights under the Severance Agreement and the Management Agreement, to enter
into a consulting relationship between the Company and the Consultant upon the
terms and conditions set forth in this Agreement and to bind the Consultant to
certain restrictive covenants in favor of the Company as set forth in this
Agreement.

     NOW, THEREFORE, in consideration of and in reliance upon the foregoing and
the covenants, obligations and agreements contained herein, the parties hereto
agree as follows:

     1.    Termination of Employment. The parties agree that the Consultant’s
employment with Province will terminate effective upon and subject to the
consummation of the transactions contemplated in the Merger Agreement (the
“Effective Time”), and the Consultant hereby agrees to resign from all offices
and positions he holds with Province or any of its subsidiaries as of the
Effective Time. The parties agree that the Consultant’s termination of
employment will be treated as a termination after a change in control for
purposes of the Severance Agreement and will entitle the Consultant to a lump
sum payment of $2,600,000 (the “Lump Sum Payment”) within 10 days of
termination of employment. The Consultant agrees that the Lump Sum Payment and
the other compensation payable under Section 4 hereof shall represent complete
satisfaction of the obligations of Province and the Company under the Severance
Agreement, the Management Agreement and any other severance plan, policy or
arrangement of Province or the Company, and that the Consultant waives any
other rights he may have under the Severance Agreement, the Management
Agreement and any other severance plan, policy or arrangement of Province or
the Company. Notwithstanding the foregoing, the parties hereby agree that
Section 2.2 of the Severance Agreement will continue to apply in accordance
with its terms, provided that Section 2.2 of the Severance Agreement will not
apply to any payment, right or benefit provided to the Consultant under Section
4.1 or 4.4 hereof or any coverage under Section 4.2

 

 

hereof following two years after the Effective Time.

     2.     Consulting
Period. Subject to early termination as provided in Section 5 hereof, the term of this Agreement will begin on the Effective Time and will
end on the date that is twenty-four months following the date of the Effective
Time (the “Consulting Period”).

     3.     Consultancy.

     3.1   Consulting Services.    During the Consulting Period, the Consultant
agrees to be available for up to 20 hours per month to (a) perform transition
and integration services with respect to the transactions contemplated in the
Merger Agreement, (b) identify and develop potential acquisition targets for
the Company and assist with acquisitions by the Company, (c) assist with
government relations and (d) perform any other services related to the
businesses of Province and the Company as reasonably requested (the “Consulting
Services”). The Consultant shall report directly to the Chief Executive
Officer of the Company and shall perform such Consulting Services as directed
by the Chief Executive Officer, which shall be consistent with the Consultant’s
industry standing and expertise. The Consulting Services will be performed at
such times as are reasonably requested by the Company after reasonable
consultation with the Consultant. The Consulting Services will be performed at
the Company’s principal executive offices or at such other locations as may be
reasonably specified by the Company from time to time.

     3.2   Status.    The Consultant acknowledges and agrees that his status at all
times during the Consulting Period shall be that of an independent contractor,
and that he may not, at any time, act as a representative for or on behalf of
the Company for any purpose or transaction, and may not bind or otherwise
obligate the Company in any manner whatsoever without obtaining the prior
written approval of an authorized representative of the Company therefor. The
Consultant hereby waives any rights to be treated as an employee or deemed
employee of the Company or any of its affiliates for any purpose following his
termination of employment at the Effective Time. The parties hereby
acknowledge and agree that the compensation provided for in Section 4 hereof
shall represent fees for the Consultant’s Consulting Services as an independent
contractor, and shall be paid therefor without any deductions or withholdings
taken therefrom for taxes or any other purpose. The Consultant further
acknowledges that the Company makes no warranties as to any tax consequences
regarding payment of compensation under this Agreement, and specifically agrees
that the determination of any tax liability or other consequences of the
payment set forth above is his sole and complete responsibility and that he
will pay all federal, state and local taxes, if any, assessed on such payments,
but will not be responsible for any taxes or penalties imposed by any taxing
authority against the Company for its failure to properly report the
Consultant’s earnings under this Agreement.

     4.     Compensation and Benefits.

     4.1   Consulting Fee.    During the Consulting Period, the Company shall pay
the Consultant a monthly fee of $75,000, payable monthly in arrears (the
“Consulting Fee”).

     4.2   Welfare Coverages.    For a period of twenty-four months following the
Effective Time, the Consultant (and his eligible dependents, if applicable)
will either (i) continue to

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participate, at the Company’s cost, in Company-sponsored group health care,
life insurance, and disability coverages, as in effect from time to time, on
the same basis as applies to active employees of the Company generally or (ii)
be provided with health care, life insurance, and disability coverages
reasonably equivalent to the coverages described in (i). Following the
expiration of such twenty-four month period, the Consultant (and his eligible
dependents) will be eligible for health care continuation “COBRA” coverage
under Section 4980B of the Internal Revenue Code of 1986, as amended.

     4.3   Office
Services. During the Consulting Period, the Consultant will be
provided with office space at the Company’s headquarters.

     4.4   Company
Airplane. During the Consulting Period, the Consultant shall
be permitted the limited, personal use of the Company’s corporate aircraft.
Any such use shall be subject to the Company’s policies for use of corporate
aircraft and shall be scheduled with the prior approval of the Company. Such
use shall be limited to an aggregate of 37.5 hours of air travel during the
Consulting Period. In addition, the Company shall make cash payments to the
Consultant sufficient to make him whole, on an after-tax basis, for all income
taxes imposed on him as a result of such usage.

     4.5   Business
Expenses. All reasonable and necessary business expenses
incurred by the Consultant in the performance of his services hereunder shall
be promptly reimbursed by the Company in accordance with the Company’s standard
expense reimbursement policies applicable to independent contractors, provided
the incurrence of such expenses are approved in advance by the Company.

     5.     Termination
of Consultancy.

     5.1   Termination
Without Cause/Death Disability. The Company or the
Consultant may terminate the Consulting Period and the Consultant’s service
hereunder at any time and for any reason during the Consulting Period. In the
event that the Consulting Period and the Consultant’s service hereunder is
terminated by the Company without Cause (as defined below), or on account of
the Consultant’s death or Disability (as defined below), neither the Consultant
nor the Consultant’s beneficiaries or estate will have any further rights or
claims against the Company under this Agreement, except the right to receive
(i) any unpaid portion of the Consulting Fee provided for in Section 4.1 hereof
to the date of termination, and any other amounts or benefits due to the
Consultant hereunder through the date of termination, (ii) continued monthly
payment of the Consulting Fee until the date that is twenty-four months from
the date of the Effective Time and (iii) the welfare coverages in accordance
with Section 4.2 hereof until the date that is twenty-four months from the date
of the Effective Time. For purposes hereof, “Cause” shall mean (i) the
Consultant’s willful and substantial misconduct, (ii) the Consultant’s gross
neglect of or willful failure to perform the Consulting Services, (iii) the
Consultant’s material breach of any of the agreements contained in Sections 6
hereof, (iv) the commission by the Consultant of a fraudulent act with respect
to the business and affairs of the Company or any subsidiary thereof or (v) the
Consultant’s conviction of (or plea of nolo contendere to) a crime constituting
a felony. It shall be a condition precedent to the Company’s right to
terminate the Consulting Period and the Consultant’s service hereunder for
“Cause” that (1) the Company shall first have given the Consultant written
notice stating with specificity the reason

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for the termination (“breach”) and (2) if such breach is susceptible of cure or
remedy, a period of thirty days from and after the giving of such notice shall
have elapsed without the breaching party having effectively cured or remedied
such breach. For purposes hereof, “Disability” shall mean the Consultant being
rendered incapable of performing his duties hereunder by reason of any
medically determined physical or mental impairment that can be expected to
result in death or that can be expected to last for a period of either (i) six
or more consecutive months from the first date of the Consultant’s absence due
to the disability or (ii) nine months during any twelve-month period.

     5.2   Other
Termination. In the event that the Consulting Period and the
Consultant’s service hereunder is terminated by the Company for Cause or by the
Consultant for any reason other than on account of death or Disability, neither
the Consultant nor the Consultant’s beneficiaries or estate will have any
further rights or claims against the Company under this Agreement, except the
right to receive any unpaid portion of the Consulting Fee provided for in
Section 4.1 hereof to the date of termination, and any other amounts or
benefits due to the Consultant hereunder through the date of termination.

     6.     Restrictive
Covenants.

     6.1   Disclosure
of Information. The Consultant will not, at any time
during or after the Consulting Period, disclose to any person, firm,
corporation or other business entity, except as required by law, any
non-public, proprietary or confidential information concerning the business,
products, clients or affairs of the Company or any subsidiary for any reason or
purpose whatsoever, nor will the Consultant make use of any of such non-public,
proprietary or confidential information for personal purposes or for the
benefit of any person, firm, corporation or other business entity except the
Company or any subsidiary.

     6.2   Noncompetition. The Consultant hereby acknowledges and recognizes
that, during the Consulting Period, the Consultant will be privy to trade
secrets and confidential proprietary information critical to the business of
the Company or any subsidiary, and the Consultant further acknowledges and
recognizes that the Company would find it extremely difficult or impossible to
replace the Consultant. Accordingly, the Consultant agrees that, in
consideration of the benefits to be received by the Consultant hereunder, the
Consultant will not, from and after the date hereof until the second
anniversary of the Effective Time, (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 within
a non-urban service area located in the continental United States or (B) any
other business that provides any health care services similar to any health
care services provided by hospitals operated by the Company or any of its
subsidiaries within a twenty (20) mile radius of any location where the Company
or any of its subsidiaries (x) owns, leases, manages or otherwise maintains an
operating facility, (y) engages in any business or (z) during the Consulting
Period, is actively pursuing ownership, leasing, management or maintenance of a
facility (such businesses or activities described in (A) and (B) being
hereinafter called a “Competing Business”) or (ii) assist others in engaging in
any Competing Business in the manner described in the foregoing clause (i);
provided, however, (x) the Consultant may continue to maintain his level of
ownership in the entities set forth on Schedule 6.2, (y) the Consultant may own
stock in any publicly held company listed on a national securities exchange or
whose stock is regularly traded in the over

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the counter market as long as such holding at no time exceeds five percent
(5%) of the total outstanding stock of such company and (z) the Consultant 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 the case of each of (x) (other than as set
forth on Schedule 6.2), (y) and (z), so long as the Consultant 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. For avoidance of doubt, the parties
understand that nothing in this Section 6.2 shall be construed as preventing
the Consultant from investing in an acute care hospital business or other
health care business in an urban service area, provided such business is not
located within a twenty (20) mile radius of any location where the Company or
any of its subsidiaries (x) owns, leases, manages or otherwise maintains an
operating facility, (y) engages in any business or (z) during the Consulting
Period, is actively pursuing ownership, leasing, management or maintenance of a
facility.

     6.3   Nonsolicitation. The Consultant agrees that, in consideration of the
benefits to be received by him hereunder, the Consultant will not, from and
after the date hereof until the second anniversary of the Effective Time,
directly or indirectly solicit, hire or induce any employee, customer, client
or other person doing business with the Company or any subsidiary in any way
alter their relationship or terminate their employment with the Company or any
subsidiary.

     6.4   Reasonableness. The Consultant understands that the foregoing
restrictions may limit the ability of the Consultant to earn a livelihood in a
business similar to the business of the Company, but nevertheless believes that
the Consultant has received and will receive sufficient consideration and other
benefits, as a consultant for the Company and as otherwise provided hereunder,
to justify such restrictions which, in any event (given the education, skills
and ability of the Consultant), the Consultant believes would not prevent the
Consultant from earning a living.

     6.5   Enforcement. The Consultant acknowledges that irreparable damage
would occur in the event of any breach or threatened breach of Section 6 of
this Agreement and that money damages will be inadequate. It is accordingly
agreed that the Company shall be entitled to an injunction or injunctions to
prevent breaches of Section 6 of this Agreement and to enforce specifically the
terms and provisions of Section 6 of this Agreement in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity. It is the desire and
intent of the parties hereto that the provisions of this Agreement be
enforceable to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, to the extent that a restriction contained in this Agreement is
more restrictive than permitted by the laws of any jurisdiction where this
Agreement may be subject to review and interpretation, the terms of such
restriction, for the purpose only of the operation of such restriction in such
jurisdiction, will be the maximum restriction allowed by the laws of such
jurisdiction and such restriction will be deemed to have been revised
accordingly herein. The provisions of this Section 6 shall survive the
termination of the Consulting Period and Consultant’s service hereunder.

     7.   Miscellaneous.

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     7.1   Indemnity. The Company shall indemnify, defend and hold harmless the
Consultant against all losses, claims, damages or liabilities arising out of
actions or omissions of the Consultant in connection with the performance of
the Consulting Services in compliance with this Agreement, except to the extent
that any such loss, claim, damage or liability results from the gross
negligence, willful misconduct or bad faith of the Consultant.

     7.2   Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction will not invalidate or render unenforceable such provision in
any other jurisdiction.

     7.3   Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or
by courier or overnight carrier, to the persons at the addresses set forth
below (or at such other address as may be provided hereunder), and shall be
deemed to have been delivered as of the date so delivered:

	 	 	 	 	 
	

	 	the Company:
	 	LifePoint Hospitals, Inc.

103 Powell Ct., Suite 200

Brentwood, TN 37027

Facsimile Number: (615) 372-8575

Attention: General Counsel
	 
	 	 	 	 
	

	 	Copy to Counsel:
	 	Dewey Ballantine LLP

1301 Avenue of the Americas

New York, New York 10019

Facsimile Number: (212) 259-6333

Attention: Morton A. Pierce

                 Jack S. Bodner
	 
	 	 	 	 
	

	 	Consultant:
	 	Martin S. Rash

105 Westwood Place, Suite 400

Brentwood, Tennessee 37027

Facsimile Number: (615) 370-9647
	 
	 	 	 	 
	

	 	Copy to Counsel:
	 	Latham & Watkins LLP

505 Montgomery Street, Suite 1900

San Francisco, CA 94111-2562

Facsimile Number: (415) 395-8095

Attention: Paul R. DeMuro

     7.4   Assignment. Except as set forth herein, no rights of any kind under
this Agreement shall, without the prior written consent of the Company, be
transferable to or assignable by the Consultant or any other person, or, except
as provided by applicable law, be subject to alienation, encumbrance,
garnishment, attachment, execution or levy of any kind,

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voluntary or involuntary. This Agreement shall be binding upon and shall
inure to the benefit of the Company and its successors and assigns.

     7.5   Governing
Law; Venue; Waiver of Jury Trial. Regardless of any
conflict of law or choice of law principles that might otherwise apply, the
parties agree that this Agreement shall be governed by and construed in all
respects in accordance with the laws of the State of Delaware. The parties all
expressly agree and acknowledge that the State of Delaware has a reasonable
relationship to the parties and/or this Agreement. The parties hereby
irrevocably submit to the jurisdiction of the courts of the State of Delaware
and the Federal courts of the United States of America located in the State of
Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any litigation for the
interpretation or enforcement of this Agreement or of any such document, that
it is not subject thereto or that such litigation may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate or
that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect
to such litigation shall be heard and determined in such a Delaware State or
Federal court. The parties hereby consent to and grant any such court
jurisdiction over such parties solely for such purpose and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such litigation in the manner provided in this Section 7.5
or in such other manner as may be permitted by law shall be valid and
sufficient service thereof. Each party 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 hereby
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 (i) no representative 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, (ii) each
party understands and has considered the implications of this waiver, (iii)
each party makes this waiver voluntarily, and (iv) each party has been induced
to enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 7.5.

     7.6   Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

     7.7   Captions and Sections. The captions contained in this Agreement are
for reference purposes only and are not part of this Agreement. Unless
otherwise indicated, all references to particular Sections shall mean and refer
to the referenced Sections of this Agreement.

     7.8   Entire Agreement. Except as provided in Section 1 hereof, this
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior arrangements or
understandings with respect thereto, written or oral. This Agreement may be
amended only by an agreement in writing signed by the parties hereto. The

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parties hereby agree that Province and its affiliates (now or at any time
in the future) are third-party beneficiaries under this Agreement.

[SIGNATURE PAGE FOLLOWS]

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     INTENDING TO BE LEGALLY BOUND, the parties or their duly authorized
representatives have signed this Agreement as of the date first above written.

	 	 	 	 	 
	 	LIFEPOINT HOSPITALS, INC.

 	 
	 	By:  	/s/ Kenneth C. Donahey
 	 
	 	Name:  	Kenneth C. Donahey 
	 	Its:  	Chairman of the Board, Chief Executive Officer
and President 
	 
	 	CONSULTANT

 	 
	 	/s/ Martin S. Rash
 	 
	 	Martin S. Rash 	 
	 	 	 
	 

9EXHIBIT 10.3

 

EXHIBIT 10.3

PROVINCE HEALTHCARE COMPANY RETENTION PLAN

ARTICLE ONE

INTRODUCTION

     1.1     Purpose. The Board of Directors of Province Healthcare Company
(“Province”) has determined that it is in the best interests of Province and
its stockholders to assure that Province will have the continued dedication of
its officers and employees, notwithstanding the possibility or occurrence of a
change in control of Province. The Board believes that it is imperative to
diminish the inevitable distraction of such officers and employees by virtue of
the personal uncertainties and risks created by such possibility and to
encourage the officers’ and employees’ full attention and dedication to
Province and its affiliates. Therefore, in order to accomplish these
objectives, the Company has approved and adopted this Province Healthcare
Company Retention Plan (the “Plan”) to induce certain officers and employees of
Province to remain in their current employment and to devote their time and
energies to the successful performance of their duties by providing such
persons a measure of security. It is the express intent of the Board to
structure any transaction constituting a Change in Control of Province in a
manner that will allow for the adoption of this Plan by any successor thereto.

     1.2     Effective Date. The Plan was approved by the Board of Directors of
Province (the “Committee”) on August 15, 2004 and shall be effective as of
August 15, 2004 (the “Effective Date”).

ARTICLE TWO

ELIGIBILITY

     2.1     Officers and Employees Eligible to Participate in Plan. Only officers
and employees of Province or its subsidiaries who have been designated by the
Committee are eligible to participate in the Plan. Schedule A attached hereto
contains a list of such officers and employees as of the Effective Date.
Prior to a Change in Control, the Committee may add new Participants to the
Plan from time to time in its discretion.

ARTICLE THREE

DEFINITIONS

     3.1     Definitions. The following capitalized terms used in the Plan shall
have the meanings assigned to them below:

     “Annual Salary” shall mean a Participant’s base salary as in effect
immediately prior to a Change in Control. Each Participant’s Annual Salary as
of the Effective Date is reflected on Schedule A.

     “Board” means the Board of Directors of the Company.

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     “Cause” shall mean the occurrence of any of the following: (i) conviction
of the Participant for a crime involving fraud, dishonesty or theft, or of any
felony which, in the reasonable judgment of the Board, materially affects the
Participant’s ability to perform his duties; (ii) commission by the Participant
of an act of fraud, embezzlement, or material dishonesty against the Company;
or (iii) intentional neglect of or material inattention to the Participant’s
duties, which neglect or inattention remains uncorrected for more than thirty
(30) days following written notice from the Chief Executive Officer of the
Company detailing the Company’s concern.

     “Change in Control” means a transaction or circumstance in which any of
the following have occurred:

     (a) any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than
Province or a wholly-owned subsidiary thereof, or any Province employee benefit
plan, becomes the “beneficial owner,” as such term is defined in Rule 13d-3
under the Exchange Act, directly or indirectly, of securities of Province
representing more than 50% of the total voting power represented by Province’
then-outstanding Voting Securities (as defined below), or

     (b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director whose
election by the Board or nomination for election by Province’ stockholders 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 the period of whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or

     (c) any merger or consolidation of Province with any other corporation or
other entity, other than a merger or consolidation which would result in the
Voting Securities (i.e., any securities of the entity which vote generally in
the election of its directors) of Province outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) more than 50% of the
total voting power represented by the Voting Securities of Province or such
surviving entity outstanding immediately after such merger or consolidation, or

     (d) the stockholders of Province approve a plan of complete liquidation
of Province, or

     (e) any sale or disposition by Province of all or substantially all of
its assets.

     “Company” means Province. Following consummation of transaction or series
of transactions which constitutes a Change in Control as described in
subsection (a), (c) or (e) of the definition thereof, the term “Company” shall
mean the entity resulting from such transaction or purchasing or controlling Province and/or its assets as a
result of such transaction.

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     “Committee” means the Compensation Committee of the Board.

     “Disability” means a Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months.

     “Good Reason” shall include any of the following: (i) a material adverse
alteration in the Participant’s position, responsibilities or status as in
effect immediately prior to a Change in Control; (ii) a reduction in the
Participant’s Annual Salary; (iii) relocation of the Participant by the Company
to a location that is more than thirty-five (35) miles from the Participant’s
then-current workplace as of the date immediately prior to a Change in Control;
(iv) the material breach by the Company of any obligation under this Plan,
including the failure to make any Retention Payment or Severance Payment in the
amount and at the time(s) required under Article Four, or (vi) any failure by
the Company to comply with and satisfy Section 7.11.

     “Participant” means an officer or employee who has been selected by the
Committee to receive a Retention Payment.

     "Plan” means this Pacers Retention Plan.

     "Plan Administrator” shall be the person designated in Section 5.1 or his
or her successors.

     “Qualifying Termination” shall mean termination of the Participant’s
employment (i) due to death or Disability, (ii) by the Company without Cause,
or (iii) by the Participant for Good Reason.

     “Retention Payment” shall have the meaning set forth in Section 4.1.

     “Retention Date” shall mean ninety (90) days after the occurrence of a
Change in Control.

     “Severance Payment” shall have the meaning set forth in Section 4.2.

ARTICLE FOUR

RETENTION PAYMENT

     4.1     Retention
Payment. Following the occurrence of a Change in Control,
the Company will pay to each qualifying Participant a lump sum cash amount
equal to his or her Annual Salary (the “Retention Payment”), on the earlier of
(a) the Retention Date, or (b) the termination of his or her employment
pursuant to a Qualifying Termination following a Change in Control. No Retention Payment will be made to any
Participant

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whose employment is terminated prior to the Retention Date unless
such termination is a Qualifying Termination.

     4.2   Severance Payment. In addition to the Retention Payment, in the event
that a Participant’s employment is terminated pursuant to a Qualifying
Termination following a Change in Control and prior to the first anniversary
of such Change in Control, the Company will pay to the Participant a cash
amount equal to that amount which would have been required, on the day prior to
the Change in Control, to retain the Participant’s then-current coverage levels
(including coverage of family and eligible dependents, if applicable) under the
continuation provisions of any welfare benefit plan maintained by Province and
subject to Section 4980B of the Internal Revenue Code of 1986, as amended, for
a period of twelve (12) months. Such current estimated payments for each
Participant are reflected on Schedule A. In addition, following the occurrence
of a Change in Control, the Company will pay to certain officers and employees
(including all Assistant Vice Presidents of Province as of the Effective Date),
as designated on Schedule A attached hereto, an additional cash amount equal to
six (6) months’ Annual Salary (or, with respect to one employee designated on
Schedule A, twelve (12) months’ Annual Salary), in the event that such
Participant’s employment is terminated pursuant to a Qualifying Termination
following a Change in Control and prior to the first anniversary of such Change
in Control. The aggregate payments payable to each qualifying Participant
pursuant to this Section 4.2 are referred to herein as the “Severance Payment.”
Each qualifying Participant will receive the Severance Payment in a lump sum
on such termination of his or her employment and conditioned upon his or her
execution of a release of claims in favor of the Company in the standard form
specified by the Company for terminating employees. No Severance Payment will
be made to any Participant whose employment is terminated following the first
anniversary of a Change in Control or other than pursuant to a Qualifying
Termination.

ARTICLE FIVE

ADMINISTRATION

     5.1   Plan Administration. The Plan is administered and interpreted by the
Committee, which may delegate day-to-day management to a Plan Administrator who
shall be appointed by the Committee and may be removed by the Committee at any
time. The Committee and, to the extent delegated, the Plan Administrator,
shall interpret the Plan and shall have complete control of the administration
thereof. Any decision by the Committee or such Plan Administrator reached in
accordance with the provisions contained herein shall be final.

     5.2   Consistency of Determination. In rendering its determination on any
matter within its discretion under any section of this Plan, the Committee
shall not be bound by past interpretations and is not required to be consistent
regarding its determinations.

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ARTICLE SIX

CLAIMS PROCEDURE

     6.1   Right
to File a Claim. Any former employee who believes that he or
she is entitled to a Retention Payment or a Severance Payment hereunder which
has not been received or which is different than that which has been officially
communicated may file a claim in writing with the Plan Administrator.

     6.2   Denial
of a Claim. The Plan Administrator shall make an initial
determination of eligibility or shall delegate the responsibility for such
initial determination to any other party. Any claimant whose claim to any
benefit hereunder has been denied in whole or in part shall normally receive a
notice of the determination within 90 days of the date the claim is submitted.
If, however, the Plan Administrator, or its delegate, determines that an
extension of time is required, the claimant will be notified in writing of the
need for the extension within 90 days after receipt of the claim. The
extension notice will also include the date by which the Plan Administrator
expects to make the benefit determination. Any notice of the denial of the
claim will set forth the specific reasons for such denial, specific references
to the Plan provisions on which the denial was based, what information or
materials would be required in order to reverse the denial and an explanation
of the procedure for review of the denial.

     6.3   Claim
Review Procedure. A claimant may appeal the denial of his or
her initial claim by written request for review to be made within 60 days after
receiving the initial notice of the denial. The request for review shall set
forth all grounds on which it is based, together with supporting facts and
evidence which the claimant deems pertinent, and the Plan Administrator shall
give the claimant the opportunity to review pertinent Plan documents in
preparing the request. The Plan Administrator may require the claimant to
submit such additional facts, documents or other material as it deems necessary
or advisable in making its review. The Plan Administrator will provide the
claimant a written or electronic notice of the decision within 60 days after
receipt of the request for review, except that, if there are special
circumstances requiring an extension of time for processing, the 60-day period
may be extended for an additional 60 days. If the Plan Administrator
determines that an extension of time is required, the claimant will be notified
in writing of the extension within 60 days after the Plan Administrator’s
receipt of the request for review. The extension notice will also include the
date by which the Plan Administrator expects to complete the review. The Plan
Administrator shall communicate to the claimant in writing its decision, and if
the Plan Administrator confirms the denial, in whole or in part, the
communication shall set forth the reasons for the decision and specific
references to the Plan provisions on which the decision is based. Any suit for
benefits must be brought within one year after the date the Plan Administrator
(or his or her designee) has made a final denial (or deemed denial) of the
claim.

     6.4   Requirement
to Follow Claims Procedure. Utilization of the claims
procedures set forth in this Article Six is a condition of payment of benefits
under the Plan. Failure to follow the
claims procedure here described will result in the denial of a

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Participant’s claim, and may result in the Participant’s disqualification for
payment of benefits under the Plan.

ARTICLE SEVEN

MISCELLANEOUS

     7.1   Rights
Not Exclusive. A Participant’s right to receive a Retention
Payment or Severance Payment under the Plan shall be in addition to and not
exclusive of his rights under any other agreement or plan of the Company or its
subsidiaries or affiliates, including without limitation any short- or
long-term bonus or other remuneration payable pursuant to any employment
agreement between the Participant and the Company or any subsidiary or
affiliate.

     7.2   No Contract for Employment. Nothing in the Plan shall be deemed to
give any Participant the right to be retained in the service of the Company or
its subsidiaries or affiliates, or to deny the Company or any subsidiary or
affiliate any right it may have to discharge or demote any Participant at any
time.

     7.3   Withholding. All amounts payable by the Company hereunder shall be
subject to withholding of such amounts related to taxes as the Company may be
legally obligated so to do.

     7.4   Unfunded Status of Plan. The Plan is intended to be an “unfunded”
plan for incentive compensation. With respect to any payments not yet made to
a Participant pursuant to the Plan, nothing contained in the Plan shall give
the Participant any rights that are greater than those of a general creditor of
the Company.

     7.5   Arbitration. To the extent not controlled by federal law, any dispute
or controversy arising under or in connection with the Plan shall be settled
exclusively by arbitration in Nashville, Tennessee accordance with the rules of
the American Arbitration Association then in effect. Each party agrees to
comply with any award made in any such proceeding, which shall be final, and to
the entry of judgment in accordance with applicable law in any jurisdiction
upon any such award.

     7.6   Costs of Enforcement. In the event that, following a Change in
Control, a Participant collects or attempts to collect any part or all of the
Retention Payment or otherwise enforces the terms of the Plan following a
dispute with the Company regarding the interpretation of the Plan by or through
a lawyer or lawyers, the Company will pay all costs of such collection or
enforcement, including legal fees and other out of pocket expenses reasonably
incurred by the Participant unless it is finally determined in any enforcement
action that Participant acted in bad faith.

     7.7   Notices. Notices will be considered effective upon receipt and shall
be sent by hand delivery or certified mail addressed as follows:

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If to Province:

105 Westwood Place, Suite 400

Brentwood, Tennessee 37027

Facsimile Number: (615) 376-4856

If to a Participant, at his or her last known address.

     7.8
 
Severability. The invalidity and unenforceability of any particular
provision of the Plan shall not affect any other provision of the Plan, and the
Plan shall be construed in all respects as if such invalid or unenforceable
provision were omitted.

     7.9
 
No Assignment or Alienation of Benefits by Participants.
A
Participant shall not have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify or otherwise encumber in advance any of
the benefits payable under the Plan, nor shall these benefits be subject to
seizure for the payment of debt, judgment, alimony or separate maintenance owed
by the Participant, or any person claiming through the Participant, or be
transferable by operation of law in the event of bankruptcy, insolvency or
otherwise. Any attempted assignment, anticipation, hypothecation, transfer, or
other disposal of the benefits hereunder, shall be void.

     7.10
 
Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Tennessee without regard to the
conflict of laws provision thereof and to the extent not preempted by federal
law.

     7.11
 
Successors and Assigns. The Plan shall be binding upon the Company
and its successors and assigns. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Plan in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

     7.12
 
Amendment; Termination; Lapse. The Board reserves the right to
adopt, terminate or amend the provisions of the Plan to any extent and in any
manner it desires prior to a Change in Control by execution of a written
document describing the intended amendment(s). Following a Change in Control,
the Plan may be amended or terminated by the Board at any time; provided,
however, that no such amendment or termination shall have an adverse effect on
any rights of a Participant without his or her written consent. In the event
that a Change in Control of Province does not occur within two (2) years
following the Effective Date, this Plan automatically shall terminate and be of
no further effect, and all rights of the Participants shall terminate without
consideration. Nothing in this Plan or any document describing, interpreting
or relating to the Plan shall be construed to provide, prior to a Change in
Control, any vested, nonforfeitable, nonterminable, or nonchangeable benefits
or rights thereto.

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     7.13
Headings.   The headings of the sections herein are for convenience
only and shall have no significance in the interpretation of the Plan.

     The foregoing is hereby acknowledged as being the Plan, as adopted by the
Company’s Board of Directors as of the date set forth herein.

	 	 	 	 	 
	 	PROVINCE HEALTHCARE COMPANY

 	 
	 	By:  	/s/ Martin S. Rash	 
	 	Name:  	Martin S. Rash	 
	 	Title:  	Chairman
& CEO	 
	 

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