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become chairman of the executive committee of HealthTrust. Mr.
MacNaughton had joined HCA in 1978 following his retirement from
the Prudential Insurance Co. of America, for which he had served
as chairman and chief executive officer. Mr. McWhorter selected
other HCA employees to fill other key management positions with
HealthTrust. HealthTrust Management assumed operating
responsibility for the Facilities effective June 22, 1987.
HCA Management decided to effectuate the reorganization
through a sale of stock of the subsidiaries that owned the
Facilities. In some instances, HealthTrust was to acquire every
hospital, office building, or related facility owned by a
subsidiary (Subsidiary). In those instances, prior to the sale
to HealthTrust, HCA transferred all of the Subsidiary's stock to
HCAII in exchange for stock of HCAII, and HCAII then sold all of
the Subsidiary's stock to HealthTrust. In other instances,
HealthTrust was not to acquire every hospital, office building,
or related facility owned by a subsidiary. In those instances,
the subsidiary (New Parent) contributed to a newly formed
subsidiary (New Subsidiary) the assets that HealthTrust would
acquire. The New Parent immediately thereafter transferred all
of the stock of the New Subsidiary to HCAII in exchange for stock
of HCAII, and HCAII then sold all of the stock of the New
Subsidiary to HealthTrust. Hereinafter, we shall refer to the
Subsidiaries and to the New Subsidiaries collectively as the
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