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FED. R. EVID 408 SETTLEMENT MATERIALS
April 11, 1997
Mr. Ron J. Messenger
c/o Bruce S. Mendelsohn, Esquire
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, D.C. 20036
Dear Mr. Messenger:
This letter constitutes an agreement (the "Letter Agreement")
between you and Paracelsus Healthcare Corporation ("PHC"). The
Employment Agreement dated July 17, 1996 between you and PHC (the
"Employment Agreement") is modified only as specifically provided herein.
1. (a) Effective immediately, you will cease to be an officer,
director and employee of PHC, its affiliates and any entity in which you
hold such a position at the request of PHC.
(b) During the Term (as defined herein) of this Letter
Agreement, PHC will continue to provide you with all of the health,
medical, dental, life and disability benefits (insurance or otherwise)
you and your family presently receive from PHC.
(c) This Letter Agreement is not evidence of any assertion by
PHC, or an admission by you, that you engage in any action or inaction
that would constitute Cause (as defined in the Employment Agreement) for
the termination of your employment under the Employment Agreement or the
SERP (as defined herein). The Letter Agreement shall not be admissible
in any legal or equitable proceeding for the purpose of establishing the
appropriateness of any or all of your actions or inactions while an
officer, director or employee of PHC or any of its affiliates.
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Mr. Ron J. Messenger
April 11, 1997
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2. You and PHC will continue to attempt to negotiate the
resolution of all issues between you and PHC and its affiliates,
including, without limitations, your claims under the Employment
Agreement and the SERP, and all claims PHC or any of its affiliates may
have against you.
3. Both you and PHC fully reserve and do not waive or forfeit,
except as specifically stated in this Letter Agreement, any or all legal
or other rights, benefits, claims or defenses you ro it has or had on or
before the date of this Letter Agreement (the "Rights"). This full and
complete reservation of Rights, includes, but is not limited to, the
following:
(a) RIGHTS UNDER THE EMPLOYMENT AGREEMENT. You reserve the right
to assert that your employment was not and cannot be terminated
for Cause under Section 4(a) or ended
without you having resigned for Good Reason (as both terms
are defined in the Employment Agreement). PHC shall have 75
days following the termination of the Term of this Letter
Agreement to determine whether Cause under Section 4(a) existed
for the termination of your employment on the date of this
Letter Agreement. You waive any argument that PHC may not
terminate you for Cause under the Employment Agreement because
it did not make a finding before your employment ended that
Cause for your termination existed.
(b) RIGHTS UNDER PHC'S RESTATED AND AMENDED SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN ("SERP"), EFFECTIVE JANUARY 1, 1996, AS
AMENDED. During the Term, you and PHC will discuss whether you
will receive a payment pursuant to the SERP and, if so the
amount of the payment. If this Letter Agreement terminates
without a further agreement between you and PHC, you will have
the right to assert, inter alia, that your employment was
terminated without Cause (as defined in the SERP), and PHC will
have the right to assert, inter alia, that your employment was
terminated for Cause (as defined in the SERP). PHC shall have
75 days following the termination of the Term of this Letter
Agreement to determine whether Cause under Section 1.46 of the
SERP exists for the termination of your employment on the date
of this Letter Agreement. You waive any argument that PHC may
not terminate you for Cause under the SERP because it did not
make a finding before your employment ended that Cause for your
termination existed.
(c) RIGHTS UNDER THE INDEMNITY AND INSURANCE COVERAGE AGREEMENT,
DATED AUGUST 16, 1996, BETWEEN YOU AND PHC (THE "IICA"), ANY
INSURANCE POLICY IN WHICH PHC HAS AN INTEREST THAT IN WHOLE OR
PART MAY BE FOR YOUR BENEFIT, PHC'S BY-LAWS AND ALL LAWS
APPLICABLE TO THE ADVANCEMENT OF YOUR EXPENSES AND YOUR
INDEMNIFICATION. PHC will
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Mr. Ron J. Messenger
April 11, 1997
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continue to advance reasonable defense costs under the terms of its
letter to you of November 18, 1996 that are incurred in any and
all civil, government or other investigation, proceeding or
litigation arising from, or related in any way to, the August
1996 merger, PHC's past financial statements, or public filings
with the SEC or any or all of the issues involved in the
internal investigation conducted by the Special Committee of
the Board of Directors of PHC. Additionally, during the Term
of this Letter Agreement, PHC will not make or seek any
determination as to whether you should be indemnified by PHC
under the IICA, PHC's by-laws and/or any law or rule, unless
specifically requested to do so by you.
(d) RIGHTS TO ASSERT CLAIMS OR DEFENSES. You and PHC each retains
all rights to assert Rights, claims or defenses against each
other in the event this Letter Agreement terminates without a
further agreement between you and PHC.
4 While this Letter Agreement is in effect, neither PHC nor you
will institute any legal or equitable action or proceeding against the
other or take any action to prejudice, disadvantage or harm the position
of the other, unless required by law or an order of a court of competent
jurisdiction. PHC and you agree that any statute of limitations, laches
or other defenses based on delay applicable to any Rights, claims, causes
of actions or defenses, which PHC or you may assert in any lawsuit,
litigation, arbitration or other proceeding shall be tolled commencing on
the date of this Letter Agreement and concluding on the effective date of
its termination. Neither PHC nor you will assert any statute of
limitations, laches or any other defense based on delay with respect to
any time period between the date of this Letter Agreement and the
effective date of its termination.
5. During the Term, you will not exercise the 1,000,000 options to
purchase shares of PHC for $.01 which your possess.
6. During the Term, PHC and you will cooperate with each other an
its and your attorneys in connection with any and all ongoing and future
or possible civil, government, or other proceeding or litigation. This
cooperation includes your promise to make yourself available to meet with
PHC's attorneys at reasonable times and upon reasonable advance notice,
and PHC's promise to make its attorneys available to meet with your
attorneys at reasonable times and upon reasonable advance notice. PHC
agrees to reimburse you for all reasonable expenses you incur in
connection with any cooperation that you provide at the express request
of PHC. Nothing in this paragraph prevents you or PHC from cooperating
with others in connection with any civil, government, or other
investigation, proceeding or litigation.
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Mr. Ron J. Messenger
April 11, 1997
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7. Notwithstanding anything in the Employment Agreement, you will
not disclose to any person other than an authorized director, officer,
employee or agent of PHC any confidential business or financial
information about PHC unless required by law.
8. Either you or PHC may terminate this Letter Agreement at any
time following 120 days after the execution of this Letter Agreement by
sending written notice to the other. Termination will take effect 14
days after the receipt of notice. The term of this Letter Agreement
shall commence on the date of the execution of this Letter Agreement and
shall conclude 14 days after the receipt of notice of termination (the
"Term"). Notice to you will be effective when received by your
designated counsel, Bruce S. Mendelsohn of Akin, Gump, Strauss, Hauer &
Feld, L.L.P., unless you designate otherwise. Notice to PHC will be
effective when received by PHC's designated counsel, Arthur F. Mathews of
Wilmer, Cutler & Pickering, unless PHC designates otherwise.
9. Termination of this Letter Agreement will not reinstate you as
a director, officer or employee of PHC, or void the effect of paragraphs
1 and 3 of this Letter Agreement.
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Mr. Ron J. Messenger
April 11, 1997
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Your signature below indicates your agreement to these terms. Your
signature and the signature of Robert C. Joyner as specifically
designated by PHC satisfies the amendment and waiver provisions of
Section 13 of the Employment Agreement.
PARACELSUS HEALTHCARE CORPORATION
BY: /S/ Robert C. Joyner
_____________________________________________
Robert C. Joyner
Senior Vice President
General Counsel and Secretary
Paracelsus Healthcare Corporation
April 12, 1997
_____________________________________________
Date
Accepted and agreed:
/s/ Ron J. Messenger
________________________________
Ron J. Messenger
April 14, 1997
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Date