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EXHIBIT 10.39
INSURANCE AGREEMENT
AGREEMENT (the "Agreement") made as of this 17th day of July, 1996
between Paracelsus Healthcare Corporation, a California corporation (the
"Company"), and Dr. Manfred George Krukemeyer.
WHEREAS, the Company desires to provide certain life insurance and
permanent disability benefits to Dr. Krukemeyer.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties contained herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Term of Agreement. The term of this Agreement (the "Term") shall commence
on the date of closing (the "Closing Date") of the proposed merger transaction
among the Company, Champion Healthcare Corporation, a Delaware corporation
("Champion"), and PC Merger Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of the Company, whereby Champion will become a wholly owned
subsidiary of the Company (the "Merger"), and shall expire on the date that is
ten (10) years following the Closing Date; provided, that in the event the
Merger is abandoned or otherwise does not close, the Agreement shall thereupon
automatically terminate without further obligation by either party hereto.
2. Permanent Disability Benefit. In the event of Dr. Krukemeyer's permanent
disability prior to the expiration of the Term, the Company shall provide for
the payment to Dr. Krukemeyer of a permanent disability benefit, payable
quarterly in advance, commencing as of the date on which Dr. Krukemeyer is
determined to be so permanently disabled (the "Permanent Disability
Determination Date") and continuing through the remainder of the Term, at the
rate of U.S. $1 million per year (each such payment, a "Disability Payment");
provided, however, that in the event of Dr. Krukemeyer's death on or after the
Permanent Disability Determination Date and prior to the expiration of the
Term, (i) the Disability Payments shall continue to be made through the
remainder of the Term to Dr. Krukemeyer's estate or as otherwise directed by
him, or alternatively, (ii) upon the written election of Dr. Krukemeyer's
estate, the Company shall provide for the payment to Dr. Krukemeyer's estate
(or as otherwise directed by Dr. Krukemeyer), in lieu of any further Disability
Payments, within thirty (30) business days following the date of such death, of
a lump-sum amount in cash equal to the present value, determined as of the date
of such death in accordance with a reasonable and prevailing rate of interest
as agreed to by the Company and Dr. Krukemeyer's estate, of any remaining
Disability Payments otherwise payable through the remainder of the Term;
provided, that in no event shall benefits be payable under both Section 2 and
Section 3 hereof. For purposes of this Agreement, any determination of
permanent disability shall be made by a physician selected by the Company and
reasonably acceptable to Dr. Krukemeyer, whose approval shall not be
unreasonably withheld; provided, however, that the selection of such physician
(i) shall be made in consultation with Dr. Krukemeyer and (ii) shall not (x)
unreasonably require Dr. Krukemeyer to travel in order to be examined, (y)
result in an unreasonable infringement of Dr. Krukemeyer's privacy, or (z)
otherwise result in any unreasonable hardship to Dr. Krukemeyer.
3. Death Benefit. In the event of Dr. Krukemeyer's death during the Term and
prior to the occurrence of any Permanent Disability Determination Date, the
Company shall provide for the payment to Dr. Krukemeyer's estate (or as
otherwise directed by Dr. Krukemeyer), of a death
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benefit, payable quarterly in advance, commencing as of the date of Dr.
Krukemeyer's death and continuing through the remainder of the Term at the rate
of U.S. $1 million per year (the "Death Benefit"); provided, however, that upon
the written election of Dr. Krukemeyer's estate, the Company shall instead
provide for the payment, within thirty (30) business days following the date of
such death, of a lump-sum amount in cash equal to the present value of the
Death Benefit, determined as of the date of such death in accordance with a
reasonable and prevailing rate of interest as agreed to by the Company and Dr.
Krukemeyer's estate.
4. Insurance. The Company shall have the right to discharge its obligations
under Sections 2 and 3 through the purchase of insurance. Dr. Krukemeyer shall
reasonably cooperate with the Company and any insurance carrier with respect to
medical examinations and any other commercially reasonable and standard
conditions to the issuance of such insurance; provided, however, that the
Company's obligations to provide the benefits described in Sections 2 and 3
shall remain in full force and effect regardless of (i) a determination for any
reason that Dr. Krukemeyer is uninsurable, (ii) any conditions imposed by any
potential insurer with respect to the issuance of such insurance, or (iii) any
other term or condition affecting the ability of the Company to acquire such
insurance, the cost thereof or otherwise.
5. Successors; Binding Agreement. The Company shall 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
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 had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Paragraph 5 or which otherwise becomes bound by the terms and provisions of
this Agreement by operation of law.
6. Notice. Any notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given upon
(a) transmitter's confirmation of a receipt of a facsimile transmission, (b)
confirmed delivery by a standard overnight carrier or (c) the expiration of
five business days after the day when mailed by certified or registered mail,
postage prepaid, addressed as follows (or at such other address as the parties
hereto shall specify by like notice):
If to Dr. Krukemeyer or any Beneficiary hereunder::
Dr. Manfred George Krukemeyer
AM Natruper Holz 69
D-49076 Osnabruck
Federal Republic of Germany
Facsimile: (011) 49-541-966-4006
with a copy to:
R.J. Messenger
155 North Lake Avenue, Suite 1100
Pasadena, CA 91101
Facsimile: (818) 578-6380
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and to:
Dr. Meyer zu Losebeck
Sozietat Dr. H. Mertens
Hasemauer 9
49074 Osnabruck, Germany
Facsimile: (011) 49-541-331-1616
Attention:
If to the Company:
Paracelsus Healthcare Corporation
515 West Greens Road, Suite 800
Houston, TX 77067
Attention: Robert C. Joyner
Vice President and General Counsel
Facsimile: (713) 873-6686
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Attention: Thomas C. Janson, Jr.
Facsimile: (213) 687-5600
7. Withholding. All amounts payable hereunder shall be subject to such
withholding taxes, if any, as may be required by law. Prior to making any
payments required hereunder, the Company will in good faith discuss with Dr.
Krukemeyer's advisors (or, as applicable, with the advisors of the beneficiary
of any amounts payable hereunder (each, a "Beneficiary")) the appropriate
withholding level.
8. Modification of Agreement; Governing Law and Venue. No provisions of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in a writing signed by Dr. Krukemeyer
(or, after his death, any Beneficiary (including but not limited to Dr.
Krukemeyer's estate)) and such officer of the Company as may be specifically
designated by the Board. No waiver by either party hereto (or, as applicable,
by any Beneficiary) at any time of any breach by the other party hereto or by
such Beneficiary of, or compliance with, any condition or provision of this
Agreement to be performed by such other party or Beneficiary shall be deemed a
waiver of any similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New York without regard to its
conflicts of law principles. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the Federal courts of
the United States of America located in the State of New York solely in respect
of the interpretation and enforcement of the provisions of this Agreement, and
in respect of the transactions contemplated hereby, and hereby waive, and agree
not to
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assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement hereof or of any such document, that it is not subject thereto
or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that such action, suit or proceeding 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 action or proceeding shall be heard and determined in such
a New York State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
6 shall be valid and sufficient service thereof.
9. Validity. The validity or enforceability of any provision or provisions
of this Agreement shall not be affected by the invalidity or unenforceability
of any other provision of this Agreement, and such valid and enforceable
provisions shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same instrument.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto with respect to the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any other prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
PARACELSUS HEALTHCARE CORPORATION
By: \s\ Ronald J. Messenger
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Name: R. J. Messenger
Title: Chief Executive Officer
\s\ Dr. Manfred G. Krukemeyer
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Dr. Manfred George Krukemeyer