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EXHIBIT 10.42
DIVIDEND AND NOTE AGREEMENT
THIS DIVIDEND AND NOTE AGREEMENT (this "Agreement") is entered into as
of August 16, 1996, between Park Hospital GmbH, a German corporation (the
"Shareholder") and Paracelsus Healthcare Corp., a California corporation
("Paracelsus").
WHEREAS, On August 14, 1996 Paracelsus declared a dividend of
$21,113,387, plus $3,574.26 for each day from and including July 31, 1996 to
the date the dividend is paid to holders of record of Paracelsus Common Stock
(as defined below) as of such date;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Definitions. (a) For the purposes of this Agreement, capitalized
terms not otherwise defined herein shall have the meanings assigned to them in
the Shareholder Agreement between Park Hospital GmbH and Paracelsus entered
into as of August 16, 1996.
2. Representations of the Shareholder. As of the date hereof, the
Shareholder represents and warrants to Paracelsus that:
(a) such Shareholder Beneficially Owns all of the outstanding
shares of common stock, no par value per share, of Paracelsus ("Paracelsus
Common Stock");
(b) this Agreement has been duly executed and delivered by the
Shareholder and, assuming due execution by Paracelsus, this Agreement is a
legal, valid and binding obligation, enforceable against the Shareholder in
accordance with its terms; and
(c) The execution, delivery and performance by the Shareholder of
this Agreement do not and will not contravene or conflict with any provision of
any law, regulation, judgment, injunction, order or decree binding upon the
Shareholder or any agreement, contract or other instrument to which the
Shareholder is a party, other than any such contraventions or conflicts that
would not prevent or materially delay the performance of the Shareholder's
obligations hereunder.
3. Representations of Paracelsus. As of the date hereof, Paracelsus
represents and warrants to the Shareholder that the execution, delivery and
performance of this Agreement by it has been duly and validly authorized by all
necessary corporate action on its part and, assuming due execution by the
Shareholder, that this Agreement is a legal, valid and binding obligation,
enforceable against Paracelsus in accordance with its terms.
4. Agreements.
(a) No Relief of Liabilities. Neither the termination of this
Agreement nor the Transfer by the Shareholder of Beneficial Ownership of any
Voting Securities of Paracelsus shall relieve the Shareholder of any
liabilities or obligations to Paracelsus that arose or accrued prior to the
date of such termination or Transfer.
(b) Further Assurances. Paracelsus and the Shareholder shall execute
and deliver such additional instruments and other documents and shall take such
further actions as may be
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necessary or appropriate to effectuate, carry out and comply with all of the
terms of this Agreement and the transactions contemplated hereby.
(c) Shareholder Action. The Shareholder agrees that he shall
promptly after the execution hereof and receipt of the dividend referred to in
the whereas clause invest $7,185,467 in Paracelsus in return for the
Shareholder Subordinated Note. For the purposes hereof, the "Shareholder
Subordinated Note" shall mean the subordinated note of Paracelsus issued to the
Shareholder containing substantially the terms described in Annex A hereto. In
addition, the Shareholder agrees to cause all of the voting securities of
Paracelsus that are Beneficially Owned by the Shareholder and his Affiliates
and Associates to be released from any pledge or encumbrance (other than those
arising under or permitted by the Shareholder Agreement) promptly after the
receipt of such dividend.
5. Specific Performance. Each party hereto acknowledges that it will be
impossible to measure in money the damage to the other party if a party hereto
fails to comply with any of the obligations imposed by this Agreement, that
every such obligation is material and that, in the event of any such failure,
the other party will not have an adequate remedy at law or damages.
Accordingly, each party hereto agrees that injunctive relief or other equitable
remedy, in addition to remedies at law or damages, is the appropriate remedy
for any such failure and will not oppose the granting of such relief on the
basis that the other party has an adequate remedy at law. Each party hereto
agrees that it shall not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with any other party's seeking or
obtaining such equitable relief.
6. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall not be assignable (by operation of law or otherwise) without the
written consent of all other parties hereto; provided, that in the event of a
merger where Paracelsus is not the surviving corporation, (x) this Agreement
shall be assigned to and shall inure to the benefit of and be binding upon such
surviving corporation and (y) any reference herein to Paracelsus shall be
deemed to be a reference to such surviving corporation; provided, further, that
in the event of a merger where Paracelsus is the surviving corporation, this
Agreement shall continue in full force and effect.
7. Entire Agreement; Amendment; Waiver. This Agreement (including any
exhibits hereto) and the Shareholder Agreement supersede all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by Paracelsus and approved by the unanimous vote
of the Independent Directors and, with respect to the Shareholder, by the
Shareholder. No waiver of any provisions hereof by any party shall be deemed a
waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
8. Miscellaneous.
(a) Governing Law and Venue. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH AND SUBJECT TO THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO CONFLICTS OF LAWS PRINCIPLES. The parties hereby
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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 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 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 9(b), shall be valid and
sufficient service thereof.
(b) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given (i) on
the first business day following the date received, if delivered personally or
by telecopy (with telephonic confirmation of receipt by the addressee), (ii) on
the business day following timely deposit with an overnight courier service, if
sent by overnight courier specifying next day delivery and (iii) on the first
business day that is at least five days following deposit in the mails, if sent
by first class mail, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
If to the Shareholder, to:
Dr. Manfred George Krukemeyer
AM Natruper Holz 69
D-49076 Osnabruck
Federal Republic of Germany
Facsimile: (011) 49-541-966-4006
with copies to:
R. J. Messenger
155 North Lake Avenue, Suite 1100
Pasadena, California 91101
Facsimile: (818) 578-6387
and to:
Dr. Meyer zu Losebeck
Sozietat Dr. H. Mertens
Hasemauer 9
49074 Osnabruck, Germany
Facsimile: (011) 49-54-331-1616
If to Paracelsus, to:
Paracelsus Healthcare Corporation
515 West Greens Road, Suite 800
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Houston, Texas 77067
Facsimile: (713) 873-6686
Attention: Robert C. Joyner
Vice President and General Counsel
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
(c) Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
(d) Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which shall together constitute the same
agreement.
(e) Termination. This Agreement shall terminate automatically
without any action by any party upon the satisfaction by the Shareholder of all
obligations under Section 4.
(f) Headings. All Section headings and the recitals herein are for
convenience of reference only and are not part of this Agreement, and no
construction or reference shall be derived therefrom.
(g) Other Agreements. The parties hereto agree that there is not and
has not been any other agreement, arrangement or understanding between the
parties hereto with respect to the matters set forth herein.
(h) THIRD PARTY BENEFICIARIES. NOTHING IN THIS AGREEMENT, EXPRESS OR
IMPLIED, IS INTENDED TO CONFER UPON ANY THIRD PARTY (INCLUDING ANY HOLDER OF
VOTING SECURITIES OF PARACELSUS) ANY RIGHTS OR REMEDIES OF ANY NATURE
WHATSOEVER UNDER OR BY REASON OF THIS AGREEMENT; PROVIDED, THAT THE FOREGOING
SHALL NOT IN ANY WAY RESTRICT OR LIMIT ANY HOLDER OF VOTING SECURITIES OF
PARACELSUS FROM BRINGING A SHAREHOLDER DERIVATIVE ACTION TO SEEK OR COMPEL THE
DIRECTORS OF PARACELSUS TO CAUSE PARACELSUS TO ENFORCE ANY OBLIGATIONS OF THE
SHAREHOLDER HEREUNDER OR TO EXERCISE ANY RIGHTS OR REMEDIES OF PARACELSUS
HEREUNDER.
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IN WITNESS WHEREOF, Paracelsus and the Shareholder have executed and
delivered this Agreement, or a counterpart hereof, as of the date first written
above.
PARACELSUS HEALTHCARE
By: /s/ Ronald J. Messenger
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Name: R. J. Messenger
Title: President & Chief Executive Officer
THE SHAREHOLDER
By: /s/ Dr. Manfred G. Krukemeyer
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Name: Dr. Manfred George Krukemeyer
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ANNEX A
SHAREHOLDER SUBORDINATED NOTE
Principal Amount: $7,185,467
Maturity: 10 years from the Issue Date
Interest Rate: 6.51% per annum
Optional Redemption: None
Payments: Payments annually on each anniversary of the
Issue Date of $1,000,000, consisting of principal and
accrued interest
Ranking: Subordinated in right of payment to (i) all Senior
Indebtedness, to be defined in the same manner as
"Senior Indebtedness" under the existing Paracelsus
indenture, plus the existing Senior Subordinated
Indebtedness and all indebtedness ranking pari passu
with such indebtedness (and/or refinancing
indebtedness) and (ii) any other indebtedness for
borrowed money with an initial principal amount in
excess of $50 million which is designated as "Senior
Indebtedness" by Paracelsus
Events of Default: Same as existing senior subordinated indebtedness