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EXHIBIT 10.36
PARACELSUS SHAREHOLDER REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of August 16, 1996, by and among PARACELSUS HEALTHCARE
CORPORATION, a California corporation (together with its permitted successors
and assigns, the "Company"), and Park Hospital GmbH, a German corporation (the
"Paracelsus Shareholder").
WHEREAS, in connection with that certain Amended and Restated Merger
Agreement dated as of May 29, 1996 (as further amended from time to time in
accordance with the terms thereof, the "Merger Agreement"), by and among the
Company, Champion Healthcare Corporation, a Delaware corporation, and PC Merger
Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company,
the Company has agreed to provide the Paracelsus Shareholder with the
registration rights set forth in this Agreement;
NOW, THEREFORE, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
intending to be bound hereby, agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
Affiliate: With respect to any specified person, any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agreement: See the introductory clauses hereof.
Business Day: Any day that is not a Saturday, a Sunday, a legal holiday or a
day on which banking institutions in the States of New York or Texas are not
required to be open.
Company: See the introductory clauses hereof.
Company Common Stock: The common stock, no stated value per share, of the
Company or any other shares of capital stock of the Company into which such
stock shall be reclassified or changed. After the date hereof, if the Company
Common Stock has been so reclassified or changed, or if the Company pays a
dividend or makes a distribution on the Company Common Stock in shares of
capital stock, or subdivides (or combines) its outstanding shares of the
Company Common Stock into a greater (or smaller) number of shares of the
Company Common Stock, a share of the Company Common Stock shall be deemed to be
such number of shares of capital stock and amount of other securities to which
a holder of a share of the Company Common Stock outstanding immediately prior
to such reclassification, exchange, dividend, distribution, subdivision or
combination would be entitled.
Company Notice: See Section 2(b) hereof.
Delay Period: See Section 2(c) hereof.
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Demand Notice: See Section 2(a) hereof.
Demand Registration: See Section 2(b) hereof.
Effectiveness Period: See Section 2(c) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder.
indemnified party: See Section 8(c) hereof.
indemnifying party: See Section 8(c) hereof.
Losses: See Section 8(a) hereof.
Merger Agreement: See the introductory clauses hereof.
Paracelsus Shareholder: See the introductory clauses hereof.
Permitted Transferee: Any person to which the Paracelsus Shareholder may
transfer its Shares under the terms of the Shareholder Agreement between the
Paracelsus Shareholder and the Company, dated as of August 16, 1996.
person: Any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, limited liability company, unincorporated
organization or government or any agency or political subdivision thereof.
Piggyback Registration: See Section 3(a) hereof.
Prospectus: The prospectus included in any Registration Statement (including,
without limitation, a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A or any term sheet meeting the requirements of Rule
434), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Shares covered by
such Registration Statement and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Registrable Shares: Each Share until (i) a registration statement covering
such Share has been declared effective by the SEC and such Shares have been
disposed of pursuant to such effective registration statement, or (ii) such
Share has been transferred other than pursuant to Rule "4(1-1/2)" (or any
similar private transfer exemption) under the Securities Act.
Registration Statement: Any registration statement of the Company under the
Securities Act that covers any of the Registrable Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
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Rule 144: Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Shareholders: The Paracelsus Shareholder and any transferee who holds
Registrable Shares.
Shares: All shares of Company Common Stock beneficially owned immediately
after the effective time of the merger contemplated by the Merger Agreement by
the Paracelsus Shareholder, and any shares of Company Common Stock hereafter
acquired by the Paracelsus Shareholder if at the time of such acquisition the
Paracelsus Shareholder beneficially owns any Registrable Shares.
underwritten registration or underwritten offering: A registration or
offering in which securities of the Company are sold to an underwriter for
reoffering to the public.
SECTION 2. Demand Registration.
(a) The Shareholders shall have the right, by written notice (the
"Demand Notice") given by the Shareholders who hold at least a majority of the
then existing Registrable Shares to the Company so long as this Agreement has
not been terminated in accordance with Section 9.1 hereof, to request that the
Company register under and in accordance with the provisions of the Securities
Act all or part of the Registrable Shares designated by such holders; provided,
that at the time of the Demand Notice the market value of the Registrable
Shares to be registered in accordance therewith exceeds in the aggregate $25
million, provided, however, that if the Shareholders in the aggregate own
Registrable Shares, the market value of which does not exceed $25 million, then
the Demand Notice shall apply to all of such Registrable Shares; and provided,
further, that no one Demand Notice may be given if a Demand Notice was given
during the eighteen-month period ending immediately prior to such Demand Notice
and the Company filed a Registration Statement relating to all the shares
covered by such prior Demand Notice, which registration statement becomes
effective in accordance with the provisions hereof, and the Company otherwise
complied with its obligations under this Agreement with respect to such prior
Demand Notice. All Demand Notices shall specify the amount of Registrable
Shares to be registered and the intended methods of disposition thereof. The
Shareholders shall be entitled in the aggregate to five Demand Registrations
pursuant to this Section 2 unless a Demand Registration did not become
effective or was not maintained effective for a period (whether or not
continuous) of at least 180 days (subject to Section 2(e) hereof) or such
shorter period at the end of which all Registrable Shares covered by such
Demand Registration have been sold pursuant thereto, in which case the
Shareholders will be entitled in the aggregate to one additional Demand
Registration pursuant hereto for each instance in which the condition set forth
above had not been satisfied.
(b) The Company shall file with, and shall use reasonable best
efforts to cause to be declared effective by, the SEC within 90 days of the
date on which the Company first receives the Demand Notice given by the
Shareholders pursuant to Section 2 hereof, a Registration Statement
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under the Securities Act relating to the number of Registrable Shares specified
in such Demand Notice (a "Demand Registration"); provided, that the Company
shall have the right for a reasonable period of time not in excess of 90 days
(exercisable by delivery of notice to the Shareholders of Registrable Shares
included in such Registration Statement) to delay the filing of such
Registration Statement if, in the Company's good faith exercise of its
reasonable business judgment (i) such registration and offering would adversely
affect or interfere with a pending bona fide corporate transaction involving,
or any bona fide financing by, the Company, (ii) the Company is in possession
of material information that it determines, if disclosed in a registration
statement, would have a material adverse effect on the business or operations
of the Company and would not otherwise be required under law to be publicly
disclosed or (iii) the Company is engaged in a program for the purchase of
shares of Company Common Stock, unless such repurchase program and the
requested registration may proceed concurrently pursuant to an exemption from
Rule 10b-6 under the Exchange Act; provided, that the Company may so delay the
filing of such Registration Statement with respect to any one Demand
Registration twice, but no more than twice, in any twelve-month period.
(c) The Company agrees to use reasonable best efforts to keep any
Registration Statement filed pursuant to this Section 2 continuously effective
and usable for the resale of Registrable Shares for a period of 180 days
(subject to Section 2(e) hereof) from the date on which the SEC declares such
Registration Statement effective or such shorter period which will terminate
when all the Registrable Shares covered by such Registration Statement have
been sold pursuant to such Registration Statement. The foregoing
notwithstanding, the Company shall have the right to suspend the use of the
Registration Statement for a reasonable length of time not exceeding with
respect to any one Demand Registration an aggregate of 90 days (a "Delay
Period") if and only if in the good faith exercise of the Company's reasonable
business judgment (i) such use would adversely affect or interfere with a
pending bona fide corporate transaction involving, or any bona fide financing
by, the Company, (ii) the Company is in possession of material information that
it determines, if disclosed in a registration statement, would have a material
adverse effect on the business or operations of the Company and would not
otherwise be required under law to be publicly disclosed or (iii) the Company
is engaged in a program for the purchase of any shares of Company Common Stock,
unless such repurchase program and the requested registration may proceed
concurrently pursuant to an exemption from Rule 10b-6 under the Exchange Act;
provided, that the Company may so suspend sales with respect to any one Demand
Registration, twice, but no more than twice, in any twelve-month period; and
provided, further, that the foregoing delay provisions of this sentence shall
not apply for any period longer than the shortest period for which similar
provisions are imposed by any other registration rights or similar agreement
between the Company and another party. The Company shall provide written notice
to the Shareholders of the beginning and end of each Delay Period and the
Shareholders shall cease all disposition efforts with respect to Registrable
Shares held by them immediately upon receipt of notice of the beginning of any
Delay Period. The period for which the Company is required to maintain the
effectiveness of the Registration Statement shall be extended by the aggregate
number of days of all Delay Periods. Such period, including the extension
thereof required by the preceding sentence, is hereafter referred to as the
"Effectiveness Period."
(d) In the case of a proposed offering pursuant to a Demand
Registration, the Company may, in its sole discretion, include shares of
Company Common Stock in such Demand Registration (whether for the account of
the Company or otherwise, including without limitation shares of Company Common
Stock held by security holders, if any, who have piggyback registration rights
with respect thereto) on the same terms and conditions as the Registrable
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Shares. Notwithstanding the foregoing, if the Company or, in case of any
underwritten public offering, the managing underwriter or underwriters
participating in such offering conclude that the total amount of shares of
Company Common Stock requested to be included in such Demand Registration
exceeds the amount which can be sold without materially and adversely delaying
or affecting the success of the offering, then the amount of securities to be
offered for the account of all holders other than the Company and the
Shareholders shall be reduced (to zero if necessary) pro rata on the basis of
the number of shares of Company Common Stock requested to be registered by each
such holder. If, after such cut back, the Company or such underwriter concludes
that the total amount of securities to be included in such Demand Registration
still materially and adversely affects the success of such offering, then the
amount of securities to be offered for the account of the Company shall be
reduced (to zero if necessary).
(e) If any Demand Registration pursuant to this Section 2 is
requested to be a "shelf" registration pursuant to Rule 415 under the
Securities Act, the Company shall file a Registration Statement under Rule 415
under the Securities Act and shall keep such Registration Statement filed in
respect thereof continuously effective for a period ending on the earlier of
(i) two years from the date on which the SEC declares such Registration
Statement effective under the Securities Act (subject to the extension pursuant
to Section 4 hereof), and (ii) the date on which all the Registrable Securities
covered by such Registration Statement have been sold pursuant to such
Registration Statement. Upon the occurrence of any event that would cause such
Registration Statement (i) to contain an untrue or alleged untrue statement of
material fact, or any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or (ii) not to be effective and usable for resale of Registrable
Securities during the period that such Registration Statement is required to be
effective and usable, the Company shall promptly file an amendment to such
Registration Statement, in the case of clause (i), to correct any such
misstatement or omission and, in the case of either clause (i) or (ii), use all
reasonable efforts to cause such amendment to be declared effective and such
Registration Statement to become usable as soon as practical thereafter.
SECTION 3. Piggyback Registration.
(a) Right to Piggyback. If at any time the Company proposes to file a
registration statement under the Securities Act with respect to an offering of
Company Common Stock (other than a registration statement (i) on Form S-4 or
S-8 or any successor forms thereto, or (ii) filed solely in connection with an
exchange offer or dividend reinvestment plan) whether or not for its own
account, then the Company shall give written notice of such proposed filing to
the Shareholders at least 15 Business Days before the anticipated filing date.
Such notice shall offer the Shareholders the opportunity to register such
amount of Registrable Shares as they may request (a "Piggyback Registration").
Subject to Section 3(b) hereof, the Company shall include in each such
Piggyback Registration all Registrable Shares with respect to which the Company
has received written requests for inclusion therein within ten Business Days
after notice has been received by the applicable holder. The Shareholders shall
be permitted to withdraw all or part of the Registrable Shares from a Piggyback
Registration by giving written notice to the Company at least one Business Day
prior to the later of the expected or actual effective date of such Piggyback
Registration.
(b) Priority on Piggyback Registrations. The Company shall permit the
Shareholders to include all such Registrable Shares on the same terms and
conditions as any similar securities, if any, of the Company included therein.
Notwithstanding the foregoing, if the Company or an underwriter
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participating in such offering concludes in good faith that the total amount of
securities requested to be included in such Piggyback Registration exceeds the
amount which can be sold without materially and adversely delaying or affecting
the success of the offering, then the amount of securities to be offered for
the account of the Shareholders shall be reduced in the following manner:
(i) if such Piggyback Registration was initiated as a result of a
primary registration on behalf of the Company, the amount of securities to be
offered for the account of the Shareholders and other holders of securities who
have piggyback registration rights with respect thereto shall be reduced (to
zero if necessary) pro rata on the basis of the number of capital stock
equivalents requested to be registered by each such holder of securities with
piggyback registration rights participating in such offering; and
(ii) if such Piggyback Registration was initiated as a result of an
underwritten secondary registration on behalf of holders of securities of the
Company other than the Shareholders, the Company shall include in such
registration: (x) first, up to the full number of common stock equivalents of
such persons exercising "demand" registration rights, and (y) second, the
number of securities to be offered for the account of the Shareholders and
other holders of securities who have piggyback registration rights with respect
thereto in excess of the amount of securities such persons exercising "demand"
registration rights propose to sell (allocated pro rata among the Shareholders
and other holders of such securities on the basis of the number of common stock
equivalents requested to be registered by such holders).
SECTION 4. Hold-Back Agreements.
(a) The Shareholders agree, if requested by the Company or the
managing underwriter in connection with a public offering of equity securities
of the Company (whether for the account of the Company or otherwise), not to
effect any public sale or distribution of any shares of Company Common Stock,
including a sale pursuant to Rule 144 (except as part of such underwritten
registration), during a period equivalent to that requested by the Company or
such underwriter, provided that such period shall not exceed 90 days.
(b) The Company agrees, if requested by the holders of a majority
of the Registrable Shares being sold or the managing underwriter, if any, in
connection with a Demand Registration of such Registrable Shares, not to effect
any public sale or public distribution of any equity securities of the Company
(except as part of such registration or pursuant to a bona fide employee
option, bonus or other benefit plan), during a period equivalent to that
requested by the Shareholders or such underwriter, if any, provided that such
period shall not exceed (i) 180 days with respect to the first public offering
hereunder by holders of Registrable Shares after the date hereof and (ii) 90
days with respect to each such registration thereafter.
SECTION 5. Registration Procedures.
In connection with the registration obligations of the Company and in
accordance with Sections 2 and 3 hereof, the Company will use its best efforts
to effect such registrations to permit the sale of such Registrable Shares in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company shall:
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(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on such form which shall be available for the sale of
the Registrable Shares by the holders thereof in accordance with the intended
method or methods of distribution thereof, and use reasonable best efforts to
cause such Registration Statement to become effective as soon as practicable
after such filing and to remain effective as provided herein; provided,
however, that before filing a Registration Statement or Prospectus or any
amendments or supplements thereto (including documents that would be
incorporated or deemed to be incorporated therein by reference), the Company
shall, upon the written request of participating Shareholders, furnish or
otherwise make available to such holders of the Registrable Shares covered by
such Registration Statement, their counsel and the managing underwriters, if
any, copies of all such documents proposed to be filed, which documents will be
subject to the review of such holders, their counsel and such underwriters, if
any, provided, however, that the Company shall not be required to deliver to
such holders a copy of any such document that has not been materially changed
from a copy of such document that was previously delivered to such holders. The
Company shall not file any such Registration Statement or Prospectus or any
amendments or supplements thereto (including such documents that, upon filing,
would be incorporated or deemed to be incorporated by reference therein) to
which the holders of a majority of the Registrable Shares covered by such
Registration Statement, their counsel or the managing underwriters, if any,
shall reasonably object in writing on a timely basis unless, in the opinion of
the Company, such filing is necessary to comply with applicable law.
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) to each Registration Statement as may be necessary
to keep such Registration Statement continuously effective during the period
provided herein with respect to the disposition of all securities covered by
such Registration Statement; and cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provision then in force) under
the Securities Act.
(c) Notify the Shareholders registering shares as part of such
Registration Statement, their counsel and the managing underwriters, if any,
promptly and (if requested by any such person) confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related Prospectus or for additional information regarding the Shareholders
registering shares as part of such Registration Statement, (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time the representations and warranties of the Company contained
in any agreement (including any underwriting agreement) contemplated by Section
5(j) below cease to be true and correct, (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (vi) of the happening of any event that requires the making of any
changes in such Registration Statement, Prospectus or documents incorporated or
deemed to be incorporated therein by reference so that in the case of the
Registration Statement it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case
of the Prospectus it will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
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(d) Use reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification or exemption from qualification of any
of the Registrable Shares for sale in any jurisdiction.
(e) If requested by a Shareholder, furnish to counsel for the
Shareholders and each managing underwriter, if any, without charge, one
conformed copy of each Registration Statement as declared effective by the SEC
and of each post-effective amendment thereto, in each case including financial
statements and schedules and all exhibits and reports incorporated or deemed to
be incorporated therein by reference; and deliver, without charge, such number
of copies of the preliminary prospectus, each amended preliminary prospectus,
each final Prospectus and each post-effective amendment or supplement thereto,
as the Shareholder may reasonably request in order to facilitate the
disposition of the Registrable Shares covered by each Registration Statement in
conformity with the requirements of the Securities Act.
(f) Prior to any public offering of Registrable Shares, use
reasonable best efforts to register or qualify such Registrable Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions in
the United States as any holders of the Registrable Shares to which such public
offering relates shall reasonably request in writing; and do any and all other
reasonable acts or things necessary or advisable to enable the Shareholders to
consummate the disposition in such jurisdictions of such Registrable Shares
covered by the Registration Statement, provided, however, that the Company
shall in no event be required to qualify generally to do business as a foreign
corporation or as a dealer in any jurisdiction where it is not at the time so
qualified or to execute or file a consent to general service of process in any
such jurisdiction where it has not theretofore done so or to take any action
that would subject it to service of process or taxation in any such
jurisdiction where it is not then subject.
(g) Except during any Delay Period, upon the occurrence of any
event contemplated by Sections 5(c)(ii) or 5(c)(vi) above, prepare a supplement
or post-effective amendment to each Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Shares being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(h) Use its best efforts to cause all Registrable Shares covered
by such Registration Statement to be listed on each securities exchange or
quoted on each automated interdealer quotation system, if any, on which the
shares of Company Common Stock are then listed or quoted.
(i) On or before the effective date of the Registration Statement,
provide the transfer agent of the Company for the Registrable Shares with
printed certificates for the Registrable Shares, which are in a form eligible
for deposit with The Depositary Trust Company.
(j) If requested by the holders of a majority of the Registrable
Shares being sold, enter into one or more customary "firm commitment" or "best
efforts" underwriting agreements, engagement letters, agency agreements or
similar agreements, as appropriate, and in such connection, whether or not any
such agreement is entered into and whether or not the registration
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is an underwritten registration, the Company shall (i) make such
representations and warranties to the holders of such Registrable Shares and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case,
in form, substance and scope as are customarily made by issuers to underwriters
in underwritten offerings, and if true, confirm the same if and when requested,
(ii) use its reasonable efforts to obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and
counsel to such holders of the Registrable Shares being sold), addressed to
each such selling holder of Registrable Shares and each of the underwriters, if
any, covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such counsel and underwriters, (iii) use its reasonable efforts to obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each such
selling holder of Registrable Shares (unless such accountants shall be
prohibited from so addressing such letters by applicable standards of the
accounting profession) and each of the underwriters, if any, such letters to be
in customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings, and (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures substantially to the effect set forth in Section 8
hereof with respect to all parties to be indemnified pursuant to said Section.
The above shall be done at each closing under such underwriting or similar
agreement, or as and to the extent required thereunder.
(k) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, or any similar rule promulgated under the Securities Act, no later
than forty-five (45) days after the end of any twelve (12) month period (or
ninety (90) days after the end of any twelve (12) month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Shares are sold to underwriters in a "firm commitment" or "best
efforts" underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said twelve (12) month periods.
The Company may require each seller of Registrable Shares as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Shares as the
Company may, from time to time, request in writing and as, in the opinion of
counsel for the Company, is required by law to effect such registration. If any
such information with respect to a seller or such distribution of Registrable
Shares is not furnished within a reasonable period of time after receipt of
such request, the Company may exclude such Shareholder's Registrable Shares
from such Registration Statement. Each seller of Registrable Shares agrees to
notify the Company as promptly as practicable following its discovery of any
inaccuracy or change in information so furnished in writing by such seller to
the Company or of the occurrence of any event that causes any prospectus
relating to such registration to contain an untrue statement of a material fact
or omit to state any material fact regarding such seller or the distribution of
such Registrable Shares that is required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made.
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Each holder of Registrable Shares agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iii), 5(c)(v) or 5(c)(vi) hereof, that such holder shall
forthwith discontinue disposition of such Registrable Shares covered by such
Registration Statement or Prospectus until receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(g) hereof, or
until such holder is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amended or
supplemented Prospectus or any additional or supplemental filings which are
incorporated, or deemed to be incorporated, by reference in such Prospectus
and, if requested by the Company, such holder shall deliver to the Company (at
the expense of the Company) all copies then in its possession, other than
permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Shares at the time of receipt of such request.
Each holder of Registrable Shares further agrees not to utilize any
material other than the applicable current Prospectus in connection with the
offering of Registrable Shares pursuant to a Demand Registration or otherwise
hereunder.
SECTION 6. Registration Expenses.
(a) Whether or not any Registration Statement becomes effective, the
Company shall pay all costs, fees and expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
(i) all registration and filing fees, (ii) fees and expenses of compliance with
securities or Blue Sky laws, (iii) printing expenses (including without
limitation expenses of printing certificates for Registrable Shares and of
printing prospectuses if the printing of prospectuses is requested by the
managing underwriter, if any, or by the holders of a majority of the
Registrable Shares included in any Registration Statement), (iv) messenger,
telephone and delivery expenses, (v) fees and disbursements of counsel for the
Company and one special counsel for the sellers of Registrable Shares (subject
to the provisions of Section 6(b) hereof), and (vi) fees and disbursements of
all independent certified public accountants of the Company (including without
limitation expenses of any "cold comfort" letters required in connection with
this Agreement) and all other persons retained by the Company in connection
with the Registration Statement. In addition, the Company shall pay its
internal expenses (including without limitation all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit and the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange on which
similar securities issued by the Company are then listed. Notwithstanding the
foregoing, each participating Shareholder shall pay all commissions, fees or
discounts payable to brokers, dealers or underwriters and all transfer taxes in
connection with the sale of its Registrable Shares.
(b) In connection with any Demand Registration or Piggyback
Registration (including any "shelf" registration in connection therewith)
hereunder, the Company shall reimburse the holders of the Registrable Shares
being registered in such registration for the reasonable fees and disbursements
of not more than one counsel (together with appropriate local counsel, if
required) chosen by the holders of a majority of all of such Registrable Shares
being registered in such registration.
SECTION 7. Underwritten Registrations.
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(a) Subject to Section 7(b) hereof, the Shareholders shall have the
right, by written notice, to request that any Demand Registration be made
pursuant to an underwritten offering.
(b) If any of the Registrable Securities are to be sold in an
underwritten offering pursuant to a Demand Registration, the institution or
institutions that shall manage or lead the offering or placement shall be
selected by the holders of a majority of the Registrable Shares being sold;
provided, that such institution or institutions shall be reasonably
satisfactory to the Company. In connection with any Piggyback Registration, no
Shareholder shall be entitled to participate unless and until it shall enter
into an underwriting or other agreement with such lead institutions for such
offering in such form as the Company and such lead institutions shall
reasonably determine.
SECTION 8. Indemnification.
(a) Indemnification by the Company. The Company shall, without limitation as
to time, indemnify and hold harmless, to the full extent permitted by law, each
holder of Registrable Shares whose Registrable Shares are covered by a
Registration Statement or Prospectus, the officers, directors and agents and
employees of each of them, each Person who controls each such holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
person, to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, reasonable
costs of preparing, investigating or defending such claim and reasonable
attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising
out of or based upon (i) any untrue or alleged untrue statement of a material
fact contained in such Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary prospectus, or arising out of or
based upon any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same arise out of or are based upon information furnished
in writing to the Company by such holder expressly for use therein and (ii) any
violation or alleged violation by the Company of the Securities Act, Exchange
Act or any other federal or state securities laws, rule or regulation
applicable to the Company and relating to the action or inaction by the Company
in connection with any such registration nor qualification; provided, however,
that the Company shall not be liable to any holder of Registrable Shares to the
extent that any such Losses arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if (x) such holder failed to send or deliver a copy of
the Prospectus with or prior to the delivery of written confirmation of the
sale by such holder of a Registrable Share to the person asserting the claim
from which such Losses arise and (y) the Prospectus would have corrected in all
material respects such untrue statement or alleged untrue statement or such
omission or alleged omission; and provided further, that the Company shall not
be liable in any such case to the extent that any such Losses arise out of or
are based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if (x) such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in all material
respects in an amendment or supplement to the Prospectus and (y) having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or concurrently
with the sale of a Registrable Share to the person asserting the claim from
which such Losses arise.
(b) Indemnification by Holder of Registrable Shares. In connection with any
Registration Statement in which a holder of Registrable Shares is
participating, such holder of Registrable
12
Shares shall furnish to the Company in writing such information as the Company
reasonably requests for use in connection with any Registration Statement or
Prospectus and agrees to indemnify, to the full extent permitted by law, the
Company, its directors, officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling persons, from and against all Losses arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus or any amendment or
supplement thereto, or any preliminary prospectus, or arising out of or based
upon any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue or alleged untrue statement or
omission or alleged omission is contained in any information so furnished in
writing by such holder to the Company expressly for use in such Registration
Statement or Prospectus and that such information was relied upon by the
Company in preparation of such Registration Statement or Prospectus or
amendment, supplement or preliminary prospectus.
(c) Conduct of Indemnification Proceedings. If any Person shall be entitled
to indemnity hereunder (an "indemnified party"), such indemnified party shall
give prompt written notice to the party from which such indemnity is sought
(the "indemnifying party") of any claim or of the commencement of any
proceeding with respect to which such indemnified party seeks indemnification
or contribution pursuant hereto; provided, however, that the delay or failure
to so notify the indemnifying party shall not relieve the indemnifying party
from any obligation or liability except to the extent that the indemnifying
party has been prejudiced materially by such delay or failure. The indemnifying
party shall have the right, exercisable by giving written notice to an
indemnified party promptly after the receipt of written notice from such
indemnified party of such claim or proceeding, to assume, at the indemnifying
party's expense, the defense of any such claim or proceeding, with counsel
reasonably satisfactory to such indemnified party; provided, however, that an
indemnified party shall have the right to employ separate counsel in any such
claim or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (l) the indemnifying party agrees in writing to pay such fees and
expenses, (2) the indemnifying party fails promptly to assume the defense of
such claim or proceeding or fails to employ counsel reasonably satisfactory to
such indemnified party, or (3) in the judgment of counsel to such indemnified
party a conflict of interest is reasonably likely to exist between such
indemnified party and any other of such indemnified parties with respect to
such proceeding (in which case the indemnified party shall have the right to
employ counsel and to assume the defense of such claim or proceeding);
provided, however, that the indemnifying party shall not, in connection with
any one such claim or proceeding or separate but substantially similar or
related claims or proceedings in the same jurisdiction, arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one firm of attorneys (together with appropriate local counsel) at
any time for all of the indemnified parties, or for fees and expenses that are
not reasonable. Whether or not such defense is assumed by the indemnifying
party, such indemnified party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld). The indemnifying party shall not, without the written consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release, in form and
substance reasonably satisfactory to the indemnified party, from all liability
in respect of such claim or litigation for which such indemnified party would
be entitled to indemnification hereunder.
13
(d) Contribution. If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any Losses (other than in
accordance with its terms) or is insufficient to hold such indemnified party
harmless, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the one
hand, and such indemnified party, on the other hand, in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party, on the one hand, and indemnified party, on the other hand,
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to
include any legal or other fees or expenses incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provision of this Section 8(d), an indemnifying
party that is a selling holder of Registrable Securities shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities sold by such indemnifying party exceeds the
amount of any damages that such indemnifying party has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
SECTION 9. Miscellaneous.
9.1 Termination. This Agreement and the obligations of the Company hereunder
shall terminate on the earliest of (i) the tenth anniversary of the date hereof
and (ii) the first date on which no Registrable Shares shall exist.
9.2 Notices. All notices or communications hereunder shall be in writing
(including telecopy or similar writing), addressed as follows:
To the Company:
Paracelsus Healthcare Corporation
515 West Greens Road, Suite 800
Houston, Texas 77067
Attention: Robert C. Joyner,
Senior Vice President and General Counsel
Facsimile: (713) 873-6686
With a copy to:
14
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Attention: Thomas C. Janson, Jr.
Facsimile: (213) 687-5600
To the Paracelsus Shareholder:
Park Hospital GmbH
AM Natruper Holz 69
D-49076 Osnabruck
Federal Republic of Germany
Attention: Dr. Manfred George Krukemeyer
Telecopier No.: (011) 49-541-966-4006
With a copy to:
R.J. Messenger
155 North Lake Avenue, Suite 1100
Pasadena, California 91101
Facsimile: (818) 578-6380
and to:
Dr. Meyer zu Losebeck
Sozietat Dr. H. Mertens
Hasemauer 9
49074 Osnabruck, Germany
Facsimile: (011) 49-541-331-1616
Any such notice or communication shall be deemed given (i) when made,
if made by hand delivery, (ii) one business day after being deposited with a
next-day courier, postage prepaid, or (iii) three business days after being
sent certified or registered mail, return receipt requested, postage prepaid,
in each case addressed as above (or to such other address as such party may
designate in writing from time to time).
9.3 Separability. If any provision of this Agreement shall be declared to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
9.4 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns; provided, however, that neither this
Agreement nor any rights hereunder shall be assignable or otherwise subject to
hypothecation by the Paracelsus Shareholder, except that the foregoing
limitation will not apply to:
(a) any sale, transfer, assignment, pledge, hypothecation or other
disposition thereof (a "Transfer") made to the Company; and
15
(b) any Transfer to a Permitted Transferee; provided, that such
transferee agrees in writing to be bound by the terms of this Agreement as if
such person were the Paracelsus Shareholder.
9.5 Entire Agreement. This Agreement represents the entire agreement of the
parties and shall supersede any and all previous contracts, arrangements or
understandings between the parties hereto with respect to the subject matter
hereof. This Agreement may be amended at any time by mutual written agreement
of the parties hereto.
9.6 Publicity. Each of the Shareholders and the Company agree that no public
release or announcement concerning the transactions contemplated hereby shall
be issued by either party without the prior consent of the other party, except
to the extent that the Shareholders or the Company is advised by counsel that
such release or announcement is necessary or advisable under applicable law or
the rules or regulations of any securities exchange, in which case the party
required to make the release or announcement shall to the extent practicable
provide the other party with an opportunity to review and comment on such
release or announcement in advance of its issuance.
9.7 Expenses. Except as otherwise specifically provided in Section 6 hereof,
whether or not the transactions contemplated hereby are consummated, except as
otherwise provided herein, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses.
9.8 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.9 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
9.10 Governing Law; Venue. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of the State of incorporation of
Paracelsus, without reference to rules relating to conflicts of law.
9.11 Calculation of Time Periods. Except as otherwise indicated, all periods
of time referred to herein shall include all Saturdays, Sundays and holidays;
provided, that if the date to perform the act or give any notice with respect
to this Agreement shall fall on a day other than a Business Day, such act or
notice may be timely performed or given if performed or given on the next
succeeding Business Day.
9.12 No Inconsistent Agreements. The Company has not, as of the date hereof,
and shall not, on or after the date of this Agreement, enter into any agreement
with respect to its securities which is inconsistent with the rights granted to
the holders of Registrable Shares in this Agreement or otherwise conflicts with
the provisions hereof.
9.13 Participation by Shareholders. Each Shareholder hereby agrees that it
may not participate in any offering hereunder unless it (i) agrees to sell the
Registrable Shares to be included by it therein in the manner and upon the
terms and conditions provided in any underwriting or other
16
agreement approved by the persons entitled hereunder to determine the method of
distribution thereof and (ii) completes and executes such questionnaires,
powers of attorney, indemnities, underwriting agreements or other similar
documents reasonably required in accordance with the terms hereof or any
agreement contemplated by the foregoing clause (i).
9.14 Compliance with Shareholder Agreement. Any sale of Registrable Shares
pursuant to the registration rights provided for herein by any Shareholder
bound by the terms of the Shareholder Agreement, dated as of August 16, 1996,
between the Paracelsus Shareholder and the Company must comply with the
applicable provisions of such agreement.
9.15 Amendment. This Agreement, as to any amendment of rights, may be
amended, and the Company may take any action herein prohibited or omit to
perform any act herein required to be performed by it, if the Company shall
obtain the written consent to such amendment, action or omission to act given
by the Shareholders who hold at least fifty percent (50%) of the then existing
Registrable Shares. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement is sought.
9.16 Independent Rights. The rights and remedies of each Shareholder
hereunder shall be independent of the rights and remedies of any other
Shareholder, except as otherwise expressly provided herein. Without limiting
the foregoing, if the Company or any other person has any rights, claims or
defenses against any holder of Registrable Shares, such rights, claims or
defenses shall not apply with respect to any other Shareholder, except as
otherwise expressly provided herein. The taking of any action or the failure
to take any action by any Shareholder with respect to the subject matter of
this Agreement shall not, and shall not be deemed to, constitute the taking of
any action or the failure to take any action by any other holder, except as
expressly set forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
PARACELSUS HEALTHCARE CORPORATION
By: /s/ Robert C. Joyner
-----------------------------
Name: Robert C. Joyner
Title: Vice President and Secretary
PARK HOSPITAL GmbH
By: /s/ Dr. Manfred G. Krukemeyer
-----------------------------
Name: Dr. Manfred George Krukemeyer
Title: Chairman