September 13, 1999
Dear Stockholders:
You are cordially invited to the Annual Meeting of Stockholders to be held at
the Hotel Sofitel, 425 North Sam Houston Parkway East, Houston, Texas 77060,
on Wednesday, October 20, 1999, at 9:30 a.m., Houston Time.
You are requested to read carefully the accompanying Notice of Meeting and
Proxy Statement. At the meeting, you will be asked to elect Ms. Joan S.
Fortune as a director for a term of three years. The Board of Directors
recommends that you vote for the election of Ms. Fortune. A proxy card on
which to indicate your vote and an envelope, postage prepaid, in which to
return your proxy, are enclosed.
We hope you will attend our Annual Meeting. Whether or not you plan to attend
the meeting, your vote is important. WE URGE YOU TO COMPLETE, SIGN AND RETURN
THE ENCLOSED PROXY SO THAT YOUR SHARES WILL BE REPRESENTED. If you are able
to attend the meeting, you may revoke your proxy at that time by voting your
shares in person.
If you desire any additional information concerning the meeting, we would be
pleased to hear from you through our Investor Relations Department at (281)
774-5166.
Very truly yours,
James G. VanDevender
Chief Executive Officer & Director
<PAGE>
PARACELSUS HEALTHCARE CORPORATION
515 W. GREENS ROAD, SUITE 500
HOUSTON, TEXAS 77067
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
_____________________
To Be Held October 20, 1999
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
Paracelsus Healthcare Corporation will be held at the Hotel Sofitel, 425 North
Sam Houston Parkway East, Houston, Texas 77060, on Wednesday, October 20,
1999, at 9:30 a.m., Houston Time, for the following purposes:
1. To elect a Class III director to serve for a term of three years;
2. To transact such other business as may properly come before the
meeting or any adjournment
thereof.
The Board of Directors has fixed the close of business on September 1,
1999, as the record date for determining stockholders entitled to notice of
and to vote at the meeting or any adjournment thereof. Any stockholder may
examine a list of stockholders eligible to vote at the meeting during the ten-
day period preceding the meeting at the Company's executive offices located at
515 W. Greens Road, Suite 500, Houston, Texas 77067 during ordinary business
hours.
PLEASE PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY to
assure that your shares are voted and that a quorum will be present at the
meeting. A return envelope, which requires no postage if mailed in the United
States, has been provided for your use.
IF YOU ATTEND THE MEETING and vote your shares in person or inform the
Secretary of the Company in writing that you wish to revoke your proxy, your
proxy will not be used. Please note that space limitations make it necessary
to limit attendance to stockholders and invited guests. "Street Name" holders
will need to bring a copy of a brokerage statement reflecting stock ownership
as of the record date. Cameras and recording devices will not be permitted.
By order of the Board of Directors,
James G. VanDevender
Corporate Secretary
Houston, Texas
September 13, 1999
<PAGE>
PARACELSUS HEALTHCARE CORPORATION
515 W. GREENS ROAD, SUITE 500
HOUSTON, TEXAS 77067
_______________
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
_____________
To Be Held October 20, 1999
This Proxy Statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors (the "Board") of Paracelsus
Healthcare Corporation (the "Company") to be used at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Hotel Sofitel, 425 North
Sam Houston Parkway East, Houston, Texas 77060, on October 20, 1999, at 9:30
a.m., Houston Time, and any adjournment thereof, as set forth in the foregoing
notice.
This Proxy Statement and the accompanying proxy card are being mailed to
stockholders on or about September 20, 1999. The 1998 Annual Report was
previously mailed to stockholders of record as of June 10, 1999. If you were
not a stockholder of record as of June 10, 1999 and/or you did not receive
your 1998 Annual Report, please contact Paracelsus Healthcare Corporation,
Investor Relations Department, 515 West Greens Road, Suite 500, Houston, Texas
77067. The proxy, when properly executed and received by the Secretary of the
Company prior to the Annual Meeting, will be voted as therein specified. If
no election is made, the persons designated as proxies in the accompanying
proxy card will vote "FOR" the election of the nominee to the Board named
herein. The Board is not currently aware of any matters other than those
referred to herein, which will come before the Annual Meeting. If any other
matter should be presented at the Annual Meeting for action, the persons named
in the accompanying proxy card will vote the proxy on such matter in their own
discretion.
Proxies may be revoked at any time before they are exercised by
delivering notice of revocation to the Secretary of the Company, by submitting
a subsequently dated proxy or by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not, in itself, constitute
revocation of the proxy.
Only holders of record of the Company's common stock, no stated par value
("Common Stock"), at the close of business on September 1, 1999, will be
entitled to vote at the Annual Meeting. As of that date, there were
55,118,330 shares of Common Stock outstanding. Each share of Common Stock
entitles the holder to one vote. A majority of the shares of Common Stock
entitled to vote, present in person or by proxy (including shares that abstain
or do not vote with respect to one or more of the matters presented at the
Annual Meeting), will constitute a quorum for the Annual Meeting. There is no
cumulative voting and there are no other voting securities of the Company
outstanding.
The cost of preparing, printing and mailing proxy materials to the
Company's stockholders will be borne by the Company. The Company has retained
Georgeson & Company Inc., a professional solicitation firm, to assist in the
soliciting of proxies from stockholders at a fee of $7.50 for each delivery
plus $0.04 per set of material, but in no event to be less than $600, plus
reimbursement for out-of-pocket expenses. In addition, proxies may be
solicited personally or by telephone by officers or employees of the Company,
none of whom will receive additional compensation therefor. The Company will
also reimburse brokerage houses and other nominees for their expenses in
forwarding proxy materials to beneficial owners of Common Stock.
<PAGE>
ELECTION OF DIRECTORS
On July 22, 1999, the United States District Court for the Southern
District of Texas (the "Court") granted final approval of the global
settlement of the putative class and derivative actions arising out of the
Company's August 1996 merger (the "Merger") with Champion Healthcare
Corporation ("Champion") and two related public offerings (the "Shareholder
Litigation"). The terms of the global settlement were described in detail in
the Company's 1998 Annual Report on Form 10-K. The global settlement, which
became effective on September 2, 1999, affected the composition of the Board
of Directors as discussed below.
The Amended and Restated Articles of Incorporation of the Company divide
the Board of Directors into three classes composed as nearly as possible of an
equal number of directors. The Articles and the Amended and Restated Bylaws
of the Company provide that there shall be a minimum of nine members on the
Board. Each class of directors is elected to a three-year term expiring at
the Annual Meetings on a staggered basis.
In connection with the settlement of the Shareholder Litigation, the
Company entered into an agreement (the "Shareholder Agreement") with Park-
Hospital GmbH ("Park") and another agreement (The "Park-Champion Agreement")
with Park and the former Champion shareholders (as described in Part I. Item 3
of the Company's 1998 Annual Report on Form 10-K). The Shareholder Agreement
and the Park-Champion Agreement together give each of Park and the former
Champion shareholders the right to designate three nominees for director to
the Company's Board of Directors and obligate the Company to use its best
efforts to cause the Board of Directors to be constituted as set forth in the
agreements. The Shareholder Agreement provides that one member of each class
of directors will be a person designated by Park. The Park-Champion
Agreement requires the Company to use its reasonable best efforts to cause one
of the board members that is not designated by Park or the former Champion
shareholders to be a member of management (the "Management Director") and to
cause the other board members who are not designated by Park or the former
Champion shareholders to meet certain standards of independence set out in the
agreement (the "Independent Directors)."
In fulfillment of the Company's obligations under the Shareholder
Agreement and the Park-Champion Agreement, the Board of Directors appointed,
in May 1999, Ms. Joan S. Fortune to fill a vacancy in Class III (expiring in
1999) and, in August 1999, Mr. Robert W. Miller to fill a vacancy in Class I
(expiring in 2000). Both Ms. Fortune and Mr. Miller qualify as Independent
Directors. The former Champion shareholders designated Mr. Nolan Lehmann (who
was already a member of the Board of Directors) and Mr. Lawrence P. English as
its Director designees and, in June 1999, the Board of Directors appointed Mr.
English a Class II Director with a term expiring in 2001. Park designated, as
its Director designees, Dr. Heiner Meyer zu Losebeck (who was already a member
of the Board of Directors) and Mr. Peter Schnitzler, who was appointed by the
Board of Directors in April 1999, as a Class I Director with a term expiring
in 2000. Mr. VanDevender is the Management Director and is in Class II.
Neither Park nor the former Champion shareholders have designated the
remaining directors they are entitled to identify.
The directors of the Company, their positions and offices, their
respective terms of office as directors and their respective ages are as
follows:
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES WITH SERVED AS TERM
AGE* THE COMPANY DIRECTOR EXPIRING
NAME CLASS SINCE ON
- ------------------------ ---- -------------- ----- --------- --------
<S> <C> <C> <C> <C> <C>
Christian A. Lange (a) (b) 59 Director III 1983 1999
Joan S. Fortune (c) 52 Director III 1999 1999
Nolan Lehmann (a) (b) (c) 55 Director I 1998 2000
Peter Schnitzler 31 Director I 1999 2000
Robert W. Miller 59 Director I 1999 2000
James G. VanDevender 51 Chief Executive
Officer and
Director II 1996 2001
Heiner Meyer zu Losebeck (a)
(b) 46 Director II 1998 2001
Lawrence P. English 59 Director II 1999 2001
</TABLE>
*As of August 31, 1999
__________________________________________________
(a) Member of the Finance and Strategic Planning Committee.
(b) Member of the Compensation and Stock Option Committee.
(c) Member of the Audit Committee.
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
The Board has nominated Ms. Joan S. Fortune to serve as a Class III
director for a three-year term expiring at the 2002 Annual Meeting. Ms.
Fortune has consented to serve if elected, but if she becomes unable to serve
as a director, and if the Board designates a substitute nominee, the person
named in the accompanying proxy card will vote for the substitute nominee
designated by the Board. No one has been nominated to fill the Class III
position that will be vacated by Mr. Christian A. Lange at this year's Annual
Meeting. The Company intends to leave this position, as well as the remaining
position in Class III, open until Park and the former Champion shareholders
have identified qualified nominees. The accompanying proxy will not be voted
to fill any director positions other than the position for which the nominee is
described herein.
Certain information regarding the nominee, furnished to the Company by
such person is set forth below.
NAME AND PRINCIPAL OCCUPATION
JOAN S. FORTUNE - Ms. Fortune was General Partner of Frontenac Company, a
venture capital firm from 1987 until her retirement in 1995. She was a
director of Frontenac from 1984 to 1987. At Frontenac, Ms. Fortune specialized
in investments in healthcare products and services. Prior to her time at
Frontenac, she was a management consultant with Hayes/Hill, Inc. and worked for
more than 10 years in the healthcare industry at American Hospital Supply
Corporation, G.D. Searle & Co. and a research facility associated with the
University of Wisconsin. Ms. Fortune will be an Independent Director.
STOCKHOLDER APPROVAL
SHARES REPRESENTED BY THE ACCOMPANYING PROXY CARD WILL BE VOTED "FOR" THE
ELECTION OF THE ABOVE NOMINEE UNLESS AUTHORITY TO VOTE IS WITHHELD. THE
DIRECTOR WILL BE ELECTED BY A PLURALITY OF THE VOTES OF THE SHARES OF COMMON
STOCK PRESENT IN PERSON OR BY PROXY AT THE ANNUAL MEETING. ABSTENTIONS ON THIS
MATTER WILL BE COUNTED FOR QUORUM PURPOSES BUT NOT VOTED.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE ABOVE NOMINEES AS MEMBERS OF THE BOARD.
<PAGE>
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
Certain information for those directors who will serve until the 2000 or
2001 Annual Meeting is set forth below.
JAMES G. VANDEVENDER - Effective July 1, 1999, immediately following the
resignation of Mr. Charles R. Miller as President and Chief Operating Officer,
Mr. VanDevender became interim Chief Executive Officer ("CEO"), pursuant to a
newly executed employment agreement which expires on December 31, 1999, unless
sooner terminated or extended. Pursuant to his employment agreement, Mr.
VanDevender agrees to resign as an officer and director upon the termination of
the employment agreement. Prior to becoming interim CEO, Mr. VanDevender served
as a Senior Executive Vice President since June 1997, and as Executive Vice
President, Chief Financial Officer and a director of the Company since August
1996. From 1990 to 1996, he was Executive Vice President, Chief Financial
Officer, Secretary and a director of Champion, which he co-founded. Mr.
VanDevender is a Management Director.
ROBERT W. MILLER - Mr. Miller was a partner with the law firm of King &
Spalding from 1985 until his retirement at the end of 1997. He currently
serves as non-executive Chairman of the Board of Magellan Health Services,
Inc., a behavioral managed care company listed on the New York Stock Exchange,
and is a past president of the American Academy of Healthcare Attorneys. Mr.
Miller is an Independent Director.
Heiner Meyer zu Losebeck - Dr. Meyer Zu Losebeck is The Managing Director
of Paracelsus-Kliniken-Deutschland GMBH ("PKD"), Park, and other affiliates of
PKD. PKD owns and operates 26 hospitals ranging in size from 42 to 350 beds in
Germany and Switzerland. As of record date, Park owned approximately 54
percent of the shares of the Company, and PKD owns all the shares of Park-
Hospital. From 1989 through August 1997, Dr. Meyer Zu Losebeck was a tax
consultant, auditor, and chartered accountant at Dr. Mertens and Partners,
Osnabruck, Germany. Dr. Meyer Zu Losebeck is a Park Director.
NOLAN LEHMANN - Mr. Lehmann has been the President and director of Equus
Capital Management Corporation, an investment advisor firm located in Houston,
Texas, since 1983. Mr. Lehmann is also President and a director of Equus II
Incorporated, a registered investment company traded on the New York Stock
Exchange. Mr. Lehmann also serves as a director of Allied Waste Industries,
Inc. and Drypers Corporation. Mr. Lehmann holds graduate and undergraduate
degrees in accounting and economics from Rice University and is a Certified
Public Accountant. Mr. Lehmann is a Champion Director .
PETER SCHNITZLER - Mr. Schnitzler is the Corporate Accountant of PKD. He
has been employed by PKD (and its respective legal predecessor) since 1993.
Mr. Schnitzler has a graduate degree in finance, auditing and hospital
administration. Mr. Schnitzler is a Park Director.
LAWRENCE P. ENGLISH - Mr. English is President of Lawrence P. English,
Inc., a consulting and turnaround management firm. He was the founder,
Chairman and Chief Executive Officer ("CEO") of Aesthetics Medical Management,
Inc., a physician management company from 1997 to 1998. From 1992 to 1996, he
was the president of Cigna Healthcare, a healthcare management organization and
a division of Cigna Corporation. Mr. English currently serves as a director of
Spacefitters, Inc., a Windsor, Connecticut based technology company, and
Dental Benefit Providers, a Bethesda, Maryland based dental HMO. Mr. English
has over 36 years of experience in the insurance and health care industries.
Mr. English is a Champion Director.
MEETINGS OF THE BOARD
The Board convened 17 times and acted by unanimous written consent two
times during 1998. All members of the Board participated in at least 75% of the
combined total of the meetings of the Board and its committees on which they
served.
<PAGE>
COMMITTEES OF THE BOARD
The Company has four committees: the Executive Committee, the Compensation
and Stock Option Committee, the Audit Committee and the Finance and Strategic
Planning Committee. The Company has no Nominating Committee. These committees
were established effective August 13, 1996 with the exception of the
Compensation and Stock Option Committee, which was established in July 1996.
The Executive Committee was composed of Messrs. Charles Miller and James
VanDevender, until Mr. Miller's resignation from the Board in April 1999. The
committee did not meet in 1998 and, after Mr. Miller's resignation, did not
have sufficient members to convene as a committee. When properly constituted,
the committee is empowered to exercise all of the powers and authority of the
Board permitted by law between meetings of the Board.
The Audit Committee is empowered, among other things, to (i) recommend to
the Board the appointment of independent public accountants, (ii) review the
scope of audits made by independent public accountants and the audit reports
submitted by such accountants, (iii) review the scope and results of internal
audits, overall accounting practices, accounting policies and accounting and
financial controls and (iv) perform such other functions as may be necessary or
appropriate for the efficient discharge of its duties. The Audit Committee,
which was comprised of two former Independent Directors who resigned in
February 1999, met five times during 1998.
The Finance and Strategic Planning Committee is composed of Dr. Meyer zu
Losebeck and Messrs. Lehmann and Lange. The Committee is empowered to supervise
the financial and strategic planning of the Company. The Finance and Strategic
Planning Committee met one time during 1998.
Dr. Meyer zu Losebeck and Messrs. Lehmann and Lange also serve as members
of the Compensation and Stock Option Committee. The Committee develops
recommendations for compensation and benefit levels for the executive officers
and administers the Company's stock incentive plan. The Compensation and Stock
Option Committee met five times during 1998.
The Shareholder Agreement provides that each committee of the Board (other
than the Audit Committee and Compensation and Stock Option Committee) will
contain representation of Park Directors as nearly as possible proportional to
the Park Directors representation on the Board. In addition, the Audit
Committee shall consist solely of independent directors, and the Compensation
and Stock Option Committee shall comprise one Park Director, one Independent
Director and an additional non-employee director. In connection with the
recomposition of the Board of Directors resulting from the global settlement of
the Shareholder Litigation, the Board of Directors intends to restructure the
Board committees and to reappoint members to those committees following the
1999 Annual Meeting.
LEGAL PROCEEDINGS
The Company, Park, the former Champion shareholders, Mr. VanDevender and
certain former executive officers of the Company were parties to the
Shareholder Litigation discussed above. As indicated, on July 22, 1999, the
Court granted final approval of the global settlement of litigation, which
became effective on September 2, 1999.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon confirmations provided by the directors and executive
officers of the Company reporting transactions involving the Company's
securities during the most recent fiscal year, the Company believes that all
transactions by reporting persons were reported on a timely basis. Based on
shareholder filings, the Company does not believe any other shareholders are
subject to Section 16(a) filing requirements.
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the Company's former
President and Chief Operating Officer and four most highly compensated
executive officers (the "Named Executives") with respect to all services
rendered to the Company during the calendar years indicated.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- ------------
ALL
SECURITIES OTHER
UNDERLYING COMPEN-
NAME AND PRINCIPAL SALARY BONUS OPTIONS SATION
POSITION(A) YEAR ($) ($)(B) (#)(C) ($)(D)
- ---------------------- ---- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Charles R. Miller 1998 $ 548,167 $ - - $ 315,460
President & Chief 1997 500,000 - - -
Operating Officer 1996 187,500 1,492,188 1,547,876 -
James G. VanDevender
Senior Executive Vice 1998 $ 370,313 $ - - $ 108,005
President & Chief 1997 360,000 - - -
Financial Officer 1996 131,250 911,875 1,070,000 -
Ronald R. Patterson
Executive Vice
President & 1998 $ 370,313 $ - - $ 92,920
President, Healthcare 1997 360,000 - - 2,375
Operations 1996 131,250 661,875 690,690 563
Michael M. Brooks 1998 $ 232,062 $ 100,000 - $ 3,690
Senior Vice President, 1997 224,253 - 100,000 8,962
Development 1996 69,375 80,000 90,000 464
Warren W. Wilkey 1998 $ 269,479 $ - - $ 2,544
Senior Vice President, 1997 250,000 - 100,000 1,211
Operations 1996 84,375 377,755 20,000 563
</TABLE>
- ---------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
(a) The Named Executives are former Champion executives who became employees of the Company
effective August 16, 1996, the consummation date of the Merger. Salaries for 1996 reflect
amounts paid for the period from August 16, 1996 to December 31, 1996.
(b) Payments of $1.2 million, $750,000, $500,000 and $280,000 for Messrs. Miller,
VanDevender, Patterson and Wilkey, respectively, were made in 1996 in exchange for Messrs.
Miller, VanDevender and Patterson surrendering certain severance rights under the Change of
Control provisions in their Champion employment agreements and a special merger bonus to Mr.
Wilkey.
(c) Includes Champion stock options assumed pursuant to the terms of the Merger.
(d) Represents relocation reimbursements, life insurance premiums and matching contributions paid
by the Company under its Employee Retirement Savings 401(k) Plan and includes payments in 1998
for vested benefits under the supplemental executive retirement plan to Messrs. Miller,
VanDevender and Patterson of $310,510, $104,969 and $85,793, respectively.
</TABLE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The Company did not grant any options to the Named Executives in 1998 and
the exercise prices on stock options previously granted were not amended or
adjusted. The Company has no outstanding stock appreciation rights.
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
No options were exercised by the Named Executives during 1998. In
connection with an executive agreement executed on November 25, 1998 (the
"Executive Agreement"), Messrs. Miller, VanDevender and Patterson gave up all
rights to exercise or dispose of options to acquire 696,000 shares of Company
common stock at $0.01 per share ("Value Options") that they received at the
time of the Merger. See "Employment, Services and Other Agreements". The
following table excludes the Value Options and sets forth the number of
options held by the Named Executives and their value at December 31, 1998.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
Underlying Unexercised In-the-Money
OPTIONS AT FY-END (#) OPTIONS AT FY-END($)(A)
--------------------------- --------------------------
<TABLE>
<CAPTION>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles R. Miller 211,876 (c) 1,000,000 (b) $ 60,750 $ -
James G. VanDevender 350,000 540,000 (b) 40,500 -
Ronald R. Patterson 270,690 (c) 240,000 (b) - -
Michael M. Brooks 125,416 64,584 - -
Warren W. Wilkey 55,416 64,584 - -
</TABLE>
(b) Market value of underlying securities at December 31, 1998 minus the option
exercise price times the number of unexercised options at December 31,
1998.
(c) Represents options granted to Messrs. Miller, VanDevender, and Patterson to
purchase 1.0 million, 540,000, and 240,000 shares, respectively, of Common
Stock at $8.50 per share (the "Market Options"), which were cancelled when
the global settlement became effective on September 2, 1999 and could not
be exercised prior to their termination.
(d) Includes 103,876 and 270,690 options granted to Messrs. Miller and
Patterson, respectively, which will expire, if not exercised within 90 days
following their respective resignation from the Company.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company has a supplemental executive retirement plan ("SERP") to
provide additional post-termination benefits to selected members of management
and certain highly compensated employees. As a result of a change in control
from the Merger, officers and employees of the Company who were participants in
the SERP prior to the Merger became fully vested in all benefits thereunder.
Pursuant to their respective employment agreements, certain Champion executives
became participants in the SERP and received retroactive benefits for their
years of service with Champion. In April 1997, the Board of Directors elected
to terminate the provision of future benefits for certain participants under
the plan.
Pursuant to the Executive Agreement, the Company is released from SERP
obligations to Messrs. Miller, VanDevender and Patterson. In turn, the Company
paid the senior executives $501,272 during 1998 (as reported in footnote (d) to
the Summary Compensation Table), which represented amounts due such individuals
for vested benefits under the SERP. In connection with the global settlement
of the Shareholder Litigation, the Company was also released from certain
existing contractual obligations under the SERP to certain former officers when
the settlement became effective. Messrs. Wilkey and Brooks do not participate
in the SERP.
<PAGE>
ANNUAL BONUS PLAN
The 1998 Bonus Plan (the "Bonus Plan") is designed to reward certain
employees of the Company for achieving corporate performance objectives. The
Bonus Plan is intended to provide an incentive for superior work and to
motivate participating employees toward higher achievement and business
results, to link their goals and interests more closely with those of the
Company and its shareholders, and to enable the Company to attract and retain
highly qualified employees. With respect to those officers holding the title
of executive officer and above, the Bonus Plan is administered and approved by
the Compensation and Stock Option Committee each year. Upon achievement by the
Company of certain targeted operating results or other performance goals, such
as operating income, earnings per share or quality standards, the Company will
pay performance bonuses, the aggregate amounts of which will be determined
annually based upon an objective formula.
EMPLOYEE RETIREMENT SAVINGS 401(K) PLAN
The Company has defined contribution 401(k) retirement plans covering all
eligible employees at its hospitals and the corporate office. Effective April
1, 1998, participants may contribute up to 20% of pretax compensation, not
exceeding a limit set annually by the Internal Revenue Service. The Company
matched $.25 for each $1.00 of employee contributions up to 6% of employees'
gross pay. The Company may make additional discretionary contributions. In
1998, the Company contributed $2.0 million to the plans.
CHANGE OF CONTROL SEPARATION PAY PLAN
Effective August 1, 1997 and amended April 1, 1999, the Company has
established the Change of Control Separation Pay Plan (the "Separation Pay
Plan") to retain key employees and to provide, under certain circumstances,
severance to participants whose employment with the Company ends after a Change
of Control, as defined. Messrs. Miller, VanDevender and Patterson do not
participate in the Separation Pay Plan. Messrs. Brooks and Wilkey, other
officers and certain employees of the Company participate in the Separation Pay
Plan which is administered by the Compensation and Stock Option Committee and
provides participants with severance benefits, under certain circumstances,
ranging from twelve to twenty-four months of base salary, as defined.
EMPLOYMENT, SERVICES AND OTHER AGREEMENTS
On November 25, 1998, the Company and its senior executives, Messrs.
Miller, VanDevender and Patterson executed the Executive Agreement superseding
their then existing employment contracts and certain other stock option and
retirement agreements with the Company. The Executive Agreement was amended in
certain respects, including the elimination of certain additional payments, in
connection with the global settlement of the Shareholder Litigation. Under the
Executive Agreement, as amended, Messrs. Miller and Patterson remained in their
management positions with the Company until their resignation effective June
30, 1999. The Board of Directors designated Mr. VanDevender as interim CEO
effective July 1, 1999, subject to the terms and conditions of an employment
agreement discussed below.
Pursuant to the Executive Agreement, the Company paid during 1998 amounts
of $310,510, $104,969 and $85,793 due Messrs. Miller, VanDevender, and
Patterson, respectively, for vested benefits under the SERP, and the senior
executives released the Company from any obligations under the SERP or any
similar retirement plan. In accordance with the Executive Agreement, the
Company paid the three executives a total of $4.6 million on April 14, 1999.
Such amount reflects payments equal to i) three times each executive's then
annual salary or $1.6 million to Mr. Miller and $1.1 million each to Messrs.
VanDevender and Patterson and ii) three times 25 percent of each executive's
target annual bonus or $344,250 to Mr. Miller and $196,875 each to Messrs.
VanDevender and Patterson. Upon payment to the senior executives, the Company
and the senior executives provided each other with mutual releases of any and
all obligations either party may have under the respective employment
agreements or otherwise arising out of the senior executives' employment. Upon
<PAGE>
signing the Executive Agreement, the senior executives also gave up all rights
to exercise or dispose of 696,000 shares of Value Options and 1,780,000 shares
of Market Options, all of which, except for 180,000 shares of Value Options
granted to Mr. VanDevender, were cancelled when the global settlement became
effective. Mr. VanDevender's Value Options will cancel upon the termination of
his employment contract on December 31, 1999, unless sooner terminated or
extended. .
The Company entered into Indemnity and Insurance Coverage Agreements,
effective August 16, 1996, with Messrs. Miller, VanDevender and Patterson,
members of the Board of Directors and certain other officers of the Company, to
advance reasonable defense costs in connection with litigation, investigations
and other proceedings, subject to their undertakings to repay such costs in
certain circumstances. Pursuant to these agreements, the Company paid defense
costs of approximately $235,000 in 1998 on behalf of Messrs. Miller,
VanDevender and Patterson, collectively. When the global settlement became
effective on September 2, 1999, the Indemnity and Insurance Coverage Agreement
between Mr. Christian Lange, who is a director, and the Company was terminated.
Under Mr. VanDevender's current employment agreement, which is effective
from July 1, 1999 through December 31, 1999, unless sooner terminated or
extended, Mr. VanDevender's compensation includes (i) a base salary of not less
than $45,000 per month, (ii) a bonus of $125,000, plus a variable component
based on the completion of certain events before December 31, 1999 and (iii)
certain benefits, including, but not limited to, life insurance and long-term
disability. The agreement also includes certain non-compete provisions, which
will remain in effect for a period of 12 to 36 months following Mr.
VanDevender's resignation from the Company.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives an annual fee of
$30,000 and a fee of $2,500 for each meeting of the Board or any committee
thereof attended. Directors of the Company who are also employees of the
Company will not receive any additional compensation for their service as
directors. All directors will be reimbursed for reasonable expenses incurred
in the performance of their duties.
Directors are also eligible to receive options to purchase shares of
Common Stock under the 1996 Stock Incentive Plan (the "Incentive Plan"). No
stock option grants were made to directors under the Incentive Plan during
1998.
STOCK OPTION AND COMPENSATION COMMITTEE'S REPORT ON
EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Compensation Committee")
was established in July 1996 and is responsible for determining compensation
and benefit levels for the Company's executive officers and for administrating
the Stock Incentive Plan for all plan participants. Its recommendations are
subject to approval by the Board of Directors of the Company. Executive
officers are individuals occupying positions at the level of Executive Vice
President or above. Until May 1998, the Compensation Committee was comprised
of Mr. Lange and two former directors. Since May 1998, the Compensation
Committee has been comprised of Messrs. Lange and Lehmann and Dr. Meyer zu
Losebeck.
The responsibility for determining compensation and benefit levels for
non-executive officers was governed by the Management Rights Agreement, which
was executed as part of the Merger. Under this agreement, in 1998, Mr. Miller,
the former President and Chief Operating Officer, had the sole authority for
determining compensation and benefits for all employees except Messrs. Lawrence
A. Humphrey, Miller, VanDevender and Patterson. The Management Rights
Agreement was terminated upon Mr. Miller's resignation from the Company
effective June 30, 1999. The Board of Directors and senior management now have
the responsibility for determining compensation and benefit levels for all
officers.
<PAGE>
Grants of options to all employees under the Company's stock option plans,
including its executive officers, are determined by the Compensation Committee
subject to approval by the Board of Directors.
COMPENSATION PHILOSOPHY
In 1998, the Board of Directors and the Compensation Committee set the
Company's executive officer compensation program to meet the following
Objectives:
(i) To target executive compensation at a level sufficient to attract,
motivate and retain superior executive talent;
(ii) To motivate executives to advance stockholder interests with
compensation plans that are tied to the Company's operating performance
and achievement of strategic objectives;
(iii) To provide a compensation package that balances individual
contributions with overall business results and is competitive within the
healthcare industry; and
(iv) To align the interests of the Company's employees with those of
stockholders through potential stock ownership.
Accordingly, the Company has adopted a compensation program consisting of
base salary, bonus and long-term incentive compensation, mainly through stock-
based incentive awards. The Company, through its Compensation Committee,
attempts to offer an overall compensation program, which is competitive with
comparable executive positions in similarly-sized publicly traded healthcare
companies. This may be determined by either a formal study by a consulting firm
recognized in the field of executive compensation and/or by a review of
information which may be publicly available about such companies such as proxy
statements, annual reports and similar information. The Company may also take
into consideration any special qualitative or quantitative objectives which may
be unique to the Company's circumstances or performance in terms of structuring
either annual base salary or annual bonus plans for its executives. Executive
compensation is further aligned with stockholder value through stock-based
incentive awards such as stock option grants by providing executives with an
appropriate level of ownership interest in the Company and the opportunity to
participate with stockholders in the value derived from appreciation in the
price of the Company's stock.
EXECUTIVE COMPENSATION PROGRAM
The executive compensation program is based on a 1996 studY conducted by a
nationally recognized healthcare compensation consulting firm to ensure that
executive salary levels were comparable to executive positions in similar-sized
peer group companies. Similar guidelines and structure were used in developing
compensation levels for other officers of the Company.
BASE SALARY - Salaries are reviewed on an annual basis and may be adjusted
at that time based on the Compensation Committee's subjective assessment of
individual performance and contribution to the Company during the preceding
fiscal year, level of responsibility and competitive pay level of a comparable
position at similar organizations. In 1998, the base salaries of certain
executives were increased based upon the individual evaluation of the
executive's performance and the criteria set forth above.
BONUS - All executive officers and others are eligible to participate in a
bonus plan on an annual basis. Bonus payments to executives are predicated on
the Company's success in achieving certain strategic, business and financial
goals as well as other specific objectives set forth for such individuals at
the beginning of each performance period. Reference is made to the information
included under "Executive Compensation - Annual Bonus Plan," for additional
information regarding such plan.
<PAGE>
LONG-TERM INCENTIVES - The Company provides long-term incentives to its
executives through the Stock Incentive Plan. Through the ability to offer
stock-incentive awards such as stock options, restricted stock, performance
shares, stock appreciation rights and deferred stock, the Company offers the
executives the right to obtain an ownership interest in the Company which is of
value only if the share price increases, with the naturally resulting benefit
to stockholder value. Stock option awards are based on the Company's subjective
assessment of each executive's previous and anticipated future contribution to
the Company and the amount and terms of options already held by the executive.
Stock awards, including all terms such as exercise price and vesting schedule,
are determined by the Compensation Committee.
In 1997, the Compensation Committee authorized a stock option grant to
executive officers and other key management to help ensure the retention and
motivation of key executives during a period of considerable challenges unique
in the Company's history. In recognition of the nature and size of the 1997
grant, no stock options were granted in 1998. In reviewing equity incentives in
1999, however, the Compensation Committee determined that an additional award
of stock options to certain executive officers and other key employees was
appropriate in order to continue to ensure the retention and motivation of
these key employees. These options provide the right to purchase shares of
Common Stock above market price on the date of grant and become vested and
exercisable over a period of four years. A total of 300,000 options to
purchase Common Stock were granted in April 1999 to Messrs. Wilkey, Brooks and
Humphrey. Other key employees received a total of 745,000 options to purchase
Common Stock. Messrs. Miller, VanDevender and Patterson did not receive any
option grants in April 1999.
Executive officers and others may also participate in the Company's 401(k)
retirement plan, which includes both employee and employer contributions.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Company did not designate a Chief Executive Officer ("CEO") in 1998
and had not designated such officer since the former CEO ceased his employment
with the Company in April 1997.
In 1999, the Company entered into an employment agreement with Mr.
VanDevender effective July 1, 1999, pursuant to his designation by the Board of
Directors as interim CEO. The agreement, which ends on December 31, 1999,
unless sooner terminated or extended, provides for compensation of (i) salary
of not less than $45,000 per month, (ii) a bonus payment of $125,000 plus a
variable component based on the completion of certain events before December
31, 1999 and (iii) certain benefits, including, but not limited to, life
insurance and long-term disability.
The foregoing report shall not be deemed incorporated by reference by any
general statement incorporating by reference the Proxy Statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed incorporated.
Compensation and Stock Option Committee
Mr. Christian A. Lange
Mr. Nolan Lehmann
Dr. Heiner Meyer zu Losebeck
COMPANY STOCK PERFORMANCE
The following graph demonstrates comparison of cumulative stockholder
returns, on a dividend basis, for the Company and companies on the Standard &
Poor's ("S&P") 500 Stock Index, the S&P Healthcare Sector and the S&P
Healthcare Hospital Management Index, commencing on August 16, 1996, the first
day Common Stock was publicly traded.
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG PARACELSUS HEALTHCARE CORPORATION,
THE S&P 500 STOCK INDEX, THE S&P HEALTHCARE SECTOR INDEX AND
THE S&P HEALTHCARE HOSPITAL MANAGEMENT INDEX
<TABLE>
<CAPTION>
AUGUST DECEMBER DECEMBER DECEMBER
1996 1996 1997 1998
------ -------- -------- --------
<S> <C> <C> <C> <C>
Paracelsus Healthcare Corporation $100 $ 41 $ 39 $ 18
S&P 500 Stock Index $100 $117 $156 $200
S&P Healthcare Sector Index $100 $118 $169 $244
S&P Healthcare Hospital
Management Sector Index $100 $118 $103 $ 85
</TABLE>
* Assumes $100 invested on August 16, 1996 in Common Stock or on July 31,
1996 for the indices presented (including reinvestment of dividends).
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the securities laws that might incorporate future
filings, the report of the Compensation and Stock Option Committee and the
performance graph included in this Proxy Statement shall not be incorporated by
reference into any such filing.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the shares
of Common Stock beneficially owned by (i) each stockholder known by the Company
to be a beneficial owner of more than five percent of Common Stock, (ii) each
director of the Company, (iii) each Named Executive, excluding Messrs. Miller
and Patterson who resigned effective June 30, 1999 and (iv) all directors and
executive officers of the Company as a group.
The table sets forth information as of September 1, 1999, the record date.
For purposes of computing this table, the shares of Common Stock that were
transferred on September 2, 1999, the effective date of the global settlement,
were considered to be beneficially owned on the record date both by Park, the
transferor, and the transferees. The table does not reflect (i) the transfer
by the Company of approximately 1.5 million newly-issued shares of Common Stock
to the class settlement fund (as defined and described in Part I. Item 3 of the
Company's 1998 Annual report on Form 10-K) or (ii) the transfer by Park of 1.2
million shares of Common Stock to the class settlement fund. The final
distribution among class members of the shares transferred to the class
settlement fund has not yet taken place. Certain officers of the Company will
receive shares of Common Stock in the distribution of the class settlement
fund.
The table below also does not reflect the aggregate shares of Common Stock
held by the former Champion shareholders. If these shareholders were treated
as a group under Section 13(d) of the Securities Exchange Act of 1934 for the
purposes of holding their shares, the group would hold in excess of 5% of the
issued and outstanding shares of Common Stock, and the shareholdings of each of
the Champion shareholders would need to be disclosed in the table. Although
the Champion shareholders could be deemed to be a group for purposes of holding
shares of the Company's Common Stock, they have not filed the disclosure that
would be required if they were considered a group.
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP PERCENTAGE OF
(2)(3) CLASS (3)
- ------------------------------------------ -------------------- -------------
<S> <C> <C>>
Park-Hospital GmbH (4,5) 29,771,742 (7) 54.0%
Paracelsus-Kliniken-Deutschland GmbH (4,5) 29,771,742 (7) 54.0%
Dr. Heiner Meyer zu Losebeck (4,5) 29,771,742 (7) 54.0%
Peter Frommhold (5,6) 29,771,742 (7) 54.0%
Peter Schnitzler (4) - *
James G. VanDevender 450,000 (8) *
Christian A. Lange - *
Nolan Lehmann (10,11,12) 2,564,694 (9) 4.7%
Equus II Incorporated (11,12) 2,018,213 (9) 3.7%
Equus Capital Partners, L.P. (11,12) 540,481 (9) 1.0
Joan S. Fortune - *
Robert W. Miller - *
Michael M. Brooks 173,333 (13) (16) *
Warren W. Wilkey 105,333 (14) (16) *
All directors and officers as
a group (15 persons) 33,603,194 (15) (16) 59.8%
Olympus Private Placement Fund L.P. 3,319,261 (17) (18) 6.0%
</TABLE>
- --------------------------------------------------------------
* Percentage is less than 1% of the total outstanding shares of the Company.
(1) The address of each named director and officer, unless otherwise
indicated, is c/o Paracelsus Healthcare Corporation, 515 W. Greens Road,
Suite 500, Houston, Texas 77067.
(2) Unless otherwise indicated, such shares of Common Stock are owned
directly with sole voting and investment power.
(3) Includes shares issuable upon exercise of stock options or warrants that
are exercisable as of, or exercisable 60 days after, September 1, 1999.
Such shares, for the purpose of computing the percentage of outstanding
Common Stock, are deemed owned by each named individual and by the
group, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person. Total shares
outstanding do not include 1,549,391 shares and 1,000,000 shares issued
by the Company to the class settlement fund and to the Former Chairman,
respectively, when the global settlement became effective on September 2,
1999.
(4) The address is Sedanstrasse 109, D-49076 Osnabruck, Federal Republic of
Germany.
(5) Park-Hospital GmbH ("Park"), a German corporation wholly owned by
Paracelsus-Kliniken-Deutschland GmbH ("PKD"), is the record owner of such
shares. PKD may be deemed to beneficially own the shares of Common Stock
owned by Park. Pursuant to the Schedule 13D filed by Park, PKD, Dr.
Heiner Meyer zu Losebeck, and Mr. Peter Frommhold on December 15,
1997, Dr. Meyer zu Losebeck and Mr. Frommhold, as co-executors of the
estate of Professor Dr. Hartmut Krukemeyer, and the Managing Directors
of Park and PKD share indirect voting and investment power over the
shares of Common Stock owned by Park. Therefore, they may be deemed
to beneficially own the shares of Common Stock owned by Park.
(6) The address is Drubbel 17/18, D-48143 Munster, Federal Republic of Germany.
(7) Does not reflects the transfer of 8,674,233 shares and 1,190,000 shares
to the former Champion shareholders and the class settlement fund,
respectively, when the global settlement became effective on September 2,
1999.
(8) Includes 350,000 shares issuable upon exercise of options that are
currently exercisable, or exercisable within 60 days.
(9) Includes 755,155 shares and 202,232 shares which Equus II
Incorporated and Equus Capital Partners received from Park when the global
settlement became effective on September 2, 1999.
(10)Mr. Lehmann is President of Equus Capital Management Corporation, the
financial advisor and manager of Equus II Incorporated and Equus Capital
Partners, L.P. Mr. Lehmann is also President and Director of Equus II
<PAGE>
Incorporated.
(11) Address is 2929 Allen Parkway, Suite 2500, Houston, TX 77019.
(12) By reason of his status as President of Equus Capital Management
Corporation and as President and Director of Equus II Incorporated, Mr.
Lehmann may be deemed to be the beneficial owner of the common shares
owned by Equus II Incorporated and Equus Capital Partners, L.P. In
addition, Mr. Lehmann owns directly 6,000 shares of Common Stock.
Accordingly, Mr. Lehmann may be deemed to be the beneficial owner of
2,564,694 shares of Common Stock. Mr. Lehmann disclaims beneficial
ownership of Common Stock owned by Equus II Incorporated and Equus
Capital Partners, L.P. Both Equus II Incorporated and Equus Capital
Partners, L.P. (as well as other entities with which Mr. Lehmann is
associated) are former Champion shareholders. The number of shares
beneficially owned by Mr. Lehmann does not include any shares owned by
other former Champion shareholders.
(13) Includes 173,333 shares issuable upon exercise of options that are
currently exercisable, or exercisable within 60 days.
(14) Includes 103,333 shares issuable upon exercise of options that are
currently exercisable, or exercisable within 60 days.
(15) Includes 1,087,499 shares issuable upon exercise of options that are
currently exercisable, or exercisable within 60 days.
(16) Excludes an indeterminate number of shares, which certain officers,
as class members, will receive from the class settlement fund, pursuant
to the global settlement, after the closing of the claims period on
September 10, 1999.
(17) Metro Center, One Station Place, Stamford, Ct. 06902.
(18) Reflects the shares known by the Company to be beneficially owned by
Olympus Private Placement Fund L.P. and includes 1,241,969 shares of
Common Stock received from Park on September 2, 1999. Olympus Private
Placement Fund L.P. may be the beneficial owner of additional shares not
held in its name.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 30, 1996, Park loaned the Company $7.2 million in the form of a
$7.2 million 6.51% subordinated note, payable in the annual amount of $1.0
million over a term of 10 years. Effective April 14, 1997, pursuant to the
terms of the Company's senior bank credit agreement, Park waived its right to
receive principal payments under the note until all obligations of the Company
under such credit agreement have been satisfied. The Company made interest
payments of $467,000 and $533,000 during 1998 and 1997, respectively. In
connection with the global settlement of the Shareholder Litigation, effective
September 2, 1999, the Company will recommence payment of principal in
accordance with the note's stated terms beginning with the annual payment due
in August 2000 and will repay all arrears then outstanding.
Effective August 16, 1996, the Company became a party to a services
agreement with the Former Chairman. Pursuant to such agreement, the Former
Chairman provided management and strategic advisory services to the Company for
a consulting fee of $1.0 million per year, for a term not to exceed ten years.
Effective April 14, 1997, the annual consulting fee was reduced to $250,000
until all obligations of the Company under its senior bank credit agreement
have been satisfied. Payments of $187,500 and $500,000 were made to the Former
Chairman during 1998 and 1997, respectively, under the agreement. In
connection with the global settlement of the Shareholder Litigation, on
September 2, 1999, the Company paid the Former Chairman $1.0 million in cash
and transferred to him 1.0 million newly-issued shares of Common Stock in
consideration for the simultaneous termination of the services agreement.
The Company is also a party to an insurance agreement, which provides
insurance benefits to the Former Chairman in the event of his death or
permanent disability, in an amount equal to $1.0 million per year during the
10-year term of such agreement.
<PAGE>
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, Certified Public Accountants, has been the
independent auditors for the Company since 1981. The Board has selected Ernst &
Young LLP as the Company's independent auditors for 1999. Representatives of
Ernst & Young LLP, the Company's independent auditors, are expected to be
present at the Annual Meeting to respond to any appropriate questions and to
make a statement if they so desire.
TRANSACTION OF OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
Annual Meeting. However, if any such other business is properly presented for
action, the persons named in the accompanying form of proxy will vote the
shares represented thereby in their discretion on such matters to the extent
permitted by law.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting and included in the proxy materials for such meeting must be received
by the Company by no later than May 26, 2000. Otherwise, the Amended and
Restated Bylaws of the Company provide that only stockholder proposals
containing the information required by the Bylaws and delivered to, or mailed
and received at, the principal executive offices of the Company not less than
60 days nor more than 90 days prior to the anniversary date of the immediately
preceding annual meeting will be considered at the Annual Meeting. In the
event that the Annual Meeting is called for a date that is not within 30 days
before or after such anniversary date, stockholder notice must be received not
later than the close of business on the tenth day following the notice date of
such Annual Meeting.
By order of the Board of Directors
James G. VanDevender
Date: September 13, 1999 Chief Executive Officer &
Director
THE COMPANY'S ANNUAL REPORT FOR 1998 INCLUDES AS A PART THEREOF ITS ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND FORM 10K/A NO. 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. UPON WRITTEN REQUEST AND
THE PAYMENT OF A PER PAGE FEE OF $0.20, THE COMPANY WILL FURNISH STOCKHOLDERS
OF RECORD ON SEPTEMBER 1, 1999 AND TO EACH BENEFICIAL OWNER OF SHARES ON THAT
DATE, COPIES OF EXHIBITS LISTED IN ITS FORM 10-K FOR 1998. ALL SUCH REQUESTS
SHOULD BE DIRECTED TO MR. JAMES G. VANDEVENDER, CORPORATE SECRETARY, PARACELSUS
HEALTHCARE CORPORATION, 515 W. GREENS ROAD, SUITE 500, HOUSTON, TEXAS 77067.
REQUESTS FROM BENEFICIAL OWNERS OF COMMON STOCK MUST SET FORTH A GOOD FAITH
REPRESENTATION AS TO SUCH OWNERSHIP.
<PAGE>
PROXY
PARACELSUS HEALTHCARE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON OCTOBER 20, 1999.
The undersigned hereby appoints Robert M. Starling and Suzanne S. Miskin,
and any one of them, with full power of substitution, as attorneys and proxies
of the undersigned to represent and vote all shares of common stock of
Paracelsus Healthcare Corporation (the "Company") standing in the name of the
undersigned with all powers which the undersigned would possess if present,
which the undersigned is entitled to vote at the annual meeting of stockholders
of the Company to be held on October 20, 1999, at the Hotel Sofitel, 425 North
Sam Houston Parkway East, Houston, Texas at 9:30 a.m. central standard time
(Houston time) and at any and all continuations and adjournments thereof.
(Please date and sign on the reverse side)
FOLD AND DETACH HERE
Please
mark your
vote as
indicated in
this
example [X]
1. ELECTION OF DIRECTOR - NOMINEE: Joan S. Fortune
FOR the WITHHOLD
Election authority
(except as for nominee
indicated listed
(below)
[ ] [ ]
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- ---------------------------------------------------
2. In their discretion, the Proxies are authorized to vote FOR such other
business as may properly come before the meeting.
All as described in the Notice of the Meeting of Stockholders and Proxy
Statement, receipt of which is hereby acknowledged.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREIN. IF
NO CONTRARY SPECIFICATION IS MADE, IT WILL BE VOTED "FOR" EACH OF THE PROPOSALS
SET FORTH.
Dated this ____ day of ________________________, 1999.
_________________________________________________
_________________________________________________
Signature(s) of stockholder(s)
Please sign exactly as your name appears on your stock certificate. When
signing as an executor, administrator, trustee or other representative, please
sign your full title. All joint owners should sign. If a corporation, give
full corporate name and have a duly authorized officer sign, stating title. If
a partnership, please sign in partnership name by authorized person.
PLEASE DATE, SIGN AND MAIL YOUR PROXY PROMPLY.
FOLD AND DETACH HERE
