TRUST UNDER
XXXXX HEALTHCARE CORPORATION
BOARD OF DIRECTORS RETIREMENT PLAN
This Trust Agreement (the "Agreement") is made and entered into this
28th day of October, 1997 by and between Xxxxx Healthcare Corporation, a
Nevada corporation (the "Company"), and United States Trust Company of New
York (the "Trustee") with reference to the following facts:
A. Company has adopted the Xxxxx Healthcare Corporation Board of
Directors Retirement Plan, as amended (the "Plan"), a copy of which is
attached hereto as Exhibit A.
B. Company has incurred or expects to incur liability under the
terms of the Plan with respect to the individuals participating in the Plan.
C. Company wishes to establish a trust (hereinafter called the
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan.
D. It is the intention of the parties that this Trust shall
constitute an unfunded arrangement.
E. Since the only participants in the Plan are members of the Board
of Directors of the Company who are not employees of the Company, the Plan is
not subject to Title I of the Employee Retirement Income Security Act of
1974, as amended.
F. It is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. ESTABLISHMENT OF TRUST.
(a) Company hereby deposits with Trustee in trust 20,000 shares of the
$0.075 par value per share common stock of Company which shall become the
principal of the Trust to be held, administered and disposed of by Trustee as
provided in this Trust Agreement.
(b) The Trust shall become irrevocable upon approval by the Board of
Directors. Company shall provide a certified copy of the resolution of the
Board of Directors stipulating that the Trust has been approved by them.
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(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively
for the uses and purposes of Plan participants and general creditors as
herein set forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of
the Trust. Any rights created under the Plan and this Agreement shall be
mere unsecured contractual rights of Plan participants and their
beneficiaries against Company. Any assets held by the Trust will be subject
to the claims of Company's general creditors under federal and state law in
the event of Insolvency, as defined in Section 3(a) herein.
(e) Upon a Change of Control, as defined in Section 13(d) herein, and
on the last day of every calendar quarter commencing with the first calendar
quarter beginning after the month in which a Change of Control occurs (a
"Quarter"), Company shall, as soon as possible, but in no event longer than
thirty days following the Change of Control and no longer than ten days after
the end of each Quarter, make an irrevocable contribution to the Trust in an
amount that is sufficient together with all assets held by the Trust as of
such date to pay each Plan participant or beneficiary on a pre-tax basis, the
benefits to which Plan participants or their beneficiaries would be entitled
pursuant to the terms of the Plan as of the date on which the Change of
Control occurred, and as of the last day of each Quarter, calculated as if
each participant were at least 65 years of age as of the date on which the
Change of Control occurred and as of the last day of each Quarter. Company
shall notify the Trustee immediately following verification that a Change of
Control has occurred.
Section 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Whenever a Plan participant (or his or her beneficiaries) becomes
entitled to begin receiving benefits under the Plan, Company shall deliver to
Trustee a schedule (the "Payment Schedule") that indicates the amounts
payable in respect of such Plan participant (and his or her beneficiaries),
that provides a formula or other instructions acceptable to Trustee for
determining the amounts so payable, the form in which such amount is to be
paid (as provided for or available under the Plan), and the time of
commencement for payment of such amounts. Except as otherwise provided
herein, Trustee shall make payments to the Plan participants and their
beneficiaries in accordance with such Payment Schedule. The Trustee shall
not be responsible for determining the accuracy of the amounts to be paid
according to the Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state or local taxes pursuant to
the terms of the Plan and shall pay amounts withheld to the appropriate
taxing authorities or determine that such amounts have been reported,
withheld and paid by Company.
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(b) The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by Company or such party as it
shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(c) Company may make payment of benefits directly to Plan participants
or their beneficiaries as they become due under the terms of the Plan.
Company shall notify Trustee of its decision to make payment of benefits
directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with
the terms of the Plan, Company shall make the balance of each such payment as
it falls due. Trustee shall notify Company where principal and earnings are
not sufficient.
Section 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of Company under federal and state law as set
forth below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in
writing to Trustee that Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such determination, Trustee shall
discontinue payment of benefits to Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's Insolvency,
or has received notice from Company or a person claiming to be a creditor
alleging that Company is Insolvent, Trustee shall have no duty to inquire
whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and
that provides Trustee with a reasonable basis for making a determination
concerning Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of Plan participants or their beneficiaries to pursue
their rights as general creditors of Company with respect to benefits due
under the Plan or otherwise.
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(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this
Trust Agreement only after Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the
period of such discontinuance, less the aggregate amount of any payments made
to Plan participants or their beneficiaries by Company in lieu of the
payments provided for hereunder during any such period of discontinuance.
Section 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Company shall have no right or power to direct Trustee to return
to Company or to divert to others any of the Trust assets before all payment
of benefits have been made to Plan participants and their beneficiaries
pursuant to the terms of the Plan.
Section 5. INVESTMENT AUTHORITY.
It is the intent of Company that the Trustee shall invest the
contributions to the Trust in shares of common stock of Company. Trustee may
invest in securities (including stock or rights to acquire stock) or
obligations issued by Company. All rights associated with assets of the
Trust shall be exercised by Trustee or the person designated by Trustee, and
shall in no event be exercisable by or rest with Plan participants or their
beneficiaries. Company shall have the right, at any time, and from time to
time in its sole discretion, to substitute assets of equal fair market value
for any asset held by the Trust. This right is exercisable by Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity. The Trustee shall hold the stock or other such assets
until such time as the stock or other such assets must be liquidated to pay
Plan participants or their beneficiaries or until such time as the Trustee
determines it to be clearly imprudent to retain the stock or other such
assets to preserve the principal balance required to maintain adequate
funding for future payments due to Plan participants or their beneficiaries.
Company represents and warrants that it has filed and will file with
the Securities and Exchange Commission and with all applicable state agencies
or authorities all required registration statements relating to shares of
Company stock and other interests which may be issued under the Plan. The
Company acknowledges that it is and shall be responsible for, and that the
Trustee shall not be responsible for, preparing or filing such registration
statements or for the accuracy of statements contained therein, or for
preparing or filing any other reports, statements or filings required under
federal or state securities laws with respect to the Trust's investment in
Company stock.
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Section 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested.
Section 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within sixty days following the close of each calendar
year and within sixty days after the removal or resignation of Trustee,
Trustee shall deliver to Company a written account of its administration of
the Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest
paid or receivable being shown separately), and showing all cash, securities
and other property held in the Trust at the end of such year or as of the
date of such removal or resignation, as the case may be.
Section 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the cirucmstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant
to a direction, request or approval given by Company which is contemplated
by, and in conformity with, the terms of the Plan or this Trust and is given
in writing by Company. In the event of a dispute between Company and a
party, Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's reasonable costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) relating thereto and to
be primarily liable for such payments. If Company does not pay such costs,
expenses and liabilities in a reasonably timely manner, Trustee may obtain
payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel
for Company generally) with respect to any of its duties or obligations
hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
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(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
(g) Notwithstanding any provision in this Agreement to the contrary,
in the event of a Change of Control, the Trustee is hereby directed to sell
any and all shares of Company stock, or other stock that is received by the
Trustee in exchange for such Company stock as a result of the Change of
Control, which the Trustee holds as a Trust asset, within thirty days of such
Change of Control. The Trustee shall invest any and all proceeds that it
receives as a result of such sales that are not immediately needed in order
to make distributions to Plan participants and their beneficiaries in United
States government securities and/or securities of United States government
agencies with average portfolio maturity of two years. Additionally, if the
Trustee sells any Company stock prior to a Change of Control, the proceeds
from any such sale that are not immediately needed in order to make
distributions to Plan participants and their beneficiaries shall also be
invested by the Trustee in United States government securities and/or
securities of United States government agencies with average portfolio
maturity of two years.
(h) The Company shall indemnify and hold the Trustee harmless from and
against all loss or liability (including expenses and reasonable attorneys'
fees), to which it may be subject by reason of its execution of its duties
under this Trust, or by reason of any acts taken in good faith in accordance
with any directions, or acts omitted in good faith due to absence of
directions, from the Company or a Participant, unless, and only to the
extent, such loss or liability is due to the Trustee's gross negligence or
willful misconduct.
(i) In the event that the Trustee is named as a defendant in a lawsuit
or proceeding involving the Plan or the Trust Fund, the Trustee shall be
entitled to receive payments on a current basis pursuant to the indemnity
provisions provided for in this Section, provided however, that if the final
judgment entered in the lawsuit or proceeding holds that Trustee is guilty of
gross negligence or wilful misconduct with respect to the Trust Fund, the
Trustee shall be required to refund the indemnity payments that it has
received.
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(j) All releases and indemnities provided in this Trust Agreement
shall survive the termination of this Trust Agreement.
Section 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all reasonable administrative and Trustee's fees
and expenses. If not so paid, the fees and expenses shall be paid from the
Trust. In the event of a Change of Control or any other matter, which in the
Trustee's reasonable discretion requires the Trustee to perform services in
addition to the Trustee's custodial and investment responsibilities under
this Agreement, the Trustee shall be entitled to an additional fee as
negotiated in good faith. If the parties are unable to reach agreement as to
the additional fee, the fee will be calculated using the applicable published
X.X.Xxxxx fee schedule for the type of additional service to be provided,
less 10%. In addition, the Trustee shall be reimbursed for the reasonable
fees and expenses of its counsel or other experts reasonably required to be
engaged by the Trustee. Such amounts shall be paid by Company to the Trustee
within thirty days of billing, provided that if timely payment is not made by
the Company, the Trustee may discharge any such obligation out of the Trust
assets, regardless of whether the Trust is fully funded. In the event of the
termination of the Trust or the removal or resignation of the Trustee, the
Trustee shall be entitled to withhold out of the Trust assets all amounts due
to the Trustee pursuant to this Section 9. This Section 9 shall supersede
any conflicting provision of this Agreement or the Plan.
Section 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective ninety days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Subject to Section 10(c), Trustee may be removed by Company on
ninety days notice or upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may not be
removed by Company for ten years.
(d) If Trustee resigns or is removed within ten years after a Change
of Control, as defined herein, Trustee shall select a successor Trustee in
accordance with the provisions of Section 11(b) hereof prior to the effective
date of Trustee's resignation or removal.
(e) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within ninety days after
receipt of notice of resignation, removal or transfer, unless Company extends
the time limit.
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(f) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
Section 11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal.
The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably requested by Company or the
successor Trustee to evidence the transfer.
(b) If Trustee resigns or is removed pursuant to the provisions of
Section 10(e) hereof and selects a successor Trustee, Trustee may appoint any
third party such as a bank trust department or other party that may be
granted corporate trustee powers under state law. The appointment of a
successor Trustee shall be effective when accepted in writing by the new
Trustee. The new Trustee shall have all the rights and powers of the former
Trustee, including ownership rights in Trust assets. The former Trustee
shall execute any instrument necessary or reasonably requested by the
successor Trustee to evidence the transfer.
(c) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for
and Company shall indemnify and defend the successor Trustee from any claim
or liability resulting from any action or inaction of any prior Trustee or
from any other past event, or any condition existing at the time it becomes
successor Trustee.
Section 12. AMENDMENT OR TERMINATION.
(a) This Agreement may be amended by a written instrument executed by
Trustee and Company. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan or shall make the Trust revocable after
it has become irrevocable in accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan unless sooner revoked in accordance with
Section 1(b) hereof. Upon termination of the Trust any assets remaining in
the Trust shall be returned to Company.
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(c) Upon written approval of participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, Company may terminate
this Trust prior to the time all benefit payments under the Plan have been
made. Company shall provide verification to the Trustee that all Plan
participants or beneficiaries entitled to benefits under the Plan have in
fact approved the termination of the Trust. All assets in the Trust at
termination shall be returned to Company.
(d) Sections 1(e), 4, 5, 8(g), 10(c), 10(d), 12(d) and 13(d) of this
Trust Agreement may not be amended by Company for ten years after a Change of
Control, as defined herein.
Section 13. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or
in equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) For purposes of this Trust, a Change of Control shall be deemed to
have occurred if (a) any person (as defined in Section 13(c) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended), becomes the beneficial
owner directly or indirectly of thirty percent or more of the combined voting
power of the Company's then outstanding securities or (b) during any two-year
period, individuals who at the beginning of such period constitute the Board
of Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors; provided, however,
that (i) any individual who becomes a director of the Company, whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be deemed to have been a member of the Incumbent
Board and (ii) no individual who was elected initially as a director as a
result of an actual or threatened election contest, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended, or any other actual or threatened solicitations of
proxies or consents by or on behalf of any person other than the Incumbent
Board shall be deemed to have been a member of the Incumbent Board.
(e) If a Plan participant or beneficiary of a Plan participant is
required to institute a legal proceeding in order to enforce his or her
rights under this Agreement and such Plan participant or beneficiary prevails
in such legal proceeding then the Company shall reimburse such Plan
participant or beneficiary for the reasonable legal fees and expense incurred
in bringing and prosecuting such legal proceeding.
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Section 14. EFFECTIVE DATE.
The effective date of this Agreement shall be the date first written
above.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
"Company"
Xxxxx Healthcare Corporation
By: /s/ Xxxx X. Xxxxx
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Its: Sr. Vice President
"Trustee"
United States Trust Company
of New York
By: /s/ Xxxxxxx Xxxx
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Its: Authorizd Agent
United States Trust Company
of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: 000 000-0000
