EXHIBIT 10(aaa)
1994 NME DEFERRED COMPENSATION PLAN TRUST
AS AMENDED JULY 25, 1994
This Trust Agreement (the "Agreement") is made and entered into this 25th
day of May, 1994, by and between National Medical Enterprises, Inc., 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 National Medical Enterprises, Inc. Deferred
Compensation Plan (the "Plan"), a copy of the Plan is attached hereto as Exhibit
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A.
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B. Company has incurred or expects to incur liability under the terms of
such Plan with respect to the individuals participating in such Plan.
C. Company wishes to establish a trust (hereinafter called "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 for 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 and shall not affect the status of the Plan as an unfunded
plan maintained for the purpose of providing deferred compensation for a select
group of management or highly compensated employees for purposes of Title I of
the Employee Retirement Income Security Act of 1974 ("ERISA").
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E. 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.
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(a) Company hereby deposits with Trustee in trust Five Hundred Thousand
shares of the $.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 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.
(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 participants in the Plan and general creditors as
herein set forth. Plan participants and their beneficiaries shall have no
preferred
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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 in Control occurs (a
"Quarter"). Company shall, as soon as possible, but in no event longer than
thirty (30) days following the Change of Control and no longer than ten (10)
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 to 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. Company shall notify
the Trustee immediately following verification that a Change of Control has
occurred.
Section 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
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(a) Company shall deliver to Trustee a schedule (the "Payment Schedule")
that indicates the amounts payable in respect of each 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
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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.
(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.
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Section 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
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BENEFICIARY WHEN COMPANY IS INSOLVENT.
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(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.
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(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 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.
(4) Trustee shall resume the payment of benefits to Plan participants
or their beneficiaries in accordance with Section 2 of this 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.
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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
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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.
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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 right 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. 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
until such time as the stock 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 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. Company
acknowledges that it is and shall be responsible for, and that the Trustee shall
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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.
Section 6. DISPOSITION OF INCOME.
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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.
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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 (60) days following the close of each calendar
year and within sixty (60) 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.
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Section 8. RESPONSIBILITY OF TRUSTEE.
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(a) Trustee shall act with the care, skill, prudence and diligence under
the circumstances 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 costs,
expenses and liabilities (including, without limitation, 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
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 (30) 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 (2) years. Additionally, if the Trustee
sells any Company stock prior to a Change in 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
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United States government securities and/or securities of United States
government agencies with average portfolio maturity of two (2) years.
Section 9. COMPENSATION AND EXPENSES OF TRUSTEE.
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Company shall pay all 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 addition fee as provided in this Section 9. The Trustee
shall be compensated at its normal hourly rates for all reasonable additional
services and for the reasonable fees and expenses of its counsel or other
experts required to be engaged by the Trustee. Such amounts shall be paid by
Company to the Trustee within thirty (30) 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.
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(a) Trustee may resign at any time by written notice to Company, which
shall be effective ninety (90) days after receipt of such notice unless Company
and Trustee agree otherwise.
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(b) Subject to Section 10(c), Trustee may be removed by Company on ninety
(90) 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 (10) years.
(d) If Trustee resigns or is removed within ten (10) years of 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 (90) days after receipt of notice
of resignation, removal or transfer, unless Company extends the time limit.
(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.
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(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
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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.
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Section 12. AMENDMENT OR TERMINATION.
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(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 l(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.
(c) Upon written approval of all 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
Agreement may not be amended by Company for ten (10) years following a Change in
Control, as defined herein.
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Section 13. MISCELLANEOUS.
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(a) Any provision of this 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 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, except to the extent pre-empted by
ERISA.
(d) For purposes of this Trust, a Change of Control shall be deemed to have
occurred if after April 1, 1994 (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 twenty percent (20%) or more of the
combined voting power of Company's then outstanding securities or (b)
individuals who, as of April 1, 1994, 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 subsequent to April 1, 1994, 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 (after April 1, 1994) as a director as a
result of an
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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 expenses incurred in bringing and prosecuting
such legal proceeding.
Section 14. EFFECTIVE DATE.
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The effective date of this Agreement shall be the date first written above.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
"COMPANY"
NATIONAL MEDICAL ENTERPRISES, INC.
By: _______________________________________
Its:_______________________________________
"TRUSTEE"
UNITED STATES TRUST COMPANY OF NEW YORK
By: _______________________________________
Its:_______________________________________
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