EXHIBIT 10.3
CHS/COMMUNITY HEALTH SYSTEMS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TRUST
THIS AGREEMENT is made as of the 1st day of June, 2005, by and between
CHS/Community Health Systems, Inc. ("Company") and Wachovia Bank, N.A.
("Trustee").
WHEREAS, Company maintains the CHS/Community Health Systems, Inc.
Supplemental Executive Retirement Plan for the benefit of certain executive
employees of Community Health Systems, Inc. and its affiliates (the "Plan"); and
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan with respect to the individuals participating in such Plan;
and
WHEREAS, Company wishes to establish a trust (the "Trust") and to
contribute to the Trust assets that shall be held therein, subject to the claims
of creditors of Company in the event of the Insolvency of Company, as herein
defined, until paid to Plan participants and their beneficiaries in such manner
and at such times as specified in the Plan; and
WHEREAS, 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;
and
WHEREAS, 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 $6,500,000, 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 hereby established shall be irrevocable.
(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 Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Company.
Any assets held
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by the Trust will be subject to the claims of the general creditors of Company
under Federal and state law in the event of Insolvency, as defined in Section
3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in Trust with Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
SECTION 2
PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES
(a) Subsequent to the determination pursuant to Section 2(b), Company
shall direct Trustee to make payments from the Trust according to the terms of
the Plan, indicating the amounts payable in respect of each Plan participant
(and his or her beneficiaries), providing 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 directions. Trustee shall make provision
for the reporting and withholding of any Federal, state or local taxes that may
be required to be withheld with respect to the payment of benefits 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 the Plan Administrator 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 Company is Insolvent. Company shall be considered "Insolvent"
for purposes of this Trust Agreement if it is (i) unable to pay its debts as
they become due, or (ii) 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:
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(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of the Insolvency of
Company. 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 the Insolvency of
Company, 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 solvency of Company as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
solvency of Company.
(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 the general creditors
of Company. 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.
(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
(a) In no event may Trustee invest in securities (including stock or
rights to acquire stock) or obligations issued by Company, other than a de
minimis amount held in common investment vehicles in which Trustee invests. 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.
(b) Notwithstanding any provision to the contrary elsewhere herein,
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.
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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 (to the extent not paid by Company), 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 30 days following the close of each calendar year
and within 30 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 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 the terms of this Trust Agreement and is given in
writing by Company. In the event of a dispute between Company or Company and a
party, Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(c) 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.
(d) 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.
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SECTION 9
COMPENSATION AND EXPENSES OF TRUSTEE
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.
SECTION 10
RESIGNATION AND REMOVAL OF TRUSTEE
(a) Trustee may resign at any time by written notice to Company, which
shall be effective 60 days after receipt of such notice unless Company and
Trustee agree otherwise.
(b) Trustee may be removed by Company on 60 days notice or upon shorter
notice accepted by Trustee.
(c) 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 as soon as administratively practicable after
receipt of notice of resignation, removal or transfer.
(d) 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
INDEMNIFICATION OF TRUSTEE
(a) Company hereby indemnifies Trustee against losses, liabilities,
claims, costs and expenses in connection with the administration of the Trust,
unless resulting from the gross negligence or willful misconduct of Trustee. To
the extent Company fails to make any payment on account of an indemnity provided
in this Indemnification Agreement and/or in connection with the administration
of the Trust in a reasonably timely manner, Trustee may obtain payment from the
Trust.
(b) If Trustee undertakes or defends any litigation arising in connection
with this Trust or to protect a participant's or beneficiary's rights under the
plans or arrangements covered by the Trust, Company agrees to indemnify Trustee
against Trustee's costs, reasonable expenses and liabilities (including, without
limitation, attorneys' fees and expenses) relating thereto and to be primarily
liable for such payments. If the Company does not pay such costs, expenses and
liabilities relating to such litigation matters in a reasonably timely manner,
Trustee may obtain payment from the Trust.
(c) The obligations of Company under this Section 11 terminate upon the
termination of the Trust Agreement or the resignation or removal of the Wachovia
Bank as Trustee under the Trust Agreement.
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SECTION 12
APPOINTMENT OF SUCCESSOR
If Trustee resigns or is removed in accordance with Sections 10(a) or
10(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 the
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.
SECTION 13
AMENDMENT OR TERMINATION
(a) This Trust 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.
(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. Upon termination of the Trust any assets remaining in
the Trust shall be returned to Company.
SECTION 14
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 Tennessee.
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SECTION 15
EFFECTIVE DATE
The effective date of this Trust Agreement shall be June 1, 2005.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed this 31st day of May, 2005.
CHS/COMMUNITY HEALTH SYSTEMS, INC.
By: /s/ W. Xxxxx Xxxx
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W. Xxxxx Xxxx, Executive Vice President and Chief
Financial Officer
WACHOVIA BANK, N.A.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Senior Vice President
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