EXHIBIT 10-S (iii)
RABBI TRUST AGREEMENT
TRUST AGREEMENT FOR PRIORITY HEALTHCARE CORPORATION NON-QUALIFIED DEFERRED
COMPENSATION PLAN
(a) This agreement made this 1st day of December, 2002, by and
between Priority Healthcare Corporation (the "Company") and Delaware Management
Trust Company (the "Trustee");
(b) WHEREAS, the Company has Priority Healthcare Corporation
Non-Qualified Deferred Compensation Plan (the "Plan");
(c) WHEREAS, the Company has incurred or expects to incur liability
under the terms of the Plan with respect to each individual participating in
such Plan ("Participant" or "Participants");
(d) WHEREAS, the 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 the Company's creditors in the event of the
Company's Insolvency, as herein defined, until paid to the Participants and
their beneficiaries in such manner and at such times as specified in the Plan;
(e) WHEREAS, it is the intention of the 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;
(f) WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not cause the Plan to become
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall comprise, be held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST
(a) The Company may from time to time make, or cause to be made,
contributions to the Trust in cash or property, including insurance contracts
and/or marketable securities, which are acceptable to the Trustee and which
shall become the principal of the Trust to be held, administered and disposed of
by the Trustee as provided in this Trust Agreement. Except as provided in
Section 2(c) and (d), neither the Trustee nor any Participant or beneficiary
shall have any right to compel such contributions.
(b) The Trust hereby established shall be irrevocable by the
Company.
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(c) The Trust is intended to be a grantor Trust, of which the
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 (the
"Code"), 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 the Company and shall be used
exclusively for the uses and purposes of the Participants and general creditors
as herein set forth. The 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 the Participants and their beneficiaries against
the Company. Any assets held by the Trust will be subject to the claims of the
Company's creditors under federal and state law in the event of Insolvency, as
defined in Section 3(a) herein.
(e) The Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other property in Trust to
augment the principal to be held, administered and disposed of by the Trustee as
provided in this Trust Agreement. Neither the Trustee nor any Participant or
beneficiary shall have any right to compel such additional deposits.
SECTION 2. PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES.
(a) The Company shall deliver to the Trustee a copy of the Plan
document, together with a schedule (the "Payment Schedule") that indicates the
amounts payable in respect of each Participant (and his or her beneficiaries),
that provides a formula or other instructions acceptable to the 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. If the Company has not done so previously, it shall
deliver the Plan document and the Payment Schedule to the Trustee before the
occurrence of any Change of Control, as defined under the Plan, and upon the
occurrence of a Change of Control, shall deliver to the Trustee a current census
of Participants and a current Payment Schedule (to the extent revisions to the
most recent previous Payment Schedule are necessary or appropriate). Within 30
days after the occurrence of a Change in Control, the Company shall notify the
Trustee in writing of such occurrence. Except as otherwise provided herein, the
Trustee shall make payments to the Participants and their beneficiaries in
accordance with such Payment Schedule. The Company shall make provisions 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.
(b) Subject to any determination made and set forth in the Payment
Schedule described in section 2(a) following a Change of control, the
entitlement of a Participant or his or her beneficiaries to benefits under the
Plan shall be determined by the Company or such party as it shall designate
under the Plan, and any claim for such benefits shall be
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considered and reviewed under the procedures set forth in the Plan.
Notwithstanding the foregoing, the Trustee shall not be responsible in any way
for reviewing or deciding on any claim for benefits under the Trust or the Plan.
(c) The Company may make payment of benefits directly to the
Participants or their beneficiaries as they become due under the terms of the
Plan. The Company shall notify the Trustee of its decision to make payment of
benefits directly prior to the time such amounts are payable to the Participants
or their beneficiaries. The Company may request and obtain reimbursement from
the Trust for the amount of the benefits directly paid by the Company after such
payment is made. 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, the Company shall make the balance of each such payment as it
falls due. The Trustee shall notify the Company when principal and earnings are
not sufficient.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
WHEN THE COMPANY IS INSOLVENT.
(a) The Trustee shall cease payment of benefits to the Participants
and their beneficiaries if the Company is Insolvent. The Company shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) the Company
is unable to pay its debts as they become due, or (ii) the 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 the Company under federal and state law as set
forth below.
(1) The Board of Directors of the Company (the "Board") or
any individual designated by the Board shall have the duty to inform the Trustee
in writing of the Company's Insolvency.
(2) Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company that the Company is
Insolvent, the Trustee shall have no duty to inquire whether the Company is
Insolvent. The Trustee may in all events rely on such evidence concerning the
Company's solvency as may be furnished to the Trustee and that provides the
Trustee with a reasonable basis for making a determination concerning the
Company's solvency.
(3) If the Company is Insolvent, the Trustee shall
discontinue payments to the Participants or their beneficiaries and shall hold
the assets of the Trust for the benefit of the Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any rights of the
participants or their beneficiaries to pursue their rights as general creditors
of the Company with respect to benefits due under the Plan or otherwise.
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(4) The Trustee shall resume the payment of benefits to the
Participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after the Trustee has been informed by the Company that the
Company is not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the 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 the
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 the
Participants or their beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Sections 2 or 3 hereof, the Company shall have no
right or power to direct the Trustee to return to the Company or to divert to
others any of the Trust assets before all payments of benefits have been made to
the Participants and their beneficiaries pursuant to the terms of the Plan.
After all payments of benefits have been made to the Participants and their
beneficiaries, any remaining Trust assets shall be returned to the Company.
SECTION 5. INVESTMENT AUTHORITY.
(a) In no event may the Trustee invest in securities (including
stock or rights to acquire stock) or obligations issued by the Company. All
rights associates with assets of the Trust shall be exercised by the Trustee or
the person designated by the Trustee, and shall in no event be exercisable by or
rest with the Participants, except that prior to a Change of Control voting
rights with respect to the Trust assets will be exercised by the Company.
(b) The 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 the Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
(c) It shall be the duty of the Trustee to hold the assets of the
Trust in trust as provided in this Trust Agreement; to keep the assets of the
Trust invested without distinction between principal and income, and to
distribute and otherwise deal with the same pursuant to the provision of this
Trust Agreement. Absent any written directions from the Company, or following a
Change in Control, the Trustee shall have discretion to manage the assets of the
Trust fund and to invest the assets of the Trust. The Trustee in making and
holding investments shall not be restricted to those investments that are
authorized by the law of the Commonwealth of Pennsylvania for the investment of
Trust funds. Notwithstanding the foregoing, following a Change of Control, the
Trustee may
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continue to invest all or part of Participant's account under the Plan in the
Plan funds as previously selected by the Company in accordance with Section 5.2
of the Plan.
(d) Subject to the directions from the Company, the Trustee shall
have the following additional powers and authority with respect to the assets of
the Trust:
(i) To retain, sell, exchange, manage, lend, improve, or
transfer or otherwise dispose of any such property at
public or private sale for cash or on credit.
(ii) To invest and reinvest any money held in the Trust
hereunder in any common, collective or commingled Trust
fund established and maintained by a bank.
(iii) To participate in any agreement of reorganization,
consolidation, merger, combination, liquidation or other
similar agreement relating to any such property, and to
consent to or oppose any such agreement or any action
thereunder, or any contract, lease, mortgage, purchase,
sale or other action by any corporation or other entity.
(iv) To deposit any such property with any protective,
reorganization or similar committee; to delegate with
discretionary power to any such committee; and to pay
part of the expenses and compensation of any such
committee and any assessments levied with respect to any
property so deposited.
(v) To exercise any conversion privilege or subscription
right available in connection with any such property; to
oppose or to consent to the reorganization,
consolidation, merger or readjustment of the finances of
any corporation, Company or association, or to the sale,
mortgage, pledge or lease of the property of any
corporation, Company or association any of the
securities of which may at any time be held in the Trust
and to do any act with reference thereto, including the
exercise of options, the making of agreements or
subscriptions and the payment of expenses, assessments
or subscriptions, which may be deemed necessary or
advisable in connection therewith, and to hold and
retain any securities or other property which it may so
acquire.
(vi) To commence or defend suits or legal proceedings and to
represent the Trust in all suits or legal proceedings;
to settle, compromise or submit to arbitration any
claims, debts or damages, due or owing to or from the
Trust; provided, however, that the Trustee shall notify
the Company of all such suits, legal proceedings and
claims and shall obtain the written consent of the
Company before settling,
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compromising or submitting to binding arbitration any
claim, suit or legal proceeding of any nature
whatsoever, which consent shall not unreasonably be
withheld.
(vii) To exercise, personally or by general or limited power
of attorney, any right, including the right to vote,
appurtenant to any securities or other such property.
(viii) To register any securities held by the Trustee in its
own name or in the name of a nominee of the Trustee or
any custodian of such property, including the nominee of
any system for the central handling of securities, with
or without the addition of words indicating that such
securities are held in a fiduciary capacity; to deposit
or arrange for the deposit of any such securities with
such a system and to hold any securities in bearer form,
provided that the Trustee shall at all times remain
responsible for the safe custody and disposition of the
assets of the Trust.
(ix) To make, execute and deliver, as Trustee, any and all
deeds, leases, notes, bonds, guarantees, mortgages,
conveyances, contracts, waivers, releases or other
instruments in writing necessary or proper for the
accomplishment of any of the foregoing powers.
(x) To hold cash (including, without limitation, in
non-interest bearing accounts) in time or demand
deposits including deposits with the Trustee, such
deposits to pay a reasonable amount of interest.
(xi) To exercise, generally, any of the powers which an
individual owner might exercise in connection with
property either real, personal or mixed held by the
Trust, and to do all other acts that the Trustee may
deem necessary or proper to carry out any of the powers
set forth in this Section 5 or otherwise in the best
interests of the Trust.
(xii) to temporarily place the assets of the Trust in a
non-interest bearing account, where other client assets
may also be held, for purposes of processing
contributions to, withdrawals from, and other
transactions of the Plan. The Company acknowledges that
maintenance of such a non-interest bearing account may
generate certain service credits from the bank with
which the account is maintained and that such service
credits will be used exclusively and directly to reduce
any banking-related charges that would otherwise be
borne by the Plan participants and other clients.
(xiii) Prior to a Change of Control the Trustee shall upon the
written direction of the Company invest all or part of
the assets of the
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Trust in Plan funds selected by the Company, subject to
the provisions noted above following a Change of
Control. The Company shall be responsible to ensure that
such written directions are made in accordance with the
Plan and are not contrary to law. The Trustee shall have
no responsibility to monitor investments of the Trust
Fund and shall not be liable for any investment losses
or other consequences resulting from any action or
inaction of the Company with respect to the investments
of the Trust Fund. Notwithstanding the foregoing,
following a Change of Control, the Trustee shall have
the discretion to manage the Trust Fund in accordance
with subsection (c) above.
(e) The Trustee shall be accountable only for funds actually
received by it hereunder and shall have no duty or liability to determine that
the amount of the funds received by it comply with the provisions of the Plan.
If the Company has established a contract with an insurance company to carry out
the purposes of the Plan, the Trustee shall not be liable for the acts or
omissions of such insurance company, or be under an obligation to invest or
otherwise manage the portion of the Trust Fund which is subject to the
management of such insurance company.
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.
The 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 the
Company and the Trustee. Within 90 days following the close of each calendar
year and within 60 days after the removal or resignation of the Trustee, the
Trustee shall deliver to the 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.
Upon the expiration of thirty (30) days from the date of filing any such
account or upon the earlier specific approval thereof by the Company, the
Trustee shall be forever released and discharged from all liability and
accountability to the Employer with respect to the propriety of its acts and
transactions shown in such account, except with respect to any such acts or
transactions as to which the Company shall, within such thirty (30) day period,
file written objections with the Trustee. Nothing herein contained, however,
shall
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be deemed to preclude the Trustee of its right to have its account judicially
settled by a court of competent jurisdiction.
SECTION 8. RESPONSIBILTY OF TRUSTEE.
(a) The Trustee shall act with the care, skill, prudence and
diligence under the circumstances the prevailing that 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 the
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by the Company; and, provided, further,
that the Trustee shall incur no liability to any person for any action or
failure to act taken pursuant to the determination of the existence or
non-existence of an event of Insolvency. In the event of a dispute between the
Company and a party, the Trustee may apply to a court of competent jurisdiction
to resolve the dispute.
(b) If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the Trustee against
the Trustee's costs, 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
in a reasonably timely manner, the Trustee may obtain payment from the Trust.
(c) The Trustee may consult with legal counsel (who may also be
counsel for the Company generally) or obtain actuarial or other expert advice,
with respect to any of its duties or obligations hereunder, and shall have no
liability for any action or failure to act in reliance upon advice of such
counsel.
(d) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist in performing
any of its duties or obligations hereunder.
(e) The 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,
the 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
other than the Company the proceeds of any borrowing against such policy.
(f) Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or applicable law, the 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 Code.
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SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
The Company shall pay all administrative and the Trustee's fees and
expenses. If not so paid, such fees and expenses shall be paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) The Trustee may resign at any time by written notice to the
Company, which shall be effective 60 days after receipt of such notice unless
the Company and the Trustee agree otherwise.
(b) The Trustee may be removed by the Company on 60 days notice or
upon shorter notice accepted by the Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 90 days after receipt of notice
of resignation, removal or transfer, unless the Company extends the time limit.
(d) If the Trustee resigns or is removed, a successor shall be
appointed by the Company, in accordance with Section 11 hereof, by the effective
date of resignation or removal under paragraph (a) or (b) of this section. If no
such appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
the Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.
(e) Upon a Change of Control, the Trustee may not be removed by the
Company for 2 years.
(f) If the Trustee resigns within 2 years after a Change of Control,
the Company shall apply to a court of competent jurisdiction for the appointment
of a successor trustee or for instructions.
SECTION 11. APPOINTMENT OF SUCCESSOR TRUSTEE.
(a) If the Trustee resigns or is removed in accordance with Section
10(a) or (b) hereof the Company may appoint any third party, such as a bank
Trust department that may be granted corporate Trustee powers under state law,
as a successor to replace the Trustee upon resignation or removal. Each such
successor Trustee, during such period as it shall act as such; shall be bound by
all of the provisions hereof, as well as any instructions provided by the
Company pursuant to the provisions hereof, shall have the powers and duties
herein conferred upon an individual Trustee, and the word "Trustee" wherever
used herein, except where the context otherwise requires, shall be deemed to
include any successor Trustee. The appointment shall be effective when accepted
in
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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 the
Company or the successor Trustee to evidence the transfer.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan.
(b) The Trust shall not terminate until the date on which the
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 the Company.
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 the 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 Commonwealth of Pennsylvania, unless otherwise
preempted by any applicable federal law.
The effective date of this Trust Agreement shall be December 1, 2002.
ATTEST:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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ATTEST: DELAWARE MANAGEMENT TRUST COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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