UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
THE HILLHAVEN CORPORATION
(Name of Issuer)
Common Stock, $.75 Par Value
(Title of Class of Securities)
431576 10 7
(CUSIP Number)
Thomas E. Phillippe, Sr.
7240 Shadeland Station, Suite 250
Indianapolis, Indiana 46256 (317) 596-6115
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 30, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
l3D, and is filing this schedule because of Rule l3d-1(b)(3) or
(4), check the following box [ ]
Check the following box if a fee is being paid with the statement [X]
(A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class.) (See
Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule l3d-l(a) for other parties
to whom copies are to be sent.
The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
Total pages: _22__
<PAGE>
CUSIP No. 431576 10 7 SCHEDULE 13D
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Thomas E. Phillippe, Sr.
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
(3) SEC USE ONLY
(4) SOURCE OF FUNDS
OO
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D)OR 2(E) [ ]
(6) CITIZENSHIP OR PLACE OR ORGANIZATION
U.S.A.
:(7) SOLE VOTING POWER
:
: 2,560,948
NUMBER OF SHARES BENEFICIALLY :
OWNED BY EACH REPORTING :(8) SHARED VOTING
:
PERSON WITH : 0
:
:(9) SOLE DISPOSITIVE
:
: 2,560,948
:
:(10) SHARED DISPOSITIVE
:
: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,560,948
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
(14) TYPE OF REPORTING PERSON
IN
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer.
The class of equity securities to which this statement relates
is the Common Stock, $.75 par value (the "Hillhaven Common
Shares"), of The Hillhaven Corporation, a Nevada corporation with
its principal offices at 1148 Broadway Plaza, Tacoma, Washington
98402 ("Hillhaven").
Item 2. Identity and Background.
This statement is filed by Thomas E. Phillippe, Sr., an
individual resident in the State of Indiana (the "Reporting
Person"). The business address of the Reporting Person is 7240
Shadeland Station, Suite 250, Indianapolis, Indiana, 46256. The
Reporting Person is currently the President of Opal Care Centers,
Inc., an Indiana corporation with its principal offices at 7240
Shadeland Station, Suite 250, Indianapolis, Indiana, 46256, which
specializes in construction with respect to nursing homes. The
Reporting Person is a United States citizen.
The Reporting Person has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors)
and has not been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which
the Reporting Person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The shares reported in this statement (the "Reported Shares")
were acquired by the Reporting Person in connection with a share
exchange transaction (the "Share Exchange") pursuant to a Share
Exchange Agreement (the "Share Exchange Agreement") by and among
Hillhaven, Nationwide Care, Inc., an Indiana corporation ("NCI"),
Phillippe Enterprises, Inc., an Indiana corporation ("PEI"),
Meadowvale Skilled Care Center, Inc., an Indiana corporation
("Meadowvale")(NCI, PEI and Meadowvale are collectively referred to
herein as the "Targets"), and certain affiliated partnerships of
the Targets (the Targets and the affiliated partnerships are
collectively referred to herein as the "Nationwide Entities"). The
Share Exchange was structured as a tax-free reorganization and was
consummated on June 30, 1995 (the "Closing Date"). In connection
with the Share Exchange, Hillhaven exchanged 5,000,000 Hillhaven
Common Shares (the "Share Exchange Consideration") for all of the
outstanding common stock of each of the Targets. The Reporting
Person was a significant stockholder of NCI and PEI prior to the
Share Exchange.
<PAGE>
Item 4. Purpose of the Transaction.
The Hillhaven Common Shares reported on this statement were
acquired in connection with the Share Exchange described in Item 3
and are held for investment purposes. The Reporting Person has no
present plans or proposals which may relate to or would result in
(a) the acquisition or disposition of additional securities of
Hillhaven by any person; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation,
involving Hillhaven or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of Hillhaven or any of its
subsidiaries; (d) any change in the present Board of Directors or
management of Hillhaven, including any plans or proposals to change
the number or term of directors or to fill any existing vacancies
on the Board; (e) any material change in the present capitalization
or dividend policy of Hillhaven; (f) any other material change in
Hillhaven's business or corporate structure; (g) changes in
Hillhaven's charter, by-laws or instruments corresponding thereto
or other actions which may impede the acquisition of control of
Hillhaven by any person; (h) causing a class of securities of
Hillhaven to be delisted from a national securities exchange or to
cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association; (i) a class
of equity securities of Hillhaven becoming eligible for termination
of a registration pursuant to section 12(g)(4) of the Securities
Exchange Act of 1934 as amended; or (j) any action similar to any
of those enumerated above.
Item 5. Interest in Securities of the Issuer.
At the close of business on July 18, 1995, the Reporting
Person was the beneficial owner of 2,560,948 Hillhaven Common
Shares. Based upon the most recent information available to the
Reporting Person, these shares constitute approximately 6.8% of the
issued and outstanding Hillhaven Common Shares.
The Reporting Person holds sole power to vote or to direct the
vote and sole power to dispose or to direct the disposition of the
Reported Shares. Of the Reported Shares, 479,435 Hillhaven Common
Shares (or an aggregate of 1,438,305 Hillhaven Common Shares) are
owned by three separate annuity trusts established by the Reporting
Person (the "Trusts"), one for the benefit of each of the three
children of the Reporting Person. As the trustee under the Trusts,
the Reporting Person retains sole voting and dispositive power over
the Hillhaven Common Shares owned by the Trusts.
Other than in connection with the Share Exchange, the
Reporting Person has not effected any other transactions in the
Hillhaven Common Shares during the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
Because the Reporting Person was an affiliate of NCI and PEI
prior to the Share Exchange, future transfers of the Reported
Shares by the Reporting Person will be subject to certain
restrictions in accordance with Rule 145 promulgated by the
Securities and Exchange Commission under the Securities Act of
1933, as amended.
<PAGE>
In order to preserve the treatment of the Share Exchange as a
pooling-of-interests for accounting purposes, the shareholders of
the Targets (the "Target Shareholders") agreed to refrain from
selling, exchanging, pledging or otherwise disposing of any
Hillhaven Common Shares received as a result of the Share Exchange
until Hillhaven has published financial results of the combined
operations of Hillhaven and the Nationwide Entities covering at
least 30 days of such combined operations. Hillhaven agreed to
publish such results no later than the last to occur of (a) 60 days
following the end of the month including the Closing Date or (b) 10
days following delivery of such financial information with respect
to the operations previously owned by the Nationwide Entities as
Hillhaven considers reasonably necessary to prepare such combined
financial results.
As security for, and as the sole source for satisfaction of,
certain indemnification obligations of the Target Shareholders
provided for under the Share Exchange Agreement, 10% of the number
of Hillhaven Common Shares that comprised the Share Exchange
Consideration (the "Escrow Shares") were placed in escrow by the
Target Shareholders with Bank One, Indianapolis, N.A. (the "Escrow
Agent"), to remain in escrow until Hillhaven's independent
accountants have completed the first audit following the effective
time of the Share Exchange (the "Effective Time") of Hillhaven's
and the Nationwide Entities' combined operations, but not later
than one year after the Closing Date.
In addition, as security for the indemnification obligations
with respect to certain litigation, 5% of the number of Hillhaven
Common Shares that comprised the Share Exchange Consideration (the
"Supplemental Escrow Shares") were placed in escrow by the
shareholders of NCI with Bank One, Indianapolis, N.A. (the
"Supplemental Escrow Agent"), to remain in escrow until the earlier
of the date certain litigation has been finally settled or
otherwise finally resolved or the date that an unappealable summary
judgment to the effect that punitive damages will not be allowed in
such litigation has been granted.
Pursuant to each of the escrow agreements described above,
Thomas E. Phillippe, Jr., the son of the Reporting Person, was
appointed as attorney-in-fact (the "Shareholder Agent") to act as
the agent of the Target Shareholders in the performance of all of
their obligations and exercise all of their rights under such
agreements. All voting and dividend rights with respect to the
Escrow Shares and Supplemental Escrow Shares remain with each
respective Target Shareholder. The Shareholder Agent may also
direct the Escrow Agent and Supplemental Escrow Agent to sell one
or more of the Escrow Shares or Supplemental Escrow Shares on the
NYSE and deposit the proceeds into the appropriate escrow account,
which proceeds shall be distributed, designated, withheld and
otherwise subject to the terms of such agreements.
On the Closing Date, pursuant to the Share Exchange Agreement
the Target Shareholders executed and delivered to Hillhaven certain
Agreements Among Shareholders (the "Shareholders' Agreements"). In
order to facilitate the delivery of certain legal opinions to be
delivered at closing concerning the tax treatment of the Share
Exchange, under the Shareholders' Agreements each Target
Shareholder represented, warranted and covenanted that such Target
Shareholder would not dissent in or to the transactions
contemplated in connection with the proposed merger (the "Merger")
between Hillhaven and Vencor, Inc., a Delaware corporation
("Vencor"). Each Target Shareholder also severally represented,
warranted and covenanted to the other Target Shareholders that he,
she or it had no plan, intention or arrangement to sell, exchange,
pledge, or otherwise dispose of a number of the Hillhaven Common
Shares received as Share Exchange Consideration (or shares of
Vencor common stock received in the Merger) that would reduce such
person's ownership of such Hillhaven Common Shares (or shares of
Vencor common stock) to a number having a value, determined at the
Effective Time, of less than 50% of the value of Target stock held
by such person immediately before the Share Exchange. Further,
pursuant to the Shareholders' Agreements, a Target Shareholder may
sell, exchange, pledge, or otherwise dispose of any of the
Hillhaven Common Shares received as Share Exchange Consideration
(or shares of Vencor common stock received in the Merger) provided
such disposition would not reduce the fair market value of the
Hillhaven Common Shares (or shares of Vencor common stock),
determined as of the Effective Time, held by such Target
Shareholder to an amount less than 50% of the fair market value of
the Target stock held by such Target Shareholder immediately before
the Share Exchange. A Target Shareholder may not sell, exchange,
pledge, or dispose of more than 50% of such Shareholder's Hillhaven
Common Shares (or shares of Vencor common stock received in the
Merger) within the two-year period immediately following the
Effective Time, or within two years of the effective time of the
Merger, whichever is later, unless: (a) such Target Shareholder
obtains and delivers to Thomas E. Phillippe, Jr., acting as a
representative of all the Target Shareholders (the
"Representative"), an unqualified opinion of counsel (from counsel
reasonably acceptable to the Representative, and in a form
acceptable to the Representative) to the effect that such sale,
exchange, pledge, or disposition would not adversely affect the
tax-free status of the Share Exchange; and (b) the Representative
and the Reporting Person (the "Phillippes") jointly consent in
writing to such sale, exchange, pledge, or disposition. The
Phillippes are required to use reasonable efforts to reply to a
request for a disposition of shares pursuant to clause (b) above
within 30 days of receipt of a written notice of a Target
Shareholder's request to sell shares pursuant to such clause.
<PAGE>
In connection with the execution of the Shareholders'
Agreement respecting NCI, in order to permit the sale by certain
Target Shareholders of a number of Hillhaven Common Shares in
addition to the number permitted to be sold by such Target
Shareholders under such Shareholders' Agreement, the Reporting
Person agreed not to sell, exchange, pledge or otherwise dispose of
200,008 Hillhaven Common Shares with respect to which the Reporting
Person maintains dispositive power, in addition to the number of
Hillhaven Common Shares which may not be sold, exchanged, pledged
or otherwise disposed of by the Reporting Person pursuant to the
terms of such Shareholders' Agreement.
The Reporting Person created the Trusts, one for the benefit
of each of his three children. Each Trust is irrevocable and
expires two years from the date of creation of the Trust (the
"Term"). Of the Hillhaven Common Shares reported on this
statement, each of the Trusts owns 479,435 Hillhaven Common Shares.
The Reporting Person retains voting and dispositive power over the
Hillhaven Common Shares owned by the Trusts, and the Reporting
Person may direct that such Hillhaven Common Shares be sold by the
Trusts prior to expiration of the Term, subject to the provisions
of the Shareholders' Agreement with respect to NCI. The Trust
documents provide for annual annuity payments to be made to the
Reporting Person and for the disposition of all of the trust assets
to the Reporting Person and/or the respective child of the
Reporting Person at the expiration of the Term.
Item 7. Material to be Filed as Exhibits.
Page in
Sequential
Description of Exhibits Numbering System
Escrow Agreement dated by and among
The Hillhaven Corporation and those
shareholders named therein
(Incorporated by reference to
Exhibit 3.3(a) to Exhibit 2.01 to
Amendment No.1 to Form S-4 filed on
May 19, 1995 by The Hillhaven
Corporation, File No. 33-58641).
Supplemental Escrow Agreement by and
among The Hillhaven Corporation and
those shareholders named therein
(Incorporated by reference to
Exhibit 3.3(b) to Exhibit 2.01 to
Amendment No.1 to Form S-4 filed on
May 19, 1995 by The Hillhaven
Corporation, File No. 33-58641).
Agreement Among Shareholders by and
among the former shareholders of
Nationwide Care, Inc. (Incorporated
by reference to Exhibit 12.2(i)(a)
to Exhibit 2.01 to Amendment No.1 to
Form S-4 filed on May 19, 1995 by
The Hillhaven Corporation, File No.
33-58641).
Agreement Among Shareholders dated
June 30, 1995 by and among the
former shareholders of Phillippe
Enterprises, Inc. (Incorporated by
reference to Exhibit 12.2(i)(a) to
Exhibit 2.01 to Amendment No.1 to
Form S-4 filed on May 19, 1995 by
The Hillhaven Corporation, File No.
33-58641).
Agreement dated June 30, 1995 by and EX-99.1
among Thomas E. Phillippe, Sr.,
Thomas E. Phillippe, Jr. and certain
former shareholders of Nationwide
Care, Inc.
Thomas E. Phillippe, Sr. Declaration EX-99.2
of Annuity Trust for the Benefit of
Thomas E. Phillippe, Jr.
Thomas E. Phillippe, Sr. Declaration EX-99.3
of Annuity Trust for the Benefit of
Stacey Jo Mervine
Thomas E. Phillippe, Sr. Declaration EX-99.4
of Annuity Trust for the Benefit of
Towana K. Moore
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Date: July 18, 1995 By: /s/ Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Sr.
AGREEMENT
This Agreement ("Agreement") is made this 30th day of June,
1995 among Thomas E. Phillippe, Sr. Thomas E. Phillippe, Jr.,
Thomas E. Phillippe, Sr., as Trustee under Declaration of Trust
dated November 29, 1994 for the benefit of Thomas E. Phillippe,
Jr., Thomas E. Phillippe, Sr., as Trustee under Declaration of
Trust dated November 29, 1994 for the benefit of Stacy Mervine and
Thomas E. Phillippe, Sr., as Trustee under Declaration of Trust
dated November 29, 1994 for the benefit of Towana Moore (all of the
foregoing parties are collectively referred to herein as the
"Phillippe Parties"; each of the Trusts are collectively referred
to as the "Trusts"), on the one hand, and Continental Illinois
Commercial Corporation, Pacific Mutual Life Insurance Company, PM
Group Life Insurance Company, Ford S. Bartholow, Matthew W. Clary,
Jeffrey M. Mann, Ann O'Brien, Robert F. Perille, Christopher J.
Perry and Thomas E. Van Pelt, Jr. (collectively, the "Investors"),
on the other hand.
Recitals
Item I. In connection with the consummation of a share exchange
(the "Share Exchange") between Nationwide Care, Inc. ("Nationwide")
and The Hillhaven Corporation ("Acquiror") pursuant to that certain
Amended and Restated Agreement and Plan of Share of Exchange dated
as of February 27, 1995 among Nationwide, Acquiror and certain
other parties named therein, all of the shareholders of Nationwide
(the "Shareholders") are required to execute a shareholders
agreement (the "Shareholders Agreement") prior to the consummation
of the Share Exchange..
Item II. The Shareholders Agreement will prohibit a Shareholder
from disposing of more than one-half of the shares of common stock
of Acquiror (the "Acquiror Common Shares") to be received by such
Shareholder for a specified period of time, unless (a) such
Shareholder obtains and delivers to the representative of the
Shareholders an unqualified opinion of counsel to the effect that
such disposition will not adversely affect the tax-free status of
the Share Exchange; and (b) Thomas E. Phillippe, Jr. and Thomas E.
Phillippe, Sr. (the "Phillippes") consent to the disposition (the
requirements set forth in (a) and (b) are referred to herein as the
"Conditions")..
Item III. As a result of the Share Exchange, the Investors will
collectively hold 600,016 Acquiror Common Shares, Thomas E.
Phillippe, Sr. will hold in his individual capacity 1,118,478
Acquiror Common Shares, and each of the Trusts will hold 479,435
Acquiror Common Shares..
<PAGE>
Item IV. Absent the agreements set forth herein, the Shareholders
Agreement contemplates that the Investors, collectively, will be
permitted to dispose of no more than 300,008 Acquiror Common Shares
without compliance with the Conditions..
Item V. Absent the agreements set forth herein, the Shareholders
Agreement contemplates that Thomas E. Phillippe, Sr., in his
individual capacity, will be permitted to dispose of no more than
559,239 Acquiror Common Shares, and the each of the Trusts will be
permitted to dispose of no more than 239,717 Acquiror Common
Shares, without compliance with the Conditions..
Item VI. The Investors, collectively, desire the flexibility to
dispose of more than 300,008 Acquiror Common Shares, and the
Phillippe Parties desire to permit the Investors to sell more than
such number of Acquiror Common Shares, upon the terms and subject
to the conditions set forth herein..
Item VII. As a condition to the closing of the Share Exchange, Ice
Miller Donadio & Ryan shall deliver to Nationwide its opinion that
the Share Exchange will constitute a tax-free reorganization. In
rendering its opinion, Ice Miller Donadio & Ryan will be relying
upon the Shareholders Agreement..
Item VIII. Unless otherwise indicated, all capitalized terms used
in this Agreement shall have the same meaning given to such terms
in the Shareholders Agreement..
NOW, THEREFORE, in consideration of the mutual promises set
forth herein, the parties hereto agree as follows:
Agreement
A. Consent of PhillippesUpon the terms set forth herein, the
Phillippes hereby consent to the disposition by the Investors,
collectively, of up to 500,016 of the Acquiror Common Shares to be
received by the Investors in connection with the Share Exchange.
As a result, the Investors, collectively, may indicate on Exhibit
A to the Shareholders Agreement their intent to dispose of up to
500,016 Acquiror Common Shares. The remaining 100,000 Acquiror
Common Shares to be received by the Investors in connection with
the Share Exchange (the "Restricted Shares") will be subject to the
terms and conditions of the Shareholders Agreement.
B. Additional Shares To Be Held By Phillippe and
TrustsThomas E. Phillippe, Sr. and the Trusts together shall not,
within two years of the Effective Time or within two years of the
effective time of the Merger, whichever is later, sell, exchange,
pledge or otherwise dispose of more than an aggregate of 1,478,401
Acquiror Common Shares, except in compliance with clause (b) of
Section 2 of the Shareholders Agreement. As a result, Thomas E.
Phillippe, Sr. and the Trusts together may not indicate on Exhibit
A to the Shareholders Agreement an intent to dispose of more than
an aggregate of 1,078,382 Acquiror Common Shares.
C. Approval of Ice Miller OpinionThe Representative hereby
accepts the Ice Miller Opinion and deems it sufficient to meet the
requirement of clause (i) of clause (b) of Section 2 of the
Shareholders Agreement in connection with the disposition by the
Investors, collectively, of up to 500,016 Acquiror Common Shares.
D. Consent to Future SaleIn the event that the Merger occurs
after December 31, 1995, the Phillippes hereby consent to the sale
of the Restricted Shares by the Investors at any time after
December 31, 1997, so long as prior to any such sale the selling
Investor delivers to the Representative an unqualified opinion of
McDermott, Will & Emery that such sale will not adversely affect
the tax-free status of the Share Exchange.<PAGE>
In Witness Whereof,
this Agreement has been executed as of the date first above written.
/s/Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Sr.
/s/Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Jr.
CONTINENTAL ILLINOIS COMMERCIAL
CORPORATION
By: /s/M. Ann O'Brian
Name:
Title:
PACIFIC MUTUAL LIFE INSURANCE
COMPANY
By: /s/Skyler Lance
Name:
Title:
PM GROUP LIFE INSURANCE COMPANY
By: /s/Skyler Lance
Name:
Title:
Ford S. Bartholow
Matthew W. Clary
Jeffrey M. Mann
M. Ann O'Brien
Robert F. Perille
Christopher J. Perry
Thomas E. Van Pelt, Jr.
Thomas E. Phillippe, Sr., as Trustee under
Declaration of Trust for the benefit of
Thomas E. Phillippe, Jr.
Thomas E. Phillippe, Sr., as Trustee under
Declaration of Trust for the benefit of
Stacy Mervine
Thomas E. Phillippe, Sr., as Trustee under
Declaration of Trust for the benefit of
Towana Moore
THOMAS E. PHILLIPPE, SR. DECLARATION OF ANNUITY TRUST
FOR THE BENEFIT OF THOMAS E. PHILLIPPE, JR.
This Declaration of Trust made by
Thomas E. Phillippe, Sr. this 29th day of November, 1994,
WITNESSETH:
Thomas E. Phillippe, Sr. hereby
declares that, on the aforesaid date, Thomas E. Phillippe, Sr.
delivered to himself, as Trustee, the property listed on Schedule
A attached hereto.
The term "Grantor," as used herein,
shall mean Thomas E. Phillippe, Sr. The term "Grantor's Spouse,"
as used herein, shall mean Joan M. Phillippe. The term "Trustee,"
as used herein, shall mean Thomas E. Phillippe, Sr., so long as he
is the trustee of this trust, and shall mean the successor trustee
or trustees thereafter.
ITEM I
Funding the Trust
The property transferred to the
Trustee shall be held and administered according to the terms of
this trust. The Trustee acknowledges the receipt of such property.
The Trustee is prohibited from accepting any additional
contributions to the trust.
ITEM II
Irrevocability
This trust and all interests in it
are irrevocable, and neither the Grantor nor any other person shall
have any power to amend any of the provisions of this trust.
Notwithstanding the foregoing, the Trustee shall have the power,
acting alone, to amend the trust in any manner required for the
sole purpose of ensuring that the Grantor's interest qualifies and
continues to qualify as a "qualified interest" within the meaning
of Section 2702 of the Internal Revenue Code of 1986, as amended
(the "Code").
ITEM III
Term of Trust
This trust shall begin on the date
of this trust agreement and shall continue until the earlier of (i)
the date of the Grantor's death or (ii) the second (2nd)
anniversary of the date of this trust agreement.
ITEM IV
Payment of Annuity Amounts to Grantor
A. During the term of this trust the
Trustee shall annually pay to the Grantor an amount equal to fifty-six
and eight-tenths percent (56.80%) of the fair market value of
the trust assets valued as of the date of this agreement ("Annuity
Amount"). In determining the Annuity Amount, the Trustee shall
prorate the Annuity Amount on a daily basis for any short trust
year, including the year of the Grantor's death (if applicable).
The Annuity Amount shall be paid in annual installments on each
anniversary date of this trust agreement, unless prorated in
accordance with this agreement for a short trust year, for each
trust year from income and, to the extent that income is
insufficient, from principal. Any trust income that is not
distributed to the Grantor as part of the Annuity Amount shall be
added to principal.
B. The Trustee shall make no
distributions of income or principal of the trust to anyone other
than the Grantor before the termination of the trust, except as
provided in Paragraph B. of Item V.
C. If the net fair market value of the
trust assets is incorrectly determined by the Trustee, then within
a reasonable period of time after the final determination of the
correct value, the Trustee shall pay to the Grantor (or the
Grantor's Spouse, if applicable), in the case of an undervaluation,
or the Grantor (or the Grantor's Spouse, if applicable) shall pay
to the Trustee, in the case of an overvaluation, an amount equal to
the difference between the Annuity Amount properly payable and the
Annuity Amount actually paid, plus interest on such amounts
computed at the rate required by the applicable treasury
regulations or, if there are no such regulations, the rate used for
valuing annuity interests under Section 664 of the Code, compounded
annually.
<PAGE>
ITEM V
Distribution Upon
Termination of the Trust
A. If the Grantor is living on the
second (2nd) anniversary of the date of this trust agreement, this
trust shall terminate on the second (2nd) anniversary of the date
of this trust agreement. The Trustee shall distribute the accrued
but undistributed Annuity Amount to the Grantor. The Trustee shall
distribute the balance of the trust property to Thomas E.
Phillippe, Jr., if he is then living. If he is not then living,
the Trustee shall distribute the trust property to his estate.
B. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the expiration of the term of this trust, and if the Grantor's
Spouse shall survive the Grantor, then the trust shall continue for
the benefit of the Grantor's Spouse unless the Grantor shall have
revoked such continuing spousal interest as hereinafter provided,
and the Trustee shall distribute to the Grantor's Spouse each year
until the second (2nd) anniversary of the date of this trust
agreement, an amount equal to the Annuity Amount. After the second
(2nd) anniversary, the Trustee shall continue to distribute each
year to the Grantor's Spouse an amount equal to all of the net
trust income. Such distributions of the net trust income shall be
made annually on the anniversary date of this trust.
Such continuing spousal interest of
the Grantor's Spouse under this Paragraph B. of this Item V shall
be identified as the Contingent Spousal Interest.
The Grantor shall have the power to
revoke the Contingent Spousal Interest of the Grantor's Spouse
under this Paragraph B. of this Item V by an instrument in writing
signed by the Grantor during his lifetime and delivered to the
Trustee or by a provision in the last will and testament of the
Grantor referring to and revoking the Contingent Spousal Interest
of his spouse under this Trust Agreement.
If the Contingent Spousal Interest
of the Grantor's Spouse shall not have been revoked by the Grantor,
then upon the death of the Grantor's Spouse the Trustee shall
distribute to the estate of the Grantor's Spouse all undistributed
amounts of the Annuity Amount or net trust income, as applicable,
which are accrued under the terms of this Trust Agreement or are
payable to the Grantor's Spouse but have not been distributed to
her as of the date of her death, and the Trustee shall distribute
the remaining trust property to such of the Grantor's descendants,
including living children and grandchildren and other more remote
descendants, and in such shares and outright or in trust, as the
Grantor's Spouse shall appoint by a provision in her last will and
testament specifically referring to and exercising the limited
power of appointment herein granted, or if the Grantor's Spouse
shall not exercise such limited power of appointment with respect
to all or any portion of the remaining trust property subject to
such power, then the trust property not distributed as directed by
the exercise of the Grantor's Spouse's limited power of appointment
shall be distributed the trust property pursuant to the terms of
Paragraph A. of this Item V.
C. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the second (2nd) anniversary of the date of this trust
agreement, and the Grantor's Spouse shall not have survived the
Grantor, the Trustee shall divide the then remaining trust property
into two (2) fractional shares as follows:
one (1) share, which shall be
identified as the Taxable Share, shall consist of a fractional
share of the remaining trust property equal to that fractional
share of the trust property that is included the Grantor's gross
estate for federal estate tax purposes; and
one (1) share, which shall be
identified as the Non-Taxable Share, shall consist of a fractional
share of the remaining Trust Property equal to that fractional
share of the Trust Property that is not included in the Grantor's
gross estate for federal estate tax purposes.
In determining the fractional
shares of the trust property included or not included in the
Grantor's gross estate for federal estate tax purposes, the
denominator of each respective fraction shall be the value of the
trust property on the date of the Grantor's death as finally
determined for federal estate tax purposes, and the numerator of
each respective fraction shall be, in the case of the Taxable
Share, the amount of the trust property included in the Grantor's
gross estate for federal estate tax purposes, and in the case of
the Non-Taxable Share, the amount of the trust property not
included in the Grantor's gross estate for federal estate tax
purposes, as finally determined for federal estate tax purposes.
(1) The Trustee shall distribute the
Taxable Share to the Grantor's estate
(2) The Trustees shall distribute the
Non-Taxable Share pursuant to the terms of Paragraph A. of this
Item V.
D. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the second (2nd) anniversary of the date of this trust
agreement, and the Grantor's Spouse shall have survived the Grantor
with the Contingent Spousal Interest of the Grantor's Spouse under
the provisions of Paragraph B. of this Item V having been revoked,
the Trustee shall distribute the remaining trust property to the
Grantor's Spouse outright.
<PAGE>
ITEM VI
Distribution to Grantor
to Pay Income Tax on Trust Income
Taxable to Grantor
A. The Grantor waives any and all
rights he may have under the law of the state of his residence or
the state of administration of the trust to reimbursement for
federal or state income tax payable by the Grantor on income of the
trust taxable to the Grantor under the provisions of Sections 671-678
of the Code.
B. If the state and federal income tax
payable by the Grantor on income of the trust taxable to the
Grantor under the provisions of Sections 671-678 of the Code is
greater than the Annuity Amount, then the Trustee shall distribute
to the Grantor additional Trust Property equal to the difference
between the Annuity Amount and the federal and state income tax
payable by the Grantor on income of the trust taxable to the
Grantor.
ITEM VII
Grantor's Power to Acquire Trust Property
At all times prior to the
termination of the Grantor's interest as provided for under Item V
of this Trust Agreement, the Grantor shall have the power, which
may be exercised without the approval or consent of any Trustee and
which may be exercised by the Grantor in a non-fiduciary capacity,
to reacquire the Trust Property by substituting other property of
any equivalent value.
ITEM VIII
Commutation
The Grantor's interest in this
trust may not be commuted.
ITEM IX
Spendthrift Clause
To the extent permitted by law, the
interests of the Grantor and any other beneficiary hereunder shall
be free from the control or interference of any creditor of a
beneficiary or of any spouse of a married beneficiary and shall not
be subject to any liabilities or creditor claims or to any
assignment, anticipation, attachment, or alienation.
ITEM X
Trustee's Powers
In extension of and not in
limitation of the powers given to the Trustee by the laws of the
State of Indiana with respect to trust property, the Trustee is
specifically empowered to do the following acts. All of the powers
given by law and by this instrument may be exercised in the sole
discretion of the Trustee without prior authorization or subsequent
approval of any court.
A. To hold and retain all or any
property received from any source, without regard to
diversification or risk. The Trustee is authorized, although no
duty is imposed on the Trustee in this regard, to retain as an
investment of the trusts created by this instrument the shares of
Nationwide Care, Inc., or the shares of any concern that shall
succeed to the whole or a substantial part of the assets or
business of Nationwide Care, Inc. that may become a part of the
property held in trust hereunder even though it might not be
proper, under the laws governing investments by trustees, for the
Trustee to hold such shares or such an amount of the shares of one
company. The Trustee shall not be liable for any loss arising out
of the retention by the Trustee of such shares.
B. To invest and reinvest the trust
funds (or hold them temporarily uninvested) in any type of property
and every kind of investment, including (but not limited to)
corporate and municipal obligations of every kind, preferred or
common stocks, securities of any regulated investment company, and
partnership interests, provided, however, that the Trustee may not
hold nonproductive assets for an unreasonable time, and the Grantor
shall have the right to require the Trustee either to make such
property productive or to convert it within a reasonable time.
C. To take any and all actions with
respect to the ownership of the shares of Nationwide Care, Inc. or
any other company held as trust property hereunder including, but
in no way limited to, the power to vote, sell, pledge, convert,
exchange, hypothecate or grant proxies relating to such securities
or any other securities or assets that may become trust property.
D. To borrow money from any source for
the payment of taxes, debts, or expenses, or in purchasing general
property, or for any other purpose which in the opinion of the
Trustee will benefit the beneficiaries or will facilitate the
administration of any trust, and pledge or mortgage property as
security for such loans; and if money is borrowed from the Trustee
individually, to pay interest thereon.
<PAGE>
ITEM XI
The Trustee
Thomas E. Phillippe, Sr., of
Indianapolis, Indiana, shall be the Trustee until his death,
incapacity, or resignation, at which time Thomas E. Phillippe, Jr.,
of Indianapolis, Indiana, shall be the successor Trustee. Any
successor trustee shall have all the rights, powers, title, and
discretion of the original trustee hereunder and shall be charged
with all the duties and obligations of the original trustee
hereunder.
ITEM XII
Miscellaneous
A. This trust shall be governed by and
construed according to the laws of the State of Indiana. Subject
only to the provisions of Item XIII hereof, the Trustee shall be
fully authorized to exercise any power or make any determination of
fact or law under, or to construe, this instrument and any such
exercise, determination and construction if made by the Trustee in
good faith shall be final, conclusive and binding upon all persons
interested in this trust.
B. The Trustee shall not be liable to
any person interested in this trust for any act or omission of the
Trustee or any agent, nor for any error of judgment, nor for any
mistake of law or fact, nor for any misconstruction of this trust,
nor for any action of any kind taken or omitted hereunder, while
endeavoring in good faith to carry out the purpose of this trust,
except for any profit derived from a breach of trust or for a
breach of trust committed in bad faith, or intentionally, or with
reckless indifference to the interest of a person therein
interested.
C. During the disability of any
beneficiary of any trust hereunder, any principal or income
distributable to such beneficiary may, in the discretion of the
Trustee, be paid to such beneficiary, applied for the benefit of
such beneficiary, paid to a legal guardian of such beneficiary, or
paid to a person having charge or custody of such beneficiary for
the sole and exclusive benefit of such beneficiary, and the receipt
of the person to whom payment is made shall be a valid release and
complete discharge of the Trustee with respect to such payment.
D. Subject to the other provisions
herein to the contrary, the Trustee is authorized to effect the
distribution of property in cash, in kind, or partly in cash and
partly in kind, in divided or undivided interests, to make
non-pro-rata distributions, to select the property to be
distributed to the various beneficiaries, and to determine the
timing of the distributions consistent with the proper
administration of the trust.
ITEM XIII
Construction of Trust
The Grantor intends by this trust
to make a completed gift to his children of a remainder interest in
the trust property, subject only to his retention of a right to the
annuity described in Item IV for two (2) years and the contingent
reversionary interest. Therefore, the Grantor intends that, except
as may be provided expressly herein, his interest in this trust
shall give him only those rights that are ordinarily associated
with an annuity trust interest for a term of years and that he
shall have no rights inconsistent therewith. The Grantor intends
to create a qualified grantor retained annuity trust that satisfies
the requirements of Section 2702 of the Code and the applicable
treasury regulations promulgated with respect to said Section
2702(b)(1) of the Code. The Grantor hereby directs that this trust
agreement be construed and interpreted in accordance with such
intent.
IN WITNESS WHEREOF, Thomas E.
Phillippe, Sr. has executed this trust agreement on the day and
year first above written.
/s/Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Sr., Grantor
/s/Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Sr., Trustee
<PAGE>
SCHEDULE A
Description of Property Net Fair Market Value
850,000 shares of Common $ _________
Stock of Nationwide Care, Inc.
THOMAS E. PHILLIPPE, SR. DECLARATION OF ANNUITY TRUST
FOR THE BENEFIT OF STACEY JO MERVINE
This Declaration of Trust made by
Thomas E. Phillippe, Sr. this 29th day of November, 1994,
WITNESSETH:
Thomas E. Phillippe, Sr. hereby
declares that, on the aforesaid date, Thomas E. Phillippe, Sr.
delivered to himself, as Trustee, the property listed on Schedule
A attached hereto.
The term "Grantor," as used herein,
shall mean Thomas E. Phillippe, Sr. The term "Grantor's Spouse,"
as used herein, shall mean Joan M. Phillippe. The term "Trustee,"
as used herein, shall mean Thomas E. Phillippe, Sr., so long as he
is the trustee of this trust, and shall mean the successor trustee
or trustees thereafter.
ITEM I
Funding the Trust
The property transferred to the
Trustee shall be held and administered according to the terms of
this trust. The Trustee acknowledges the receipt of such property.
The Trustee is prohibited from accepting any additional
contributions to the trust.
ITEM II
Irrevocability
This trust and all interests in it
are irrevocable, and neither the Grantor nor any other person shall
have any power to amend any of the provisions of this trust.
Notwithstanding the foregoing, the Trustee shall have the power,
acting alone, to amend the trust in any manner required for the
sole purpose of ensuring that the Grantor's interest qualifies and
continues to qualify as a "qualified interest" within the meaning
of Section 2702 of the Internal Revenue Code of 1986, as amended
(the "Code").
ITEM III
Term of Trust
This trust shall begin on the date
of this trust agreement and shall continue until the earlier of (i)
the date of the Grantor's death or (ii) the second (2nd)
anniversary of the date of this trust agreement.
ITEM IV
Payment of Annuity Amounts to Grantor
A. During the term of this trust the
Trustee shall annually pay to the Grantor an amount equal to fifty-six
and eight-tenths percent (56.80%) of the fair market value of
the trust assets valued as of the date of this agreement ("Annuity
Amount"). In determining the Annuity Amount, the Trustee shall
prorate the Annuity Amount on a daily basis for any short trust
year, including the year of the Grantor's death (if applicable).
The Annuity Amount shall be paid in annual installments on each
anniversary date of this trust agreement, unless prorated in
accordance with this agreement for a short trust year, for each
trust year from income and, to the extent that income is
insufficient, from principal. Any trust income that is not
distributed to the Grantor as part of the Annuity Amount shall be
added to principal.
B. The Trustee shall make no
distributions of income or principal of the trust to anyone other
than the Grantor before the termination of the trust, except as
provided in Paragraph B. of Item V.
C. If the net fair market value of the
trust assets is incorrectly determined by the Trustee, then within
a reasonable period of time after the final determination of the
correct value, the Trustee shall pay to the Grantor (or the
Grantor's Spouse, if applicable), in the case of an undervaluation,
or the Grantor (or the Grantor's Spouse, if applicable) shall pay
to the Trustee, in the case of an overvaluation, an amount equal to
the difference between the Annuity Amount properly payable and the
Annuity Amount actually paid, plus interest on such amounts
computed at the rate required by the applicable treasury
regulations or, if there are no such regulations, the rate used for
valuing annuity interests under Section 664 of the Code, compounded
annually.
<PAGE>
ITEM V
Distribution Upon
Termination of the Trust
A. If the Grantor is living on the
second (2nd) anniversary of the date of this trust agreement, this
trust shall terminate on the second (2nd) anniversary of the date
of this trust agreement. The Trustee shall distribute the accrued
but undistributed Annuity Amount to the Grantor. The Trustee shall
distribute the balance of the trust property to Stacey Jo Mervine
if she is then living. If she is not then living, the Trustee
shall distribute the trust property to her estate.
B. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the expiration of the term of this trust, and if the Grantor's
Spouse shall survive the Grantor, then the trust shall continue for
the benefit of the Grantor's Spouse unless the Grantor shall have
revoked such continuing spousal interest as hereinafter provided,
and the Trustee shall distribute to the Grantor's Spouse each year
until the second (2nd) anniversary of the date of this trust
agreement, an amount equal to the Annuit Amount. After the second
(2nd) anniversary, the Trustee shall continue to distribute each
year to the Grantor's Spouse an amount equal to all of the net
trust income. Such distributions of the net trust income shall be
made annually on the anniversary date of this trust.
Such continuing spousal interest of
the Grantor's Spouse under this Paragraph B. of this Item V shall
be identified as the Contingent Spousal Interest.
The Grantor shall have the power to
revoke the Contingent Spousal Interest of the Grantor's Spouse
under this Paragraph B. of this Item V by an instrument in writing
signed by the Grantor during his lifetime and delivered to the
Trustee or by a provision in the last will and testament of the
Grantor referring to and revoking the Contingent Spousal Interest
of his spouse under this Trust Agreement.
If the Contingent Spousal Interest
of the Grantor's Spouse shall not have been revoked by the Grantor,
then upon the death of the Grantor's Spouse the Trustee shall
distribute to the estate of the Grantor's Spouse all undistributed
amounts of the Annuity Amount or net trust income, as applicable,
which are accrued under the terms of this Trust Agreement or are
payable to the Grantor's Spouse but have not been distributed to
her as of the date of her death, and the Trustee shall distribute
the remaining trust property to such of the Grantor's descendants,
including living children and grandchildren and other more remote
descendants, and in such shares and outright or in trust, as the
Grantor's Spouse shall appoint by a provision in her last will and
testament specifically referring to and exercising the limited
power of appointment herein granted, or if the Grantor's Spouse
shall not exercise such limited power of appointment with respect
to all or any portion of the remaining trust property subject to
such power, then the trust property not distributed as directed by
the exercise of the Grantor's Spouse's limited power of appointment
shall be distributed the trust property pursuant to the terms of
Paragraph A. of this Item V.
C. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the second (2nd) anniversary of the date of this trust
agreement, and the Grantor's Spouse shall not have survived the
Grantor, the Trustee shall divide the then remaining trust property
into two (2) fractional shares as follows:
one (1) share, which shall be
identified as the Taxable Share, shall consist
of a fractional
share of the remaining trust property equal to
that fractional
share of the trust property that is included the
Grantor's gross
estate for federal estate tax purposes; and
one (1) share, which shall be
identified as the Non-Taxable Share, shall
consist of a fractional
share of the remaining Trust Property equal to
that fractional
share of the Trust Property that is not included
in the Grantor's
gross estate for federal estate tax purposes.
In determining the fractional
shares of the trust property included or not included in the
Grantor's gross estate for federal estate tax purposes, the
denominator of each respective fraction shall be the value of the
trust property on the date of the Grantor's death as finally
determined for federal estate tax purposes, and the numerator of
each respective fraction shall be, in the case of the Taxable
Share, the amount of the trust property included in the Grantor's
gross estate for federal estate tax purposes, and in the case of
the Non-Taxable Share, the amount of the trust property not
included in the Grantor's gross estate for federal estate tax
purposes, as finally determined for federal estate tax purposes.
(1) The Trustee shall distribute the
Taxable Share to the Grantor's estate.
(2) The Trustees shall distribute the
Non-Taxable Share pursuant to the terms of
Paragraph A. of this
Item V.
D. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the second (2nd) anniversary of the date of this trust
agreement, and the Grantor's Spouse shall have survived the Grantor
with the Contingent Spousal Interest of the Grantor's Spouse under
the provisions of Paragraph B. of this Item V having been revoked,
the Trustee shall distribute the remaining trust property to the
Grantor's Spouse outright.
<PAGE>
ITEM VI
Distribution to Grantor
to Pay Income Tax on Trust Income
Taxable to Grantor
A. The Grantor waives any and all
rights he may have under the law of the state of his residence or
the state of administration of the trust to reimbursement for
federal or state income tax payable by the Grantor on income of the
trust taxable to the Grantor under the provisions of Sections 671-678 of the
Code.
B. If the state and federal income tax
payable by the Grantor on income of the trust taxable to the
Grantor under the provisions of Sections 671-678 of the Code is
greater than the Annuity Amount, then the Trustee shall distribute
to the Grantor additional Trust Property equal to the difference
between the Annuity Amount and the federal and state income tax
payable by the Grantor on income of the trust taxable to the
Grantor.
ITEM VII
Grantor's Power to Acquire Trust Property
At all times prior to the
termination of the Grantor's interest as provided for under Item V
of this Trust Agreement, the Grantor shall have the power, which
may be exercised without the approval or consent of any Trustee and
which may be exercised by the Grantor in a non-fiduciary capacity,
to reacquire the Trust Property by substituting other property of
any equivalent value.
ITEM VIII
Commutation
The Grantor's interest in this
trust may not be commuted.
ITEM IX
Spendthrift Clause
To the extent permitted by law, the
interests of the Grantor and any other beneficiary hereunder shall
be free from the control or interference of any creditor of a
beneficiary or of any spouse of a married beneficiary and shall not
be subject to any liabilities or creditor claims or to any
assignment, anticipation, attachment, or alienation.
ITEM X
Trustee's Powers
In extension of and not in
limitation of the powers given to the Trustee by the laws of the
State of Indiana with respect to trust property, the Trustee is
specifically empowered to do the following acts. All of the powers
given by law and by this instrument may be exercised in the sole
discretion of the Trustee without prior authorization or subsequent
approval of any court.
A. To hold and retain all or any
property received from any source, without regard to
diversification or risk. The Trustee is authorized, although no
duty is imposed on the Trustee in this regard, to retain as an
investment of the trusts created by this instrument the shares of
Nationwide Care, Inc., or the shares of any concern that shall
succeed to the whole or a substantial part of the assets or
business of Nationwide Care, Inc. that may become a part of the
property held in trust hereunder even though it might not be
proper, under the laws governing investments by trustees, for the
Trustee to hold such shares or such an amount of the shares of one
company. The Trustee shall not be liable for any loss arising out
of the retention by the Trustee of such shares.
B. To invest and reinvest the trust
funds (or hold them temporarily uninvested) in any type of property
and every kind of investment, including (but not limited to)
corporate and municipal obligations of every kind, preferred or
common stocks, securities of any regulated investment company, and
partnership interests, provided, however, that the Trustee may not
hold nonproductive assets for an unreasonable time, and the Grantor
shall have the right to require the Trustee either to make such
property productive or to convert it within a reasonable time.
C. To take any and all actions with
respect to the ownership of the shares of Nationwide Care, Inc. or
any other company held as trust property hereunder including, but
in no way limited to, the power to vote, sell, pledge, convert,
exchange, hypothecate or grant proxies relating to such securities
or any other securities or assets that may become trust property.
D. To borrow money from any source for
the payment of taxes, debts, or expenses, or in purchasing general
property, or for any other purpose which in the opinion of the
Trustee will benefit the beneficiaries or will facilitate the
administration of any trust, and pledge or mortgage property as
security for such loans; and if money is borrowed from the Trustee
individually, to pay interest thereon.
<PAGE>
ITEM XI
The Trustee
Thomas E. Phillippe, Sr., of
Indianapolis, Indiana, shall be the Trustee until his death,
incapacity, or resignation, at which time Thomas E. Phillippe, Jr.,
of Indianapolis, Indiana, shall be the successor Trustee. Any
successor trustee shall have all the rights, powers, title, and
discretion of the original trustee hereunder and shall be charged
with all the duties and obligations of the original trustee
hereunder.
ITEM XII
Miscellaneous
A. This trust shall be governed by and
construed according to the laws of the State of Indiana. Subject
only to the provisions of Item XIII hereof, the Trustee shall be
fully authorized to exercise any power or make any determination of
fact or law under, or to construe, this instrument and any such
exercise, determination and construction if made by the Trustee in
good faith shall be final, conclusive and binding upon all persons
interested in this trust.
B. The Trustee shall not be liable to
any person interested in this trust for any act or omission of the
Trustee or any agent, nor for any error of judgment, nor for any
mistake of law or fact, nor for any misconstruction of this trust,
nor for any action of any kind taken or omitted hereunder, while
endeavoring in good faith to carry out the purpose of this trust,
except for any profit derived from a breach of trust or for a
breach of trust committed in bad faith, or intentionally, or with
reckless indifference to the interest of a person therein
interested.
C. During the disability of any
beneficiary of any trust hereunder, any principal or income
distributable to such beneficiary may, in the discretion of the
Trustee, be paid to such beneficiary, applied for the benefit of
such beneficiary, paid to a legal guardian of such beneficiary, or
paid to a person having charge or custody of such beneficiary for
the sole and exclusive benefit of such beneficiary, and the receipt
of the person to whom payment is made shall be a valid release and
complete discharge of the Trustee with respect to such payment.
D. Subject to the other provisions
herein to the contrary, the Trustee is authorized to effect the
distribution of property in cash, in kind, or partly in cash and
partly in kind, in divided or undivided interests, to make
non-pro-rata distributions, to select the property to be
distributed to the various beneficiaries, and to determine the
timing of the distributions consistent with the proper
administration of the trust.
ITEM XIII
Construction of Trust
The Grantor intends by this trust
to make a completed gift to his children of a remainder interest in
the trust property, subject only to his retention of a right to the
annuity described in Item IV for two (2) years and the contingent
reversionary interest. Therefore, the Grantor intends that, except
as may be provided expressly herein, his interest in this trust
shall give him only those rights that are ordinarily associated
with an annuity trust interest for a term of years and that he
shall have no rights inconsistent therewith. The Grantor intends
to create a qualified grantor retained annuity trust that satisfies
the requirements of Section 2702 of the Code and the applicable
treasury regulations promulgated with respect to said Section
2702(b)(1) of the Code. The Grantor hereby directs that this trust
agreement be construed and interpreted in accordance with such
intent.
IN WITNESS WHEREOF, Thomas E.
Phillippe, Sr. has executed this trust agreement on the day and
year first above written.
/s/Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Sr., Grantor
/s/Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Sr., Trustee
<PAGE>
SCHEDULE A
Description of Property Net Fair Market Value
850,000 shares of Common $ _________
Stock of Nationwide Care, Inc.
THOMAS E. PHILLIPPE, SR. DECLARATION OF ANNUITY TRUST
FOR THE BENEFIT OF TOWANA K. MOORE
This Declaration of Trust made by
Thomas E. Phillippe, Sr. this 29th day of November, 1994,
WITNESSETH:
Thomas E. Phillippe, Sr. hereby
declares that, on the aforesaid date, Thomas E. Phillippe, Sr.
delivered to himself, as Trustee, the property listed on Schedule
A attached hereto.
The term "Grantor," as used herein,
shall mean Thomas E. Phillippe, Sr. The term "Grantor's Spouse,"
as used herein, shall mean Joan M. Phillippe. The term "Trustee,"
as used herein, shall mean Thomas E. Phillippe, Sr., so long as he
is the trustee of this trust, and shall mean the successor trustee
or trustees thereafter.
ITEM I
Funding the Trust
The property transferred to the
Trustee shall be held and administered according to the terms of
this trust. The Trustee acknowledges the receipt of such property.
The Trustee is prohibited from accepting any additional
contributions to the trust.
ITEM II
Irrevocability
This trust and all interests in it
are irrevocable, and neither the Grantor nor any other person shall
have any power to amend any of the provisions of this trust.
Notwithstanding the foregoing, the Trustee shall have the power,
acting alone, to amend the trust in any manner required for the
sole purpose of ensuring that the Grantor's interest qualifies and
continues to qualify as a "qualified interest" within the meaning
of Section 2702 of the Internal Revenue Code of 1986, as amended
(the "Code").
ITEM III
Term of Trust
This trust shall begin on the date
of this trust agreement and shall continue until the earlier of (i)
the date of the Grantor's death or (ii) the second (2nd)
anniversary of the date of this trust agreement.
ITEM IV
Payment of Annuity Amounts to Grantor
A. During the term of this trust the
Trustee shall annually pay to the Grantor an amount equal to fifty-six
and eight-tenths percent (56.80%) of the fair market value of
the trust assets valued as of the date of this agreement ("Annuity
Amount"). In determining the Annuity Amount, the Trustee shall
prorate the Annuity Amount on a daily basis for any short trust
year, including the year of the Grantor's death (if applicable).
The Annuity Amount shall be paid in annual installments on each
anniversary date of this trust agreement, unless prorated in
accordance with this agreement for a short trust year, for each
trust year from income and, to the extent that income is
insufficient, from principal. Any trust income that is not
distributed to the Grantor as part of the Annuity Amount shall be
added to principal.
B. The Trustee shall make no
distributions of income or principal of the trust to anyone other
than the Grantor before the termination of the trust, except as
provided in Paragraph B. of Item V.
C. If the net fair market value of the
trust assets is incorrectly determined by the Trustee, then within
a reasonable period of time after the final determination of the
correct value, the Trustee shall pay to the Grantor (or the
Grantor's Spouse, if applicable), in the case of an undervaluation,
or the Grantor (or the Grantor's Spouse, if applicable) shall pay
to the Trustee, in the case of an overvaluation, an amount equal to
the difference between the Annuity Amount properly payable and the
Annuity Amount actually paid, plus interest on such amounts
computed at the rate required by the applicable treasury
regulations or, if there are no such regulations, the rate used for
valuing annuity interests under Section 664 of the Code, compounded
annually.
<PAGE>
ITEM V
Distribution Upon
Termination of the Trust
A. If the Grantor is living on the
second (2nd) anniversary of the date of this trust agreement, this
trust shall terminate on the second (2nd) anniversary of the date
of this trust agreement. The Trustee shall distribute the accrued
but undistributed Annuity Amount to the Grantor. The Trustee shall
distribute the balance of the trust property to Towana K. Moore, if
she is then living. If she is not then living, the Trustee shall
distribute the trust property to her estate.
B. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the expiration of the term of this trust, and if the Grantor's
Spouse shall survive the Grantor, then the trust shall continue for
the benefit of the Grantor's Spouse unless the Grantor shall have
revoked such continuing spousal interest as hereinafter provided,
and the Trustee shall distribute to the Grantor's Spouse each year
until the second (2nd) anniversary of the date of this trust
agreement, an amount equal to the Annuity Amount. After the second
(2nd) anniversary, the Trustee shall continue to distribute each
year to the Grantor's Spouse an amount equal to all of the net
trust income. Such distributions of the net trust income shall be
made annually on the anniversary date of this trust.
Such continuing spousal interest of
the Grantor's Spouse under this Paragraph B. of this Item V shall
be identified as the Contingent Spousal Interest.
The Grantor shall have the power to
revoke the Contingent Spousal Interest of the Grantor's Spouse
under this Paragraph B. of this Item V by an instrument in writing
signed by the Grantor during his lifetime and delivered to the
Trustee or by a provision in the last will and testament of the
Grantor referring to and revoking the Contingent Spousal Interest
of his spouse under this Trust Agreement.
If the Contingent Spousal Interest
of the Grantor's Spouse shall not have been revoked by the Grantor,
then upon the death of the Grantor's Spouse the Trustee shall
distribute to the estate of the Grantor's Spouse all undistributed
amounts of the Annuity Amount or net trust income, as applicable,
which are accrued under the terms of this Trust Agreement or are
payable to the Grantor's Spouse but have not been distributed to
her as of the date of her death, and the Trustee shall distribute
the remaining trust property to such of the Grantor's descendants,
including living children and grandchildren and other more remote
descendants, and in such shares and outright or in trust, as the
Grantor's Spouse shall appoint by a provision in her last will and
testament specifically referring to and exercising the limited
power of appointment herein granted, or if the Grantor's Spouse
shall not exercise such limited power of appointment with respect
to all or any portion of the remaining trust property subject to
such power, then the trust property not distributed as directed by
the exercise of the Grantor's Spouse's limited power of appointment
shall be distributed the trust property pursuant to the terms of
Paragraph A. of this Item V.
C. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the second (2nd) anniversary of the date of this trust
agreement, and the Grantor's Spouse shall not have survived the
Grantor, the Trustee shall divide the then remaining trust property
into two (2) fractional shares as follows:
one (1) share, which shall be
identified as the Taxable Share, shall
consist of a fractional
share of the remaining trust property equal
to that fractional
share of the trust property that is included
the Grantor's gross
estate for federal estate tax purposes; and
one (1) share, which shall be
identified as the Non-Taxable Share, shall
consist of a fractional
share of the remaining Trust Property equal
to that fractional
share of the Trust Property that is not included
in the Grantor's
gross estate for federal estate tax purposes.
In determining the fractional
shares of the trust property included or not included in the
Grantor's gross estate for federal estate tax purposes, the
denominator of each respective fraction shall be the value of the
trust property on the date of the Grantor's death as finally
determined for federal estate tax purposes, and the numerator of
each respective fraction shall be, in the case of the Taxable
Share, the amount of the trust property included in the Grantor's
gross estate for federal estate tax purposes, and in the case of
the Non-Taxable Share, the amount of the trust property not
included in the Grantor's gross estate for federal estate tax
purposes, as finally determined for federal estate tax purposes.
(1) The Trustee shall distribute the
Taxable Share to the Grantor's estate.
(2) The Trustees shall distribute the
Non-Taxable Share pursuant to the terms of
Paragraph A. of this
Item V.
D. If the Grantor's interest in the
trust shall terminate by reason of the death of the Grantor prior
to the second (2nd) anniversary of the date of this trust
agreement, and the Grantor's Spouse shall have survived the Grantor
with the Contingent Spousal Interest of the Grantor's Spouse under
the provisions of Paragraph B. of this Item V having been revoked,
the Trustee shall distribute the remaining trust property to the
Grantor's Spouse outright.
<PAGE>
ITEM VI
Distribution to Grantor
to Pay Income Tax on Trust Income
Taxable to Grantor
A. The Grantor waives any and all
rights he may have under the law of the state of his residence or
the state of administration of the trust to reimbursement for
federal or state income tax payable by the Grantor on income of the
trust taxable to the Grantor under the provisions of Sections 671-678 of the
Code.
B. If the state and federal income tax
payable by the Grantor on income of the trust taxable to the
Grantor under the provisions of Sections 671-678 of the Code is
greater than the Annuity Amount, then the Trustee shall distribute
to the Grantor additional Trust Property equal to the difference
between the Annuity Amount and the federal and state income tax
payable by the Grantor on income of the trust taxable to the
Grantor.
ITEM VII
Grantor's Power to Acquire Trust Property
At all times prior to the
termination of the Grantor's interest as provided for under Item V
of this Trust Agreement, the Grantor shall have the power, which
may be exercised without the approval or consent of any Trustee and
which may be exercised by the Grantor in a non-fiduciary capacity,
to reacquire the Trust Property by substituting other property of
any equivalent value.
ITEM VIII
Commutation
The Grantor's interest in this
trust may not be commuted.
ITEM IX
Spendthrift Clause
To the extent permitted by law, the
interests of the Grantor and any other beneficiary hereunder shall
be free from the control or interference of any creditor of a
beneficiary or of any spouse of a married beneficiary and shall not
be subject to any liabilities or creditor claims or to any
assignment, anticipation, attachment, or alienation.
ITEM X
Trustee's Powers
In extension of and not in
limitation of the powers given to the Trustee by the laws of the
State of Indiana with respect to trust property, the Trustee is
specifically empowered to do the following acts. All of the powers
given by law and by this instrument may be exercised in the sole
discretion of the Trustee without prior authorization or subsequent
approval of any court.
A. To hold and retain all or any
property received from any source, without regard to
diversification or risk. The Trustee is authorized, although no
duty is imposed on the Trustee in this regard, to retain as an
investment of the trusts created by this instrument the shares of
Nationwide Care, Inc., or the shares of any concern that shall
succeed to the whole or a substantial part of the assets or
business of Nationwide Care, Inc. that may become a part of the
property held in trust hereunder even though it might not be
proper, under the laws governing investments by trustees, for the
Trustee to hold such shares or such an amount of the shares of one
company. The Trustee shall not be liable for any loss arising out
of the retention by the Trustee of such shares.
B. To invest and reinvest the trust
funds (or hold them temporarily uninvested) in any type of property
and every kind of investment, including (but not limited to)
corporate and municipal obligations of every kind, preferred or
common stocks, securities of any regulated investment company, and
partnership interests, provided, however, that the Trustee may not
hold nonproductive assets for an unreasonable time, and the Grantor
shall have the right to require the Trustee either to make such
property productive or to convert it within a reasonable time.
C. To take any and all actions with
respect to the ownership of the shares of Nationwide Care, Inc. or
any other company held as trust property hereunder including, but
in no way limited to, the power to vote, sell, pledge, convert,
exchange, hypothecate or grant proxies relating to such securities
or any other securities or assets that may become trust property.
D. To borrow money from any source for
the payment of taxes, debts, or expenses, or in purchasing general
property, or for any other purpose which in the opinion of the
Trustee will benefit the beneficiaries or will facilitate the
administration of any trust, and pledge or mortgage property as
security for such loans; and if money is borrowed from the Trustee
individually, to pay interest thereon.
<PAGE>
ITEM XI
The Trustee
Thomas E. Phillippe, Sr., of
Indianapolis, Indiana, shall be the Trustee until his death,
incapacity, or resignation, at which time Thomas E. Phillippe, Jr.,
of Indianapolis, Indiana, shall be the successor Trustee. Any
successor trustee shall have all the rights, powers, title, and
discretion of the original trustee hereunder and shall be charged
with all the duties and obligations of the original trustee
hereunder.
ITEM XII
Miscellaneous
A. This trust shall be governed by and
construed according to the laws of the State of Indiana. Subject
only to the provisions of Item XIII hereof, the Trustee shall be
fully authorized to exercise any power or make any determination of
fact or law under, or to construe, this instrument and any such
exercise, determination and construction if made by the Trustee in
good faith shall be final, conclusive and binding upon all persons
interested in this trust.
B. The Trustee shall not be liable to
any person interested in this trust for any act or omission of the
Trustee or any agent, nor for any error of judgment, nor for any
mistake of law or fact, nor for any misconstruction of this trust,
nor for any action of any kind taken or omitted hereunder, while
endeavoring in good faith to carry out the purpose of this trust,
except for any profit derived from a breach of trust or for a
breach of trust committed in bad faith, or intentionally, or with
reckless indifference to the interest of a person therein
interested.
C. During the disability of any
beneficiary of any trust hereunder, any principal or income
distributable to such beneficiary may, in the discretion of the
Trustee, be paid to such beneficiary, applied for the benefit of
such beneficiary, paid to a legal guardian of such beneficiary, or
paid to a person having charge or custody of such beneficiary for
the sole and exclusive benefit of such beneficiary, and the receipt
of the person to whom payment is made shall be a valid release and
complete discharge of the Trustee with respect to such payment.
D. Subject to the other provisions
herein to the contrary, the Trustee is authorized to effect the
distribution of property in cash, in kind, or partly in cash and
partly in kind, in divided or undivided interests, to make
non-pro-rata distributions, to select the property to be
distributed to the various beneficiaries, and to determine the
timing of the distributions consistent with the proper
administration of the trust.
ITEM XIII
Construction of Trust
The Grantor intends by this trust
to make a completed gift to his children of a remainder interest in
the trust property, subject only to his retention of a right to the
annuity described in Item IV for two (2) years and the contingent
reversionary interest. Therefore, the Grantor intends that, except
as may be provided expressly herein, his interest in this trust
shall give him only those rights that are ordinarily associated
with an annuity trust interest for a term of years and that he
shall have no rights inconsistent therewith. The Grantor intends
to create a qualified grantor retained annuity trust that satisfies
the requirements of Section 2702 of the Code and the applicable
treasury regulations promulgated with respect to said Section
2702(b)(1) of the Code. The Grantor hereby directs that this trust
agreement be construed and interpreted in accordance with such
intent.
IN WITNESS WHEREOF, Thomas E.
Phillippe, Sr. has executed this trust agreement on the day and
year first above written.
/s/Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Sr.,
Grantor
/s/Thomas E. Phillippe, Sr.
Thomas E. Phillippe, Sr.,
Trustee
<PAGE>
SCHEDULE A
Description of Property Net Fair Market Value
850,000 shares of Common $ _________
Stock of Nationwide Care, Inc.
