<PAGE>
Exhibit 10.40
THIRD AMENDMENT
TO THE
HEALTH MANAGEMENT ASSOCIATES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, Health Management Associates, Inc., a corporation under the
laws of the State of Delaware (the "Company"), established the Health Management
Associates, Inc. Supplemental Executive Retirement Plan (the "Plan");
WHEREAS, the right to amend the Plan is expressly reserved to the
Company under Section 5.3 thereof;
WHEREAS, the Plan was amended effective December 13, 1993, under the
First Amendment to the Health Management Associates, Inc. Supplemental Executive
Retirement Plan;
WHEREAS, the Plan was amended effective September 17, 1996, under the
Second Amendment to the Health Management Associates, Inc. Supplemental
Executive Retirement Plan;
WHEREAS, the Company wishes to amend the Plan again.
NOW, THEREFORE, the Plan is hereby amended, effective the 19th day of
September, 2000, as follows:
1. Section 2.1 is amended to read as follows:
Section 2.1. "Actuarial Equivalent" means a benefit having the
same value as the benefit which such Actuarial Equivalent replaces.
The determination of any Actuarial Equivalent shall be based on the
following actuarial assumptions: (a) the annual rate of interest on
10-year Treasury securities in effect as of the first day of the month
for which an Actuarial Equivalent is determined and (b) the 1984
Unisex Pension Mortality Table.
2. Section 2.4 is amended to read as follows:
Section 2.4. "Change of Ownership" means (a) the acquisition
after the Effective Date, whether directly, indirectly, beneficially
(within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "1934 Act")), or of record, of securities of the
Company or its parent corporation, HMA Holding Corp., by any "person"
(within the meaning of Sections 13(d) and 14(d)(2) of the 1934 Act),
including any corporation or group of associated persons acting in
concert which, after such acquisition will result in such person
having control of the Company or HMA Holding Corp., or (b) a change in
the ownership of a substantial portion of the assets of the Company or
HMA Holding Corp. within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended. Notwithstanding the immediately
preceding sentence, a Change of Ownership shall not be deemed to have
occurred if such acquisition is by (i) the Company; and/or (ii) any
employee pension benefit plan (within the meaning of Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended) of
the Company, including a trust established pursuant to any such plan;
and/or (iii) any person who is a stockholder of HMA Holding Corp. on
the Effective Date, or any person who is the spouse of such
stockholder, or any person who, directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common
control of such stockholder. For purposes of this Section "control"
means the ownership of more than twenty-five percent (25%) of the
voting authority with respect to the Company, HMA Holding Corp. or any
such person
62
<PAGE>
within the context of clause (b)(iii) of this Section, as the case may
be.
3. Section 2.19 is hereby added to read as follows:
Section 2.19. "Trust" means a "rabbi trust" that does not
affect the unfunded status of this Plan and whose form follows
guidance promulgated by the Internal Revenue Service in Revenue
Procedure 92-64, as it may be amended from time to time.
4. Section 4.4 is amended to read as follows:
Section 4.4. Change of Ownership. Notwithstanding Sections
-------------------
4.1, 4.2 or 4.3, the following provisions shall apply in the event the
Board gains knowledge that a Change of Ownership has occurred or is
likely to occur:
(a) If such an event occurs after a Participant's
Normal Retirement Date, the Company shall immediately pay the single
cash sum Actuarial Equivalent of the Participant's Retirement Benefit
to such Participant or his Beneficiary.
(b) If such an event occurs before a Participant's
Normal Retirement Date, the Company shall immediately deposit with
trustee of the Trust an amount equal to the Actuarial Equivalent of
the Participant's Retirement Benefit. Such a deposit shall be
calculated based upon the Participant's age at the time of such
deposit. In the event of such a Participant's subsequent termination
from Full-Time Employment, for any reason including death, the trustee
of the Trust shall immediately distribute the amount of such deposit,
plus earnings thereon, to the Participant or his Beneficiary.
(c) If no Trust has been previously established under
this Plan, the Company shall establish a Trust immediately upon the
Board gaining knowledge that a Change of Ownership has occurred or is
likely to occur.
(d) The Company shall compensate the Participant or his
Beneficiary on an after-tax basis for:
(i) Medicare or FICA taxes;
(ii) the increase in the effective rate of federal
and state income taxes stemming from the lump sum payment;
and
(iii) any excise taxes
which shall be payable with respect to any payments made
hereunder as a result of a Change of Ownership.
(e) With respect to amounts determined pursuant to
subsection (d):
(i) if a Participant has reached his Normal
Retirement Date, the Company shall pay the amounts directly
to such Participant; and
(ii) if a Participant has not yet reached
his Normal Retirement Date, the Company shall make an additional
cash deposit to the trustee of the Trust equal to the amounts
determined under subsection (d) based upon the tax rates in
effect for the Participant on the date of the deposit. At the
time such a Participant or Beneficiary receives payment from the
Trust, the trustee shall distribute the additional estimated cash
deposit, with any earnings thereon, directly to such Participant
or Beneficiary to the extent necessary to compensate the
Participant or Beneficiary for the actual tax liability
(including the tax liability for the additional payment). If the
aforementioned distribution is insufficient to compensate such
Participant or Beneficiary for the actual tax
63
<PAGE>
liability (including the tax liability for the additional
payment), the Company shall make an additional direct cash
payment to the Participant or Beneficiary equal to the
shortfall. Any assets remaining in the Trust after a
Participant or Beneficiary has received the Retirement
Benefit calculated pursuant to subsection (b) and has been
compensated for the tax liability shall be returned to the
Company.
(f) Upon full payment pursuant to this Section, no
further benefits shall be payable under the Plan to such Participant.
5. Section 6.2 is amended to read as follows:
Section 6.2. Title to Plan Assets. Title to and beneficial
--------------------
ownership of any assets, whether cash or investments, which are held
or earmarked to pay the deferred compensation obligation hereunder,
shall at all times remain unrestricted assets of the Company and any
Participant or Beneficiary (or personal representative) shall not have
any property interest in such assets. However, the Company, may
establish a Trust under this Plan and deposit any assets, whether cash
or investments, therein for the benefit of the Participants or
Beneficiaries. Title to and beneficial ownership of the assets of the
Trust shall be held by the trustees of such Trust. This Plan at all
times shall be considered entirely unfunded both for federal tax
purposes and for purposes of Title I of the Employee Retirement Income
Security Act of 1974, as amended. To the extent that any Participant
or Beneficiary (or personal representative) acquires a right to
receive payments from the Company, such right shall be no greater than
the right of any unsecured general creditor of the Company.
6. Section 6.3 is amended to add the following sentence to the end
thereof:
Notwithstanding the foregoing, nothing herein shall preclude the
Company from transferring any life insurance contract to a Trust
established hereunder, or designating the trustee as beneficiary of
any such contract.
The remainder of the Plan shall remain in full force and effect and
shall be unaffected by this Third Amendment.
IN WITNESS WHEREOF, the Company has caused this Third Amendment to be
executed this 5th day of December, 2000.
HEALTH MANAGEMENT ASSOCIATES, INC.
By: /s/ Timothy R. Parry
------------------------------------
Its: Vice President
-----------------------------------
64
