Rabbi Trust Agreement (Rev. Proc. 92-64 Model — Nonqualified Deferred Compensation Grantor Trust)

IRREVOCABLE RABBI TRUST AGREEMENT

(Grantor Trust for [EMPLOYER NAME] Nonqualified Deferred Compensation Plan — Modeled on IRS Rev. Proc. 92-64)

I. PARTIES AND RECITALS

EMPLOYER / GRANTOR: [EMPLOYER FULL LEGAL NAME], a [STATE] [corporation / LLC / partnership] (the "Employer" or "Grantor")

Principal Office: [ADDRESS]

TRUSTEE: [TRUSTEE NAME, e.g., bank trust company] (the "Trustee")

Address: [ADDRESS]

EFFECTIVE DATE: This Irrevocable Rabbi Trust Agreement (this "Trust Agreement") is made and entered into as of [__/__/____].

RECITALS

WHEREAS, the Employer has adopted the [NAME OF NQDC PLAN] (the "Plan"), a nonqualified deferred compensation plan maintained for a select group of management or highly compensated employees within the meaning of ERISA §§ 201(2), 301(a)(3), and 401(a)(1), 29 U.S.C. § 1051(2) (a "Top-Hat Plan");

WHEREAS, the Employer has incurred or expects to incur liability under the terms of the Plan with respect to the individuals participating in the Plan (each, a "Participant");

WHEREAS, the Employer wishes to establish a trust (the "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of the Employer's general creditors in the event of the Employer's Insolvency (as defined herein), until paid to Participants and their beneficiaries in such manner and at such times as specified in the Plan;

WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA");

WHEREAS, it is the intention of the Employer 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;

WHEREAS, this Trust Agreement is modeled upon the model rabbi trust agreement set forth in IRS Revenue Procedure 92-64, 1992-2 C.B. 422, and shall be construed and administered consistent therewith and with Internal Revenue Code § 409A and the regulations thereunder;

NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held, and disposed of as follows.

II. ESTABLISHMENT OF TRUST

A. Deposit. The Employer hereby deposits with the Trustee in trust [DESCRIBE INITIAL CORPUS: cash, marketable securities, COLI policies, etc.], which shall become the principal of the Trust to be held, administered, and disposed of by the Trustee as provided in this Trust Agreement.

B. Irrevocability. The Trust hereby established shall be irrevocable.

C. Grantor Trust Status. The Trust is intended to be a grantor trust, of which the Employer 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. All items of income, deduction, and credit of the Trust are includible in the Employer's gross income for federal income tax purposes.

D. Segregation but Not Funded. The principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Employer and shall be used exclusively for the uses and purposes of Plan Participants and general creditors as herein set forth. 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 Participants and their beneficiaries against the Employer. Any assets held by the Trust will be subject to the claims of the Employer's general creditors under federal and state law in the event of Insolvency, as defined in Section III herein.

E. Additional Contributions. The Employer, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property in trust with the Trustee 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 deposit, except that no contribution shall be made in violation of IRC § 409A(b), including without limitation (i) any contribution to a trust located outside the United States described in § 409A(b)(1), or (ii) any contribution made during a "restricted period" or upon a change in financial health described in § 409A(b)(2)–(3).

III. PAYMENTS UPON INSOLVENCY — GENERAL CREDITOR PROVISION

A. Definition of Insolvency. The Employer shall be considered "Insolvent" for purposes of this Trust Agreement if (i) the Employer is unable to pay its debts as they become due, or (ii) the Employer is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

B. Trust Assets Available to General Creditors. At all times during the continuance of this Trust, the principal and income of the Trust shall be subject to claims of general creditors of the Employer under federal and state law as set forth below:

1. The Board of Directors and the Chief Executive Officer of the Employer shall have the duty to inform the Trustee in writing of the Employer's Insolvency. If a person claiming to be a creditor of the Employer alleges in writing to the Trustee that the Employer has become Insolvent, the Trustee shall determine whether the Employer is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to Participants or their beneficiaries.

2. Unless the Trustee has actual knowledge of the Employer's Insolvency, or has received notice from the Employer or a person claiming to be a creditor alleging that the Employer is Insolvent, the Trustee shall have no duty to inquire whether the Employer is Insolvent. The Trustee may in all events rely on such evidence concerning the Employer's solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Employer's solvency.

3. If at any time the Trustee has determined that the Employer is Insolvent, the Trustee shall discontinue payments to Participants or their beneficiaries and shall hold the assets of the Trust for the benefit of the Employer's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants or their beneficiaries to pursue their rights as general creditors of the Employer with respect to benefits due under the Plan or otherwise.

4. The Trustee shall resume the payment of benefits to Participants or their beneficiaries in accordance with the Plan only after the Trustee has determined that the Employer is not Insolvent (or is no longer Insolvent).

C. Resumption After Insolvency. Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section III(B) and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to 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 Participants or their beneficiaries by the Employer in lieu of the payments provided for hereunder during any such period of discontinuance.

IV. PAYMENTS TO PARTICIPANTS

A. Payment Schedule. The Employer shall deliver to the Trustee a schedule (the "Payment Schedule") that indicates the amounts payable in respect of each Participant (and his or her beneficiaries), the form in which such amount is to be paid (as provided for or available under the Plan), and the time of commencement for payment of such amounts. Except as otherwise provided herein, the Trustee shall make payments to the Participants and their beneficiaries in accordance with such Payment Schedule. The Trustee shall make provision for the reporting and withholding of any federal, state, or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld, and paid by the Employer.

B. Permissible Distribution Triggers Under § 409A. Notwithstanding anything to the contrary, distributions to a Participant from the Trust on account of the Plan may be made only upon one or more of the following § 409A(a)(2) events:

• ☐ Separation from service (as defined in Treas. Reg. § 1.409A-1(h))
• ☐ Disability (as defined in Treas. Reg. § 1.409A-3(i)(4))
• ☐ Death of the Participant
• ☐ A specified time or fixed schedule established under the Plan
• ☐ Change in ownership or effective control of the Employer (Treas. Reg. § 1.409A-3(i)(5))
• ☐ Unforeseeable emergency (Treas. Reg. § 1.409A-3(i)(3))

C. Six-Month Delay for Specified Employees. With respect to any Participant who is a "specified employee" (within the meaning of § 409A(a)(2)(B)(i)) of a publicly traded Employer, payments on account of separation from service shall be delayed for at least six (6) months following such separation (or, if earlier, the date of the Participant's death).

D. Direct Employer Payment. The Employer may make payment of benefits directly to Participants or their beneficiaries as they become due under the terms of the Plan. The Employer shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to Participants or their beneficiaries.

E. No Acceleration. No acceleration of the time or schedule of any payment shall be permitted, except as expressly allowed by Treas. Reg. § 1.409A-3(j)(4) (e.g., domestic relations orders, conflicts of interest, employment tax payments).

V. INVESTMENT AUTHORITY

A. Trustee Investment. The Trustee may invest in securities (including stock or rights to acquire stock) or obligations issued by the Employer. All rights associated 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 Participants.

B. Investment Direction. ☐ The Employer 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 Employer in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity.

C. No Offshore Trust (§ 409A(b)(1)). Trust assets shall at all times be located within the United States. No assets may be transferred to or held in a trust located outside the United States.

D. No Financial-Health Trigger Funding (§ 409A(b)(2)). No contribution shall be made, and no assets shall become restricted to the provision of benefits, in connection with a change in the Employer's financial health.

VI. ACCOUNTING

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 Employer and Trustee. Within sixty (60) days following the close of each calendar year and within sixty (60) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Employer 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.

VII. RESPONSIBILITY OF TRUSTEE

A. Standard of Care. The Trustee shall act with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

B. Indemnification. The Employer shall indemnify and hold harmless the Trustee from and against any liability that the Trustee may incur in the administration of the Trust, unless arising from the Trustee's own negligence, willful misconduct, or lack of good faith.

C. Compensation. The Trustee shall be entitled to reasonable compensation for its services as agreed upon in writing with the Employer.

VIII. RESIGNATION AND REMOVAL OF TRUSTEE

A. Resignation. The Trustee may resign at any time by written notice to the Employer, which shall be effective sixty (60) days after receipt of such notice unless the Employer and the Trustee agree otherwise.

B. Removal. The Trustee may be removed by the Employer on sixty (60) days' notice or upon shorter notice accepted by the Trustee, provided that following a Change in Control (as defined in the Plan or Treas. Reg. § 1.409A-3(i)(5)), the Trustee may not be removed by the Employer without the written consent of a majority of the Participants.

C. Successor. Upon resignation or removal, a successor Trustee shall be appointed by the Employer (or, after a Change in Control, by a majority of the Participants).

IX. AMENDMENT OR TERMINATION

A. Amendment. This Trust Agreement may be amended by a written instrument executed by the Trustee and the Employer. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plan, shall make the Trust revocable, shall cause the Trust assets to no longer be subject to the claims of the Employer's general creditors, or shall violate § 409A.

B. Termination. The Trust shall not terminate until the date on which 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 Employer.

C. Effect of Change in Control. Notwithstanding Section IX(A), following a Change in Control, this Trust Agreement may not be amended in any manner adverse to Participants without the written consent of a majority of the Participants then receiving or entitled to receive benefits under the Plan.

X. MISCELLANEOUS

A. No Assignment. Benefits payable to 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.

B. ERISA Top-Hat Acknowledgment. The Plan is intended to be, and this Trust is intended to support, an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, exempt from Parts 2, 3, and 4 of Title I of ERISA pursuant to 29 U.S.C. §§ 1051(2), 1081(a)(3), and 1101(a)(1).

C. § 409A Compliance. The Plan and this Trust shall be administered, interpreted, and construed in a manner consistent with § 409A. To the extent any provision is inconsistent with § 409A, such provision shall be reformed to comply.

D. Severability. Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of such prohibition without invalidating the remaining provisions.

E. Governing Law. This Trust Agreement shall be governed by and construed in accordance with the laws of the State of [GOVERNING STATE], except to the extent preempted by ERISA or other federal law.

F. State Tax Conformity Note. Certain states (including New York and Pennsylvania) have specific rules regarding deductibility, sourcing, and source-state taxation of NQDC distributions; the Employer should consult state tax counsel before adoption.

G. Securities Law. If the Trust holds employer stock or derivative rights, the Employer shall comply with applicable reporting and short-swing-profit rules under §§ 13 and 16 of the Securities Exchange Act of 1934 and Rule 16b-3.

H. Effective Date and Counterparts. This Trust Agreement shall be effective as of the date first written above. This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

XI. SIGNATURES

NOTARY ACKNOWLEDGMENT

State of [____________________]
County of [____________________]

On this [____] day of [____________], [______], before me personally appeared the above-named officers, known to me (or satisfactorily proven) to be the persons whose names are subscribed to the foregoing instrument, and acknowledged that they executed the same on behalf of the parties indicated.

_______________________
Notary Public
My commission expires: [__/__/____]

XII. SCHEDULE A — § 409A COMPLIANCE CHECKLIST

XIII. SOURCES AND REFERENCES

• Rev. Proc. 92-64, 1992-2 C.B. 422 — IRS model rabbi trust agreement
• Rev. Proc. 92-65, 1992-2 C.B. 428 — Constructive-receipt guidelines for NQDC plans
• 26 U.S.C. § 409A — Nonqualified deferred compensation
• 26 C.F.R. §§ 1.409A-1 through 1.409A-6 — Final § 409A regulations
• 29 U.S.C. § 1051(2); 29 C.F.R. § 2520.104-23 — ERISA top-hat exemption and DOL filing
• IRS Pub. 5528 (Rev. 3-2024) — Nonqualified Deferred Compensation Audit Technique Guide
• PLR 8113107 (1980) — Original IRS approval of a synagogue's deferred-compensation trust (origin of "rabbi trust")