NEW REVENUE PROCEDURE CONTAINS MODEL
RABBI TRUST PROVISIONS. The Service in Revenue Procedure 92-64
has published a model grantor trust for use in executive
compensation arrangements that are commonly referred to as
"rabbi trusts." Rev. Proc. 92-64, which is effective as of July 28, 1992,
also provides guidance for requesting rulings on nonqualified deferred
compensation plans that use those trusts.
According to the Service, the model trust is intended to
serve as a safe harbor for taxpayers that adopt and maintain
grantor trusts in connection with unfunded deferred
compensation arrangements. If the model trust is used in
accordance with Rev. Proc. 92-64, an employee will not be in
constructive receipt of income or incur an economic benefit
solely on account of the adoption or maintenance of the trust.
The Service warns, however, that the desired tax effect will
be achieved only if the nonqualified deferred compensation
arrangement effectively defers compensation. Therefore, no
inference may be drawn by reason of adoption of the model
trust concerning constructive receipt or economic benefit
issues that may be present in the underlying plan. The Service
further points out that the use of the model trust does not
change the rules generally applicable under section 6321
regarding the attachment of a federal tax lien to a taxpayer's
property and rights to property.
The Service says it will continue to rule on unfunded
deferred compensation plans that do not use a trust, on
unfunded deferred compensation plans that use the model trust,
and, when the model trust is used, generally, on the issue of
whether a trust constitutes a grantor trust. However, it will
not issue rulings on unfunded deferred compensation
arrangements that use a trust other than the model trust,
"except in rare and unusual circumstances."
Written comments, including suggested language, concerning
the model trust provisions contained in Rev. Proc. 92-64 may
be sent to Internal Revenue Service, Office of the Associate
Chief Counsel (Employee Benefits and Exempt Organizations),
Attention: CC:EE:1:1, Room 5201, PO Box 7604, Ben Franklin
Station, Washington, DC 20044.
The Service will continue to rule on unfunded deferred
compensation plans that do not use a trust, on unfunded
deferred compensation plans that use the model trust, and,
where the model trust is used, generally, on the issue of
whether a trust constitutes a grantor trust within the meaning
of subpart E, part I, subchapter J, chapter 1, subtitle A of
the Internal Revenue Code of 1986. However, rulings will not
be issued on unfunded deferred compensation arrangements that
use a trust other than the model trust, except in rare and
Taxpayers that adopt the model trust and wish to obtain a
ruling on the underlying nonqualified deferred compensation
plan, must include a representation that the plan, as amended,
is not inconsistent with the terms of the trust and must
follow the guidelines outlined in Section 4 of this revenue
procedure and Revenue Procedure 92-65, page [sic], /*/ this
Bulletin. Rulings issued on such deferred compensation
arrangements will continue to provide that the Service
expresses no opinion as to the consequences of the arrangement
under Title I of the Employee Retirement Income Security Act
of 1974 ("ERISA"). The Department of Labor has advised that
whether a "top hat" or excess benefit plan is funded or
unfunded depends upon all of the facts and circumstances.
However, it is the DOL's view that such plans will not fail to
be "unfunded" for purposes of sections 4(b)(5), 201(2),
301(a)(3) and 401(a)(1) of ERISA solely because there is
maintained in connection with such a plan a trust which
conforms to the model trust described in Section 5 of this
In addition, rulings issued on deferred compensation'
arrangements using the model trust will provide that the
Service expresses no opinion on the consequences under
subchapter C of chapter 1 of subtitle A of the Code or under
sections 1501 through 1504 on the trust's acquisition,
holding, sale or disposition of stock of the grantor.
02. The request for a ruling must contain a representation
that the trust is a valid trust under state law and that all
of the material terms and provisions of the trust, including
the creditors' rights clause, are enforceable under the
appropriate state laws.
03. The trustee of the trust must be an independent third
party that may be granted corporate trustee powers under state
law, such as a bank trust department or other similar
The model trust language contains a number of optional
provisions, which are printed in italics and marked as
"OPTIONAL." The taxpayer may substitute language of its choice
for any optional provision, provided that the substituted
language is not inconsistent with the language of the model
trust. The model trust language also contains several
alternative provisions, which are printed in italics and
marked as "ALTERNATIVE." The taxpayer must choose one of these
alternatives. Items in brackets are explanatory.
02. The text of the model trust follows.
TRUST UNDER ____ PLAN
(a) THIS AGREEMENT MADE THIS ___ DAY OF ___,
BY AND BETWEEN ____ (COMPANY) AND ____ (TRUSTEE);
(b) WHEREAS, COMPANY HAS ADOPTED THE
NONQUALIFIED DEFERRED COMPENSATION PLAN(S) AS LISTED IN
(c) WHEREAS, COMPANY HAS INCURRED OR EXPECTS
TO INCUR LIABILITY UNDER THE TERMS OF SUCH PLAN(S) WITH
RESPECT TO THE INDIVIDUALS PARTICIPATING IN SUCH PLAN(S);
(d) WHEREAS, Company wishes to establish a trust
(hereinafter called "Trust") and to contribute to the Trust
assets that shall be held therein, subject to the claims of
Company's creditors in the event of Company's Insolvency, as
herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in
(e) 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(s) 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;
(f) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed
of as follows:
Section 1. ESTABLISHMENT OF TRUST
(a) Company hereby
deposits with Trustee in trust _____ [INSERT AMOUNT
DEPOSITED], which shall become the principal of the Trust to
be held, administered and disposed of by Trustee as provided
in this Trust Agreement. ALTERNATIVES -- SELECT ONE PROVISION.
(b) THE TRUST HEREBY ESTABLISHED SHALL BE REVOCABLE BY
(b) THE TRUST HEREBY ESTABLISHED SHALL BE IRREVOCABLE.
(b) THE TRUST HEREBY ESTABLISHED IS REVOCABLE BY COMPANY;
IT SHALL BECOME IRREVOCABLE UPON A CHANGE OF CONTROL, AS
(b) THE TRUST SHALL BECOME IRREVOCABLE ____ [INSERT NUMBER]
DAYS FOLLOWING THE ISSUANCE OF A FAVORABLE PRIVATE LETTER
RULING REGARDING THE TRUST FROM THE INTERNAL REVENUE SERVICE.
(b) THE TRUST SHALL BECOME IRREVOCABLE UPON APPROVAL BY THE
BOARD OF DIRECTORS.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part
I, subchapter J, chapter 1, subtitle A of the Internal Revenue
Code of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company
and shall be used exclusively for the uses and purposes of
Plan participants and general creditors as herein set forth.
Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in,
any assets of the Trust. Any rights created under the Plan(s)
and this Trust Agreement shall be mere unsecured contractual
rights of Plan participants and their beneficiaries against
Company. Any assets held by the Trust will be subject to the
claims of Company's general creditors under federal and state
law in the event of Insolvency, as defined in Section 3(a)
ALTERNATIVES -- SELECT ONE OR MORE PROVISIONS, AS
(e) COMPANY, IN ITS SOLE DISCRETION, MAY AT ANY TIME, OR
FROM TIME TO TIME, MAKE ADDITIONAL DEPOSITS OF CASH OR OTHER
PROPERTY IN TRUST WITH TRUSTEE TO AUGMENT THE PRINCIPAL TO BE
HELD, ADMINISTERED AND DISPOSED OF BY TRUSTEE AS PROVIDED IN
THIS TRUST AGREEMENT. NEITHER TRUSTEE NOR ANY PLAN PARTICIPANT
OR BENEFICIARY SHALL HAVE ANY RIGHT TO COMPEL SUCH ADDITIONAL
(e) UPON A CHANGE OF CONTROL, COMPANY SHALL, AS SOON AS
POSSIBLE, BUT IN NO EVENT LONGER THAN ___ [FILL IN BLANK] DAYS
FOLLOWING THE CHANGE OF CONTROL, AS DEFINED HEREIN, MAKE AN
IRREVOCABLE CONTRIBUTION TO THE TRUST IN AN AMOUNT THAT IS
SUFFICIENT TO PAY EACH PLAN PARTICIPANT OR BENEFICIARY THE
BENEFITS TO WHICH PLAN PARTICIPANTS OR THEIR BENEFICIARIES
WOULD BE ENTITLED PURSUANT TO THE TERMS OF THE PLAN(S) AS OF
THE DATE ON WHICH THE CHANGE OF CONTROL OCCURRED.
(e) WITHIN ____ [FILL IN BLANK] DAYS FOLLOWING THE END OF
THE PLAN YEAR(S), ENDING AFTER THE TRUST HAS BECOME
IRREVOCABLE PURSUANT TO SECTION 1(b) HEREOF, COMPANY SHALL BE
REQUIRED TO IRREVOCABLY DEPOSIT ADDITIONAL CASH OR OTHER
PROPERTY TO THE TRUST IN AN AMOUNT SUFFICIENT TO PAY EACH PLAN
PARTICIPANT OR BENEFICIARY THE BENEFITS PAYABLE PURSUANT TO
THE TERMS OF THE PLAN(S) AS OF THE CLOSE OF THE PLAN YEAR(S).
2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Company shall deliver to Trustee a schedule (the
"Payment Schedule") that indicates the amounts payable in
respect of each Plan participant (and his or her
beneficiaries), that provides a formula or other instructions
acceptable to Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for
or available under the Plan(s)), and the time of commencement
for payment of such amounts. Except as otherwise provided
herein, Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such 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(s) and shall pay
amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld and
paid by Company.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plan(s) shall be
determined by Company or such party as it shall designate
under the Plan(s), and any claim for such benefits shall be
considered and reviewed under the procedures set out in the
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under
the terms of the Plan(s). Company shall notify Trustee of its
decision to make payment of benefits directly prior to the
time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and
any earnings thereon, are not sufficient to make payments of
benefits in accordance with the terms of the Plan (5), Company
shall make the balance of each such payment as it falls due.
Trustee shall notify Company where principal and earnings are
Section 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS
TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is
Insolvent. Company shall be considered "Insolvent" for
purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject
to a pending proceeding as a debtor under the United States
Bankruptcy Code. OPTIONAL , OR (iii) COMPANY IS DETERMINED TO
BE INSOLVENT BY ______ [INSERT NAMES OF APPLICABLE FEDERAL
AND/OR STATE REGULATORY AGENCY].
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of
the Trust shall be subject to claims of general creditors of
Company under federal and state law as set forth below.
- The Board of Directors and the
Chief Executive Officer [or substitute the title of the
highest ranking officer of the Company] of Company shall
have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company
alleges in writing to Trustee that Company has become
Insolvent, Trustee shall determine whether Company is
Insolvent and, pending such determination, Trustee shall
discontinue payment of benefits to Plan participants or
- Unless Trustee has actual
knowledge of Company's Insolvency, or has received notice
from Company or a person claiming to be a creditor alleging
that Company is Insolvent, Trustee shall have no duty to
inquire whether Company is Insolvent. Trustee may in all
events rely on such evidence concerning Company's solvency
as may be furnished to Trustee and that provides Trustee
with a reasonable basis for making a determination
concerning Company's solvency.
- If at any time Trustee has
determined that Company is Insolvent, Trustee shall
discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the
benefit of Company's general creditors. Nothing in this
Trust Agreement shall in any way diminish any rights of Plan
participants or their beneficiaries to pursue their rights
as general creditors of Company with respect to benefits due
under the Plan(s) or otherwise.
- Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after Trustee has
determined that Company is not Insolvent (or is no longer
(c) Provided that there are sufficient
assets, if Trustee discontinues the payment of benefits from
the Trust pursuant to Section 3(b) hereof and subsequently
resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all
payments due to Plan participants or their beneficiaries under
the terms of the Plan(s) for the period of such
discontinuance, less the aggregate amount of any payments made
to Plan participants or their beneficiaries by Company in lieu
of the payments provided for hereunder during any such period
Section 4. PAYMENTS TO COMPANY.
[The following need not
be included if the first alternative under 1(b) is selected.]
Except as provided in Section 3 hereof, after the Trust has
become irrevocable, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any
of the Trust assets before all payment of benefits have been
made to Plan participants and their beneficiaries pursuant to
the terms of the Plan(s).
Section 5. INVESTMENT AUTHORITY.
ALTERNATIVES -- SELECT
ONE PROVISION, AS APPROPRIATE
(a) IN NO EVENT MAY TRUSTEE INVEST IN SECURITIES (INCLUDING
STOCK OR RIGHTS TO ACQUIRE STOCK) OR OBLIGATIONS ISSUED BY
COMPANY, OTHER THAN A DE MINIMIS AMOUNT HELD IN COMMON
INVESTMENT VEHICLES IN WHICH TRUSTEE INVESTS. ALL RIGHTS
ASSOCIATED WITH ASSETS OF THE TRUST SHALL BE EXERCISED BY
TRUSTEE OR THE PERSON DESIGNATED BY TRUSTEE, AND SHALL IN NO
EVENT BE EXERCISABLE BY OR REST WITH PLAN PARTICIPANTS.
(a) TRUSTEE MAY INVEST IN SECURITIES (INCLUDING STOCK OR
RIGHTS TO ACQUIRE STOCK) OR OBLIGATIONS ISSUED BY COMPANY. ALL
RIGHTS ASSOCIATED WITH ASSETS OF THE TRUST SHALL BE EXERCISED
BY TRUSTEE OR THE PERSON DESIGNATED BY TRUSTEE, AND SHALL IN
NO EVENT BE EXERCISABLE BY OR REST WITH PLAN PARTICIPANTS.
OPTIONAL ,EXCEPT THAT VOTING RIGHTS WITH RESPECT TO TRUST
ASSETS WILL BE EXERCISED BY COMPANY.
OPTIONAL ,EXCEPT THAT DIVIDEND RIGHTS WITH RESPECT TO TRUST
ASSETS WILL REST WITH COMPANY.
OPTIONAL COMPANY SHALL HAVE THE RIGHT, AT ANYTIME, AND FROM
TIME TO TIME IN ITS SOLE DISCRETION, TO SUBSTITUTE ASSETS OF
EQUAL FAIR MARKET VALUE FOR ANY ASSET HELD BY THE TRUST.
[If the second Alternative 5(a) is selected, the trust must
provide either (1) that the trust is revocable under
Alternative 1(b), or (2) the following provision must by
included in the Trust]:
"COMPANY SHALL HAVE THE RIGHT AT ANYTIME, 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 COMPANY IN A NONFIDUCIARY CAPACITY WITHOUT
THE APPROVAL OR CONSENT OF ANY PERSON IN A FIDUCIARY
Section 6. DISPOSITION OF INCOME.
SELECT ONE PROVISION.
(a) DURING THE TERM OF THIS TRUST, ALL INCOME RECEIVED BY
THE TRUST, NET OF EXPENSES AND TAXES, SHALL BE ACCUMULATED AND
(a) DURING THE TERM OF THIS TRUST, ALL, OR ___ [INSERT
AMOUNT] PART OF THE INCOME RECEIVED BY THE TRUST, NET OF
EXPENSES AND TAXES, SHALL BE RETURNED TO COMPANY.
Section 7. ACCOUNTING BY TRUSTEE.
TRUSTEE SHALL KEEP ACCURATE AND DETAILED
RECORDS OF ALL INVESTMENTS, RECEIPTS, DISBURSEMENTS, AND ALL
OTHER TRANSACTIONS REQUIRED TO BE MADE, INCLUDING SUCH
SPECIFIC RECORDS AS SHALL BE AGREED UPON IN WRITING BETWEEN
COMPANY AND TRUSTEE. WITHIN ___ [INSERT NUMBER] DAYS FOLLOWING
THE CLOSE OF EACH CALENDAR YEAR AND WITHIN ___ [INSERT NUMBER]
DAYS AFTER THE REMOVAL OR RESIGNATION OF TRUSTEE, TRUSTEE
SHALL DELIVER TO COMPANY A WRITTEN ACCOUNT OF ITS
ADMINISTRATION OF THE TRUST DURING SUCH YEAR OR DURING THE
PERIOD FROM THE CLOSE OF THE LAST PRECEDING YEAR TO THE DATE
OF SUCH REMOVAL OR RESIGNATION, SETTING FORTH ALL INVESTMENTS,
RECEIPTS, DISBURSEMENTS AND OTHER TRANSACTIONS EFFECTED BY IT,
INCLUDING A DESCRIPTION OF ALL SECURITIES AND INVESTMENTS
PURCHASED AND SOLD WITH THE COST OR NET PROCEEDS OF SUCH
PURCHASES OR SALES (ACCRUED INTEREST PAID OR RECEIVABLE BEING
SHOWN SEPARATELY), AND SHOWING ALL CASH, SECURITIES AND OTHER
PROPERTY HELD IN THE TRUST AT THE END OF SUCH YEAR OR AS OF
THE DATE OF SUCH REMOVAL OR RESIQNATION, AS THE CASE MAY BE.
Section 8. RESPONSIBILITY OF TRUSTEE.
(a) TRUSTEE SHALL ACT WITH THE CARE, SKILL,
PRUDENCE AND DILIGENCE UNDER THE CIRCUMSTANCES THEN PREVAILING
THAT A PRUDENT PERSON ACTING IN LIKE CAPACITY AND FAMILIAR
WITH SUCH MATTERS WOULD USE IN THE CONDUCT OF AN ENTERPRISE OF
A LIKE CHARACTER AND WITH LIKE AIMS, PROVIDED, HOWEVER, THAT
TRUSTEE SHALL INCUR NO LIABILITY TO ANY PERSON FOR ANY ACTION
TAKEN PURSUANT TO A DIRECTION, REQUEST OR APPROVAL GIVEN BY
COMPANY WHICH IS CONTEMPLATED BY, AND IN CONFORMITY WITH, THE
TERMS OF THE PLAN(S) OR THIS TRUST AND IS GIVEN IN WRITING BY
COMPANY. IN THE EVENT OF A DISPUTE BETWEEN COMPANY AND A
PARTY, TRUSTEE MAY APPLY TO A COURT OF COMPETENT JURISDICTION
TO RESOLVE THE DISPUTE.
(b) IF TRUSTEE UNDERTAKES OR DEFENDS ANY
LITIGATION ARISING IN CONNECTION WITH THIS TRUST, COMPANY
AGREES TO INDEMNIFY TRUSTEE AGAINST TRUSTEE'S COSTS, EXPENSES
AND LIABILITIES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS'
FEES AND EXPENSES) RELATING THERETO AND TO BE PRIMARILY LIABLE
FOR SUCH PAYMENTS. IF COMPANY DOES NOT PAY SUCH COSTS,
EXPENSES AND LIABILITIES IN A REASONABLY TIMELY MANNER,
TRUSTEE MAY OBTAIN PAYMENT FROM THE TRUST.
(c) TRUSTEE MAY CONSULT WITH LEGAL COUNSEL
(WHO MAY ALSO BE COUNSEL FOR COMPANY GENERALLY) WITH RESPECT
TO ANY OF ITS DUTIES OR OBLIGATIONS HEREUNDER.
(d) TRUSTEE MAY HIRE AGENTS, ACCOUNTANTS,
ACTUARIES, INVESTMENT ADVISORS, FINANCIAL CONSULTANTS OR OTHER
PROFESSIONALS TO ASSIST IT IN PERFORMING ANY OF ITS DUTIES OR
(e) Trustee shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly
provided otherwise herein, provided, however, that if an
insurance policy is held as an asset of the Trust, Trustee
shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a
successor Trustee, or to loan to any person the proceeds of
any borrowing against such policy.
(f) HOWEVER, NOTWITHSTANDING THE PROVISIONS OF
SECTION 8(E) ABOVE, TRUSTEE MAY LOAN TO COMPANY THE PROCEEDS
OF ANY BORROWING AQAINST AN INSURANCE POLICY HELD AS AN ASSET
OF THE TRUST.
(g) Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall
not have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom,
within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the
Internal Revenue Code.
Section 9. COMPENSATION AND EXPENSES OF TRUSTEE.
COMPANY SHALL PAY ALL ADMINISTRATIVE AND
TRUSTEE'S FEES AND EXPENSES. IF NOT SO PAID, THE FEES AND
EXPENSES SHALL BE PAID FROM THE TRUST. Section 10. RESIQNATION
AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to
Company, which shall be effective _____ [insert number] days
after receipt of such notice unless Company and Trustee agree
(b) TRUSTEE MAY BE REMOVED BY COMPANY ON _____
[INSERT NUMBER] DAYS NOTICE OR UPON SHORTER NOTICE ACCEPTED BY
(c) UPON A CHANGE OF CONTROL, AS DEFINED
HEREIN, TRUSTEE MAY NOT BE REMOVED BY COMPANY FOR [INSERT
(d) IF TRUSTEE RESIGNS WITHIN ____ [INSERT
NUMBER] YEAR(S) AFTER A CHANGE OF CONTROL, AS DEFINED HEREIN,
COMPANY SHALL APPLY TO A COURT OF COMPETENT JURISDICTION FOR
THE APPOINTMENT OF A SUCCESSOR TRUSTEE OR FOR INSTRUCTIONS.
(e) IF TRUSTEE RESIGNS OR IS REMOVED WITHIN
_____ [INSERT NUMBER] YEAR(S) OF A CHANCE OF CONTROL, AS
DEFINED HEREIN, TRUSTEE SHALL SELECT A SUCCESSOR TRUSTEE IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 11(b) HEREOF PRIOR
TO THE EFFECTIVE DATE OF TRUSTEE'S RESIGNATION OR REMOVAL.
(f) Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within ______ [insert number] days after receipt of
notice of resignation, removal or transfer, unless Company
extends the time limit.
(g) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the
effective date of resignation or removal under paragraph(s)
(a) [OR (b))] of this section. If no such appointment has been
made, Trustee may apply to a court of competent jurisdiction
for appointment of a successor or for instructions. All
expenses of Trustee in connection with the proceeding shall be
allowed as administrative expenses of the Trust.
Section 11. APPOINTMENT OF SUCCESSOR.
OPTIONAL (a) IF TRUSTEE RESIGNS [OR IS REMOVED] IN
ACCORDANCE WITH SECTION 10(a) [OR (b)] HEREOF, COMPANY MAY
APPOINT ANY THIRD PARTY, SUCH AS A BANK TRUST DEPARTMENT OR
OTHER PARTY THAT MAY BE GRANTED CORPORATE TRUSTEE POWERS UNDER
STATE LAW, AS A SUCCESSOR TO REPLACE TRUSTEE UPON RESIGNATION
OR REMOVAL. THE APPOINTMENT SHALL BE EFFECTIVE WHEN ACCEPTED
IN WRITING BY THE NEW TRUSTEE, WHO SHALL HAVE ALL OF THE
RIGHTS AND POWERS OF THE FORMER TRUSTEE, INCLUDING OWNERSHIP
RIGHTS IN THE TRUST ASSETS. THE FORMER TRUSTEE SHALL EXECUTE
ANY INSTRUMENT NECESSARY OR REASONABLY REQUESTED BY COMPANY OR
THE SUCCESSOR TRUSTEE TO EVIDENCE THE TRANSFER.
(b) IF TRUSTEE RESIGNS OR IS REMOVED PURSUANT
TO THE PROVISIONS OF SECTION 10(e) HEREOF AND SELECTS A
SUCCESSOR TRUSTEE, TRUSTEE MAY APPOINT ANY THIRD PARTY SUCH AS
A BANK TRUST DEPARTMENT OR OTHER PARTY THAT MAY BE GRANTED
CORPORATE TRUSTEE POWERS UNDER STATE LAW. THE APPOINTMENT OF A
SUCCESSOR TRUSTEE SHALL BE EFFECTIVE WHEN ACCEPTED IN WRITING
BY THE NEW TRUSTEE. THE NEW TRUSTEE SHALL HAVE ALL THE RIGHTS
AND POWERS OF THE FORMER TRUSTEE, INCLUDING OWNERSHIP RIGHTS
IN TRUST ASSETS. THE FORMER TRUSTEE SHALL EXECUTE ANY
INSTRUMENT NECESSARY OR REASONABLY REQUESTED BY THE SUCCESSOR
TRUSTEE TO EVIDENCE THE TRANSFER.
(c) THE SUCCESSOR TRUSTEE NEED NOT EXAMINE THE
RECORDS AND ACTS OF ANY PRIOR TRUSTEE AND MAY RETAIN OR
DISPOSE OF EXISTING TRUST ASSETS, SUBJECT TO SECTIONS 7 AND 8
HEREOF. THE SUCCESSOR TRUSTEE SHALL NOT BE RESPONSIBLE FOR AND
COMPANY SHALL INDEMNIFY AND DEFEND THE SUCCESSOR TRUSTEE FROM
ANY CLAIM OR LIABILITY RESULTING FROM ANY ACTION OR INACTION
OF ANY PRIOR TRUSTEE OR FROM ANY OTHER PAST EVENT, OR ANY
CONDITION EXISTING AT THE TIME IT BECOMES SUCCESSOR TRUSTEE.
Section 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and Company. [Unless the first
alternative under 1(b) is selected, the following sentence
must be included.] Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan(s) or
shall make the Trust revocable after it has become irrevocable
in accordance with Section 1(b) hereof. (b) The Trust shall
not terminate until the date on which Plan participants and
their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan(s) [unless the second
alternative under 1(b) is selected, the following must be
included:], "unless sooner revoked in accordance with Section
1(b) hereof." Upon termination of the Trust any assets
remaining in the Trust shall be returned to Company.
(c) UPON WRITTEN APPROVAL OF PARTICIPANTS OR
BENEFICIARIES ENTITLED TO PAYMENT OF BENEFITS PURSUANT TO THE
TERMS OF THE PLAN(S), COMPANY MAY TERMINATE THIS TRUST PRIOR
TO THE TIME ALL BENEFIT PAYMENTS UNDER THE PLAN(S) HAVE BEEN
MADE. ALL ASSETS IN THE TRUST AT TERMINATION SHALL BE RETURNED
(d) SECTION(S) _____ [INSERT NUMBER(S)] OF
THIS TRUST AGREEMENT MAY NOT BE AMENDED BY COMPANY FOR ____
[INSERT NUMBER] YEAR(S) FOLLOWING A CHANGE OF CONTROL, AS
Section 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity), alienated,
pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed
in accordance with the laws of __________________.
(d) FOR PURPOSES OF THIS TRUST, CHANGE OF
CONTROL SHALL MEAN: [INSERT OBJECTIVE DEFINITION SUCH AS: "THE
PURCHASE OR OTHER ACQUISITION BY ANY PERSON, ENTITY OR GROUP
OF PERSONS, WITHIN THE MEANING OF SECTION 13(d) OR 14(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 ("ACT"), OR ANY COMPARABLE
SUCCESSOR PROVISIONS, OF BENEFICIAL OWNERSHIP WITHIN THE
MEANING OF RULE 13d-3 PROMULGATED UNDER THE ACT) OF 30 PERCENT
OR MORE OF EITHER THE OUTSTANDING SHARES OF COMMON STOCK OR
THE COMBINED VOTING POWER OF COMPANY'S THEN OUTSTANDING VOTING
SECURITIES ENTITLED TO VOTE GENERALLY, OR THE APPROVAL BY THE
STOCKHOLDERS OF COMPANY OF A REORGANIZATION, MERGER, OR
CONSOLIDATION, IN EACH CASE, WITH RESPECT TO WHICH PERSONS WHO
WERE STOCKHOLDERS OF COMPANY IMMEDIATELY PRIOR TO SUCH
REORGANIZATION, MERGER OR CONSOLIDATION DO NOT, IMMEDIATELY
THEREAFTER, OWN MORE THAN 50 PERCENT OF THE COMBINED VOTING
POWER ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS
OF THE REORGANIZED, MERGED OR CONSOLIDATED COMPANY'S THEN
OUTSTANDING SECURITIES, OR A LIQUIDATION OR DISSOLUTION OF
COMPANY OR OF THE SALE OF ALL OR SUBSTANTIALLY ALL OF
Section 14. EFFECTIVE DATE.
The effective date of this
Trust Agreement shall be ____, 20__.
[END OF MODEL TRUST]
01. This revenue procedure is effective on July 28, 1992.
02. Ruling requests with respect to grantor trusts used in
executive compensation arrangements and subject to the claims
of the employer's creditors that are submitted to the Service
subsequent to the effective date of this revenue procedure
must comply with the terms of this revenue procedure.
03. This revenue procedure does not affect any private
letter rulings that were issued prior to the effective date.
If a plan or trust that was the subject of such a ruling is
amended, and such amendments affect the rights of participants
or other creditors, such ruling will generally not remain in
Written comments, including suggested language, concerning
the model trust provision contained in this revenue procedure
may be sent to the Internal Revenue Service, Office of the
Associate Chief Counsel, (Employee Benefits and Exempt
Organizations), Attention: CC:EE:1:1, Room 5201, P.O. 7604,
Ben Franklin Station, Washington, D.C. 20044.
INFORMATION The principal author of this revenue procedure is
Catherine Livingston Fernandez of the Office of the Associate
Chief Counsel, (Employee Benefits and Exempt Organizations).
For further information regarding this revenue procedure
contact Ms. Fernandez at (202) 622- 6030 (not a toll-free