Legal DROP Agreement

LEGAL DROP AGREEMENT

This Legal DROP Agreement (the Agreement) is made and entered into as of Effective Date: by and between Employer Name: , State of Organization: , Employer Address: (Employer), and Employee Name: , Employee Address: (Employee).

RECITALS

WHEREAS, Employer maintains a pension, retirement or defined benefit plan known as Plan Name: (the Plan) that permits a Deferred Retirement Option Program ("DROP") as set forth in the Plan documents;

WHEREAS, Employee is eligible for retirement benefits under the Plan as of Retirement Date: and has requested to participate in the DROP in accordance with the terms of the Plan and this Agreement;

WHEREAS, Employer and Employee desire to set forth in writing the terms, conditions and administrative procedures governing Employee's participation in the DROP.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

1. Definitions

Capitalized terms used in this Agreement and not otherwise defined have the meanings set forth in the Plan. For purposes of this Agreement:

"DROP Account" means the account established and maintained under the Plan to record amounts credited to Employee while participating in the DROP, including interest and earnings as provided herein.

2. Election to Participate

Employee hereby elects to enter and participate in the DROP effective DROP Entry Date: pursuant to the terms of the Plan and subject to any administrative rules adopted by Employer.

This election is irrevocable except to the extent the Plan or applicable law permits revocation. Employee acknowledges that participation in the DROP may affect benefit accruals, survivor benefits and other Plan rights.

3. DROP ACCOUNT; CREDITS AND ADJUSTMENTS

Employer shall establish a DROP Account in the name of Employee as of the DROP Entry Date. The DROP Account shall be credited with Employee's regular retirement benefit otherwise payable to Employee during the period of participation and shall be adjusted for the following:

1. Periodic credit: Employee's DROP Account will be credited with the periodic benefit amount that would have been paid to Employee if Employee had retired on the DROP Entry Date.
2. Interest/earnings: DROP Account amounts shall accrue interest at the annual rate of % (annual rate) compounded , subject to Plan rules.
3. Adjustments required by final Plan calculation, overpayments, corrections, offsets for permitted contributions, or other lawful deductions under the Plan or applicable law.

4. COMPENSATION AND EMPLOYMENT STATUS

While participating in the DROP, Employee's employment status shall remain as: . Employee's salary for that period shall be: and Employee shall be eligible for benefits consistent with Employer policy and the Plan, except as otherwise provided by the Plan or this Agreement.

5. TERM; TERMINATION; FORFEITURE

The DROP participation period shall commence on the DROP Entry Date and shall terminate on the earlier of: (a) Employee's separation from service; (b) DROP Termination Date: ; or (c) such earlier date as provided by the Plan.

In the event Employee's employment is terminated for cause, the Plan's forfeiture provisions and any applicable discipline policy shall apply. Forfeiture of amounts credited to the DROP Account will be governed by the Plan and applicable law.

6. DISTRIBUTION OF DROP ACCOUNT

Upon termination of the DROP participation period, Employee's DROP Account shall be distributed in accordance with the Plan's distribution provisions. Employee elects distribution method: and understands such election is subject to Plan rules, tax withholding and any required spousal consent.

If a lump sum distribution is elected, the approximate amount currently credited to the DROP Account is: $ (subject to final calculation).

7. TAXES; WITHHOLDING; ADVICE

Employee acknowledges that distributions from the DROP Account may be subject to federal, state and local taxes and penalties. Employer may withhold taxes and make deductions as required by law. Employee acknowledges that Employer has not provided tax or legal advice and that Employee has had the opportunity to obtain tax and legal advice prior to signing this Agreement.

8. REPRESENTATIONS AND WARRANTIES

Each party represents and warrants that it has full power and authority to enter into this Agreement and that the person executing this Agreement on behalf of a party is duly authorized to bind that party. Employee represents that Employee's DROP election is knowing and voluntary.

9. INDEMNIFICATION

Employee agrees to indemnify and hold Employer harmless from and against any third-party claims, taxes, penalties or liabilities arising from Employee's election or actions inconsistent with the Plan or this Agreement, except to the extent caused by Employer's gross negligence or willful misconduct.

10. NOTICES

All notices required or permitted under this Agreement shall be in writing and shall be delivered personally or sent by certified mail, return receipt requested, or by nationally recognized overnight courier, to the addresses set forth in the opening paragraph or such other address as a party may designate by written notice to the other. Employer Notice Address:

11. AMENDMENTS; WAIVER

This Agreement may be amended only by an instrument in writing signed by both parties, and no waiver of any provision shall be effective unless in writing and signed by the party to be charged.

12. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of Governing Law State: , without regard to conflict of laws principles.

13. ENTIRE AGREEMENT

This Agreement, together with the Plan and any separate written election forms executed by Employee, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings and agreements between them.

14. SEVERABILITY

If any provision of this Agreement is held to be illegal, invalid or unenforceable, the remaining provisions shall remain in full force and effect and shall be interpreted so as to give effect to the original intent insofar as possible.

15. COUNTERPARTS; EXECUTION

This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures transmitted electronically or by facsimile shall be deemed originals for all purposes.

Sign Now