EXHIBIT 10.7
THE OHIO VALLEY BANK COMPANY
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is made this 11th day of November, 2002, by and between THE OHIO
VALLEY BANK COMPANY (the "Company"), and XXXXXX X. XXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits from the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall have the
meanings specified:
1.1 "Anniversary Date" means December 31 of each year.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Deferral Account" means the Company's accounting of the Director's
accumulated Deferrals plus accrued interest.
1.4 "Deferrals" means the amount of the Director's Fees which the Director
elects to defer according to this Agreement.
1.5 "Disability" means, if the Director is covered by a Company sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury which, in the
judgment of a physician satisfactory to the Company, prevents the Director from
performing substantially all of the Director's normal duties for the Company. As
a condition to any benefits, the Company may require the Director to submit to
such physical or mental evaluations and tests as the Company's Board of
Directors deems appropriate.
1.6 "Effective Date" means December 11, 2001.
1.7 "Election Form" means the form attached as Exhibit 1.
1.8 "Fees" means the total fees payable to the Director during a Plan Year.
1.9 "Form of Benefit Election" means the form attached as Exhibit 2.
1.10 "Normal Retirement Age" means the Director's 70th birthday.
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age or
Termination of Service.
1.12 "Plan Year" means the calendar year.
1.13 "Termination of Service" means that the Director ceases to be a member of
the Company's Board of Directors for any reason whatsoever other than by reason
of a leave of absence which is approved by the Company. For purposes of this
Agreement, if there is a dispute over the Director's status or the date of the
Director's Termination of Service, the Company shall have the sole and absolute
right to decide the dispute.
Article 2
Deferral Election
2.1 Initial Election. The Director shall make an initial deferral election under
this Agreement by filing with the Company a signed Election Form within 30 days
after the Effective Date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the Company.
2.2 Election Changes. Upon Company approval, the Director may modify the amount
of Fees to be deferred annually by filing a new Election Form with the Company
prior to the beginning of the Plan Year in which the Fees are to be deferred.
The modified deferral election shall not be effective until the calendar year
following the year in which the subsequent Election Form is received and
approved by the Company.
Article 3
Deferral Account
3.1 Establishing and Crediting. The Company shall establish a Deferral Account
on its books for the Director and shall credit to the Deferral Account the
following amounts:
3.1.1 Deferrals.The Fees deferred by the Director as of the time the Fees would
have otherwise been paid to the Director.
3.1.2 Interest.On each Anniversary Date and immediately prior to the payment of
any benefits interest is to be accrued on the account balance at an
annual rate determined by the Company's Board of Directors in its sole
and absolute discretion, compounded monthly.
3.2 Statement of Accounts. The Company shall provide to the Director, within 120
days after each Anniversary Date, a statement setting forth the Deferral Account
balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
Article 4
Lifetime Benefits
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the Deferral
Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the Director
in the manner elected on the Form of Benefit Election.
4.2 Early Retirement Benefit. Upon Termination of Service prior to the Normal
Retirement Age for reasons other than death or Disability, the Company shall pay
to the Director the benefit described in this Section 4.2 in lieu of any other
benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the Deferral
Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the Director in
the manner elected on the Form of Benefit Election.
4.3 Disability Benefit. If the Director terminates service as a Director due to
Disability prior to Normal Retirement Age, the Company shall pay to the Director
the benefit described in this Section 4.3 in lieu of any other benefit under
this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the Deferral
Account balance at the Director's Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the Director in
the manner elected on the Form of Benefit Election.
Article 5
Death Benefits
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under Section 5.1 is the greater of: a) the
Deferral Account balance on the Director's death; or b) $50,000 (Fifty
Thousand Dollars).
5.1.2 Payment of Benefit. The Company shall pay the benefit to the Director's
beneficiary in the manner elected on the Form of Benefit Election.
5.2 Death During Benefit Period. If the Director dies after benefit payments
have commenced under this Agreement but before receiving all such payments, the
Company shall pay the remaining benefits to the Director's beneficiary at the
same time and in the same amounts they would have been paid to the Director had
the Director survived.
5.3 Death After Termination of Service But Before Benefit Payments Commence. If
the Director is entitled to benefit payments under this Agreement, but dies
prior to the commencement of said benefit payments, the Company shall pay the
benefit payments to the Director's beneficiary that the Director was entitled to
prior to death except that the benefit payments shall commence on the first day
of the month following the date of the Director's death.
Article 6
Beneficiaries
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and accepted by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
Article 7
General Limitations
7.1 Termination for Cause. Notwithstanding any provision of this Agreement to
the contrary, the Company shall not pay any benefit under this Agreement that is
in excess of the Director's Deferrals if the Company terminates the Director's
service for:
(a) Gross negligence or gross neglect of duties to the Company;
(b) Commission of a felony or of a gross misdemeanor involving moral turpitude
in connection with the Director's service to the Company; or
(c) Fraud, disloyalty, dishonesty or willful violation of any law or significant
Company policy committed in connection with the Director's service and
resulting in an adverse effect on the Company.
7.2 Suicide or Misstatement. The Company shall not pay any benefit under this
Agreement if the Director commits suicide within three years after the date of
this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company, or on any application for any benefits provided by the
Company to the Director.
7.3 Excess Parachute Payment. Notwithstanding any provision of this Agreement to
the contrary, the Company shall not pay any benefit under this Agreement to the
extent the benefit would create an excise tax under the excess parachute rules
of Section 280G of the Code.
Article 8
Claims and Review Procedures
8.1 Claims Procedure. The Company shall notify any person or entity that makes a
claim against the Agreement (the "Claimant") in writing, within 90 days of
Claimant's written application for benefits, of his or her eligibility or
non-eligibility for benefits under the Agreement. If the Company determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial, (2) a specific reference to the
provisions of the Agreement on which the denial is based, (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed, and (4) an explanation of
the Agreement's claims review procedure and other appropriate information as to
the steps to be taken if the Claimant wishes to have the claim reviewed. If the
Company determines that there are special circumstances requiring additional
time to make a decision, the Company shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional 90 days.
8.2 Review Procedure. If the Claimant is determined by the Company not to be
eligible for benefits, or if the Claimant believes that he or she is entitled to
greater or different benefits, the Claimant shall have the opportunity to have
such claim reviewed by the Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. Said
petition shall state the specific reasons which the Claimant believes entitle
him or her to benefits or to greater or different benefits. Within 60 days after
receipt by the Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company verbally or in writing, and the Claimant (or counsel) shall have the
right to review the pertinent documents. The Company shall notify the Claimant
of its decision in writing within the 60-day period, stating specifically the
basis of its decision, written in a manner calculated to be understood by the
Claimant and the specific provisions of the Agreement on which the decision is
based. If, because of the need for a hearing, the 60-day period is not
sufficient, the decision may be deferred for up to another 60 days at the
election of the Company, but notice of this deferral shall be given to the
Claimant.
Article 9
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement signed
by the Company and the Director.
Notwithstanding the previous paragraph in this Article 9, the Company may amend
or terminate this Agreement at any time if, pursuant to legislative, judicial or
regulatory action, continuation of the Agreement would (i) cause benefits to be
taxable to the Director prior to actual receipt, or (ii) result in significant
financial penalties or other significantly detrimental ramifications to the
Company (other than the financial impact of paying the benefits). In no event
shall this Agreement be terminated under this section without payment to the
Director of the Deferral Account balance attributable to the Director's
Deferrals and interest credited on such amounts.
Article 10
Miscellaneous
10.1 Binding Effect. This Agreement shall bind the Director and the Company, and
their beneficiaries, survivors, executors, administrators and transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for services. It
does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholders' rights to replace the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
10.4 Tax Withholding. The Company shall withhold any taxes that are required to
be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be governed by
the laws of the State of Ohio, except to the extent preempted by the laws of the
United States of America.
10.6 Unfunded Arrangement. The Director and the Director's beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a general asset of the Company to which the Director and the Director's
beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or with
another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement.
10.8 Entire Agreement. This Agreement constitutes the entire agreement between
the Company and the Director as to the subject matter hereof. No rights are
granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the Agreement;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or desirable to
administer the Agreement.
10.10 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under the Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.
10.11 Attorney Fees. If there is a dispute between the Company and the Director
over the benefit amount and said dispute cannot be resolved between the parties
without consulting an attorney, any and all attorney fees incurred by the
Director or the Company shall be paid by the Company.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR: COMPANY:
THE OHIO VALLEY BANK COMPANY
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxx X. Xxxxxx Tile: President and CEO
