EXHIBIT 10.5
THE OHIO VALLEY BANK COMPANY
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is adopted this 12th day of January, 2004, by and between
THE OHIO VALLEY BANK COMPANY, located in Gallipolis, Ohio (the "Company"), and
XXXXXXX X. XXXXX (the "Executive").
BACKGROUND
On January 2, 1997, the Company and the Executive entered into The Ohio
Valley Bank Company Salary Continuation Agreement. The Company and the Executive
now wish to amend and restate said Agreement for the purpose of 1) increasing
the Executive's Normal Retirement Benefit amount, and 2) updating the terms and
provisions contained therein. This new Agreement shall rescind and replace the
existing Agreement.
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.
AGREEMENT
The Company and the Executive agree as follows:
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Code" means the Internal Revenue Code of 1986, as amended.
1.2 "Disability" means the Executive's suffering a sickness, accident or injury
which has been determined by the carrier of any individual or group
disability insurance policy covering the Executive, or by the Social
Security Administration, to be a disability rendering the Executive totally
and permanently disabled. The Executive must submit proof to the Company of
the carrier's or Social Security Administration's determination upon the
request of the Company.
1.3 "Early Retirement Date" means the Executive attaining age 60 or completing
20 Years of Service.
1.4 "Effective Date" means January 2, 1997.
1.5 "Involuntary Early Termination" means that the Executive, prior to Normal
Retirement Age, has been notified in writing that employment with the
Company is terminated for reasons other than an approved leave of absence,
Termination for Cause or Disability.
1.6 "Normal Retirement Age" means the Executive's 65th birthday.
1.7 "Normal Retirement Date" means the later of the Normal Retirement Age or
Termination of Employment.
1.8 "Plan Year" means a twelve-month period commencing on January 1 and ending
on December 31 of each year. The initial Plan Year shall commence on the
effective date of this Agreement.
1.9 "Termination for Cause" See Article 5.
1.10 "Termination of Employment" means that the Executive ceases to be employed
by the Company for any reason, voluntary or involuntary, other than by
reason of a leave of absence approved by the Company.
1.11 "Years of Service" means the total number of twelve-month periods during
which the Executive is employed on a full-time basis by the Company,
including any approved leaves of absence.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. Upon Termination of Employment on or after the
Normal Retirement Age for reasons other than death, the Company shall pay
to the Executive the benefit described in this Section 2.1 in lieu of any
other benefit under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is $117,100
(One Hundred Seventeen Thousand One Hundred Dollars).
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments commencing with the month
following the Executive's Normal Retirement Date. The annual benefit shall
be paid to the Executive for a period of 20 years.
2.2 Early Retirement Benefit. If the Executive terminates employment after the
Early Retirement Date but before the Normal Retirement Date and for reasons
other than death, Disability or Involuntary Early Termination, the Company
shall pay to the Executive the benefit described in this Section 2.2 in
lieu of any other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the dollar amount
equal to the liability then accrued on the books of the Company, which
shall be reported to the Executive on an annual basis by the Company. This
benefit is determined by calculating a 20-year fixed annuity from the
accrued liability, crediting interest on the unpaid balance at an annual
rate of 7.5 percent, compounded monthly.
2.2.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments commencing with the month
following the Normal Retirement Age. The annual benefit shall be paid to
the Executive for a period of 20 years.
2.3 Disability Benefit. If the Executive terminates employment due to
Disability prior to the Normal Retirement Date, the Company shall pay to
the Executive the benefit described in this Section 2.3 in lieu of any
other benefit under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the dollar amount
equal to the liability then accrued on the books of the Company, which
shall be reported to the Executive on an annual basis by the Company. This
benefit is determined by calculating a 20-year fixed annuity from the
accrued liability, crediting interest on the unpaid balance at an annual
rate of 7.5 percent, compounded monthly.
2.3.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments commencing with the month
following the Termination of Employment. The annual benefit shall be paid
to the Executive for a period of 20 years.
2.4 Involuntary Early Termination. Upon Involuntary Early Termination, the
Company shall pay to the Executive the benefit described in this Section
2.4 in lieu of any other benefit under this Agreement.
2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Involuntary
Early Termination Annual Benefit set forth in Schedule A for the Plan Year
ending immediately prior to the date in which Termination of Employment
occurs (except during the first Plan Year, the benefit is the amount set
forth for Plan Year 1). This benefit is determined by vesting the Executive
in 100 percent of the Accrual Balance. Any increase in the annual benefit
under Section 2.1.1 would require the recalculation of the Involuntary
Early Termination benefit on Schedule A. This benefit is determined by
calculating a 20-year fixed annuity from the Accrual Balance, crediting
interest on the unpaid balance at an annual rate of 7.5 percent, compounded
monthly.
2.4.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments commencing with the month
following the Termination of Employment. The annual benefit shall be paid
to the Executive for a period of 20 years.
Article 3
Death Benefits
3.1 Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive's
beneficiary the benefit described in this Section 3.1. This benefit shall
be paid in lieu of the benefits under Article 2.
3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is the Normal
Retirement Benefit amount described in Section 2.1.1.
3.1.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive's beneficiary in 12 equal monthly installments commencing with
the month following the Executive's death. The annual benefit shall be paid
to the Executive's beneficiary for a period of 20 years.
3.2 Death During Payment of a Lifetime Benefit. If the Executive dies after any
Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining benefits
to the Executive's beneficiary at the same time and in the same amounts
they would have been paid to the Executive had the Executive survived.
3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Executive is entitled to a Lifetime Benefit under
this Agreement, but dies prior to the commencement of said benefit
payments, the Company shall pay the same benefit payments to the
Executive's beneficiary that the Executive 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 Executive's death.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a beneficiary by
filing a written designation with the Company. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and received
by the Company during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as
beneficiary and the marriage is subsequently dissolved. If the Executive
dies without a valid beneficiary designation, all payments shall be made to
the Executive's estate.
4.2 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 5
General Limitations
5.1 Termination for Cause. Notwithstanding any provision of this Agreement to
the contrary, the Company shall not pay any benefit under this Agreement if
the Company terminates the Executive's employment for:
(a) Gross negligence or gross neglect of duties;
(b) Commission of a felony or of a gross misdemeanor involving moral turpitude;
or
(c) Fraud, disloyalty, dishonesty or willful violation of any law or
significant Company policy committed in connection with the Executive's
employment and resulting in an adverse effect on the Company.
5.2 Confidentiality. The Executive shall not disclose any trade secrets or
confidential information of any kind, type or description. In the event the
Executive does disclose said information, such disclosure shall constitute
a breach of this Agreement and compensation shall cease immediately
5.3 Non-Compete. The Executive agrees, during the term of this Agreement, he
will not accept employment with any bank, financial or lending organization
which is in competition directly or indirectly with the Company. In the
event the Executive does accept such employment, this agreement shall
immediately terminate.
5.4 Suicide or Misstatement. The Company shall not pay any benefit under this
Agreement if the Executive 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 Executive has made any material misstatement of
fact on an employment application or resume provided to the Company, or on
any application for any benefits provided by the Company to the Executive.
Article 6
Claims and Review Procedures
6.1 Claims Procedure. An Executive or beneficiary ("claimant") who has not
received benefits under the Agreement that he or she believes should be
paid shall make a claim for such benefits as follows:
6.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting
to the Company a written claim for the benefits.
6.1.2 Timing of Company Response. The Company shall respond to such claimant
within 90 days after receiving the claim. If the Company determines that
special circumstances require additional time for processing the claim, the
Company can extend the response period by an additional 90 days by
notifying the claimant in writing, prior to the end of the initial 90-day
period, that an additional period is required. The notice of extension must
set forth the special circumstances and the date by which the Company
expects to render its decision.
6.1.3 Notice of Decision. If the Company denies part or all of the claim, the
Company shall notify the claimant in writing of such denial. The Company
shall write the notification in a manner calculated to be understood by the
claimant. The notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the Agreement on which the denial
is based;
(c) A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed;
(d) An explanation of the Agreement's review procedures and the time limits
applicable to such procedures; and
(e) A statement of the claimant's right to bring a civil action under ERISA
Section 502(a) following an adverse benefit determination on review.
6.2 Review Procedure. If the Company denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the
Company of the denial, as follows:
6.2.1 Initiation - Written Request. To initiate the review, the claimant, within
60 days after receiving the Company's notice of denial, must file with the
Company a written request for review.
6.2.2 Additional Submissions - Information Access. The claimant shall then have
the opportunity to submit written comments, documents, records and other
information relating to the claim. The Company shall also provide the
claimant, upon request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the claimant's claim for benefits.
6.2.3 Considerations on Review. In considering the review, the Company shall
take into account all materials and information the claimant submits
relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
6.2.4 Timing of Company Response. The Company shall respond in writing to such
claimant within 60 days after receiving the request for review. If the
Company determines that special circumstances require additional time for
processing the claim, the Company can extend the response period by an
additional 60 days by notifying the claimant in writing, prior to the end
of the initial 60-day period, that an additional period is required. The
notice of extension must set forth the special circumstances and the date
by which the Company expects to render its decision.
6.2.5 Notice of Decision. The Company shall notify the claimant in writing of
its decision on review. The Company shall write the notification in a
manner calculated to be understood by the claimant. The notification shall
set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the Agreement on which the denial
is based;
(c) A statement that the claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records and
other information relevant (as defined in applicable ERISA regulations) to
the claimant's claim for benefits; and
(d) A statement of the claimant's right to bring a civil action under ERISA
Section 502(a).
Article 7
Amendments and Termination
The Company may amend or terminate this Agreement at any time prior to the
Executive's Termination of Employment by written notice to the Executive. In no
event shall this Agreement be terminated without the Executive immediately
becoming 100 percent vested in the Accrual Balance at the time of termination.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the Company,
and their beneficiaries, survivors, executors, successors, administrators
and transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company's right to discharge
the Executive. It also does not require the Executive to remain an employee
nor interfere with the Executive's right to terminate employment at any
time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 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. Upon the occurrence of such event, the
term "Company" as used in this Agreement shall be deemed to refer to the
successor or survivor company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required to
be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Executive and 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 Executive's
life is a general asset of the Company to which the Executive and
beneficiary have no preferred or secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement between
the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
8.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Establishing and revising the method of accounting for the Agreement;
(b) Maintaining a record of benefit payments;
(c) Establishing rules and prescribing any forms necessary or desirable to
administer the Agreement; and
(d) Interpreting the provisions of the Agreement.
8.10 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. It may delegate to others certain
aspects of the management and operational responsibilities including the
employment of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Executive and the Company have signed this Agreement.
EXECUTIVE: COMPANY:
THE OHIO VALLEY BANK COMPANY
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
-------------------- ------------------------
Xxxxxxx X. Xxxxx
Title: Chairman of the Board
