EXHIBIT 10.3
THE OHIO VALLEY BANK COMPANY
DIRECTOR RETIREMENT AGREEMENT
THIS AGREEMENT is adopted this 10th day of October, 2002, by and between THE
OHIO VALLEY BANK COMPANY, located in Gallipolis, Ohio (the "Company") and XXXXX
X. XXXXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide retirement benefits to the
Director. The Company will pay the benefits from its 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 "Code" means the Internal Revenue Code of 1986, as amended.
1.2 "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 who is satisfactory to
the Company, prevents the Director from performing substantially all of
the Director's normal duties for the Company. As a condition to
receiving any Disability 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 and reasonable.
1.3 "Effective Date" means November 1, 2001.
1.4 "Normal Retirement Age" means the Annual Meeting of Shareholders
following the calendar year in which the Director attains the age of
70.
1.5 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.
1.6 "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 date of this Agreement.
1.7 "Termination for Cause" See Section 5.2.
1.8 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by
the Company.
1.9 "Years of Service" means the total number of twelve-month periods
during which the Director has served on the Company's Board of
Directors.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. Upon Termination of Service on or after Normal
Retirement Age for reasons other than death, the Company shall pay to the
Director 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 the
greater of: (i) 50 percent of the Director's three (3) prior years
average total annual or monthly compensation; or (ii) 50 percent of any
consecutive three (3) prior years average total annual or monthly
compensation.
2.1.2 Payment of Benefit. For Directors with 10 Years of Service or less, the
Company shall pay the annual benefit to the Director in 12 equal monthly
installments payable on the first day of each month commencing with the
month following the Director's Normal Retirement Date. The annual benefit
shall be paid to the Director for 10 years. For Directors with more than
10 Years of Service, the Company shall pay the annual benefit to the
Director in 12 equal monthly installments payable on the first day of
each month commencing with the month following the Director's Normal
Retirement Date. The annual benefit shall be paid to the Director for 20
years.
2.2 Disability Benefit. If the Director terminates Service due to Disability
prior to Normal Retirement Age, the Company shall pay to the Director the
benefit described in this Section 2.2 in lieu of any other benefit under this
Agreement.
2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is the
greater of: (i) 50 percent of the Director's three (3) prior years
average total annual or monthly compensation; or (ii) 50 percent of any
consecutive three (3) prior years average total annual or monthly
compensation.
2.2.2 Payment of Benefit. For Directors with 10 Years of Service or less, the
Company shall pay the annual benefit to the Director in 12 equal monthly
installments payable on the first day of each month commencing with the
month following the Director's Normal Retirement Date. The annual benefit
shall be paid to the Director for 10 years. For Directors with more than
10 Years of Service, the Company shall pay the annual benefit to the
Director in 12 equal monthly installments payable on the first day of
each month commencing with the month following the Director's Normal
Retirement Date. The annual benefit shall be paid to the Director for 20
years.
Article 3
Death Benefits
3.1 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 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.
3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is 50
percent of the Director's three (3) prior years average total annual or
monthly compensation.
3.1.2 Payment of Benefit. The Company shall pay the annual benefit to the
Director's beneficiary in 12 equal monthly installments payable on the
first day of each month commencing with the month following the
Director's death. The annual benefit shall be paid to the Director's
beneficiary for 5 years.
3.2 Death During Payment of a Lifetime Benefit. If the Director dies after any
Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the Director's beneficiary
the benefit described in this Section 3.2.
3.2.1 Amount of Benefit. The annual benefit under this Section 3.2 is 50
percent of the Director's three (3) prior years average total annual or
monthly compensation.
3.2.2 Payment of Benefit. The Company shall pay the Director's beneficiary at
the same time and in the same amounts they would have paid to the
Director had the Director survived. The number of payments shall be the
lesser of: (a) the remaining benefit payments due to the Director; or (b)
5 years of annual benefits, paid monthly.
Article 4
Beneficiaries
4.1 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 received 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.
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, incapacitated
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 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.
5.2 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 Director's service 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
Director's service and resulting in an adverse effect on the
Company.
5.3 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 an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Director.
Article 6
Claims and Review Procedures
6.1 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
noneligibility 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, (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, and (5) a
time within which review must be requested. 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.
6.2 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 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 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 sixty-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 7
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 7, 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).
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Director and the Company, and
their beneficiaries, survivors, executors, successors, administrators and
transferees.
8.2 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 shareholder's rights to discharge 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.
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 Director 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 Director's life is a general asset of the
Company to which the Director and beneficiary have no preferred or secured
claim.
8.8 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.
8.9 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.
8.10 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 Service of advisors and the delegation of ministerial duties to
qualified individuals.
8.11 Recovery of Estate Taxes. If the Director's gross estate for federal estate
tax purposes includes any amount determined by reference to and on account of
this Agreement, and if the beneficiary is other than the Director's estate, then
the Director's estate shall be entitled to recover from the beneficiary
receiving such benefit under the terms of this Agreement an amount by which the
total estate tax due by the Director's estate exceeds the total estate tax which
would have been payable if the value of such benefit had not been included in
the Director's gross estate. If there is more than one person receiving such
benefit, the right of recovery shall be against each such person. In the event
the beneficiary has a liability hereunder, the beneficiary may petition the
Company for a lump sum payment in an amount not to exceed the beneficiary's
liability hereunder.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR: COMPANY:
THE OHIO VALLEY BANK COMPANY
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Xxxxx X. Xxxxxxxx
Title: President and CEO
