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EXHIBIT 10.7(b)
THE OHIO VALLEY BANK COMPANY
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
THIS EXECUTIVE DEFERRED COMPENSATION AGREEMENT is made this 17th
day of
April, 2003, by THE OHIO VALLEY BANK COMPANY (the "Company"), a
state-chartered
commercial bank located in Gallipolis, Ohio, and JEFFREY E.
SMITH (the
"Executive"). The purpose of this Agreement is to provide
specified benefits to
the Executive, a member of a select group of management or
highly compensation
employees who contribute materially to the continued growth,
development and
future business success of the Company. This Agreement shall be
unfunded for tax
purposes and for purposes of Title I of the Employee Retirement
Income Security
Act ("ERISA").
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases
shall have
the meanings specified:
1.1 "Base Salary" shall mean the annual cash compensation
relating to services
performed during any calendar year, excluding distributions
from
nonqualified deferred compensation plans, bonuses, commissions,
overtime,
fringe benefits, stock options, relocation expenses, incentive
payments,
non-monetary awards, and other fees, and automobile and other
allowances
paid to an Executive for employment services rendered (whether
or not such
allowances are included in the Executive's gross income). Base
Salary shall
be calculated before reduction for compensation voluntarily
deferred or
contributed by the Executive pursuant to all qualified or
non-qualified
plans of the Company and shall be calculated to include amounts
not
otherwise included in the Executive's gross income under Code
Sections 125,
402(e)(3), 402(h), or 403(b) pursuant to plans established by
the Company;
provided, however, that all such amounts will be included in
compensation
only to the extent that had there been no such plan, the amount
would have
been payable in cash to the Executive.
1.2 "Beneficiary" means each designated person, or the estate of
a deceased
Executive, entitled to benefits, if any, upon the death of the
Executive
determined pursuant to Article 6.
1.3 "Beneficiary Designation Form" means the form established
from time to time
by the Plan Administrator that the Executive completes, signs,
and returns
to the Plan Administrator to designate one or more
beneficiaries.
1.4 "Board" means the Board of Directors of the Company as from
time to time
constituted.
1.5 "Bonus" means the cash bonus, if any, awarded to each
Executive for
services performed during the Plan Year and that does not
qualify as
Performance-Based Compensation.
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1.6 "Code" means the Internal Revenue Code of 1986, as
amended.
1.7 "Compensation" means the total Base Salary, Bonus, and
Performance-Based
Compensation that would be paid to an Executive during a Plan
Year, absent
deferrals, less FICA taxes associated with such Base Salary,
Bonus, and
Performance-Based Compensation.
1.8 "Deferral Account" means the Company's accounting of the
Executive's
accumulated Deferrals, plus accrued interest.
1.9 "Deferrals" means the amount of the Executive's
Compensations which the
Executive elects to defer according to this Agreement.
1.10 "Disability" means the Executive (i) is unable to engage in
any substantial
gainful activity by reason of any medically determinable
physical or mental
impairment which can be expected to result in death or can be
expected to
last for a continuous period of not less than 12 months, or (ii)
is, by
reason of any medically determinable physical or mental
impairment which
can be expected to result in death or can be expected to last
for a
continuous period of not less than 12 months, receiving income
replacement
benefits for a period of not less than 3 months under an
accident and
health plan covering executives of the Company. Medical
determination of
Disability may be made by either the Social Security
Administration or by
the provider of an accident or health plan covering executives
of the
Company. The Executive must submit proof to the Plan
Administrator of
Social Security Administration's or the provider's determination
upon the
request of the Plan Administrator.
1.11 "Early Retirement" means Separation from Service before
Normal Retirement
Age for reasons other than death, Disability, or Termination for
Cause.
1.12 "Effective Date" means January 1, 2003.
1.13 "Election Form(s)" means the form(s) established from time
to time by the
Plan Administrator that the Executive completes, signs and
returns to the
Plan Administrator to make elections under the Agreement.
1.14 "Normal Retirement Age" means the Executive attaining age
sixty-five (65).
1.15 "Normal Retirement Date" means the later of Normal
Retirement Age or
Separation from Service.
1.16 "Performance-Based Compensation" means the cash bonus, if
any, awarded to
the Executive that qualifies as "performance-based compensation"
under
Section 409A of the Code and the regulations thereunder.
1.17 "Plan Administrator" means the plan administrator described
in Article 8.
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1.18 "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 and end on the following
December 31.
1.19 "Secretary" means the Secretary of the United States
Department of the
Treasury.
1.20 "Separation from Service" means the termination of the
Executive's
employment with the Company for reasons other than death or
Disability.
Whether a Separation from Service takes place is determined
based on the
facts and circumstances surrounding the termination of the
Executive's
employment and whether the Company and the Executive intended
for the
Executive to provide significant services for the Company
following such
termination. A termination of employment will not be considered
a
Separation from Service if:
(a) the Executive continues to provide services as an employee
of the Company
at an annual rate that is twenty percent (20%) or more of the
services
rendered, on average, during the immediately preceding three
full calendar
years of employment (or, if employed less than three years, such
lesser
period) and the annual remuneration for such services is twenty
percent
(20%) or more of the average annual remuneration earned during
the final
three full calendar years of employment (or, if less, such
lesser period),
or
(b) the Executive continues to provide services to the Company
in a capacity
other than as an employee of the Company at an annual rate that
is fifty
percent (50%) or more of the services rendered, on average,
during the
immediately preceding three full calendar years of employment
(or if
employed less than three years, such lesser period) and the
annual
remuneration for such services is fifty percent (50%) or more of
the
average annual remuneration earned during the final three full
calendar
years of employment (or if less, such lesser period).
1.21 "Termination for Cause" has that meaning set forth in
Section 7.1.
1.22 "Unforeseeable Emergency" means a severe financial hardship
to the
Executive resulting from an illness or accident of the
Executive, the
Executive's spouse, or a dependent (as defined in Section 152(a)
of the
Code) of the Executive, loss of the Executive's property due to
casualty,
or other similar extraordinary and unforeseeable circumstances
arising as a
result of events beyond the control of the Executive.
Article 2
Deferral Election
2.1 Elections Generally. Unless otherwise provided for by the
Secretary, the
Participant may file annually Base Salary, Bonus, and
Performance-Based
Compensation Election Form(s) with the Plan Administrator no
later than:
(a) For Base Salary and Bonus, the end of the Plan Year
preceding the Plan Year
in which services leading to such Base Salary and Bonus will be
performed;
and
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(b) For Performance-Based Compensation, no later than six months
before the end
of the service period during which the Performance-Based
Compensation is
measured.
The Election Form(s) shall set forth the amount of Base Salary,
Bonus, and
Performance-based Compensation to be deferred and shall--for
Base Salary
and Bonus only--be effective to defer only such compensation
earned for
services performed after the date the Election Form(s) are
received by the
Plan Administrator. Subsequent Election Form(s), subject to
Section 2.3(b),
shall only be effective for the Plan Year following the Plan
Year in which
they are received and approved by the Plan Administrator.
2.2 Initial Election. After being notified by the Plan
Administrator of
eligibility for participation in the Agreement, a Participant
may make an
initial deferral election under this Agreement by delivering to
the Plan
Administrator a signed Election Form(s) and Beneficiary
Designation Form
within thirty (30) days. The Election Form(s) shall set forth
the amount of
Base Salary, Bonus, and Performance-Based Compensation and shall
be
effective to defer, subject to Section 2.1(b), only Base Salary,
Bonus, and
Performance-based Compensation earned for services performed
after the date
the Election Form(s) are received by the Plan Administrator.
2.3. Change in Form or Timing of Distributions. For distribution
of benefits
under Article 4, Participant may elect to delay the timing or
change the
form of distributions by submitting the appropriate Election
Form(s) to the
Plan Administrator. Any such elections:
(a) may not accelerate the time or schedule of any distribution,
except as
allowed by the Secretary;
(b) must, for benefits payable under Section 4.1, be made at
least twelve (12)
months prior to the first scheduled distribution;
(c) must, for benefits payable under Sections 4.1 and 4.2, delay
the
commencement of distributions for a minimum of five (5) years
from the date
the first distribution was originally scheduled to be made;
and
(d) must take effect not less than twelve (12) months after the
election is
made.
Article 3
Deferral Account
3.1 Establishing and Crediting. The Company shall establish a
Deferral Account
on its books for the Executive and shall credit to the Deferral
Account the
following amounts:
3.1.1 Deferrals. The Compensations deferred by the Executive as
of the time the
Compensations would have otherwise been paid to the
Executive.
3.1.2 Interest. On the last day of each month and immediately
prior to the
distribution of any benefits, but only until commencement of
benefit
distributions under this Agreement, interest shall be credited
on the
Deferral Account at an annual rate determined by the Board in
its sole and
absolute discretion, compounded annually.
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3.2 Statement of Accounts. The Plan Administrator shall provide
to the
Executive, within one hundred twenty (120) days after the end of
each Plan
Year, 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 Executive is a general
unsecured creditor
of the Company for the distribution of benefits. The benefits
represent the
mere Company promise to pay such benefits. The Executive's
rights are not
subject in any manner to anticipation, alienation, sale,
transfer,
assignment, pledge, encumbrance, attachment, or garnishment by
the
Executive's creditors.
Article 4
Distributions During Lifetime
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date,
the Company
shall pay to the Executive the benefit described in this Section
4.1 in
lieu of any other benefit under this Article.
4.1.1 Amount of Benefit. The benefit under this Section 4.1 is
the Deferral
Account balance at the Executive's Normal Retirement Age.
4.1.2 Distribution of Benefit. The Company shall pay the benefit
to the
Executive as elected by the Executive on the Election Form(s)
commencing
within thirty (30) days following Normal Retirement Age.
4.2 Early Retirement Benefit. Upon the Executive's Early
Retirement, the
Company shall pay to the Executive the benefit described in this
Section
4.2 in lieu of any other benefit under t
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