Exhibit 10.5

 

MANAGEMENT CONTINUITY AGREEMENT

 

This Agreement (“Agreement”), dated as of March 26, 2009 is between Citizens
Bank and Trust Company, a Virginia corporation (the “Company”) and
_____________________ (“Executive”) and provides as follows:

 

 

1.

Purpose

 

The Company recognizes that the possibility of a Change in Control exists, and
the uncertainty and questions that it may raise among management may result in
the departure or distraction of management personnel to the detriment of the
Company and its shareholders. Accordingly, the Company and the Executive
previously entered into a Management Continuity Agreement dated ______________,
(the “Original Agreement”) and into a revised Management Continuity Agreement
(the “Revised Agreement) dated December 31, 2008. The Revised Agreement was
entered into to comply with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and applicable guidance issued
thereunder (“Code Section 409A”) and to update and replace the Original
Agreement. The purpose of the Original Agreement, as well as this Agreement, is
to encourage the Executive to continue employment after a Change in Control by
providing reasonable employment security to the Executive and to recognize the
prior service of the Executive in the event of a termination of employment under
certain circumstances after a Change in Control.

 

This Agreement is being entered into to: (1) Remove the Annual Bonus provision
(p.2, Item 4 (b)(ii) of the Revised Agreement) and (2) Revise the Salary
Continuance Benefit (p. 5, Item 6 (a) (ii) of the Revised Agreement) from one
times the Executive’s Final Compensation to one and one-half times the
Executive’s Final Compensation.

 

 

2.

Term of the Agreement

 

This Agreement is effective March 26, 2009, and will expire on December 31,
2009; provided that on December 31, 2009 and each December 31st thereafter (each
such December 31st is referred to as the “Renewal Date”), this Agreement will be
automatically extended for an additional calendar year so as to terminate two
years from such Renewal Date. This Agreement will not, however, be extended if
the Company gives written notice of such non-renewal to the Executive no later
than September 30 before the Renewal Date (the original and any extended term of
this Agreement is referred to as the “Change in Control Period”).

 

 

3.

Employment after a Change in Control

 

If a Change in Control of the Company (as defined in Section 12) occurs during
the Change in Control Period and the Executive is employed by the Company on the
Change in Control Date (as defined in Section 12), the Company will continue to
employ the Executive in accordance with the terms and conditions of this
Agreement for the period beginning on the Change in Control Date and ending on
the third anniversary of such date (the “Employment Period”).

 

 

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4.

Terms of Employment

 

(a)         Position and Duties. During the Employment Period, (i) the
Executive’s position, authority, duties and responsibilities will be at least
commensurate in all material respects with his training and experience and (ii)
the Executive’s services will be performed at the location where the Executive
was employed immediately preceding the Change in Control Date or any office that
is less than 60 miles from such location.

 

 

(b)

Compensation.

 

(i)          Base Salary. During the Employment Period, the Executive will
receive an annual base salary (the “Annual Base Salary”) at least equal to the
highest base salary paid or payable to the Executive by the Company and its
affiliated companies for the twelve-month period immediately preceding the
Change of Control Date. Such Annual Base Salary shall be payable in accordance
with the Company’s payroll practices as adopted for other employees but in no
event less frequently than monthly. During the Employment Period, the Annual
Base Salary will be reviewed at least annually and will be increased at any time
and from time to time as will be substantially consistent with increases in base
salary generally awarded in the ordinary course of business to other peer
executives of the Company and its affiliated companies. Any increase in the
Annual Base Salary will not serve to limit or reduce any other obligation to the
Executive under this Agreement. The Annual Base Salary will not be reduced after
any such increase, and the term Annual Base Salary as used in this Agreement
will refer to the Annual Base Salary as so increased. The term “affiliated
companies” includes any company controlled by, controlling or under common
control with the Company.

 

(ii)         Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive will be entitled to participate in all incentive
(including stock incentive), savings and retirement, insurance plans, policies
and programs applicable generally to other peer executives of the Company and
its affiliated companies pursuant to the terms of such plans, policies and
programs, but in no event will such plans, policies and programs provide the
Executive with incentive opportunities, savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the aggregate, than
those provided by the Company and its affiliated companies for the Executive
under such plans, policies and programs as in effect at any time during the six
months immediately preceding the Change in Control Date.

 

(iii)        Welfare Benefit Plans, During the Employment Period, the Executive
and/or the Executive’s family, as the case may be, will be eligible for
participation in and will receive all benefits under welfare benefit plans,
policies and programs provided by the Company and its affiliated companies
pursuant to the terms of such plans, policies and programs to the extent
applicable generally to other peer executives of the Company and its affiliated

companies, but in no event will such plans, policies and programs provide the
Executive with benefits that are less favorable, in the aggregate, than the most
favorable of such plans, policies and programs in effect at any time during the
six months immediately preceding the Change in Control Date.

 

(iv)        Fringe Benefits. During the Employment Period, the Executive will be
entitled to fringe benefits in accordance with the most favorable plans,
policies and programs of the Company and its affiliated companies pursuant to
the terms of such plans, policies and programs in effect for the Executive at
any time during the six months immediately

 

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preceding the Change in Control Date or, if more favorable to the Executive, as
in effect generally from time to time after the Change in Control Date with
respect to other peer executives of the Company and its affiliated companies.

 

(v) Vacation. During the Employment Period, the Executive will be entitled to
paid vacation in accordance with the most favorable plans, policies and programs
of the Company and its affiliated companies pursuant to the terms of such plans,
policies and programs in effect for the Executive at any time during the six
months immediately preceding the Change in Control Date or, if more favorable to
the Executive, as in effect generally from time to time after the Change in
Control Date with respect to other peer executives of the Company and its
affiliated companies.

 

 

5.

Termination of Employment Following Change in Control

 

 

(a)         Death or Disability. The Executive’s employment will terminate
automatically upon the Executive’s death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period, it may terminate the Executive’s
employment. For purposes of this Agreement, “Disability” means the Executive’s
inability to perform his duties with the Company on a full time basis for 180
consecutive days or a total of at least 240 days in any twelve month period as a
result of the Executive’s incapacity due to physical or mental illness (as
determined by an independent physician selected by the Board).

 

(b)         Cause. The Company may terminate the Executive’s employment during
the Employment Period for Cause. For purposes of this Agreement, “Cause” means
(i) gross incompetence, gross negligence, willful misconduct in office or breach
of a material fiduciary duty owed to the Company or any affiliated company; (ii)
conviction of a felony or a crime of moral turpitude (or a plea of nolo
contendere thereto) or commission of an act of embezzlement or fraud against the
Company or any affiliated company; (iii) any material breach by the Executive of
a material term of this Agreement, including, without limitation, material
failure to perform a substantial portion of his duties and responsibilities
hereunder; or (iv) deliberate dishonesty of the Executive with respect to the
Company or any affiliated company.

 

(c)         Good Reason; Window Period. The Executive’s employment may be
terminated (i) during the Employment Period by the Executive for Good Reason or
(ii) during the Window Period by the Executive without any reason. For purposes
of this Agreement, the “Window Period” means the 90-day period beginning on the
one-year anniversary of the Change in Control Date. For purposes of this
Agreement, “Good Reason” means:

 

(i)          a material adverse change in the Executive’s overall working
environment;

 

(ii)         a failure by the Company to comply with any of the provisions of
Section 4(b);

 

(iii)        the Company’s requiring the Executive to be based at any office or
location other than that described in Section 4(a)(ii);

 

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(iv)        the failure by the Company to comply with and satisfy Section 7(b);

 

(v)         the Executive is directed by the Board of Directors or an officer of
the Company or any affiliated company to engage in conduct that is unethical,
illegal or contrary to the Company’s good business practices; or

 

(vi)        the Company fails to honor any term or provision of this Agreement;

 

Any good faith determination of Good Reason made by the Executive shall be
conclusive.

 

(d)         Notice of Termination. Any termination during the Employment Period
by the Company or by the Executive for Good Reason or during the Window Period
shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon.

 

(e)         Date of Termination. “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive during the Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Executive’s employment is terminated by the Company other than
for Cause or Disability, the date specified in the Notice of Termination (which
shall not be less than 30 nor more than 60 days from the date such Notice of
Termination is given), and (iii) if the Executive’s employment is terminated for
Disability, 30 days after Notice of Termination is given, provided that the
Executive shall not have returned to the full-time performance of his duties
during such 30-day period.

 

 

6.

Compensation Upon Termination

 

(a)         Termination Without Cause or for Good Reason or During Window
Period. The Executive will be entitled to the following benefits if, during the
Employment Period, the Company terminates his employment without Cause or the
Executive terminates his employment with the Company or any affiliated company
for Good Reason or during the Window Period subject to Section 13 below .

 

(i)          Accrued Obligations. The Accrued Obligations are the sum of; (1)
the Executive’s Annual Base Salary through the Date of Termination at the rate
in effect just prior to the time a Notice of Termination is given; (2) the
amount, if any, of any incentive or bonus compensation theretofore earned which
has not yet been paid; (3) the product of the Annual Bonus paid or payable,
including by reason of deferral or the most recently completed year and a
fraction, the numerator of which is the number of days in the current year
through the Date of Termination and the denominator of which is 365; and (4) any
benefits or awards (including both the cash and stock components) which pursuant
to the terms of any plans, policies or programs have been earned or become
payable, but which have not yet been paid to the Executive (but not including
amounts that previously had been deferred at the Executive’s request, which
amounts will be paid in accordance with the Executive’s existing directions).

 

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The Accrued Obligations due hereunder will be paid to the Executive in a lump
sum cash payment within 30 days after the Date of Termination;

 

(ii)         Salary Continuance Benefit. The Salary Continuance Benefit is an
amount equal to one and one-half times the Executive’s Final Compensation. For
purposes of this Agreement, “Final Compensation” means the Annual Base Salary in
effect at the Date of Termination, and any amount contributed by the Executive
during the most recently completed year pursuant to a salary reduction agreement
or any other program that provides for pre-tax salary reductions or compensation
deferrals. The Salary Continuance Benefit will be paid to the Executive in a
lump sum cash payment not later than the 45th day following the Date of
Termination.

 

(iii)        Welfare Continuance Benefit. For 24 months following the Date of
Termination, the Executive and his dependents will continue to be covered under
all health and dental plans, disability plans, life insurance plans and all
other welfare benefit plans (as defined in Section 3(l) of ERISA) (“Welfare
Plans”) in which the Executive or his dependents were participating immediately
prior to the Date of Termination (the “Welfare Continuance Benefit”). The
Company will pay all or a portion of the cost of the Welfare Continuance Benefit
for the Executive and his dependents under the Welfare Plans on the same basis
as applicable, from time to time, to active employees covered under the Welfare
Plans with such payments being made in accordance with the terms of any such
Welfare Plan and the Executive will pay any additional costs. If participation
in any one or more of the Welfare Plans included in the Welfare Continuance
Benefit is not possible under the terms of the Welfare Plan or any provision of
law would create an adverse tax effect for the Executive or the Company due to
such participation, the Company will provide substantially identical benefits
directly or through an insurance arrangement. The Welfare Continuance Benefit as
to any Welfare Plan will cease if and when the Executive has obtained coverage
under one or more welfare benefit plans of a subsequent employer that provides
for equal or greater benefits to the Executive and his dependents with respect
to the specific type of benefit. The Executive or his dependents will become
eligible for COBRA continuation coverage as of the date the Welfare Continuance
Benefit ceases for all health and dental benefits.

 

(b)         Death. If the Executive dies during the Employment Period, this
Agreement will terminate without any further obligation on the part of the
Company under this Agreement, other than for the following and subject to
Section 13 below: (i) payment of the Accrued Obligations and three months of the
Executive’s Base Salary (which shall be paid to the Executive’s beneficiary
designated in writing or his estate, as applicable, in a lump sum cash payment
within 30 days of the date of death); (ii) the timely payment or provision of
the Welfare Continuance Benefit to the Executive’s spouse and other dependents
for 24 months following the date of death; and (iii) the timely payment of all
death and retirement benefits pursuant to the terms of any plan, policy or
arrangement of the Company and its affiliated companies.

 

(c)         Disability. If the Executive’s employment is terminated because of
the Executive’s Disability during the Employment Period, this Agreement will
terminate without any further obligation on the part of the Company under this
Agreement, other than for the following and subject to Section 13 below: (i)
payment of the Accrued Obligations and three months of the Executive’s Base
Salary (which shall be paid to the Executive in a lump sum cash payment within
30 days of the Date of Termination); (ii) the timely payment or provision of the
Welfare Continuance Benefit for 24 months following the Date of Termination; and
(iii) the timely

 

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payment of all disability and retirement benefits pursuant to the terms of any
plan, policy or arrangement of the Company and its affiliated companies.

 

(d)         Cause; Other than for Good Reason. If the Executive’s employment is
terminated for Cause during the Employment Period, this Agreement will terminate
without further obligation to the Executive other than the payment to the
Executive of the Annual Base Salary through the Date of Termination, plus the
amount of any compensation previously deferred by the Executive, all of which
shall be paid as soon as administratively practicable (and within 30 days) after
termination of Executive’s employment. If the Executive terminates employment
during the Employment Period, excluding a termination either for Good Reason or
during the Window Period, this Agreement will terminate without further
obligation to the Executive other than for the Accrued Obligations (which will
be paid in a lump sum in cash within 30 days of the Date of Termination) and any
other benefits to which the Executive may be entitled pursuant to the terms of
any plan, program or arrangement of the Company and its affiliated companies.

 

(e)         Limitation of Benefits. It is the intention of the parties that no
payment be made or benefit provided to Executive pursuant to this Agreement that
would constitute an “excess parachute payment” within the meaning of Section
280G of the Code and any regulations thereunder, thereby resulting in a loss of
an income tax deduction by the Company or the imposition of an Excise Tax on the
Executive under Section 4999 of the Code. If the independent accountants serving
as auditors for the Company on the date of a Change in Control determine that
some or all of the payments or benefits scheduled under this Agreement, as well
as any other payments or benefits on a Change in Control, would be
non-deductible by the Company under Section 280G of the Code, then the payments
scheduled under this Agreement will be reduced to $1.00 less than the maximum
amount which may be paid without causing such payment or benefit to be
non-deductible. The determination made as to the reduction of benefits or
payments required hereunder by the independent accountants shall be binding on
the parties. In the event payments and benefits are to be reduced, the Company
shall reduce or eliminate the payments and benefits to the Executive by first
reducing or eliminating those payments or benefits which are payable in cash and
then by reducing or eliminating those payments and benefits which are not
payable in cash, in each case in reverse order beginning with payments or
benefits which are to be paid or provided the farthest in time from the Change
in Control Date. Any reduction pursuant to the preceding sentence shall take
precedence over the provisions of any other plan, arrangement or agreement
governing the Executive’s rights and entitlements to any benefits or
compensation.

 

(i)          If the Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall so indicate to the Executive in writing.

 

(ii)         In the event there is an under-payment of the Gross-Up Payment due
to the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm will determine
the amount of any such under-payment that has occurred and such amount will be
promptly paid by the Company to or for the benefit of the Executive. Any
payments or reimbursements to or payments on behalf of the Executive shall be
paid as provided above but in no event later than the end of the calendar year
following the calendar year in which the related taxes are paid.

 

 

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7.

Binding Agreement; Successors

 

(a)         This Agreement will be binding upon and inure to the benefit of the
Executive (and his personal representative), the Company and any successor
organization or organizations which shall succeed to substantially all of the
business and property of the Company, whether by means of merger, consolidation,
acquisition of all or substantially of all of the assets of the Company or
otherwise, including by operation of law.

 

(b)         The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

 

(c)         For purposes of this Agreement, except as otherwise required by Code
Section 409A, the term “Company” includes any subsidiaries of the Company and
any corporation or other entity which is the surviving or continuing entity in
respect of any merger, consolidation or form of business combination in which
the Company ceases to exist.

 

 

8.

Fees and Expenses; Mitigation

 

(a)         The Company will pay or reimburse the Executive, on a current basis,
for all costs and expenses, including without limitation court costs and
reasonable attorneys’ fees, incurred by the Executive (i) in contesting or
disputing any termination of the Executive’s employment or (ii) in seeking to
obtain or enforce any right or benefit provided by this Agreement, in each case
regardless of whether or not the Executive’s claim is upheld by a court of
competent jurisdiction; provided, however, the Executive will be required to
repay any such amounts to the Company to the extent that a court issues a final
and non-appealable order setting forth the determination that the position taken
by the Executive was frivolous or advanced by him in bad faith. In no event
shall such reimbursement of legal fees be made later than the end of the year
following the year in which Executive incurs the fees.

 

(b)         The Executive shall not be required to mitigate the amount of any
payment the Company becomes obligated to make to the Executive in connection
with this Agreement, by seeking other employment or otherwise. Except as
specifically provided above with respect to the Welfare Continuance Benefit, the
amount of any payment provided for in Section 6 shall not be reduced, offset or
subject to recovery by the Company by reason of any compensation earned by the
Executive as the result of employment by another employer after the Date of
Termination, or otherwise.

 

 

9.

No Employment Contract

 

Nothing in this Agreement will be construed as creating an employment contract
between the Executive and the Company prior to Change in Control.

 

 

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10.

Continuance of Welfare Benefits Upon Death

 

If the Executive dies while receiving a Welfare Continuation Benefit, the
Executive’s spouse and other dependents will continue to be covered under all
applicable Welfare Plans during the remainder of the 24-month Coverage Period
pursuant to the terms of such applicable Welfare Plan. The Executive’s spouse
and other dependents will become eligible for COBRA continuation coverage for
health and dental benefits at the end of such 24-month period.

 

 

11.

Notice

 

Any notices and other Communications provided for by this Agreement will be
sufficient if in writing and delivered in person or sent by registered or
certified mail, postage prepaid (in which case notice will be deemed to have
been given on the third day after mailing), or by overnight deliver), by it
reliable overnight courier service (in which case notice will be deemed to have
been given on the day after delivery to such courier service). Notices to the
Company shall be directed to the Secretary of the Company, with a copy directed
to the Chairman of the Board of the Company. Notices to the Executive shall be
directed to his last known address.

 

 

12.

Definition of a Change in Control

 

(a)         Change in Control. A “Change in Control” means a change in the
ownership of the Company, a change in the effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company,
consistent with and interpreted in accordance with Code Section 409A and
regulations issued thereunder, and specifically defined as follows:

 

(i)          General Rules. In order to constitute a Change in Control as to the
Executive, the Change in Control shall relate to:

 

(A)       The corporation for whom the Executive is performing services at the
time of the Change in Control; or

 

(B)        The corporation that is liable for the payment of the deferred
compensation (or all corporations liable for the payment if more than one
corporation is liable) but only if either the deferred compensation is
attributable to the performance of service by the Executive for such corporation
(or corporations) or there is a bona fide business purpose for such corporation
or corporations to be liable for such payment and, in either case, no
significant purpose of making such corporation or corporations liable for such
payment is the avoidance of Federal income tax; or

 

(C)        A corporation that is a majority shareholder of a corporation
identified in either paragraph (A) or (B), or any corporation in a chain of
corporations in which each corporation is a majority shareholder of another
corporation in the chain, ending in a corporation identified in either
subparagraph (A) or (B) above.

 

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(ii)         Change In Ownership. A change in the ownership of a corporation
shall occur on the date that any one person, or more than one person acting as a
group, acquires ownership of stock of the corporation that, together with stock
held by such person or group, constitutes more than 50% of the total fair market
value or total voting power of the stock of such corporation. However, if any
person, or more than one person acting as a group, is considered to own more
than 50% of the total fair market value or total voting power of the stock of a
corporation, then the acquisition of additional stock by the same person or
persons shall not be considered to cause a change in the ownership of the
corporation (or to cause a change in the effective control of the corporation).

 

(iii)        Change In Effective Control. Notwithstanding the fact that a
corporation has not undergone a change in ownership as described above, a change
in the effective control of a corporation shall occur only on the date that
either:

 

(A)       Any one person or more than one person acting as a group acquires (or
has acquired during the twelve month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the
corporation possessing 30% or more of the total voting power of the stock of
such corporation; or

 

(B)        A majority of members of the corporation’s Board of Directors is
replaced during any 12-month period by Directors whose appointment or election
is not endorsed by a majority of the members of the corporation’s Board of
Directors prior to the date of the appointment or election, provided that for
purposes of this subparagraph (B), the term “corporation” refers solely to the
relevant corporation identified above, for which no other corporation is a
majority shareholder.

 

(iv)        Change In Ownership of Assets. A change in the ownership of a
substantial portion of the assets of a corporation shall occur on the date that
any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve-month period ending on the date of the most recent
acquisition by such person or persons) assets from the corporation that have a
total gross fair market value equal to or more than 40% of the total gross fair
market value of all of the assets of the corporation immediately prior to such
acquisition or acquisitions. For this purpose, “gross fair market value” shall
mean the value of the assets of the corporation, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
such assets.

 

A transfer of assets by a corporation shall not be treated as a change in the
ownership of such assets if the assets are transferred to:

 

(A)       A shareholder of the corporation (immediately before the asset
transfer) in exchange for or with respect to its stock; or

 

(B)        An entity, 50% or more of the total value or voting power of which is
owned, directly or indirectly, by the corporation; or

 

(C)        A person, or more than one person acting as a group, that owns,
directly or indirectly, 50% or more of the total value or voting power of all
the outstanding stock of the corporation; or

 

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(D)       An entity, at least 50% of the total value or voting power of which is
owned, directly or indirectly, by a person who is a “related person” under
applicable Treasury Regulations.

 

There shall be no Change in Control when there is a transfer to an entity that
is controlled by the shareholders of the transferring corporation immediately
after the transfer.

 

(b)         Change in Control Date. The Change in Control Date means the first
date during the term of the Agreement on which a Change in Control occurs.

 

 

13.

Code Section 409A Compliance

 

(a)         The intent of the parties is that payments and benefits under this
Agreement comply with Code Section 409A or comply with an exemption from the
application of Code Section 409A and, accordingly, all provisions of this
Agreement shall be construed in a manner consistent with the requirements for
avoiding taxes or penalties under Code Section 409A.

 

(b)         Neither the Executive nor the Company shall take any action to
accelerate or delay the payment of any monies and/or provision of any benefits
in any matter which would not be in compliance with Code Section 409A (including
any transition or grandfather rules thereunder).

 

(c)         A termination of employment shall not be deemed to have occurred for
purposes of any provision of this Agreement providing for the form or timing of
payment of any amounts or benefits upon or following a termination of employment
unless such termination is also a “separation from service” (within the meaning
of Code Section 409A) and, for purposes of any such provision of this Agreement
under which (and to the extent) deferred compensation subject to Code Section
409A is paid, references to a “termination” or “termination of employment” or
like references shall mean separation from service. If the Executive is deemed
on the date of separation from service with the Company to be a “specified
employee”, within the meaning of that term under Code Section 409A(a)(2)(B) and
using the identification methodology selected by the Company from time to time,
or if none, the default methodology, then with regard to any payment or benefit
that is required to be delayed in compliance with Code Section 409A(a)(2)(B),
such payment or benefit shall not be made or provided prior to the earlier of
(i) the expiration of the six-month period measured from the date of the
Executive’s separation from service or (ii) the date of the Executive’s death.
In the case of benefits, however, the Executive may pay the cost of benefit
coverage, and thereby obtain benefits, during such six month delay period and
then be reimbursed by the Company thereafter when delayed payments are made
pursuant to the next sentence. On the first day of the seventh month following
the date of the Executive’s separation from service or, if earlier, on the date
of the Executive’s death, all payments delayed pursuant to this Section 7(c)
(whether they would have otherwise been payable in a single sum or in
installments in the absence of such delay) shall be paid or reimbursed to the
Executive in a lump sum, and any remaining payments and benefits due under this
Agreement shall be paid or provided in accordance with the normal payment dates
specified for them herein.

 

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(d)         With regard to any provision herein that provides for reimbursement
of expenses or in-kind benefits, except as permitted by Code Section 409A, (i)
the right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit, and (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year, provided that the foregoing clause (ii)
shall not be violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses are subject
to a limit related to the period the arrangement is in effect. All
reimbursements shall be reimbursed in accordance with the Company’s
reimbursement policies but in no event later than the calendar year following
the calendar year in which the related expense is incurred.

 

(e)         If under this Agreement, an amount is to be paid in two or more
installments, for purposes of Code Section 409A, each installment shall be
treated as a separate payment.

 

(f)          When, if ever, a payment under this Agreement specifies a payment
period with reference to a number of days (e.g., “payment shall be made within
ten (10) days following the date of termination”), the actual date of payment
within the specified period shall be within the sole discretion of the Company.

 

(g)         Notwithstanding any of the provisions of this Agreement, the Company
shall not be liable to the Executive if any payment or benefit which is to be
provided pursuant to this Agreement and which is considered deferred
compensation subject to Section 409A otherwise fails to comply with, or be
exempt from, the requirements of Code Section 409A.

 

 

14.

Confidentiality

 

The Executive will hold in a fiduciary capacity for the benefit of the Company
all secret or confidential information, knowledge or data relating to the
Company or any of its affiliated companies and their respective businesses,
which was obtained by the Executive during the Executive’s employment by the
Company or any of its affiliated companies and which will not be or become
public knowledge. After termination of the Executive’s employment with the
Company, the Executive will not, without the prior written consent of the
Company or except as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 13 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.

 

 

15.

Miscellaneous

 

No provision of this Agreement may be amended, modified, waived or discharged
unless such amendment, modification, waiver or discharge is agreed to in a
writing signed by the Executive and the Chairman of the Board or President of
the Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or of compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a

 

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waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.

 

 

16.

Governing Law

 

The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the Commonwealth of Virginia.

 

 

17.

Validity

 

The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

 

IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
Citizens Bank and Trust Company by its duly authorized officer, and by the
Executive, as of the date first above written.

 

 

 

CITIZENS BANK AND TRUST COMPANY

 

 

 

 

By:

 

 

 

Joseph D. Borgerding, President and CEO

 

 

 

 

By:

 

 

 

Ronald E. Baron, CFO

 

 

 

 

By:

 

 

 

Roy C. Jenkins, Jr.

 

 

Chairman of the Board of Directors

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

 

 

 

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