Exhibit 10.20

AMENDED EMPLOYMENT AGREEMENT

THIS AMENDED EMPLOYMENT AGREEMENT (“Agreement”) is made as of May 18, 2004, by
and between BANK OF THE COMMONWEALTH, a banking corporation organized under the
laws of Virginia (the “Bank”), COMMONWEALTH BANKSHARES, INC., a Virginia
corporation (the “Holding “Company”) and SIMON HOUNSLOW (the “Executive”); the
Bank being sometimes hereinafter referred to as the “Employer.”

THIS AMENDED EMPLOYMENT AGREEMENT shall supersede and replace the Employment
Agreement entered into previously by the parties on December 15, 1998, and is
amended as of December 31, 2008, in order to comply with applicable provisions
of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

WITNESSETH THAT:

WHEREAS, the Executive is rendering valuable services to the Employer and it is
the desire of the Employer to have the benefit of the Executive’s loyalty,
service and counsel; and

WHEREAS, the Executive wishes to continue in the employ of the Employer;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
set forth, the parties covenant and agree as follows:

 

  1. EMPLOYMENT: The Employer agrees to employ the Executive to perform services
for the Employer and the Executive agrees to serve the Employer upon the terms
and conditions herein provided. The Executive agrees to perform such managerial
duties and responsibilities as shall be assigned to him/her by the Board of
Directors of the Employer, which duties and responsibilities shall be of
substantially the same character to those required by his/her assigned office
and functions on the date of this Agreement. The Executive shall devote his/her
time and attention on a full-time basis to the discharge of the duties
undertaken by him/her hereunder.

 

  (a) TERM OF EMPLOYMENT. Term of Employment hereunder shall be from January 1,
2004 to and including the first to occur of (i) except as otherwise provided in
Section 2 and 3 hereof, January 1, 2005, (ii) except as provided in paragraph
(d) of this Section 1, the Executive’s disability; provided further that this
Agreement shall automatically be extended for an additional one year period on
each January 1 unless at least 60 days prior to January 1, the Employer or the
Employee shall give advance written notice of non-renewal to the other.

 

  (b) COMPENSATION. During the term of employment hereunder, the Executive shall
receive for his/her services a basic salary and incentive or bonus compensation
in amounts determined by the Employer’s Board of Directors or an appropriate
committee of the Employer in accordance with the salary administration program
of the Employer as the same may from time to time be in effect, but in no event
shall such base salary be less than the Executive’s base salary at the date
hereof.

 

  (c) BENEFITS. The Executive shall be eligible for participation in any
additional plans, programs or forms of compensation or benefits that the
Employer’s Board of Directors might hereinafter provide to the class of
employees that includes the Executive.

 

  (d)

DISABILITY. In the event of physical or mental disability of the Executive by
reason of which the Executive is unable to perform the duties of his/her
employment hereunder, with or without reasonable accommodation, the Employer
shall continue to pay or provide to the Executive the compensation and benefits
provided under Paragraphs (b) and (c) of this Section 2 for the first six months
of such disability. If, however, the disability continues beyond such six-month
period, the employer may, at

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its election terminate the Executive’s employment under this Agreement, in which
case the Executive shall receive any disability benefits payable under the
Employer’s plans in effect at that time. Notwithstanding the foregoing, if the
Executive takes a leave of absence due to disability, for purposes of this
Agreement, the Executive’s employment will terminate at such time as the
Executive’s leave of absence would be considered a separation from service under
Treasury Regulation § 1.409A-1(h)(1).

 

  (e) DEATH. In the event that the Executive’s death should occur during the
term of this Agreement, this Agreement shall terminate. The Executive and
his/her estate or beneficiaries, as the case may be, shall be entitled only to
any and all retirement or death benefits payable under the Employer’s plans in
effect at that time and no further compensation will be paid under this
Agreement.

 

  2. TERMINATION:

 

  (a) TERMINATION BY THE EMPLOYER. Nothing herein contained shall prevent the
Employer from terminating the services of the Executive at any time prior to the
expiration of this Agreement.

 

  (i) If such termination is effective prior to the time “a change in control”
(as defined in paragraph (b) of this Section 2) occurs with respect to either
the Employer or the Holding Company, and prior to the time the Employer or the
Holding Company enters into negotiations which result in such change of control,
then unless the termination is “for good cause” as hereinafter defined, the
Employer shall pay the Executive a termination allowance in 12 equal monthly
payments commencing on the last day of the month in which the date of actual
termination occurs, the total amount of which will equal the base salary plus
director’s fees, if any, but not including any bonuses paid to the Executive by
the Employer in the 12 months next preceding the Notice of Termination.
Notwithstanding the foregoing, if the Executive is a Key Employee on the Date of
Termination, the termination allowance shall not commence until the first day of
the seventh month following the Date of Termination, and the first payment shall
include the first six months of termination allowance payments. Except as
provided in this paragraph 2(a)(i), upon the termination herein described, the
compensation and benefits of the Executive will cease as of the Date of
Termination as defined in paragraph 2(d).

 

  (ii) Termination of employment “for good cause” means a dismissal of the
Executive because of (i) the material failure of the Executive, after written
notice, for reasons other than disability, to render services to the Employer as
provided herein, (ii) the Executive’s gross or willful neglect of duty, or
(iii) illegal or intentional acts by the Executive demonstrating bad faith
toward the Employer. If the Employer shall terminate the Executive’s employment
for good cause, the Executive shall be entitled only to receive his/her base
salary in respect of services performed through the Date of Termination.

 

  (b) TERMINATION BY THE EXECUTIVE. The Executive shall be entitled to terminate
his/her employment for good reason, in which event the Employer shall be
obligated to pay the Executive and furnish him/her the benefits provided in
Section 3 hereof. By way of illustration and not limitation, the following
circumstances shall constitute “good reason”:

 

  (i) the Executive is assigned any duties or responsibilities that are
inconsistent with his/her positions, duties, responsibilities and status with
Employer in effect at the date of this Agreement;

 

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  (ii) the location of the Executive’s office and/or workplace for Employer is
moved or relocated to a site 25 miles or more from the location of the
Executive’s office and/or workplace for Employer as of the date of this
Agreement; or

 

  (iii) a change of control occurs with respect to either the Bank or the
Holding Company:

For the purpose of this Agreement, the term “a change in control” shall occur
when (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) who is, or who has entered into a definitive
agreement with either the Holding company or the Bank to become the beneficial
owner, directly or indirectly, of securities of either the Holding Company or
the Bank representing more than twenty-five percent (25%) of the combined voting
power of the then outstanding securities of either the Holding Company or the
Bank, (b) a change in the composition of a majority of the Board of Directors of
either the Bank or the Holding Company occurs in any twelve (12) month period,
or (c) the Holding Company ceases to be the owner of all of the Bank’s issued
and outstanding shares except for director’s qualifying shares.

The right herein conferred upon the Executive to terminate his/her employment
for good reason may be exercised by the Executive at any time during the term of
this Agreement at his sole discretion and any failure by the Executive to
exercise this right after he/she has “good reason” to do so shall not be deemed
a waiver of the right.

In the event the Executive terminates his/her employment without “good reason”
then he/she shall be entitled to no termination allowance and no further
compensation after the “Date of Termination” as defined in paragraph (d) of this
Section 2.

 

  (c) NOTICE OF TERMINATION. Any termination of the Executive’s employment by
the Employer or by the Executive shall be communicated by a written “Notice of
Termination” to the other party hereto. For purposes of this Agreement, “Notice
of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination.

 

  (d) DATE OF TERMINATION. “Date of Termination” shall mean (i) if Executive’s
employment hereunder is terminated by the Executive, the date on which the
Notice of Termination is delivered; (ii) if Executive’s employment hereunder is
terminated by the Employer because the Executive is unable to perform his or her
job, with or without reasonable accommodation, as a result of a disability,
thirty days after the Notice of Termination is given; or (iii) if Executive’s
employment hereunder is terminated by the Employer for any reason, other than
disability, the date on which a Notice of Termination is given, unless within
thirty days thereafter the Executive notifies the Employer that a dispute exists
concerning the termination, in which case the Date of Termination shall be the
date on which the dispute is finally determined, whether by mutual written
agreement of the parties or by final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).

 

  (e) KEY EMPLOYEE. “Key Employee” shall have the meaning assigned to that term
under Section 409A of the Code, which generally defines a Key Employee as an
employee who, with respect to a publicly traded company, is (a) one of the top
fifty most highly compensated officers with an annual compensation in excess of
$130,000 (as adjusted from time to time by Treasury Regulations), (b) a five
percent owner of the Holding Company, or (c) a one percent owner of the Holding
Company with annual compensation in excess of $150,000 (as adjusted from time to
time by Treasury Regulations).

 

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  3. COMPENSATION UPON TERMINATION. Except as provided in paragraph 2(a)(1)
above, if, without good cause, the Employer terminates the services of the
Executive prior to the expiration of this Agreement or if the Executive
terminates his/her employment for good reason, then:

 

  (a) ACCRUED BUT UNPAID COMPENSATION. The Employer shall pay the Executive’s
full base salary through the date of termination at the rate then in effect and
the amount, if any, of awards theretofore made which have not yet been paid.

 

  (b) SEVERANCE ALLOWANCE. The Employer shall pay the Executive a severance
allowance in 60 equal monthly payments, commencing on the last day of the month
which included the Date of Termination, the total amount of which will equal and
will not exceed the present value of one times the Executive’s base salary
amount minus $1.00 plus the present value of any other payment in the nature of
compensation within the meaning of Section 280G(b)(2)(a)(ii) of the Code.
Notwithstanding the foregoing, if the Executive is a Key Employee on the Date of
Termination, the severance allowance shall not commence until the first day of
the seventh month following the Date of Termination and the first payment shall
include the first six months of severance allowance payments. For purposes of
this paragraph 3(b), the following definitions shall apply.

 

  (i) Base Amount—The term “base amount means the Executive’s annualized
includible compensation for the base period.

 

  (ii) Annualized Includible compensation for the Base Period—The term
“annualized includible compensation for the base period” means the average
annual compensation paid by the Bank, which was includible in the gross income
of the Executive for federal income tax purposes for the taxable years in the
base period.

 

  (iii) Base Period—The term “Base Period” means the period consisting of the
most recent five taxable years ending before the date on which termination
occurs, except for termination as a result of the operation of Paragraph
3(b)(ii) above in which case the date of termination shall be deemed to be the
date a change in control occurs as to either the Bank or the Holding Company.

 

  (iv) Present Value—Present value shall be determined in accordance with
Section 1274(b)(2) of the code.

 

  (c) EMPLOYEE BENEFITS. The Employer shall maintain in full force and effect,
for the Executive’s continued benefit, until the earlier of six months
subsequent to the Date of Termination or the date the Executive becomes a
participant in similar plans, programs or arrangements provided by a subsequent
employer, all life, accident, medical and dental insurance benefit plans and
programs or arrangements in which the Executive has been entitled to participate
immediately prior to the Date of Termination, provided that the Executive’s
continued participation is possible under the general terms and provisions of
such plans and programs. Said cost to be the responsibility of the Employer. In
the event that the Executive’s participation in any such plan or program is
barred, the Employer shall arrange to provide the Executive with benefits
substantially similar to those which the Executive is entitled to receive under
such plans and programs. At the end of the period of coverage, the Executive
shall have the option to have assigned to him at no cost and with no appointment
of prepaid premiums, any assignable insurance policy owned by the Employer or
the Holding Company and relating specifically to the Executive.

 

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  (d) NO DUTY TO MITIGATE. The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 3 by seeking other employment
or otherwise, nor shall the amount of any payment provided for in this Section 3
be reduced by any compensation earned by the Executive as the result of
employment by another employer after the Date of Termination, or otherwise.

 

  4. MISCELLANEOUS:

 

  (a) WAIVER. A waiver by any party of any of the terms and conditions of this
Agreement in any instance shall not be deemed or construed to be a waiver of
such terms and conditions for the future or any subsequent breach thereof.

 

  (b) SEVERABILITY. If any provision of this Agreement, as applied to any
circumstances, shall be found by a court to be void and unenforceable, the same
shall in no way affect any other provision of this Agreement or the
applicability of such provision to any other circumstances.

 

  (c) AMENDMENT. This Agreement may not be varied, altered, modified, changed,
or in any way amended except by an instrument in writing, executed by the
parties hereto or their legal representatives.

 

  (d) NON-ASSIGNABILITY. Neither the Executive nor his/her estate shall have any
right to commute, sell, assign, transfer or otherwise convey the right to
receive any payments hereunder, which payments and the right thereto, are
expressly declared to be non-assignable and non-transferable.

 

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

 

  (f) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, whether statutory or
decisional, applicable to agreements made and entirely to be performed within
such state and provisions of federal law as may be applicable.

 

  (g) HOLDING COMPANY JOINDER. The Holding Company executes this Agreement to
evidence its consent hereto.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

BANK OF THE COMMONWEALTH By:  

/s/ Cynthia A. Sabol

Name:   Cynthia A. Sabol Title:   Executive Vice President & CFO COMMONWEALTH
BANKSHARES, INC. By:  

/s/ E. J. Woodard, Jr. CLBB

Name:   E. J. Woodard, Jr. CLBB Title:   Chairman of the Board,   President &
CEO

 

/s/ Simon Hounslow

Simon Hounslow Executive

 

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