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Exhibit 10.12

EMPLOYMENT AGREEMENT
(AMENDED AND RESTATED)
 
THIS AGREEMENT made as of the 1st day of January, 2013, by and between C&F
MORTGAGE CORPORATION (C&F), Virginia Corporation and BRYAN McKERNON (McKernon):
 
RECITAL
 
This Agreement originally entered into as of December 19, 2006, as amended
through the date hereof, is now being amended and restated to incorporate the
prior amendments and to reflect changes in annual salary, bonus opportunity, and
non-solicitation provisions.
 
WITNESSETH:
 
That for and in consideration of the mutual covenants contained herein, the
parties hereto do agree as follows:
 
1.            Scope of Services; Exclusivity. C&F hereby employs McKernon and
McKernon hereby agrees to accept employment and serve as President and Chief
Executive Officer of C&F Mortgage Corporation. McKernon agrees to perform the
duties normally associated with such positions, as well as such other legally
permissible and proper duties and functions as the Board of Directors of C&F
shall from time to time assign to him.
 
During the period of his employment with C&F, McKernon will devote his exclusive
efforts toward the establishment and operation of C&F. He will not engage in any
activities which would conflict with the present or future enterprises of C&F
and will use his best efforts to promote the present and future welfare of C&F
in all his business and social dealings.
 
2.            Compensation; Bonus. McKernon shall be paid monthly salary
payments, based on an annual salary of no less than $220,000.00.
In addition, C&F will pay to McKernon a bonus equal to a percentage of the
_____________________ (calculated according to Generally Accepted Accounting
Principles)(____) realized by C&F, according to the following schedule:
 
 
  %
 
 
 
 
 
 

 
The bonus will be computed at the end of each month and will be paid prior to
the end of the next month, except as limited by the next sentences. The bonus
computation will be based upon 80% of the annualized year-to-date results and
will be adjusted at year-end based upon final results in order that the total
bonus will be equal to the appropriate percentage of year end ____.  Any amount
due based on the adjustment after the end of any calendar year will be paid no
later than 60 days after the end of such calendar year.
 
3.            Term of Agreement; Termination. The term of this Agreement shall
be 3 years at all times, unless and until notice is given pursuant to the
following sentence or until terminated as otherwise allowed herein. Either party
may give notice to the other party, at any time and for any reason, that the
party giving notice intends to terminate this Agreement 3 years from the date
that the notice is received. Three years from the date of such notice, this
Agreement shall be terminated and neither party hereto shall have any further
obligation or liability hereunder. McKernon may terminate this Agreement
immediately upon the happening of an event of "Covered Termination" as defined
in that "Change in Control Agreement" between McKernon and C&F Financial
Corporation attached hereto and labeled "Schedule A" (the "Change in Control
Agreement"). Any termination of this Agreement shall also terminate the Change
in Control Agreement with the exception of a termination of this Agreement by
McKernon as allowed by the preceding sentence.
 

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4.            Further Termination of Agreement.
 
A.            Anything to the contrary in this Agreement notwithstanding, either
party may terminate this Agreement, with no further obligation of any nature to
the other party, except that C&F may elect to purchase a non-solicitation
commitment under paragraph 4.C., upon the happening of either of the following
events: (i) if there shall be ________  in which C&F experiences ______ during
any period of ____________________; or (ii) if C&F experiences ______ during any
__________________________ exceeding  the sum of ________.
 
B.            Except as otherwise provided in this Agreement, C & F shall have
the right, at any time and at its sole option, to buy out McKernon's interest in
this Agreement and terminate his employment, thereafter having no further
obligation to McKernon except as may be set out in this Agreement, based upon
the following chart:
 
 
 
 
 
 
 
 
 
 
 
 
 

 
For purposes of this paragraph, ____ (as defined in Section 2) shall be
calculated for the 12 months immediately preceding the buyout.  Such buyout
payments shall be paid in a lump sum within 30 days of McKernon's termination of
employment.
 
C.            Should McKernon's employment terminate (either voluntarily by him
or involuntarily by C&F) and this Agreement be terminated for any reason other
than McKernon's death or termination of this Agreement in accordance with the
second sentence in paragraph 3, C&F shall have the right, in its sole
discretion, to purchase a non-solicitation commitment from McKernon, on a
month-to-month basis for up to _________ following termination of employment,
based upon the following monthly purchase price:  (i) if McKernon voluntarily
terminates his employment, a monthly amount equal to
_______________________________; or (ii) if C&F terminates McKernon's
employment, a monthly amount equal to ______________________________.  Under the
non-solicitation commitment, McKernon shall be prohibited from, directly or
indirectly, communicating with, soliciting or hiring any employee of C&F.
 
D.            This Agreement shall terminate upon the death or disability of
McKernon, whereupon C&F shall have no obligation to McKernon, his heirs or
personal representatives except as may be set out in this Agreement.
 
E.            This Agreement shall terminate upon the failure of either party to
fulfill its obligations undertaken herein. Thereafter, the aggrieved party shall
be free to pursue any remedies it may have at law and in equity against the
breaching party.
 
F.            McKernon acknowledges that the non-solicitation provisions set
forth in paragraph 4.C. are just, reasonable, and necessary to protect the
legitimate business interests of C&F.  McKernon further acknowledges that if he
breaches or threatens to breach the applicable non-solicitation provisions,
C&F's remedies at law will be inadequate, and C&F will be irreparably harmed.
 Accordingly, C&F shall be entitled to an injunction, both preliminary and
permanent, restraining McKernon from such breach or threatened breach, such
injunctive relief not to preclude C&F from pursuing all available legal and
equitable remedies.  In addition to all other available remedies, if McKernon
violates the non-solicitation provisions in paragraph 4.C., McKernon shall pay
all reasonable costs and reasonable attorneys' fees incurred by C&F in enforcing
the provision of paragraph 4.C.
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5.            Benefits. C&F shall provide McKernon, during the time of his
employment by C&F, benefits commensurate with benefits furnished to other
employees of C&F. Such benefits are anticipated to include: major
medical/hospitalization insurance; dental insurance; long-term disability
insurance; and life insurance.
 
6.            Vacations; Sick Leave. McKernon shall accrue vacation leave at the
rate of 20 days per year and shall accrue sick leave at the rate of 12 days per
year.
 
7.            Confidentiality. All information, whether printed, written or
oral, acquired by McKernon from or in connection with his employment by C&F
shall be held in confidence by McKernon and shall be considered proprietary in
nature. All such information shall be used for business purposes only. Upon
termination of his employment, McKernon shall immediately return all such
information to C&F, keeping no copies.
 
8.            Disqualification from Performance of Duties. Should McKernon be
disqualified from the performance of his duties under this Agreement, or
otherwise be rendered unable to perform such duties, by Federal, state or local
statutes, laws, rules, regulations, or ordinances, this Agreement shall at once
be terminated and C&F shall have no obligation to McKernon hereunder except as
may be set out in this Agreement.
 
9.            General Provisions.
 
A.            This Agreement and Schedule A constitute the entire agreement
between the parties. This Agreement supercedes and replaces all previous
agreements between the parties addressing the subject matter.
 
B.            This Agreement shall be binding upon and inure to the benefit of
the heirs, personal representatives, successors and assigns of the parties.
 
C.            If any provision or any portion thereof contained in this
Agreement is held to be unconstitutional, invalid or unenforceable, the
remainder of this Agreement or portion thereof shall be deemed severable, and
shall not be affected and shall remain in full force and effect; waiver of any
provision of this Agreement shall be in writing and shall not be deemed to be a
waiver of any default thereafter occurring.
 
D.            In the event of a dispute regarding the interpretation,
application or enforcement of this Agreement, the parties agree that the
jurisdiction for a resolution of such dispute shall be the appropriate court of
law in King William County, Virginia.
 
E.            Code Section 409A Provisions.
 
(1)           The intent of the parties is that payments and benefits under this
Agreement comply with, or comply with an exemption from the application of,
Internal Revenue Code Section 409A, as amended from time to time and applicable
guidance issued thereunder ("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.
 
(2)           Neither McKernon nor C&F 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) to the extent Code Section 409A
applies to such payment or benefit.
 
(3)           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 McKernon
is deemed on the date of separation from service with C&F 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 C&F 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 McKernon's
separation from service or (ii) the date of McKernon's death.  On the first day
of the seventh month following the date of McKernon's separation from service
or, if earlier, on the date of McKernon's death, all payments delayed pursuant
to this Section 9.E(3) (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 McKernon in a lump sum (without interest), 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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(4)           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 Internal Revenue 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 C&F's reimbursement policies but in no event later than the calendar year
following the calendar year in which the related expense is incurred.
 
(5)           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.
 
(6)           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 C&F.
 
(7)           Notwithstanding any of the provisions of this Agreement, C&F shall
not be liable to McKernon if any payment or benefit which is to be provided
pursuant to this Agreement and which is considered deferred compensation subject
to Code Section 409A otherwise fails to comply with, or be exempt from, the
requirements of Code Section 409A.
 
10.          Clawback.  McKernon agrees that any incentive-based compensation or
award he receives, or has received, from C&F or any subsidiary or affiliate,
pursuant to this Agreement or otherwise, is subject to such clawback (recovery)
as may be required to be made pursuant to law, rule, regulation or stock
exchange listing requirement or any policy of C&F or any subsidiary or affiliate
adopted pursuant to any such law, rule, regulation or stock exchange listing
requirement.
 
WITNESS the following signatures and seals as of the day, month and year first
above written.

 
 
 
C&F Mortgage Corporation
 
 
 
 
 
 
 
 
 
 
Date:
March 1, 2013
 
By:
/s/ Larry G. Dillon
 
 
 
Chairman, Board of Directors
 
 
 
 
 
 
 
 
 
 
Date:
March 1, 2013
 
/s/ Bryan McKernon
 
 
 
Bryan McKernon

 
 
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