Document:

ex10-1.htm

    EXHIBIT
      10.1

    

    EMPLOYMENT
      AGREEMENT

    

    

    THIS
      EMPLOYMENT AGREEMENT (“Agreement”) is effective as of July 25, 2007, and is
      among CITY HOLDING COMPANY, a West Virginia corporation (the “Company”), CITY
      NATIONAL BANK OF WEST VIRGINIA, a national banking association
      (“City National”), and John W. Alderman III (“Employee”). The Company and
      City National are referred to collectively herein as the
“Employer.”

     

    Recitals:

     

    A.
      The
      Company and City National desire to employ Employee as its Senior Vice-President
      & Chief Legal Officer.

     

    B.
      This
      employment agreement replaces and supersedes the Employment Agreement entered
      into between the Employer and Employee on March 14, 2002 and all former
      employment agreements between the Employer and Employee. The Employment
      Agreement dated March 14, 2002 terminated on March 14, 2007.

     

    C.
      Employee is willing to make his services available to Employer on the terms
      and
      subject to the conditions set forth herein.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and promises contained
      herein and other good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, the parties agree as follows:

     

    Agreement:

     

    1.  Employment.
      Employee is employed as Senior Vice-President and Chief Legal Officer of the
      Company and City National. Employee shall have such duties and responsibilities
      as are commensurate with such positions. Employee accepts and agrees to such
      employment, subject to the general supervision and pursuant to the orders,
      advice and direction of Employer and its Boards of Directors. Employee shall
      report to and be under the supervision of the President or Chief Executive
      Officer. Employee shall perform such duties as are customarily performed by
      one
      holding such positions in other same or similar businesses or enterprises as
      that engaged in by Employer and shall also render such other services and duties
      as may be reasonably assigned to him from time to time by Employer, consistent
      with his positions.

     

    2.  Term
      of Employment. The term of this Agreement shall commence on July
      25, 2007 and shall terminate on July 31, 2009, unless extended. On each
      monthly anniversary date following July 31, 2007, this Agreement will be
      automatically extended for an additional month; provided, however, that on
      any
      one month anniversary date following July 31, 2007 either Employer or
      Employee may serve notice to the other party to fix the term to a definite
      two
      year period from the date of such notice and, in such event, no further
      automatic extensions will occur. The term of this Agreement as it may be
      extended pursuant to this Section 2, or as it may be shortened in accordance
      with Section 5 or Section 6, is referred to as the “Term.”

     

    
      
        
        

      

      
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    3.  Compensation.

     

    (a)  For
      all
      services rendered by Employee to Employer under this Agreement, Employer shall
      pay to Employee a minimum annual salary at a rate not less than $170,000 or
      as
      it has been periodically adjusted, payable in accordance with the payroll
      practices of Employer applicable to its officers. The Company and/or City
      National may make such payments as well as any other payments provided for
      in
      this Agreement but, regardless of who is the payor, both the Company and City
      National shall be jointly and severally liable for such payments.

     

    (b)  Employee
      shall have the right to participate in the incentive plans of Employer for
      which
      he may become eligible and designated a participant, including but not limited
      to any equity based compensation plans and future incentive plans adopted by
      the
      Employer during the Term.

     

    (c)   Except
      as otherwise specifically provided herein, for so long as Employee is employed
      by Employer, Employee also shall be paid, on the same basis as other officers
      of
      Employer, employee pension and welfare benefits and group employee benefits
      such
      as sick leave, vacation, group disability and health, life, and accident
      insurance and similar indirect compensation which Employer may from time to
      time
      extend to its officers; provided that Employee shall receive term life insurance
      coverage in an amount not less than two (2) times his base salary as then in
      effect. For purposes of clarification, under Employer’s existing policies
      Employee shall be entitled to up to eight weeks of vacation each year. Unused
      vacation pay shall not carry over to succeeding years.

     

    (d)  If
      during
      the Term of the Agreement Employee becomes eligible for retirement under
      Employer's retirement plans and he retires, Employee may elect to continue
      receiving the health insurance coverage provided to Employee prior to retirement
      at a comparable rate and benefit available to other retired employees (or,
      if no
      such benefit is then made available to other retired employees, at the rate
      and
      benefit available to Employee at the time of retirement).

     

    (e)  For
      so
      long as Employee is employed by Employer, Employer shall pay Employee's
      reasonable legal bar dues, bar association dues and reasonable costs of
      continuing legal education programs for Employee, and provide necessary legal
      books and similar materials to enable Employee to carry out his duties as Chief
      Legal Officer.

     

    4.  Covenants
      of Employee.

     

    (a)  Subject
      to the limitations provided in Subsections 4(b), 4(c), 4(d), and 4(e) (whichever
      may be applicable), upon termination of Employee's employment, Employee will
      not, directly or indirectly, either as a principal, executive officer, employer,
      stockholder, co-partner or in any other individual or representative capacity
      whatsoever, engage in the consumer, savings or commercial banking business,
      the
      savings and loan business, or the mortgage banking business in any county of
      any
      state in which the Company or City National Bank maintains offices immediately
      prior to the termination of employment, as well as the counties of Kanawha,
      Putnam, Jackson, Cabell, Wayne, Mason, Lincoln, Doddridge, Marion, Raleigh,
      Summers, Fayette, Greenbrier, Nicholas, Braxton, Lewis, Monroe, Pocahontas,
      Mercer, Wood, Harrison, Jefferson, Berkeley, Morgan, Hampshire in West Virginia
      or the counties of Boyd, Carter, Greenup or Johnson in Kentucky, or the counties
      of Lawrence or Scioto in Ohio, nor will Employee solicit, or assist any other
      person in so soliciting, any depositors or customers of Employer or its
      Affiliates or induce any then or former employee of Employer or its Affiliates
      to terminate his or her employment with Employer or its Affiliates; provided,
      however, that nothing herein contained shall be deemed to prevent or limit
      the
      right of Employee to invest in a business similar to Employer's business if
      such
      investment is limited to less than one percent of the capital stock or other
      securities of any corporation or similar organization whose stock or securities
      are publicly owned or are regularly traded on any public exchange. The term
      “Affiliate” as used in this Agreement means a Person that directly or indirectly
      through one or more intermediaries, controls, or is controlled by, or is under
      common control with, another Person. The term “Person” as used in this Agreement
      means any person, partnership, corporation, group or other entity.
      Notwithstanding the foregoing, Employee may engage in the general practice
      of
      law, and such practice of law shall not be considered a violation hereof, even
      if Employee represents financial institutions as a third party
      attorney.

     

    
      
        
        

      

      
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    (b)  Except
      as
      provided in Section 4(e) hereof, if Employee voluntarily terminates his
      employment with Employer, Employee will be subject to the provisions of
      Subsection 4(a) for a period of 24 months following the date of termination
      of
      employment of Employee.

     

    (c)  If
      Employee's employment is terminated by Employer for Just Cause (as defined
      in
      Subsection 6(b)), Employee will be subject to the provisions of Subsection
      4(a)
      for a period of 24 months following the date of termination of Employee’s
      employment.

     

    (d)  If
      Employee's employment is terminated by Employer for reasons other than Just
      Cause (as defined In Subsection 6(b)) at any time, Employee will not be subject
      to the provisions of Subsection 4(a), provided, however, that for 24 months
      after termination, Employee shall not solicit or assist another person in
      soliciting, any depositor or customer of Employer or its Affiliates or induce
      any then or former employee to terminate his or her employment with Employer
      or
      its Affiliates.

     

    (e)  Notwithstanding
      any other provision of this Agreement to the contrary, if Employee voluntarily
      terminates his employment with Employer in accordance with Subsection 6(e),
      Employee will not be subject to Subsection 4(a), provided, however, that for
      24
      months after termination, Employee shall not solicit or assist another person
      in
      soliciting, any depositor or customer of Employer or its Affiliates or induce
      any then or former employee to terminate his or her employment with Employer
      or
      its Affiliates.

     

    
      
        
        

      

      
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    (f)  During
      the Term of Employee's employment hereunder and thereafterfor a period of 24
      months, and except as required by any court, supervisory authority or
      administrative agency or as may be otherwise required by applicable law,
      Employee shall not, without the written consent of the Board of Directors of
      Employer or a person authorized thereby, disclose to any person, other than
      an
      employee of Employer or an Affiliate thereof or a person to whom disclosure
      is
      reasonably necessary or appropriate in connection with the performance by
      Employee of his duties as an employee of Employer or an Affiliate, any
      confidential information obtained by him while in the employ of Employer, unless
      such information has become a matter of public knowledge at the time of such
      disclosure.

     

    (g)  The
      covenants contained in this Section 4 shall be construed and interpreted in
      any
      judicial proceeding to permit their enforcement to the maximum extent permitted
      by law. Employee agrees that the restraints imposed herein are necessary for
      the
      reasonable and proper protection of Employer and its Affiliates and that each
      and every one of the restraints is reasonable in respect to such matter, length
      of time and the area proscribed. Employee further acknowledges that damages
      at
      law would not be a measurable or adequate remedy for breach of the covenants
      contained in this Section 4 and, accordingly, Employee agrees to submit to
      the
      equitable jurisdiction of any court of competent jurisdiction in Charleston,
      West Virginia in connection with any action to enjoin Employee from violating
      any such covenants.

     

    5.  Disability.

     

    If,
      by
      reason of Total and Permanent Disability (as defined below) during the Term,
      Employee is unable to carry out the essential functions of his employment for
      12
      consecutive months, his services may be terminated by the Board of Directors
      determining so to do upon one month's notice to be given to Employee at any
      time
      after the period of 12 continuous months of Total and Permanent Disability
      and
      while such Total and Permanent Disability continues. If, prior to the expiration
      of the one month period after the giving of such notice, Employee shall recover
      from such Total and Permanent Disability and return to the full-time active
      discharge of his duties, then such notice shall be of no further force and
      effect and Employee's employment shall continue as if the same had been
      uninterrupted. If Employee shall not so recover from his Total and Permanent
      Disability and return to his duties, then his services shall terminate at the
      expiration date of such one month's notice with the same force and effect as
      if
      that date had been the date of termination originally provided for hereunder.
      During the first 12 months of the period of Employee's Total and Permanent
      Disability, Employee shall continue to earn all compensation (including bonuses
      and incentive compensation) to which Employee would have been entitled as if
      he
      had not been Totally and Permanently Disabled, such compensation to be paid
      at
      the time, in the amounts, and in the manner provided in Subsection 3(a), and
      to
      be reduced by the amount of any compensation received pursuant to any applicable
      disability insurance plan of Employer. Thereafter, Employee shall receive
      compensation to which he is entitled under any applicable disability insurance
      plan. If a dispute arises between Employee and Employer concerning Employee's
      physical or mental ability to continue or return to the performance of his
      duties as aforesaid, Employee shall submit to examination by a competent
      physician mutually agreeable to the parties, and his opinion as to Employee's
      capability to so perform will be final and binding. Upon termination of
      Employee's services by reason of Total and Permanent Disability, the Term shall
      end. For purposes of this Agreement, “Total and Permanent Disability” means the
      Employee: (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 twelve (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 twelve
      (12) months, receiving income replacement benefits for a period of not less
      than
      three (3) months under an accident and health plan covering employees of the
      Company.

     

    
      
        
        

      

      
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    6.  Termination.

     

    (a)  “Termination
      Compensation” means the highest amount of cash compensation paid (or earned and
      payable whether or not deferred) to or for the benefit of Employee in respect
      of
      any of the three most recent calendar years ending prior to the date of
      termination, determined by reference to the annual cash compensation (salary,
      incentive compensation, and  bonus) reflected in the summary
      compensation table set forth in the Company’s proxy statement for such year, or,
      in the absence of such previously reported table, by reference to the amount
      of
      such compensation as would be reflected for such year in such a summary
      compensation table prepared in accordance with Item 402(b) of Regulation S-K
      of
      the Securities and Exchange Commission.

     

    (b)  Employer
      shall have the right to terminate Employee's employment under this Agreement
      at
      any time for Just Cause, which termination shall be Effective immediately.
      Termination for “Just Cause” shall include termination for (a) Employee's
      commission of an act materially and demonstrably detrimental to the Employer,
      which act constitutes willful misconduct by the Employee in the performance
      of
      his material duties to the Employer not authorized, directed or ratified by
      City
      National’s or the Company’s Board of Directors; (b) Employee's conviction of a
      felony involving moral turpitude; or (c) Employee’s material breach of any other
      provision of this Agreement, provided that Employee has received written notice
      from Employer of such material breach and such breach remains uncured 30 days
      after the delivery of such notice. No act or failure to act will be considered
      “willful” under this Agreement unless it is done, or omitted to be done, by the
      Employee in bad faith or without reasonable belief that his action or omission
      was in the best interests of the Employer. In the event Employee's employment
      under this Agreement is terminated for Just Cause, Employee shall have no right
      to receive compensation or other benefits under this Agreement for any period
      after such termination.

     

    (c)  If
      Employee shall die during the Term, this Agreement and the employment
      relationship hereunder will automatically terminate on the date of death, which
      date shall be the last date of the Term. Notwithstanding this Subsection 6(c),
      if Employee dies while employed by Employer, Employee's estate shall receive
      an
      amount equal to the Employee's Termination Compensation paid over 12 equal
      monthly payments commencing with the first day of the month following the date
      of death, in addition to any life insurance benefits available to all employees
      of City National.

     

    
      
        
        

      

      
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    (d)  Employer
      may terminate Employee’s employment other than for “Just Cause,” as described in
      Subsection 6(b), at any time upon written notice to Employee, which termination
      shall be effective immediately. In the event Employer terminates Employee
      pursuant to this Subsection 6(d), Employee will nevertheless receive his
      Termination Compensation paid in 12 monthly installments commencing with the
      first day of the month following Employee’s termination of employment under this
      Section 6(d). In addition, Employee shall continue to receive health insurance
      coverage from Employer on the same terms as were in effect prior to Employee’s
      termination, either under Employer’s plans or comparable coverage, for 24
      months, or until Employee becomes eligible for health benefits offered by
      another employer, which benefits are substantially equivalent to those provided
      by Employer to Employee immediately prior to termination, whichever is shorter.
      Notwithstanding anything in this Agreement to the contrary, if Employee breaches
      Subsection 4(d), Employee will not be entitled to receive any further
      compensation or benefits pursuant to this Subsection 6(d).

     

    (e)  Employee
      may voluntarily terminate employment with Employer (i) pursuant to
      paragraph 8(g) hereof, or (ii) for “Good Reason.”  In either such
      event, Employee shall be entitled to receive (i) any compensation due but not
      yet paid through the date of termination, and (ii) in lieu of any further salary
      payments from the date of termination to the end of the Term, an amount equal
      to
      the Termination Compensation paid in 12 monthly installments commencing with
      the
      first day of the month following the date of such termination of employment.
      In
      addition, Employee shall continue to receive health insurance coverage from
      Employer on the same terms as were in effect prior to Employee’s termination,
      either under Employer’s plans or comparable coverage for either 24 months or
      until Employee becomes eligible for health benefits provided by another
      employer, which benefits are substantially equivalent to those offered by
      Employer to Employee immediately prior to termination, whichever is shorter.
      Under these circumstances, Employee shall not be subject to the restrictions
      in
      Section 4(a), as set forth in Section 4(e).

     

    “Good
      Reason” shall mean the occurrence of any of the following events without
      Employee's express written consent:

     

    (i)  the
      assignment to Employee of duties inconsistent with the position of Senior
      Vice-President and Chief Legal Officer of companies similar to the
      Employer;

     

    (ii)   a
      reduction by Employer in Employee's pay grade or base salary as then in effect
      or the exclusion of Employee from participation in Employer's benefit plans
      in
      which he previously participated as in effect at the date hereof or as the
      same
      may be increased from time to time during the term of this
      Agreement.

     

    (iii)   an
      involuntary relocation of Employee more than 50 miles from the location where
      Employee worked immediately following his most recent voluntary relocation
      or
      the breach by Employer of any other material provision of this
      Agreement;

     

    
      
        
        

      

      
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    (iv)  any
      purported termination of the employment of Employee by Employer which is not
      effected in accordance with this Agreement; or

     

    (v)  the
      occurrence of a Change of Control within the period of 24 months preceding
      such
      termination.

     

    A
“Change
      of Control” shall be deemed to have occurred if (i) any person or group of
      persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act
      of
      1934) together with its affiliates, excluding employee benefit plans of
      Employer, is or becomes, directly or indirectly, the “beneficial owner” (as
      defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
      of
      securities of the Company or of City National representing 20% or more of the
      combined voting power of its then outstanding securities; or (ii) during the
      term of this Agreement as a result of a tender offer or exchange offer for
      the
      purchase of securities of the Company or of City National (other than such
      an
      offer by the Company or City National for its own securities), or as a result
      of
      a proxy contest, merger, consolidation or sale of assets, or as a result of
      any
      combination of the foregoing, individuals who at the beginning of any two-year
      period during the Term of this Agreement constitute the Company’s or City
      National’s Board of Directors, plus new directors whose election or nomination
      for election by the Company’s or City National’s shareholders, as applicable, is
      approved by a vote of at least two-thirds of the directors still in office
      who
      were directors at the beginning of such two-year period, cease for any reason
      during such two-year period to constitute at least two-thirds of the members
      of
      such Board of Directors; or (iii) the shareholders of the Company or of City
      National approve a merger or consolidation of the Company and/or City National
      with any other corporation or entity regardless of which entity is the survivor,
      other than a merger or consolidation which would result in the voting securities
      of the Company or City National outstanding immediately prior thereto continuing
      to represent (either by remaining outstanding or being converted into voting
      securities of the surviving entity) at least 80% of the combined voting power
      of
      the voting securities of the Company or City National or such surviving entity
      outstanding immediately after such merger or consolidation; or (iv) the
      shareholders of the Company or City National, as applicable, approve a plan
      of
      complete liquidation or winding-up of the Company or City National or an
      agreement for the sale or disposition by the Company or City National of all
      or
      substantially all of the Company’s or City National’s assets; or (v) any event
      which Employer's Board of Directors determines should constitute a Change of
      Control.

     

    (f)  In
      receiving any payments pursuant to this Section 6, Employee shall not be
      obligated to seek other employment or take any other action by way of mitigation
      of the amounts payable to Employee hereunder, and such amounts shall not be
      reduced or terminated whether or not Employee obtains other
      employment.

     

    (g)  In
      the
      event that Employer's independent public accountants or the Internal Revenue
      Service determine, at any time during or after expiration of this Agreement,
      that Employee has collected an amount arising from any and all sources of
      compensation from Employer (including, without limitation, by virtue of the
      immediately following sentence) exceeding the product of 2.99 and Employee's
      “base amount” as defined in Section 280G(b)(3) of the Internal Revenue Code (the
“Code § 280G Maximum”), notwithstanding any provision of this agreement or any
      plan or arrangement of Employer to the contrary, Employer shall pay Employee
      147.5% of the federal excise taxes payable by Employee under Code § 4999. Such
      tax gross up payment shall be made to Employee no later than the due date of
      the
      Employee’s tax return reporting the amount of such tax. If, by virtue of any
      plan or arrangement of Employer, benefits to which Employee would otherwise
      be
      entitled would be curtailed or reduced because Employee may collect an amount
      exceeding the Code § 280G Maximum, Employer shall nevertheless pay to Employee
      an amount equal to 100% of the value by which such benefits are curtailed or
      reduced, and any such payments shall be subject to the excise tax reimbursement
      prescribed by the preceding section.

     

    
      
        
        

      

      
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    (h)  To
      the
      extent that Employee is a "key employee" (as defined under Section 416(i) of
      the
      Internal Revenue Code, disregarding Section 416(i)(5) of the Internal Revenue
      Code) of the Company, no payment of Termination Compensation may be made under
      this Section 6 prior to the earlier of (i) the expiration of the six (6)-month
      period measured from the date of Employee's separation from service, or (ii)
      the
      date of Employee's death; provided, however, that the six (6) month delay
      required under this Section 6(i) shall not apply to the portion of any payment
      resulting from the Employee’s “involuntary separation from service” (as defined
      in Treas. Reg. § 1.409A 1(n) and including a “separation from service for good
      reason,” as defined in Treas. Reg. § 1.409A 1(n)(2)) that (a) is payable no
      later than the last day of the second year following the year in which the
      separation from service occurs, and (b) does not exceed two times the lesser
      of
      (i) the Employee’s annualized compensation for the year prior to the year in
      which the separation from services occurs, or (ii) the dollar limit described
      in
      Section 401(a)(17) of the Code. To the extent Termination Compensation payable
      in monthly installments under this Section 6 is required to be deferred under
      the preceding sentence, the first six months of monthly installments shall
      be
      payable in month seven following Employee's separation from service and the
      remaining monthly payments shall be made when otherwise scheduled.

     

    (i)  Any
      reference in this Agreement to a termination of employment, severance from
      employment or separation from employment shall be deemed to mean a “Termination
      of Employment.”  A “Termination of Employment” means the termination
      of the Employee’s employment with the Company and its Affiliates for reasons
      other than death or Total and Permanent Disability.  Whether a
      Termination of Employment takes place is determined based on the facts and
      circumstances surrounding the termination of the Employee’s
      employment.  A Termination of Employment will be considered to have
      occurred if it is reasonably anticipated that:

     

    (i)  the
      Employee will not perform any services for the Company or its Affiliates after
      Termination of Employment, or

     

    (ii)  the
      Employee will continue to provide services as the Company or its Affiliates
      at
      an annual rate that is less than fifty percent (50%) of the bona fide services
      rendered during the immediately preceding twelve (12) months of
      employment.

     

    
      
        
        

      

      
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    7.  Other
      Employment.

     

    Employee
      shall devote all of his business time, attention, knowledge and skills solely
      to
      the business and interest of Employer and its Affiliates, and Employer and
      its
      Affiliates shall be entitled to all of the benefits, profits and other
      emoluments arising from or incident to all work, services and advice of
      Employee, and Employee shall not, during the Term hereof, become interested
      directly or indirectly, in any manner, as partner, officer, director,
      stockholder, advisor, employee or in any other capacity in any other business
      similar to Employer's business; provided, however, that nothing herein contained
      shall be deemed to prevent or limit the right of Employee to invest in a
      business similar to Employer's business if such investment is limited to less
      than one percent of the capital stock or other securities of any corporation
      or
      similar organization whose stock or securities are publicly owned or are
      regularly traded on any public exchange.

     

    8.  Miscellaneous.

     

    (a)   This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of West Virginia without regard to conflicts of law principles
      thereof.

     

    (b)  This
      Agreement constitutes the entire Agreement between Employee and Employer, with
      respect to the subject matter hereof, and supersedes all prior agreements with
      respect thereto. Without limiting the foregoing, Employee agrees that this
      Agreement satisfies any rights he may have had under the prior employment
      agreements.

     

    (c)  This
      Agreement may be executed in one or more counterparts, all of which, taken
      together, shall constitute one and the same instrument.

     

    (d)  Any
      notice or other communication required or permitted under this Agreement shall
      be effective only if it is in writing and delivered in person or by reliable
      overnight courier service or deposited in the mails, postage prepaid, return
      receipt requested, addressed as follows:

     

    To
      Employer:

     

    City
      Holding Company

     

    25
      Gatewater Road

     

    Charleston,
      West Virginia 25313

     

    (304)
      769-1100

     

    Attention:      Corporate
      Secretary

     

    To
      Employee:

     

    John
      W.
      Alderman, III

     

    [Address
      and Telephone Number]

     

    

    
      
        
        

      

      
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    Notices
      given in person or by overnight courier service shall be deemed given when
      delivered to the address required by this Subsection 8(d), and notices given
      by
      mail shall be deemed given three days after deposit in the mails. Any party
      hereto may designate by written notice to the other party in accordance herewith
      any other address to which notices addressed to him shall be sent.

     

    (e)  The
      provisions of this Agreement shall be deemed severable and the invalidity or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions hereof. It is understood and agreed
      that
      no failure or delay by Employer or Employee in exercising any right, power
      or
      privilege under this Agreement shall operate as a waiver thereof, nor shall
      any
      single or partial exercise thereof preclude any other or further exercise
      thereof or the exercise of any other right, power or privilege
      hereunder.

     

    (f)  In
      the
      event any dispute shall arise between Employee and Employer as to the terms
      or
      interpretations of this Agreement, whether instituted by formal legal
      proceedings or otherwise, including any action taken by Employee to enforce
      the
      terms of this Agreement or in defending against any action taken by Employer,
      Employer shall reimburse Employee for all reasonable costs and expenses,
      including reasonable attorneys' fees, arising from such dispute, proceeding
      or
      action, if Employee shall prevail in any action initiated by Employee or shall
      have acted reasonably and in good faith in defending against any action
      initiated by Employer. Such reimbursement shall be paid within 10 days of
      Employee furnishing to Employer written evidence, which may be in the form,
      among other things, of a canceled check or receipt, of any costs or expenses
      incurred by Employee. Any such request for reimbursement by Employee shall
      be
      made no more frequently than at 60 day intervals.

     

    (g)  Should
      Employee die after termination of his employment with Employer while any amounts
      are payable to him hereunder, this Agreement shall inure to the benefit of
      and
      be enforceable by Employee's executors, administrators, heirs, distributees,
      devisees and legatees and all amounts payable hereunder shall be paid in
      accordance with the terms of this Agreement to Employee's devisee, legatee
      or
      other designee or, if there is no such designee, to his estate. Employer shall
      require any successor (whether direct or indirect, by purchase, merger,
      consolidation or other-wise) to all or substantially all of the business or
      assets of Employer, by agreement in form and substance reasonably satisfactory
      to Employee to expressly assume and agree to perform this Agreement in the
      same
      manner and same extent that Employer would be required to perform it if no
      such
      succession had taken place. Failure of Employer to obtain such agreement prior
      to the effectiveness of any such succession shall be deemed “Good Reason”,
      permitting termination by Employee pursuant to Section 6(e). As used in this
      Agreement, “Employer” shall mean Employer as hereinbefore defined and any
      successor to its business or assets as aforesaid.

     

    (h)  To
      the
      extent necessary to effectuate the terms of this Agreement, the terms of this
      Agreement, and the respective rights and obligations of the parties, which
      must
      survive the termination of Employee's employment or the termination or
      expiration of this Agreement shall so survive. Without limiting the foregoing,
      Sections 4, 5, 6, and 8(g) shall expressly survive the termination of this
      Agreement.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

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

    

     

    

     

    
      	
              CITY
                HOLDING COMPANY

            
	 
	 
	
              By:           /s/
                Charles R. Hageboeck

            
	
              Charles
                R. Hageboeck, President
                &

            
	
              CEO

            

    

    

    

    
      	
              CITY
                NATIONAL BANK OF

            
	
              WEST
                VIRGINIA

            
	 
	 
	
              By:           /s/
                Charles R. Hageboeck

            
	
              Charles
                R. Hageboeck, President
                &

            
	
              CEO

            

    

    

    

    
      	
              EMPLOYEE

            
	 
	 
	
              /s/
                John W. Alderman III

            
	
              John
                W. Alderman
                III

            

    

    

    -15-ex10a.htm

    

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        SUPPLEMENTAL
          LIFE INSURANCE
          PLAN

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        Effective:  January
          1, 1986

      

      
        Revisions
          Effective: May 25,
          2007

      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

      
           SUPPLEMENTAL
          LIFE INSURANCE PLAN

      

      
        

      

      
        TABLE
          OF
          CONTENTS

      

      
        

      

      
        
 

      

      
          
          SECTION

      

      
         

      

      
        
          
            
              	
                      Subject

                    	 	
                      Page

                    
	 	 	 
	 	 	 
	 	 	 
	
                      1.

                    	
                      Purpose

                    	
                      1

                    
	
                      2.

                    	
                      Definitions

                    	
                      1

                    
	
                      3.

                    	
                      Eligibility

                    	
                      3

                    
	
                      4.

                    	
                      Pre-Retirement
                        Benefits
                        and Post-

                    	 
	 	
                      Retirement
                        Benefits

                    	 
	 	
                      - Basic
                        Death
                        Benefit

                    	
                      3

                    
	 	
                      -
                        Optional
                        Supplementary Benefit

                    	
                      4

                    
	 	
                      -
                        Alternate Death
                        Benefit

                    	
                      6

                    
	 	
                      -
                        Salary Continuation
                        Death Benefit

                    	
                      7

                    
	 	
                      -
                        Survivor Annuity
                        Equivalent

                    	
                      8

                    
	
                      5.

                    	
                      Incidents
                        of
                        Ownership

                    	
                      9

                    
	
                      6.

                    	
                      Premiums

                    	
                      9

                    
	
                      7.

                    	
                      Termination
                        of
                        Coverage

                    	
                      9

                    
	
                      8.

                    	
                      Non-Competition

                    	
                      10

                    
	
                      9.

                    	
                      Restriction
                        on
                        Assignment

                    	
                      11

                    
	
                      10.

                    	
                      Unsecured
                        General
                        Creditor

                    	
                      11

                    
	
                      11.

                    	
                      Employment
                        not
                        Guaranteed

                    	
                      12

                    
	
                      12.

                    	
                      Protective
                        Provisions

                    	
                      12

                    
	
                      13.

                    	
                      Change
                        in
                        Status

                    	
                      12

                    
	
                      14.

                    	
                      Named
                        Fiduciary

                    	
                      13

                    
	
                      15.

                    	
                      Applicable
                        Law

                    	
                      13

                    
	
                      16.

                    	
                      Administration
                        of the
                        Plan

                    	
                      13

                    
	
                      17.

                    	
                      Relation
                        to Prior
                        Plans

                    	
                      13

                    
	
                      18.

                    	
                      Amendments
                        and
                        Termination

                    	
                      14

                    

            

          

           

           

          
            
              
              

            

            
              i

              
              

            

            
              
              

            

          

         

         

      

      
        SUPPLEMENTAL
          LIFE INSURANCE
          PLAN

      

      
         

        
           

          
            
               

            

            
               

            

            
               

            

          

          1.           
            Purpose.  The purpose of the Supplemental Life Insurance
            Plan  ("Plan") is to allow for provision of additional survivor
            benefits for Eligible Employees.

           

          2.            Definitions.  For
            purposes of
            this Plan, the following words
            and phrases shall have
            the meanings indicated, unless the
            context clearly indicates
            otherwise:

           

        

      

      
        
          	
                   

                	
                  Annual
                    Base
                    Salary
                    or Annual
                    Salary
                    or Salary.

                

        

      

      
        
          	
                   

                	
                  "Annual
                    Base Salary" or
                    "Annual Salary" or "Salary" shall mean an Eligible Employee's
                    annual base
                    salary rate determined by AT&T, excluding (1) all differentials
                    regarded as temporary or extra payments and (2) all payments
                    and incentive
                    awards and distributions made either as a long term award or
                    as a short
                    term award; and such Salary shall be as before reduction due
                    to any
                    contribution pursuant to any deferred compensation plan or agreement
                    provided by AT&T, including but not limited to compensation deferred
                    in accordance with Section 401(k) of the Internal Revenue
                    Code.  Annual Salary or Salary shall mean an annualized amount
                    determined from an Eligible Employee's Annual Base Salary
                    rate.

                

        

      

      
        

          	
                   

                	
                  
                    Beneficiary.  "Beneficiary"
                      shall mean any beneficiary or beneficiaries designated by the
                      Eligible
                      Employee pursuant to the AT&T Rules for Employee Beneficiary
                      Designations as may hereafter be amended from time-to-time
                      ("Rules").

                  

                

        

      

      

        	
                 

              	
                
                  
                    Chairman.  "Chairman"
                      shall mean the Chairman of the Board of AT&T
                      Inc.

                  

                

              

      

      

        	
                 

              	
                
                  
                    
                      Committee.  "Committee"
                        shall mean the Human Resources Committee of the Board of
                        AT&T
                        Inc.

                    

                  

                

              

      

      

        	
                 

              	
                
                  
                    
                      
                        
                          Eligible
                            Employee.  "Eligible
                            Employee" shall mean an Officer and any other individual
                            who is
                            participating in the Plan as of September 1,
                            2005.  Notwithstanding the foregoing, the CEO may, from time
                            to
                            time, exclude any Officer or group of Officers from being
                            an “Eligible
                            Employee” under this Plan.  Further, an employee of a company
                            acquired by AT&T shall not be considered an Eligible Employee unless
                            designated as eligible by the
                            CEO.

                        

                      

                    

                  

                

              

      

      
         

        
          	
                   

                	
                  
                    
                      
                        
                          
                            
                              Insurance
                                Contract.  "Insurance
                                Contract" shall mean a contract(s) of life insurance
                                insuring the life of
                                the Eligible Employee entered into by
                                AT&T.

                            

                          

                        

                      

                    

                  

                

        

      

       

      
         

        
          
            
            

          

          
            1

            
            

          

          
            
            

          

        

         

         

      

      
        
          	
                   

                	
                  
                    
                      
                        
                          
                            
                              
                                Officer.  "Officer"
                                  shall mean an individual who is designated as an
                                  officer of AT&T or of
                                  any AT&T subsidiary for compensation purposes on AT&T’s
                                  records.  

                              

                            

                          

                        

                      

                    

                  

                

        

      

      
         

        
          	
                   

                	
                  
                    
                      
                        
                          
                            
                              
                                Retirement.
                                  "Retirement" shall mean the termination of an Eligible
                                  Employee's
                                  employment with AT&T or any of its subsidiaries, for reasons other
                                  than death, on or after the earlier of the following
                                  dates:  (1)
                                  the date a participant has attained age 55, and,
                                  for an individual who
                                  becomes a participant on or after January 1, 2002,
                                  has five (5) years of
                                  service, or (2) the date the Eligible Employee
                                  has attained one of the
                                  following combinations of age and service at termination
                                  of employment on
                                  or after April 1, 1997, except as otherwise indicated
                                  below:

                              

                            

                          

                        

                      

                    

                  

                

        

        

          
            	
                    Net
                      Credited
                      Service

                  	
                    Age

                  
	
                    10
                      years or
                      more

                  	
                    65
                      or
                      older

                  
	
                    20
                      years or
                      more

                  	
                    55
                      or
                      older

                  
	
                    25
                      years or
                      more

                  	
                    50
                      or
                      older

                  
	
                    30
                      years or
                      more

                  	
                    Any
                      age

                  

          

          	
                   

                	
                  
                    
                      
                        
                          
                            
                              
                                
                                  With
                                    respect to an
                                    Eligible Employee who is granted an EMP Service
                                    Pension under and pursuant
                                    to the provisions of the AT&T Pension Benefit Plan - Nonbargained
                                    Program ("ATTPBP") upon termination of Employment,
                                    the term "Retirement"
                                    shall include such Eligible Employee's termination
                                    of
                                    employment.

                                

                              

                            

                          

                        

                      

                    

                  

                

        

      

      
 

      
        
          	
                   

                	
                  Termination
                    Under EPR.  In
                    determining whether an Eligible Employee’s termination of employment under
                    the Enhanced Pension and Retirement Program (“EPR”) is a Retirement for
                    purposes of this Plan, five years shall be added to each of age
                    and net
                    credited service (“NCS”).  If with such additional age and years
                    of service, (1) an Eligible Employee upon such termination of
                    employment
                    under EPR is Retirement Eligible according to the AT&T Supplemental
                    Retirement Income Plan (“SRIP”) or (2) the Eligible Employee upon such
                    termination of employment under EPR has attained one of the following
                    combinations of age and
                    service,

                

        

      

      
         

         

        
          	
                  Actual
                    NCS + 5
                    Years

                	
                  Actual
                    Age + 5
                    Years

                
	
                  10
                    years or
                    more

                	
                  65
                    or
                    older

                
	
                  20
                    years or
                    more

                	
                  55
                    or
                    older

                
	
                  25
                    years or
                    more

                	
                  50
                    or
                    older

                
	
                  30
                    years or
                    more

                	
                  Any
                    age

                

        

      

      
        

      

      
 

      
        
          
          

        

        
          2

          
          

        

        
          
          

        

      

      
         

        
          	
                   

                	
                  then
                    such termination
                    of employment shall be a Retirement for all purposes under this
                    Plan and
                    the Eligible Employee shall be entitled to the treatment under
                    this Plan
                    afforded in the case of a termination of employment which is
                    a
                    Retirement.

                

        

         

      

      
        
          	
                   

                	
                  AT&T. 
                    "AT&T" shall mean AT&T
                    Inc.

                

      

      
        
 

      

      
        
          	
                  3.

                	
                  Eligibility.
                    Each Eligible
                    Employee shall be eligible to participate in the Plan
                    

                

        

      

      
        

      

      
        
          	
                  4.

                	
                  Pre-Retirement
                    Benefits and Post-Retirement Benefits.  

                

        

      

      
         

        
          	
                   

                	
                  Basic
                    Death
                    Benefit

                

          	
                   

                	
                  
                    While
                      this plan is in
                      effect, the Beneficiary who is designated by the Eligible Employee
                      shall
                      be entitled to receive as a Basic Death Benefit from the proceeds
                      of the
                      Insurance Contract an amount equal to the result of multiplying
                      the
                      Eligible Employee's Annual Salary rounded to the next higher
                      $1,000 by the
                      following
                      amounts:

                  

                

        

      

      
         

      

      
        
          	
                  
                    Chief
                      Executive Officer

                  

                	
                  
                    2

                  

                
	
                  Other
                    Eligible Employees

                	
                  1

                
	
                  
                     

                  

                	
                  
                     

                  

                
	
                	
                

        

        	
                 

              	
                
                  
                    This
                      amount shall be
                      reduced (but not below zero) by any amount payable under any
                      group term
                      life insurance covering the Eligible Employee which is maintained
                      by
                      AT&T, which amount of group term life insurance will be limited
                      to a
                      maximum of
                      $50,000.

                  

                

              

      

      

        	
                 

              	
                
                  
                    
                      The
                        amount of Basic
                        Death Benefit payable hereunder will automatically increase
                        if pay
                        increases.

                    

                  

                

              

      

      
         

        
          	
                   

                	
                  
                    
                      
                        At
                          Retirement, the
                          pre-retirement benefit converts to a post-retirement
                          benefit.  This benefit is equal to one times Salary rounded to
                          the next higher $1,000 (at the time of retirement) and
                          shall be reduced
                          (but not below zero) by any amount payable under any group
                          term life
                          insurance covering the Eligible Employee which is maintained
                          by AT&T,
                          which amount of group term life insurance will be limited
                          to a maximum of
                          $50,000; provided, however, for an executive who first
                          becomes a Plan
                          participant on or after January 1, 1998, this post-retirement
                          death
                          benefit shall be reduced by 10% of its original post-retirement
                          amount
                          each year for five years beginning at the later of the
                          date the Eligible
                          Employee attains age 65 or
                          Retirement.

                      

                    

                  

                

        

      

       

      
        

        
          
            
            

          

          
            3

            
            

          

          
            
            

          

        

      

      
        

      

      
        
          	
                   

                	
                  
                    
                      
                        Optional
                          Supplementary
                          Benefit

                      

                    

                  

                

      

      
        
          	
                   

                	
                  
                    
                      
                        
                          Subject
                            to the
                            limitations in the remaining paragraphs in this section
                            describing
                            optional supplementary benefits, each Eligible Employee
                            may also purchase
                            optional supplementary pre-retirement life insurance
                            coverage from
                            AT&T in an amount equal to one times the Eligible Employee’s Annual
                            Salary rounded to the next higher $1,000, and an additional
                            amount of such
                            insurance in an amount equal to another one times such
                            amount (for a total
                            of two times the Annual Salary rounded to the next higher
                            $1,000), which
                            insurance shall be payable from the proceeds of the Insurance
                            Contract.  Each such amount of insurance ("one times salary")
                            continued until such employee reaches age 65, by continuing
                            to contribute
                            for it, shall entitle the beneficiary under the Insurance
                            Contract to
                            receive an amount from the proceeds of such Insurance
                            Contract equal to
                            one times the Eligible Employee’s final Annual Salary rounded to the next
                            higher $1,000, when such Eligible Employee dies after
                            Retirement.

                        

                      

                    

                  

                

      

      
        
          	
                   

                	
                  
                    
                      
                        
                          
                            To
                              elect this optional
                              supplementary coverage, the Eligible Employee must
                              complete an enrollment
                              form on which he or she specifies the amount of coverage
                              he or she wishes
                              to purchase and authorizes his or her employing company
                              to deduct his or
                              her contributions for coverage from his or her
                              salary.

                          

                        

                      

                    

                  

                

        

      

      

        	
                 

              	
                
                  
                    
                      
                        
                          
                            An
                              Eligible Employee
                              may not elect this coverage while receiving disability
                              benefits under any
                              Company disability benefit
                              plan.

                          

                        

                      

                    

                  

                

              

      

      

        	
                 

              	
                
                  
                    
                      
                        
                          
                            
                              An
                                Eligible Employee
                                must make his or her election to purchase optional
                                supplementary coverage
                                within three calendar months of being declared eligible
                                to participate in
                                the Plan; except any Eligible Employee who was declared
                                an Eligible
                                Employee before October 1, 1997, shall have until
                                December 31, 1997 to
                                enroll for such optional supplementary coverage or
                                to increase such
                                coverage.

                            

                          

                        

                      

                    

                  

                

              

      

       

      
        	
                 

              	
                
                  
                    
                      
                        
                          
                            
                              The
                                optional
                                supplementary life insurance is effective upon AT&T's binding of life
                                insurance coverage for the Eligible Employee pursuant
                                to an Insurance
                                Contract

                            

                          

                        

                      

                    

                  

                

              

        	
                 

              	
                
                  
                    
                      
                        
                          
                            
                              
                                Effective
                                  January 1,
                                  1998, once an Eligible Employee enrolls for optional
                                  supplementary
                                  coverage, he or she can later decrease or terminate
                                  such coverage but
                                  never increase or reinstate such
                                  coverage.

                              

                            

                          

                        

                      

                    

                  

                

              

        	
                 

              	
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  Regardless
                                    of the
                                    amount of coverage elected, the amount in force
                                    will automatically
                                    increase if Salary increases.  The cost for this coverage will
                                    increase
                                    accordingly.

                                

                              

                            

                          

                        

                      

                    

                  

                

              

      

      
 

      
        
          
          

        

        
          4

          
          

        

        
          
          

        

      

       

      
        
          This
            optional supplementary
            life insurance is paid for on a contributory basis by those Eligible
            Employees
            who enroll in the coverage.  The cost of coverage, and therefore, how
            much an Eligible Employee contributes, depends on age and the amount
            of coverage
            and shall be as determined by AT&T.  There will be no periodic
            waiver of premium payments.

        

      

      

        	
                 

              	
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  In
                                    the event of death,
                                    the Eligible Employee’s optional supplementary life insurance benefit
                                    will
                                    be paid to the Eligible Employee’s Beneficiary or Beneficiaries in a lump
                                    sum, unless the Salary Continuation Death Benefit
                                    form of payment was
                                    elected on the Eligible Employee’s enrollment form.  The option
                                    to elect other than a lump sum payment is limited
                                    to an Eligible Employee
                                    who became an Eligible Employee on or before
                                    January 1,
                                    1998.  If the Eligible Employee has no surviving beneficiaries,
                                    the benefit will be paid in a lump sum in accordance
                                    with the
                                    Rules.

                                

                              

                            

                          

                        

                      

                    

                  

                

              

      

       

      
        
          	
                   

                	
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      The
                                        optional
                                        supplementary life insurance coverage hereunder
                                        will automatically
                                        continue while an Eligible Employee is receiving
                                        disability benefits under
                                        any AT&T disability benefit plan, provided the Eligible
                                        Employee
                                        continues his or her
                                        contributions.

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

        

      

      
        

      

      
        	
                 

              	
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      If
                                        an Eligible Employee
                                        terminates employment with AT&T or any of its subsidiaries for any
                                        reason other
                                        than
                                        Retirement, this coverage will stop at the
                                        end of the month of
                                        termination; provided, however, Eligible
                                        Employees who are 65 at the time
                                        of their termination will continue to have
                                        non-contributory unreduced
                                        coverage after age
                                        65.

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

      

       

      
        Alternate
          Death
          Benefit

      

      
        

      

      
        Alternate
          death benefit
          coverage shall only be available to an Eligible Employee who became an
          Eligible
          Employee before January 1, 1998.  Such Eligible Employees shall be
          entitled to elect to receive alternate death benefit life insurance coverage;
          provided such election is made before January 1, 1998.

      

      
        

      

      
        Under
          such coverage, an
          Eligible Employee’s Beneficiary or Beneficiaries will be entitled to receive
          from the proceeds of the Insurance Contract a payment equal to the Eligible
          Employee’s final Annual Salary upon his or her death.  This benefit
          will not
          be rounded to the next
          higher $1,000.  The amount of insurance in force will automatically
          increase if salary increases.  Coverage applies to death from any
          cause, except with respect to an on-the-job accident for which an Eligible
          Employee is protected while an active employee by any Accident Death Benefit
          feature of the ATTPBP.

      

      
         

         

        
          
            
            

          

          
            5

            
            

          

          
            
            

          

        

      

      
         

        By
          enrolling in this
          coverage, an Eligible Employee automatically waives his or her eligibility
          for
          any Sickness Death Benefit and Pensioner Death Benefits otherwise payable
          under
          the ATTPBP.

      

      
        

      

      
        The
          coverage provided by the
          alternate death benefit life insurance coverage will continue after
          Retirement.

      

      
        

      

      
        To
          elect this coverage, an
          Eligible Employee must complete an irrevocable
          enrollment and waiver
          form.  

      

      
        

      

      
        AT&T
          pays the full cost
          of the alternate death benefit life insurance
          coverage.

      

      
        

      

      
        The
          insurance benefit
          provided under this alternate death benefit life insurance will be paid
          in a
          lump sum, unless otherwise elected on the Eligible Employee's enrollment
          form.

      

      
        

      

      
        Alternate
          death benefit
          coverage ceases upon an Eligible Employee's Termination of Employment other
          than
          a Retirement.  This alternate death benefit life insurance may not be
          converted to an individual policy.

      

      
        

      

      
        Salary
          Continuation Death
          Benefit.  

      

      
        

      

      
        The
          salary continuation death
          benefit shall only be available under the conditions specified hereunder,
          to an
          Eligible Employee who became an Eligible Employee before January 1,
          1998.

      

      
        

      

      
        By
          a written election filed
          with AT&T before January 1, 1998, an Eligible Employee may terminate his or
          her rights to a Basic Death Benefit and/or to Optional Supplementary Coverage
          (if any) and/or to an Alternate Death Benefit (if
          any).

      

      
        

      

      
        If
          such an election is filed,
          and the Eligible Employee dies on or after the first day of the calendar
          year
          following the year in which such election is filed and prior to the termination
          of coverage pursuant to Section 7, the Eligible Employee's Beneficiary
          or
          Beneficiaries theretofore named shall be paid by AT&T an amount per annum
          for ten (10) years which amounts, in the aggregate, have a net present
          value,
          using an eleven percent (11%) discount rate, equal to one hundred eight-five
          percent (185%) of the (i)Basic Death Benefit amount and/or (ii) the amount
          elected as Optional Supplementary coverage(if any) and/or  (iii) the
          amount elected as an Alternate Death Benefit
          (if any) which would be payable to his or her Beneficiary or Beneficiaries
          as of
          the date of the Eligible Employee's death, and no other benefit shall be
          payable
          hereunder as either a Basic Death Benefit, Optional Supplementary Coverage
          or
          Alternate Death Benefit . Such payment(s) shall commence no later than
          sixty
          (60) days following the date of the Eligible Employee's
          death.
           

        

         

         

        
          
            
            

          

          
            6

            
            

          

          
            
            

          

        

         

      

      
        

      

      
        On
          or after January 1, 1998,
          an Eligible Employee who has elected death benefits in the form of salary
          continuation pursuant to this Section may cancel such election and have
          his or
          her Beneficiaries receive death benefits as insurance in a lump-sum but,
          an
          Eligible Employee who cancels his or her salary continuation election may
          not
          thereafter re-elect such option.

      

      
        

      

      
        Survivor
          Annuity
          Equivalent

      

      
        

      

      
        Additionally,
          each Eligible
          Employee who is not eligible for the Immediate Automatic Pre-retirement
          Survivor
          Annuity of the ATTPBP (or equivalent thereof) shall be eligible hereunder
          for a
          Survivor Annuity Equivalent benefit of one times salary payable to the
          surviving
          spouse of such Eligible Employee.  Such benefit shall be paid as
          follows: an amount per annum for ten (10) years shall be paid to the Eligible
          Employee's surviving spouse which amounts, in the aggregate, shall have
          a net
          present value, using an eleven percent (11%) discount rate, equal to one
          hundred
          eighty-five percent (185%) of one times the Eligible Employee's salary
          at the
          time of his or her death; provided, however, no such Survivor Annuity Equivalent
          payments will be made on or after the date of death of the surviving
          spouse.  Such payments shall commence no later than sixty (60) days
          following the date of the Eligible Employee's death.

      

      
        

      

      
        For
          the purposes of the
          Survivor Annuity Equivalent, the Eligible Employee's surviving spouse means
          a
          spouse legally married to the Eligible Employee at the time of the Eligible
          Employee's death.

      

      
        

      

      
        Eligibility
          for the Survivor
          Annuity Equivalent shall automatically cease on the date of termination
          of the
          Eligible Employee's employment.  If the Eligible Employee becomes
          totally disabled prior to Retirement, the Eligible Employee shall continue
          to be
          eligible for the Survivor Annuity Equivalent until the expiration of disability
          benefits.  If the Eligible Employee is granted a leave of absence,
          other than for military service of more than four weeks, the Eligible Employee
          shall continue to be eligible for the Survivor Annuity Equivalent during
          such
          leave of absence.

         

         

        
          
            
            

          

          
            7

            
            

          

          
            
            

          

        

         

         

      

      
        The
          Eligible Employee shall
          cease to be eligible for the Survivor Annuity Equivalent at the conclusion
          of
          the day immediately preceding the date the Eligible Employee becomes eligible
          for the Immediate Automatic Pre-retirement Survivor Annuity of the
          ATTPBP.

      

      
         

        
          
            5.            
              Incidents
              of
              Ownership.  AT&T
              will be
              the owner and hold all the incidents of ownership in the Insurance
              Contract,
              including the right to dividends, if paid.  The Eligible Employee may
              specify in writing to AT&T, the Beneficiary or Beneficiaries and the mode of
              payment for any death proceeds not in excess of the amounts payable
              under this
              Plan.  Upon receipt of a written request from the Eligible Employee,
              AT&T will immediately take such action as shall be necessary to implement
              such Beneficiary appointment. Any balance of proceeds from the Insurance
              Contract not paid as either a Basic Death Benefit or otherwise pursuant
              to the
              Plan shall be paid to AT&T.

          

        

         

        
          
            6.            
              Premiums.  All
              premiums due
              on the Insurance Contract shall be paid by AT&T.  However, the
              Eligible Employee agrees to reimburse AT&T by January 31 following the date
              of each premium payment in an amount such that, for Federal Income
              Tax purposes
              the reimbursement for each year is equal to the amount which would
              be required
              to be included in the Eligible Employee's income for Federal Income
              Tax purposes
              by reasons of the "economic benefit" of the Insurance Contract provided
              by
              AT&T; provided, however, that AT&T, in its sole discretion, may decline
              to accept any such reimbursement and require the inclusion of such
              "economic
              benefit" in the Eligible Employee's  income.  In its
              discretion AT&T may deduct the Eligible Employee's portion of the premiums
              from the Eligible Employee's pay. For purposes of this Plan, the value
              of the
“economic benefit” shall be determined based on the insurers published premium
              rates available to all standard risks for initial issue one-year term
              insurance
              in compliance with Revenue Rulings 66-110 and 67-154 issued by the
              Internal
              Revenue Service.

          

        

         

      

      
        7.             
          Termination
          of Coverage.  An
          Eligible
          Employee's coverage under this Plan shall terminate immediately when the
          Eligible Employee realizes an "Event of Termination" which shall mean any
          of the
          following:

      

      
        

      

      
        
          	
                  (a)

                	
                  Termination
                    of an
                    Eligible Employee's employment with his or her employing company
                    for any
                    reason other than (i) death, (ii) Disability as such term is
                    defined in
                    the SRIP, or (iii)
                    Retirement.

                

        

      

      
        

      

      
        
          	
                  (b)

                	
                  In
                    the case of an
                    Eligible Employee who terminates employment by reason of a disability
                    but
                    who does not realize an Event of Termination because of Section
                    7a(ii)
                    above, a termination of the Eligible Employee's total Disability
                    that is
                    not accompanied by either a return to employment with his or
                    her employing
                    company or the Eligible Employee's death or
                    Retirement.

                

        

      

      
         

         

        
          
            
            

          

          
            8

            
            

          

          
            
            

          

        

        
 

      

      
        
          	
                  (c)

                	
                  Except
                    in the case of
                    an Eligible Employee who has theretofore terminated employment
                    for a
                    reason described in Section 7a(ii) or (iii) above, AT&T elects to
                    terminate the Eligible Employee's coverage under the Plan by
                    a written
                    notice to that effect given to the Eligible Employee.  AT&T
                    shall have no right to amend the Plan or terminate the Eligible
                    Employee's
                    coverage under the Plan with respect to an Eligible Employee
                    who has
                    theretofore terminated employment for a reason described in Section
                    7a(ii)
                    or (iii) above without the written consent of the Eligible
                    Employee.

                

        

      

      
        

      

      
        8.            
          Non-Competition.  Notwithstanding
          any other provision of this Plan, no coverage shall be provided under this
          Plan
          with respect to any Eligible Employee who shall, without the written consent
          of
          AT&T, and while employed by AT&T or any subsidiary thereof, or within
          three (3) years after termination of employment from AT&T or any subsidiary
          thereof, engage in competition with AT&T or any subsidiary thereof or with
          any business with which a subsidiary of AT&T or an affiliated company has a
          substantial interest (collectively referred to herein as "Employer
          business").  For purposes of this Plan, engaging in competition with
          any Employer business shall mean engaging by Eligible Employee in any business
          or activity in the same geographical market where the same or substantially
          similar business or activity is being carried on as an Employer
          business.  Such term shall not include owning a nonsubstantial
          publicly traded interest as a shareholder in a business that competes with
          an
          Employer business.  However, engaging in competition with an Employer
          business shall include representing or providing consulting services to,
          or
          being an employee of, any person or entity that is engaged in competition
          with
          any Employer business or that takes a position adverse to any Employer
          business.  Accordingly, coverage shall not be provided under this Plan
          if, within the time period and without the written consent specified, Eligible
          Employee either engages directly in competitive activity or in any capacity
          in
          any location becomes employed by, associated with, or renders service to
          any
          company, or parent or affiliate thereof, or any subsidiary of any of them,
          if
          any of them is engaged in competition with an Employer business, regardless
          of
          the position or duties the Eligible Employee takes and regardless of whether
          or
          not the employing company, or the company that Eligible Employee becomes
          associated with or renders service to, is itself engaged in direct competition
          with an Employer business.

      

      
         

         

        
 

        
          
            
            

          

          
            9

            
            

          

          
            
            

          

        

      

      
         

        9.             
          Restriction
          on Assignment.  The
          Eligible
          Employee may assign all or any part of his or her right, title, claim,
          interest,
          benefits and all other incidents of ownership which he or she may have
          in the
          Insurance Contract to any other individual or trustee, provided that any
          such
          assignment shall be subject to the terms of this Plan; except neither the
          Eligible Employee nor any other person shall have any right to commute,
          sell,
          assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
          hypothecate or convey in advance of actual receipt the amounts, if any,
          payable  as a Salary Continuation Death Benefit hereunder , which are,
          and all rights to which are, expressly declared to be unassignable and
          non-transferable.  No part of the amounts payable as a Salary
          Continuation Death Benefit hereunder shall, prior to actual payment, be
          subject
          to seizure or sequestration for the payment of any debts, judgments, alimony
          or
          separate maintenance owed by the Eligible Employee or any other person,
          nor be
          transferable by operation of law in the event of the Eligible Employee's
          or any
          other person’s bankruptcy or insolvency.  Except as provided in this
          Section 8, no assignment or alienation of any benefits under the Plan will
          be
          permitted or recognized.

      

      
        

      

      
        10.           
          Unsecured
          General Creditor.  Except
          to the
          extent of rights with respect to the Insurance Contract in the absence
          of an
          election to receive benefits in Salary Continuation Death Benefit form,
          the
          Eligible Employee and his or her Beneficiaries, heirs, successors and assigns
          shall have no legal or equitable rights, interest or claims in any property
          or
          assets of AT&T, nor shall they be beneficiaries, or have any rights, claims
          or interests in, any life insurance policies, annuity contracts or the
          proceeds
          therefrom owned or which may be acquired by AT&T ("Policies"); such Policies
          or other assets of AT&T shall not be held under any trust for the benefit of
          the Eligible Employee , his or her designated beneficiaries, heirs, successors
          or assigns, or held in any way as collateral security for the fulfilling
          of the
          obligations of AT&T under this Agreement; any and all of AT&T’s assets
          and Policies shall be, and remain, the general, unpledged, unrestricted
          assets
          of AT&T; AT&T shall have no obligation to acquire any Policies or any
          other assets; and AT&T’s obligations under this Agreement shall be merely
          that of an unfunded and unsecured promise of AT&T to pay money in the
          future.

      

      
        

      

      
        11.           
          Employment
          Not Guaranteed.  Nothing
          contained in this Plan nor any action taken hereunder shall be construed
          as a
          contract of employment or as giving the Eligible Employee any right to
          be
          retained in the employ of any AT&T company.

      

      
        

      

      
        12.            
          Protective
          Provisions.  The
          Eligible
          Employee will cooperate with AT&T by furnishing any and all information
          requested by AT&T, in order to facilitate the payment of benefits hereunder,
          taking such physical examinations as AT&T may deem necessary and taking such
          other relevant action as may be requested by AT&T, in order to facilitate
          the payment of benefits hereunder.  If the Eligible Employee refuses
          so to cooperate, the Eligible Employee's participation in the Plan shall
          terminate and AT&T shall have no further obligation to the Eligible Employee
          or his or her designated Beneficiary hereunder.  If the Eligible
          Employee commits suicide during the two-year period beginning on the date
          of
          eligibility under the Plan, or if the Eligible Employee makes any material
          misstatement of information or nondisclosure of medical history, then no
          benefits will be payable by reason of this Plan to the Eligible Employee
          or his
          or her designated Beneficiary, or in AT&T’s sole discretion, benefits may be
          payable in a reduced amount.

      

      
         

         

        
          
            
            

          

          
            10

            
            

          

          
            
            

          

        

        
 

      

      
        13.            
          Change
          in
          Status.  In
          the event of
          a change in the employment status of an Eligible Employee to a status in
          which
          he or she is no longer an Eligible Employee under the Plan, such Eligible
          Employee shall immediately cease to be eligible for any benefits under
          this
          Plan; provided, however, such survivor benefits as would be available to
          such
          employee by reason of his or her new status but which do not automatically
          become effective upon attainment of such new status shall continue to be
          provided under this Plan until such benefits become effective or until
          such
          employee has had reasonable opportunity to effectuate such benefits but
          has
          failed to take any requisite action necessary for such benefits to become
          effective.

      

      
        

      

      
        14.             
          Named
          Fiduciary.  If
          this Plan is
          subject to the Employee Retirement Income Security Act of 1974 (ERISA),
          AT&T
          is the "named fiduciary" of the Plan.

      

      
        

      

      
        15.             
          Applicable
          Law.  This
          Plan and
          the rights and obligations hereunder shall be governed by and construed
          in
          accordance with the laws of the State of Texas to the extent such law is
          not
          preempted by ERISA.

      

      
        

      

      
        16.             
          Administration
          of the
          Plan.  The
          Committee
          shall be the sole administrator of the Plan and will administer the Plan,
          interpret, construe and apply its provisions in accordance with its
          terms.  The Committee shall further establish, adopt or revise such
          rules and regulations as it may deem necessary or advisable for the
          administration of the Plan.  All decisions of the Committee shall be
          binding.

      

      
        

      

      
        17.             
          Relation
          to
          Prior Plans.  This
          Plan
          supersedes and replaces prior Senior Management Survivor Benefit, Senior
          Management Supplementary Life Insurance, and Senior Management Alternate
          Death
          Benefit Life Insurance Plans as in effect prior to January 1, 1986, except
          such
          plans shall continue to apply to Eligible Employees who retired before
          January
          1, 1986; provided, however, that with respect to those Eligible Employees
          who
          retired during calendar year 1986 by reason of the fact of attaining age
          65, the
          Post-Retirement Benefit provided pursuant to the  Senior Management
          Survivor Benefit Plan as in effect prior to January 1, 1986, shall continue
          to
          apply and the post-retirement benefit provided under the Basic Death Benefit
          portion hereof shall not apply.

      

      
         

        
 

        
          
            
            

          

          
            11

            
            

          

          
            
            

          

        

      

      
         

        18.             
          Amendments
          and Termination.  This
          Plan may be
          modified or terminated at any time in accordance with the provisions of
          AT&T's Schedule of Authorizations. A modification or Plan termination may
          affect present and future Eligible Employees; provided, however, that no
          modification shall be made to this Plan with respect to an Eligible Employee
          who
          terminates employment for reason of disability or Retirement), nor shall
          a
          termination of the Plan operate so as to be applicable to such an individual,
          without the written consent of the Eligible
          Employee.

      

12

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