Exhibit 10.2
MANAGEMENT CONTINUITY
AGREEMENT
This Agreement (“Agreement”),
dated as of March 28, 2003, is between Citizens Bank and Trust
Company, a Virginia corporation (the “Company”) and
Joseph D. Borgerding (“Executive”) and provides
as follows:
1.
Purpose
The Company recognizes that the
possibility of a Change in Control exists, and the uncertainty and
questions that it may raise among management may result in the
departure or distraction of management personnel to the detriment
of the Company and its shareholders. Accordingly, the purpose
of this Agreement is to encourage the Executive to continue
employment after a Change in Control by providing reasonable
employment security to the Executive and to recognize the prior
service of the Executive in the event of a termination of
employment under certain circumstances after a Change in
Control.
2.
Term of the Agreement
This Agreement is effective March 28,
2003, and will expire on December 31, 2004; provided that on
December 31, 2003 and each December 31 st thereafter
(each such December 31 st is referred to as the
“Renewal Date”), this Agreement will be automatically
extended for an additional calendar year so as to terminate two
years from such Renewal Date. This Agreement will not,
however, be extended if the Company gives written notice of such
non-renewal to the Executive no later than September 30 before the
Renewal Date (the original and any extended term of this Agreement
is referred to as the “Change in Control
Period”).
3.
Employment after a Change in
Control
If a Change in Control of the Company (as
defined in Section 12) occurs during the Change in Control Period
and the Executive is employed by the Company on the date the Change
in Control occurs (the “Change in Control Date”), the
Company will continue to employ the Executive in accordance with
the terms and conditions of this Agreement for the period beginning
on the Change in Control Date and ending on the third anniversary
of such date (the “Employment Period”). If a
Change in Control occurs on account of a series of transactions,
the Change in Control Date is the date of the last of such
transactions.
4.
Terms of Employment
(a)
Position and Duties
. During the Employment Period, (i)
the Executive’s position, authority, duties and
responsibilities will be at least commensurate in all material
respects with his training and experience (ii) the
Executive’s services will be performed at the location where
the Executive was employed immediately preceding the Change in
Control Date or any office that is less than 60 miles from such
location.
(b)
Compensation .
(i)
Base Salary . During the Employment Period, the Executive
will receive an annual base salary (the “Annual Base
Salary”) at least equal to the highest base salary paid or
payable to the Executive by the Company and its affiliated
companies for the twelve-month period immediately preceding the
Change of Control Date. During the Employment Period, the
Annual Base Salary will be reviewed at least annually and will be
increased at any time and from time to time as will be
substantially consistent with increases in base salary generally
awarded in the ordinary course of business to other peer executives
of the Company and its affiliated companies. Any increase in
the Annual Base Salary will not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Annual
Base Salary will not be reduced after any such increase, and the
term Annual Base Salary as used in this Agreement will refer to the
Annual Base Salary as so increased. The term
“affiliated companies” includes any company controlled
by, controlling or under common control with the
Company.
(ii)
Annual Bonus . In addition to the Annual Base Salary, the
Executive will be awarded for each year ending during the
Employment Period an annual bonus (the “Annual Bonus”)
in cash at least equal to the highest annual bonus paid or payable,
including by reason of any deferral, for the two years immediately
preceding the year in which the Change in Control Date occurs.
Each such Annual Bonus will be paid no later than the end of
the third month of the year next following the year for which the
Annual Bonus is awarded.
(iii)
Incentive, Savings and Retirement
Plans . During the
Employment Period, the Executive will be entitled to participate in
all incentive (including stock incentive), savings and retirement,
insurance plans, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies,
but in no event will such plans, policies and programs provide the
Executive with incentive opportunities, savings opportunities and
retirement benefit opportunities, in each case, less favorable, in
the aggregate, than those provided by the Company and its
affiliated companies for the Executive under such plans, policies
and programs as in effect at any time during the six months
immediately preceding the Change in Control Date.
(iv)
Welfare Benefit Plans
, During the Employment Period, the
Executive and/or the Executive’s family, as the case may be,
will be eligible for participation in and will receive all benefits
under welfare benefit plans, policies and programs provided by the
Company and its affiliated companies to the extent applicable
generally to other peer executives of the Company and its
affiliated companies, but in no event will such plans, policies and
programs provide the Executive with benefits that are less
favorable, in the aggregate, than the
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most favorable of such plans, policies
and programs in effect at any time during the six months
immediately preceding the Change in Control Date.
(v)
Fringe Benefits
. During the Employment Period, the
Executive will be entitled to fringe benefits in accordance with
the most favorable plans, policies and programs of the Company and
its affiliated companies in effect for the Executive at any time
during the six months immediately preceding the Change in Control
Date or, if more favorable to the Executive, as in effect generally
from time to time after the Change in Control Date with respect to
other peer executives of the Company and its affiliated
companies.
(vi)
Vacation . During the Employment Period, the Executive
will be entitled to paid vacation in accordance with the most
favorable plans, policies and programs of the Company and its
affiliated companies in effect for the Executive at any time during
the six months immediately preceding the Change in Control Date or,
if more favorable to the Executive, as in effect generally from
time to time after the Change in Control Date with respect to other
peer executives of the Company and its affiliated
companies.
5.
Termination of Employment Following
Change in Control
(a)
Death or Disability
. The Executive’s employment
will terminate automatically upon the Executive’s death
during the Employment Period. If the Company determines in
good faith that the Disability of the Executive has occurred during
the Employment Period, it may terminate the Executive’s
employment. For purposes of this Agreement,
“Disability” means the Executive’s inability to
perform his duties with the Company on a full time basis for 180
consecutive days or a total of at least 240 days in any twelve
month period as a result of the Executive’s incapacity due to
physical or mental illness (as determined by an independent
physician selected by the Board).
(b)
Cause . The Company may terminate the
Executive’s employment during the Employment Period for
Cause. For purposes of this Agreement, “Cause”
means (i) gross incompetence, gross negligence, willful misconduct
in office or breach of a material fiduciary duty owed to the
Company or any affiliated company; (ii) conviction of a felony or a
crime of moral turpitude (or a plea of nolo contendere thereto) or
commission of an act of embezzlement or fraud against the Company
or any affiliated company; (iii) any material breach by the
Executive of a material term of this Agreement, including, without
limitation, material failure to perform a substantial portion of
his duties and responsibilities hereunder; or (iv) deliberate
dishonesty of the Executive with respect to the Company or any
affiliated company.
(c)
Good Reason; Window Period
. The Executive’s employment
may be terminated (i) during the Employment Period by the Executive
for Good Reason or (ii) during the Window Period by the Executive
without any reason. For purposes of this Agreement, the
“Window Period” means the 90-day period beginning on
the later of the one-year anniversary of the Change in Control Date
or the date of closing of the corporate transaction that is the
subject of shareholder approval in Section 12. For purposes
of this Agreement, “Good Reason” means:
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(i)
a material adverse change in the
Executive’s overall working environment
(ii)
a failure by the Company to comply with
any of the provisions of Section 4(b);
(iii)
the Company’s requiring the
Executive to be based at any office or location other than that
described in Section 4(a)(ii);
(iv)
the failure by the Company to comply with
and satisfy Section 7(b);
(v)
the Executive is directed by the Board of
Directors or an officer of the Company or any affiliated company to
engage in conduct that is unethical, illegal or contrary to the
Company’s good business practices; or
(vi)
the Company fails to honor any term or
provision of this Agreement;
Any good faith determination of Good
Reason made by the Executive shall be conclusive.
(d)
Notice of Termination
. Any termination during the
Employment Period by the Company or by the Executive for Good
Reason or during the Window Period shall be communicated by written
Notice of Termination to the other party hereto. For purposes
of this Agreement, a “Notice of Termination” shall mean
a notice which shall indicate the specific termination provision in
this Agreement relied upon.
(e)
Date of Termination
. “Date of Termination”
means (i) if the Executive’s employment is terminated by the
Company for Cause, or by the Executive during the Window Period or
for Good Reason, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be, (ii) if
the Executive’s employment is terminated by the Company other
than for Cause or Disability, the date specified in the Notice of
Termination (which shall not be less than 30 nor more than 60 days
from the date such Notice of Termination is given), and (iii) if
the Executive’s employment is terminated for Disability, 30
days after Notice of Termination is given, provided that the
Executive shall not have returned to the full-time performance of
his duties during such 30-day period.
6.
Compensation Upon
Termination
(a)
Termination Without Cause or for Good
Reason or During Window Period . The Executive will be entitled to the
following benefits if, during the Employment Period, the Company
terminates his employment without Cause or the Executive terminates
his employment with the Company or any affiliated company for Good
Reason or during the Window Period.
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