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Exhibit 10.14
SUMMIT FINANCIAL GROUP, INC.
AMENDMENT NO. 2 TO DIRECTORS DEFERRAL PLAN
 
This Amendment No. 2 to The Summit Financial Group, Inc.’s Company Directors
Deferral Plan, to be effective as of December 31, 2008, provided, however, that
all provisions applicable to compliance under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) shall be effective as of January
1, 2005, by and among the Summit Financial Group, Inc., or any successor
corporation (hereinafter referred to as the “Company”), Summit Community Bank,
as successor in interest to South Branch Valley National Bank, a banking
corporation with its principal place of business in West Virginia, or any
successor corporation (hereinafter refereed to as the “Trustee”) and the members
of the Board of Directors of Summit Financial Group, Inc. (hereinafter referred
to both individually and collectively as the “Director” or “Participant”).
 
WHEREAS, the Company established The Summit Financial Group, Inc.’s Company
Directors Deferral Plan on April 25, 2000 (the “Benefit Plan”);
 
WHEREAS, Director is a Participant in the Benefit Plan;
 
WHEREAS, Subsection A of Section XVI of the Benefit Plan allows amendment of the
Benefit Plan by the mutual written consent of the Participant, the Company and
the Trustee;
 
WHEREAS, Summit Community Bank, as successor in interest to South Branch Valley
National Bank, is the Trustee;
 
WHEREAS, the parties have previously amended said Benefit Plan by an Amendment
No. 1 effective December 30, 2005;
 
WHEREAS, the Benefit Plan needs to be further modified to comply with provisions
of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and regulations and guidance issued thereunder and the parties hereto intend
this amendment to comply with Transition Relief promulgated by the Internal
Revenue Service pursuant to Code Section 409A, and accordingly, notwithstanding
any other provisions of this Amendment No. 2, this amendment applies only to
amounts that would not otherwise be payable in 2006, 2007 or 2008 and shall not
cause (i) an amount to be paid in 2006 that would not otherwise be payable in
such year, (ii) an amount to be paid in 2007 that would not otherwise be payable
in such year, or (iii) an amount to be paid in 2008 that would not otherwise be
payable in such year, and to the extent necessary to qualify under Transition
Relief issued under said Code Section 409A, to not be treated as a change in the
form and timing of a payment under Section 409A(a)(4) or an acceleration of a
payment under Section 409A(a)(3), Director, by executing this Amendment No. 2,
shall be deemed to have elected the timing and distribution provisions of this
Amendment No. 2, and to have elected the form of distribution or distributions
as set forth herein, all prior to December 31, 2008; and
 

 
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NOW THEREFORE WITNESSETH: in accordance with the provisions of Subsection A of
Section XVI of the Benefit Plan and in consideration of the mutual covenants set
forth herein, the parties hereto agree as follows:
 
1.           Section III of said Benefit Plan is hereby amended to read in full
as follows:
 
III.           ELECTION OF DEFERRED COMPENSATION AND INVESTMENTS
 
The Director shall, for any calendar year, prior to the beginning of such
calendar year, file a written statement with the Company notifying them as to
the percent (%) or dollar amount of fees as defined in Paragraph II and to be
earned in that calendar year that is to be deferred, and any such election shall
be irrevocable as of the last day of the prior calendar year with respect to the
year to which the election relates.  An election may be changed or revoked
respecting any subsequent calendar year, if so changed or revoked by written
election delivered to the Company prior to the beginning of such subsequent
calendar year, which change or revocation shall also be irrevocable as of the
last day of the prior calendar year with respect to the year to which the change
or revocation relates.
 
Notwithstanding the above paragraph, in the case of the first year in which a
Director becomes eligible to participate in the Benefit Plan, such election may
be made with respect to fees paid for services performed subsequent to the
election within 30 days after the date the Director becomes eligible to
participate in the Benefit Plan (and if so made during such 30 day period such
election shall be irrevocable, as of the last day of such 30 day period, as to
such fees paid for services performed subsequent to the election and during the
remainder of the same calendar year in which such election has been made),
provided however that such Director meets all of the following requirements for
“Initial Eligibility”:  a Director shall only be considered as meeting the
requirements for ‘Initial Eligibility’ hereunder, if, in any instance in which
such Director is participating or has at any time participated in this Benefit
Plan or any other plan which is, under the aggregation rules of Code Section
409A and the regulations and guidance issued thereunder, aggregated with this
Benefit Plan and with respect to which amounts deferred hereunder and under such
other plan or plans are treated as deferred under a single plan (hereinafter
sometimes referred to as the “Aggregated Plans”), (i) he or she has been paid
all amounts deferred under this Benefit Plan and he or she has been paid all
amounts deferred under any and all such Aggregated Plans, if any, and (ii) on
and before the
 

 
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date of the last payment to such Director under this Benefit Plan and any and
all of the Aggregated Plans, if any, as the case may be, such Director was not
eligible to continue (or to elect to continue) to participate in the Benefit
Plan or any of the Aggregated Plans, if any, for periods after such last payment
(other than through an election of a different time and form of payment with
respect to the amounts paid,) or (iii) such Director ceased being eligible to
participate (other than the accrual of earnings), in all of the following plans
in which Director has participated: (1) this Benefit Plan and (2) any of the
Aggregated Plans, if any, regardless of whether all amounts deferred under this
Benefit Plan and any of the Aggregated Plans, if any in which Director has
participated, as the case may be, have been paid, and such Director subsequently
becomes eligible to participate in this Benefit Plan and the Director has not
been eligible to participate (other than the accrual of earnings) in this
Benefit Plan or any such Aggregated Plan at any time during the 24-month period
ending on the date the Director becomes eligible to participate in this Benefit
Plan. Any election made after the thirty (30) day period specified in the
preceding sentences and any election made within such period by a Director who
does not meet the above requirements for ‘Initial Eligibility’ shall not be
effective until the calendar year following the date of said election.
 
Notwithstanding any of the foregoing, for deferrals relating all or in part to
services performed on or before December 31, 2005, a written statement may be
filed on or before March 15, 2005 with the Company by the Director participating
in the Benefit Plan, notifying the Company as to the percent (%) or dollar
amount of fees as defined in Paragraph II, relating all or in part to services
performed after the date of said election and on or before December 31, 2005,
that is to be deferred.
 
Signed written statements, including but not limited to, modifications or
revocations, filed under this section, unless modified or revoked in writing,
shall be valid for all succeeding years and a written modification or revocation
shall only be effective as to deferral of fees beginning in the calendar year
after the calendar year in which such written modification or revocation is
delivered.
 
In addition, the Director may file with the Trustee quarterly investment options
setting forth the percentage that should hypothetically be invested in each
particular investment vehicle.  (A copy of said investment election form is
attached hereto, marked as Exhibit “A-1” and fully incorporated herein by
reference).  Said amounts shall not actually be invested in said
 

 
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investments, and said investment options are merely for the purpose of
calculating interest and returns on the Deferred Compensation Account as set
forth in Paragraph V.  The Trustee shall not be under any duty to advise a
participant or beneficiary with respect to any said hypothetical
investment.  Said investment options must be received by the Trustee on or
before the 25th day of the month prior to the beginning of the quarter to which
such options relate.
 
2.           Section VII of said Benefit Plan is hereby amended to read in full
as follows:
 
VII.           PAYMENT OF DIRECTOR'S DEFERRED COMPENSATION
 
Subject to Subparagraphs VII (A) and (B) hereinbelow, the amounts in the
Directors Deferred Compensation Account shall be paid, at the election of the
Director, in a lump sum, or five (5), ten (10), fifteen (15), or twenty (20)
equal annual installments, plus or minus each year the annual interest gained or
market value lost during the year, all provided that the Director has a
Separation from Service other than by death after attaining the age of
sixty-five years, which may sometimes be referred to in this Benefit Plan or in
election or other forms related thereto as ‘retirement.’  The Director shall
make said election no later than the date prior to the first date on which
services are performed with respect to which any fees are deferred under this
Benefit Plan.  In the event the Director fails to make said election by said
date, then the Director shall be deemed to have elected, as of said date, to
receive the payments in ten (10) equal annual installments.  Any such election
or deemed election of form of distribution hereunder shall be irrevocable when
made or deemed made and may not be revoked or changed at any time.  The amount
payable would be the balance of the Director’s Deferred Compensation Account as
defined in Section IV, including all interest and returns credited pursuant to
Paragraph V.  The payments set forth herein shall commence thirty (30) days
after the end of the calendar quarter following the Director’s Separation from
Service.
 
Notwithstanding the foregoing, only during the period ending December 31, 2008,
pursuant to Code Section 409A Transition Relief, Directors are permitted to file
elections on or before December 31, 2008 changing any previous election of a
lump sum, or five (5), ten (10), fifteen (15), or twenty (20) equal annual
installments, and any such Transition Relief election shall be irrevocable as of
December 31, 2008, and any such Transition Relief election shall apply only to
amounts that would not
 

 
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otherwise be payable in 2006, 2007 or 2008 and shall not cause (i) an amount to
be paid in 2006 that would not otherwise be payable in such year, (ii) an amount
to be paid in 2007 that would not otherwise be payable in such year, or (iii) an
amount to be paid in 2008 that would not otherwise be payable in such year.
 
Notwithstanding any other provisions of this Section VII or this Benefit Plan,
in any instance in which the Director is participating or has at any time
participated in any other plan which is, under the aggregation rules of Code
Section 409A and the regulations and guidance issued thereunder, aggregated with
this Benefit Plan and with respect to which amounts deferred hereunder and under
such other plan or plans are treated as deferred under a single plan
(hereinafter sometimes referred to as an “Aggregated Plan” or together as the
“Aggregated Plans”), then in such instance the first election made (or deemed
made) by such Director under any of the Aggregated Plans shall be deemed to be
the Director’s election under this Benefit Plan, in accordance with the timing
requirements specified herein.
 
(A)           Separation from Service of the Director other than by death and
before attaining the age of sixty-five years.  Subject to Subparagraph VII (B)
hereinbelow, if the Director Separates from Service other than by death and
prior to attaining the age of sixty-five years, then the Director shall receive
the account balance1 in a lump sum thirty (30) days after the end of the
calendar quarter following the Director’s Separation from Service.
 
(B)           Six month delay for payment upon Separation from Service other
than by death of Director.  Notwithstanding any other provision of this Benefit
Plan, no payment upon or based upon Separation from Service may be made under
this Benefit Plan before the date that is six months after the date of
Separation from Service, other than by death, of a Director if the Director is a
Specified Employee on the Director’s date of Separation from Service.  In the
event a distribution under this Benefit Plan is delayed pursuant to this
paragraph, the originally scheduled payment shall be delayed until six months
after the date of Separation from Service as follows:  (i) if payments are
scheduled under this Benefit Plan to be made in installments, all such
installment payments which would have otherwise been paid within six (6) months
after the date of a Separation from Service shall be delayed, aggregated, and
paid instead on the first day of the seventh month after Separation from
Service, after which all installment payments shall be made on their regular
schedule; or
 

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1 Deferrals plus credited interest and returns
 

 
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(ii) if payment is scheduled under this Benefit Plan to be made in a lump sum,
the lump payment shall be delayed until six months after the date of Separation
from Service and instead be made on the first day of the seventh month after the
date of Separation from Service.
 
(C)           “Specified Employee” means, in the case of any Director meeting
the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in
accordance with the regulations thereunder and disregarding section 416(i)(5))
at any time during the 12 month period ending on any Specified
Employee Identification Date, which shall be December 31 of each calendar year
(or otherwise meeting the requirements applicable to qualification as a
‘Specified Employee’ under Code Section 409A and the regulations and guidance
issued thereunder), that such Director shall, for purposes of this Benefit Plan,
thereafter be a Specified Employee under this Benefit Plan for the period of
time consisting of the entire 12-month period beginning on the Specified
Employee Effective Date, and said Specified Employee Effective Date shall be the
first day of the fourth month following the Specified Employee Identification
Date.
 
(D)            “Separation from Service” means the good faith, complete
expiration and termination of Director’s service, as a member of the Board of
Directors or otherwise, with all of those of Company and its Affiliates, as the
case may be, with respect to which the Director serves on the Board of Directors
or otherwise, for any reason.  In addition, notwithstanding any of the
foregoing, the term “Separation from Service” shall be interpreted under
this Benefit Plan in a manner consistent with the requirements of Code Section
409A including, but not limited to (i) an examination of the relevant facts and
circumstances, as set forth in Code Section 409A and the regulations and
guidance thereunder, in the case of any performance of services or availability
to perform services after a purported termination or Separation from Service,
(ii) in any instance in which such Director is participating or has at any time
participated in any other plan which is, under the aggregation rules of Code
Section 409A and the regulations and guidance issued thereunder, aggregated with
this Benefit Plan and with respect to which amounts deferred hereunder and under
such other plan or plans are treated as deferred under a single plan
(hereinafter sometimes referred to as an “Aggregated Plan” or together as the
“Aggregated Plans”), then in such instance the Director shall only be considered
to meet the requirements of a Separation from Service hereunder if such Director
meets (a) the requirements of a Separation from Service under all such
Aggregated Plans and (b) the requirements of a Separation from Service under
this Benefit
 

 
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Plan which would otherwise apply, (iii) in any instance in which a Director is
an employee and an independent contractor of Company or any Affiliate or both
the Director must have a Separation from Service in all such capacities to meet
the requirements of a Separation from Service hereunder, although,
notwithstanding the foregoing, if a Director provides services both as an
employee and a member of the Board of Directors of Company or any Affiliate or
both or any combination thereof, the services provided as an employee are not
taken into account in determining whether the Director has had a Separation from
Service as a Director under this Benefit Plan, provided that no plan in which
such Director participates or has participated in his or her capacity as an
employee is an Aggregated Plan.
 
3.           Section VIII of said Benefit Plan is hereby amended to read in full
as follows:
 
VIII.         DEATH OF DIRECTOR PRIOR TO SEPARATION FROM SERVICE
 
In the event of the death of the Director prior to Separation from Service, the
Director’s account balance shall be paid in a lump sum thirty (30) days after
the end of the calendar quarter following the Director’s death and shall be made
to a beneficiary or beneficiaries designated by the Director in writing and
delivered to the Company.  In the event no designation is made, the Director’s
account balance shall be paid thirty (30) days after the end of the calendar
quarter following the Director’s death in a lump sum to the Director’s
estate.  The lump sum payment to be made under this Paragraph shall be the
Director's account balance1 as determined at the quarterly evaluation following
the Director’s death.
 
4.           Section IX of said Benefit Plan is hereby amended to read in full
as follows:
 
IX.           DIRECTOR'S DEATH AFTER SEPARATION FROM SERVICE BUT BEFORE
RECEIVING ALL PAYMENTS
 
In the event of the death of the Director after Separation from Service, but
prior to receiving all payments due under this Benefit Plan, the Director’s
account balance shall be paid in a lump sum thirty (30) days after the end of
the calendar quarter following the Director’s death and shall be made to a
beneficiary or beneficiaries designated by the Director in writing and
delivered to the Company.  In the event no designation is made, the Director’s
account balance shall be paid in a lump sum to the Director’s
 

 
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estate.  The lump sum payment to be made under this Paragraph shall be the
Director’s account balance1 as determined at the quarterly evaluation following
the Director’s death.
 
5.           Section XV of said Benefit Plan is hereby amended to read in full
as follows:
 
XV.           CLAIMS PROCEDURE AND ARBITRATION
 
Any person claiming a benefit under the Benefit Plan (a “Claimant”) shall
present the claim, in writing, to the Company or the Plan Fiduciary and
Administrator and the Company or the Plan Fiduciary and Administrator shall
respond in writing.  If the claim is denied in whole or in part, the written
notice of denial shall state, in a manner calculated to be understood by the
Claimant:
 
(a)           The specific reason or reasons for denial, with specific
references to the Benefit Plan provisions on which the denial is based;
 
(b)           A description of any additional material or information necessary
for the Claimant to perfect his or her claim and an explanation of why such
material or information is necessary; and
 
(c)           An explanation of the Benefit Plan’s claims review procedure and
the time limits applicable to such procedures, including a statement of the
Claimant’s right to bring a civil action under Section 502(a) of ERISA following
an adverse benefit determination on review.
 
The written notice denying or granting the Claimant’s claim shall be provided to
the Claimant within ninety (90) days after the Company or the Plan Fiduciary and
Administrator’s receipt of the claim, unless special circumstances require an
extension of time for processing the claim.  If such an extension is required,
written notice of the extension shall be furnished by the Company or the Plan
Fiduciary and Administrator to the Claimant within the initial ninety (90) day
period and in no event shall such an extension exceed a period of ninety (90)
days from the end of the initial ninety (90) day period.  Any extension notice
shall indicate the special circumstances requiring the extension and the date on
which the Company or the Plan Fiduciary and Administrator expects to render a
decision on the claim.  Any claim not granted or denied within the period noted
above shall be deemed to have been denied on the last day of the applicable
period. In the case of any extension hereunder, the notice of extension shall
specifically explain the standards on which entitlement to a benefit is based,
 

 
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the unresolved issues that prevent a decision on the claim, and the additional
information needed to resolve those issues, and the Claimant shall be afforded
at least 45 days within which to provide the specified information.
 
Any Claimant whose claim is denied in whole or in part, or deemed to be denied
under the preceding sentences, (or such Claimant’s authorized representative,)
may, within sixty (60) days after the Claimant’s receipt of notice of the
denial, or after the date of the deemed denial, request a review of the denial
by notice given, in writing, to the Company or the Plan Fiduciary and
Administrator.  Upon such a request for review, the claim shall be fully and
fairly reviewed by the Company or the Plan Fiduciary and Administrator (or its
designated representative) which may, but shall not be required to, grant the
Claimant a hearing.  In connection with the review, the Claimant may have
representation, may, upon request and free of charge, be provided reasonable
access to and copies of pertinent documents, records, and information, and may
submit documents, records, issues and comments in writing.
 
The decision on review normally shall be made within sixty (60) days of the
Company or the Plan Fiduciary and Administrator’s receipt of the request for
review.  If an extension of time is required due to special circumstances, the
Claimant shall be notified, in writing, by the Company or the Plan Fiduciary and
Administrator prior to the end of the sixty (60) day period, and the time limit
for the decision on review shall be extended to one hundred twenty (120) days.
 The decision on review shall be in writing and shall state, in a manner
calculated to be understood by the Claimant, the specific reasons for the
decision and shall include references to the relevant Benefit Plan provisions on
which the decision is based.  The written decision on review shall be given to
the Claimant within the sixty (60) day (or, if applicable, the one hundred
twenty (120) day) time limit discussed above.  If the decision on review is not
communicated to the Claimant within the sixty (60) day (or, if applicable, the
one hundred twenty (120) day) period discussed above, the claim shall be deemed
to have been denied upon review. All decisions on review shall be final and
binding with respect to all concerned parties, provided, however, that if
Claimants continue to dispute the benefit denial based upon completed
performance of this Benefit Plan or the meaning and effect of the terms and
conditions thereof, then Claimants may submit the dispute to a Board of
Arbitration for final arbitration.   Said Board shall consist of one member
selected by the Claimant, one member selected by the Company, one member
selected by the first two members.  The Board shall operate under any generally
 

 
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recognized set of arbitration rules.  The parties hereto agree that they and
their heirs, personal representatives, successors and assigns shall be bound by
the decision of such Board with respect to any controversy properly submitted to
it for determination.
 
All actions permitted in this Section XV to be taken by the Claimant may
likewise be taken by a representative of the Claimant duly authorized to act in
such matters on the Claimant’s behalf.  The Company or the Plan Fiduciary and
Administrator may require such evidence of the authority to act of any such
representative as it may reasonably deem necessary or advisable.
 
6.           Any additions or modifications to the Benefit Plan must be in
writing and signed by the parties, all provided that (i) no such amendment shall
be effective if it would, if effective, cause this Benefit Plan to violate Code
Section 409A and the regulations and guidance thereunder or cause any amount of
compensation or payment hereunder to be subject to a penalty tax under Code
Section 409A and the regulations and guidance issued thereunder, which amount of
compensation or payment would not have been subject to a penalty tax under Code
Section 409A and the regulations and guidance thereunder in the absence of such
amendment and (ii) the provisions of subparagraph (i) above are
irrevocable.  This Amendment No. 2 may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
shall together constitute  only one agreement.
 
IN WITNESS WHEREOF the parties hereto acknowledge that each has carefully read
this Amendment No. 2 and executed the original thereof, individually, in the
case of Director, or by its respective duly authorized officer in the case of
Trustee and Company, all on the _9th___ day of _October__, 2008.
 

   
COMPANY:
 
/s/ Teresa D. Ely_________________
 
/s/ H. Charles Maddy, III_________
Witness
 
 
Title:_President & CEO__________
   
TRUSTEE:
 
/s/ Teresa D. Ely_________________
 
/s/ H. Charles Maddy, III_________
Witness
 
 
Title:_President & CEO__________
/s/ Teresa D. Ely_________________
 
/s/ H. Charles Maddy, III_________
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/ Oscar M. Bean_______________
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/ Gary L. Hinkle_______________
Witness
 
Director

 

 
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/s/ Teresa D. Ely_________________
 
/s/ Dewey F. Bensenhaver, MD            
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/ James P. Geary, II   ___________
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/ Gerald Huffman_______________
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/ Phoebe Fisher Heishman _______
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/ James M. Cookman ___________
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/ Thomas J. Hawse, III_____________
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/  John W. Crites__________________
Witness
 
 
Director
/s/ Teresa D. Ely_________________
 
/s/  Charles S. Piccirillo_______________
Witness
 
 
Director
/s/ Pamela J. Newman____________
 
/s/  Frank A. Baer, III_______________
Witness
 
Director

 
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