Exhibit 10.2
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) made in
duplicate originals and effective this 6th day of July, 2004, is between SUMMIT
FINANCIAL GROUP, INC. (“Summit”), CAPITAL STATE BANK, INC., a West Virginia
corporation (the “Company”), and C. DAVID ROBERTSON (“Employee”).
 
WHEREAS, the Company offers the terms and conditions of employment hereinafter
set forth and the Employee has indicated his willingness to accept such terms
and conditions in consideration of his employment with the Company;
 
WHEREAS, Employee and Company executed an Employment Agreement, effective
February 5, 1999 (the “Employment Agreement”);
 
WHEREAS, Employee and the Company amended the Employment Agreement to provide
for the waiver of merit raises by Employee in exchange for the establishment of
supplement executive retirement plan by the Company on behalf of Employee on
December 12, 2000 (the “First Amendment to Employment Agreement”); and
 
WHEREAS, Employee and the Company desire to amend the Employment Agreement to
provide for the changes set forth in the First Amendment to Employment Agreement
and to provide for (i) renewal of the original term of the Employment Agreement
for an additional five (5) years commencing on July 1, 2004, and (ii) a
reduction in the Employment Agreement’s noncompetition and nonsolicitation
clauses from five (5) years to three (3) years.

NOW, THEREFORE, in consideration of the mutual promises and covenants made in
this Amended and Restated Agreement, the parties agree as follows:
 
1. Employment. The Company hereby employs Employee and Employee hereby accepts
employment with the Company as President and Chief Executive Officer of the
Company and member of the Board of Directors of the Company upon the terms and
conditions set forth herein effective July 1, 2004, or such earlier date as the
parties may mutually agree.
 
2. Term. The term of this Amended and Restated Agreement shall be for five (5)
years, unless one of the parties terminates this Amended and Restated Agreement
as provided herein. Upon termination of the original term of the Agreement, the
Board of Directors of the Company shall review the Agreement at least annually,
and may, with the consent of the Employee, extend this term of employment for
additional one (1) year term(s), in which case such term shall end one (1) year
from the date on which it is last renewed.
 
3. Duties. Employee shall perform and have all of the duties and
responsibilities that may be assigned to him from time to time by the Board of
Directors of the Company. Employee shall devote his best efforts on a full-time
basis to the performance of such duties.
 
4. Compensation and Benefits. During the term of employment, the Company agrees
to pay Employee a base salary and to provide benefits as set forth in Exhibit A,
which is attached hereto and incorporated herein by reference.
 
5. Termination by the Company or Employee. The employment of Employee with the
Company may be terminated by any one of the following means, in which case
Employee shall be entitled to such compensation as is described below:
 

 
A.
Mutual Agreement. The Employee’s employment may be terminated by mutual
agreement of the parties upon such terms and conditions as they may agree.

 

 
B.
For Cause.

 
(1)
The Employee’s employment may be terminated by the Company for cause consisting
of one or more of the reasons specified in Paragraph 5(B)(2)(a) - (e) below;
provided, however, that if the cause of termination is for a reason specified in
Paragraph 5(B)(2)(a) below, and if in the reasonable judgment of the Board of
Directors of the Company the damage incurred by the Company as a result of
Employee’s conduct constituting cause is damage of a type that is capable of
being substantially reversed and corrected, the Company shall give Employee
thirty (30) days advance notice of the Company’s intention to terminate his
employment for cause and a reasonable opportunity to cure the cause of the
possible termination to the satisfaction of the Company.

 

 
(2)
For purposes of this Amended and Restated Agreement, the term “cause” shall be
defined as follows:

 

 
(a)
Employee’s negligence, malfeasance or misfeasance in the performance of
Employee’s duties that can reasonably be expected to have an adverse impact upon
the business and affairs of the Company, including but not limited to
(i) failure of Employee to ensure the overall quality of the Company’s loan
portfolio is maintained at a level which is satisfactory to the Board of
Directors of the Company, and (ii) failure of the Employee to ensure that the
Company’s loan loss experience remains at a level which is satisfactory to the
Company’s Board of Directors;

 

 
(b)
Employee’s commission of any act constituting theft, intentional wrongdoing or
fraud;

 

 
(c)
The conviction of the Employee of a felony criminal offense in either state or
federal court;

 

 
(d)
Any single act by Employee constituting gross negligence or which causes
material harm to the reputation, financial condition or property of the Company;
or

 

 
(e)
The death of Employee during the term of this Amended and Restated Agreement, in
which event the Company shall pay to the estate of the Employee any compensation
for services rendered but unpaid prior to the Employee’s date of death.

 

 
(3)
The Board of Directors of the Company shall determine, in its sole discretion,
whether any acts and/or omissions on the part of Employee constitute “cause” as
defined above. Notwithstanding the foregoing, Employee shall be entitled to
arbitrate a finding of the Board of Directors of “cause” in accordance with
Paragraph 9 hereof.

 

 
(4)
In the event that Company terminates Employee’s employment for cause as defined
above, Employee shall be entitled to be paid his regular salary and benefits up
to the effective date of the termination, but not any additional compensation.

 

 
C.
Not for Cause. Employee’s employment may be terminated by the Company for any
reason so long as Employee is given thirty (30) days advance written notice (or
payment in lieu thereof). In the event of a termination pursuant to this
subparagraph, Employee shall be entitled to payment from the Company equivalent
to the base salary compensation set forth in this Amended and Restated Agreement
for the remaining term of the Agreement or severance pay equal to six (6) months
of base salary payments, whichever is greater.

 

 
D.
Change in Control. Exhibit B hereto sets forth the rights and responsibilities
of the parties in the event of a change in control, as defined therein, and is
incorporated herein by reference.

 
6. Noncompetition and Nonsolicitation. In consideration of the covenants set
forth herein, including but not limited to the severance pay set forth in
Paragraph 5(E) and Exhibit A, Employee agrees as follows:
 

 
A.
For a period of three (3) years after Employee’s employment with the Company is
terminated by Employee for any reason other than Employee’s disability or Good
Reason (as that term is defined in Exhibit B hereto), Employee shall not,
directly or indirectly, engage in the business of banking in the City of
Charleston or the Counties of Kanawha and Greenbrier, West Virginia, or in any
other county in which the Company has operating offices at the time of the
termination. For purposes of this Paragraph 6(A), being engaged in the business
of banking shall mean Employee’s presence or work in a bank office in the
specified geographic area or Employee’s solicitation of business from clients
with a primary or principle office in the specified geographic area.

 

 
B.
During Employee’s employment by the Company and for three (3) years after
Employee’s employment with the Company is terminated by Employee for any reason
other than Employee’s disability, Employee shall not, on his own behalf or on
behalf of any other person, corporation or entity, either directly or
indirectly, solicit, induce, recruit or cause another person in the employ of
the Company or its affiliates to terminate his or her employment for the purpose
of joining, associating or becoming an employee with any business which is in
competition with any business or activity engaged in by the Company or its
affiliates.

 

 
C.
Employee further recognizes and acknowledges that in the event of the
termination of Employee’s employment with the Company for any reason other than
Employee’s disability, (1) a breach of the obligations and conditions set forth
herein will irreparably harm and damage the Company; (2) an award of money
damages may not be adequate to remedy such harm; and (3) considering Employee’s
relevant background, education and experience, Employee believes that he will be
able to earn a livelihood without violating the foregoing restrictions.
Consequently, Employee agrees that, in the event that Employee breaches any of
the covenants set forth in this Paragraph 6, the Company and/or its affiliates
shall be entitled to both a preliminary and permanent injunction in order to
prevent the continuation of such harm and to recover money damages, insofar as
they can be determined, including, without limitation, all costs and attorneys’
fees incurred by the Company in enforcing the provisions of this Paragraph 6.
Such relief may be sought notwithstanding the arbitration provision set forth in
Paragraph 10 below.

 
7. Definition of Disability. For purposes of the Agreement, the term
“disability” shall mean a physical or mental condition rendering Employee
substantially and permanently unable to perform the duties of an officer and
director of a banking organization.
 
8. Notices. Any notice required or permitted to be given under this Amended and
Restated Agreement shall be sufficient if in writing and sent by registered or
certified mail listed herein; in the case of Employee, to the following address:
206 Georgetown Place, Charleston, West Virginia 25314; in the case of Summit and
the Company, addressed to H. Charles Maddy, III, in care of Summit Financial
Group, Inc., 300 North Main Street, Moorefield, WV 26836. Any notice sent
pursuant to this paragraph shall be effective when deposited in the mail.
 
9. Confidential Information. Employee shall not, during the term of this Amended
and Restated Agreement or at any time thereafter, directly or indirectly,
publish or disclose to any person or entity any confidential information
concerning the assets, business or affairs of the Company, including but not
limited to any trade secrets, financial data, employee or customer/client
information or organizational structure.
 
10. Arbitration. Any dispute between the parties arising out of or with respect
to this Amended and Restated Agreement or any of its provisions or Employee’s
employment with the Company shall be resolved by the sole and exclusive remedy
of binding arbitration. Arbitration shall be conducted in Charleston, West
Virginia in accordance with the rules of the American Arbitration Association
(“AAA”). The parties agree to select one arbitrator from an AAA employment
panel. The arbitration shall be conducted in accordance with the West Virginia
Rules of Evidence and all discovery issues shall be decided by the arbitrator.
The arbitrator shall supply a written opinion and analysis of the matter
submitted for arbitration along with the decision. The arbitration decision
shall be final and subject to enforcement in the local circuit court.
 
11. Entire Agreement. This Amended and Restated Agreement constitutes the entire
Agreement between the parties and shall supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and may not be changed or amended except by an instrument
in writing to be executed by each of the parties hereto.
 
12. Severability. If any provision hereof, or any portion of any provision
hereof, is held to be invalid, illegal or unenforceable, all other provisions
shall remain in force and effect as if such invalid, illegal or unenforceable
provision or portion thereof had not been included herein. If any provision or
portion of any provision of this Amended and Restated Agreement is so broad as
to be unenforceable, such provision or a portion thereof shall be interpreted to
be only so broad as is enforceable.
 
13. Headings. The headings contained in this Amended and Restated Agreement are
included for convenience or reference only and shall have no effect on the
construction, meaning or interpretation of this Amended and Restated Agreement.
 
14. Governing Law. The laws of the State of West Virginia shall govern the
interpretation and enforcement of this Amended and Restated Agreement.
 
15. Amendments. Any amendments to the Agreement must be in writing and signed by
all parties hereto except that extensions of the term of this Amended and
Restated Agreement under Paragraph 2 above, may be evidenced by minutes of a
meeting of the Board of Directors.
 
16. Wavier of Breach. No requirement of this Amended and Restated Agreement may
be waived except by a written document signed by the party adversely affected. A
waiver of a breach of any provision of the Agreement by any party shall not be
construed as a waiver of subsequent breaches of that provision.
 
17. Counterparts. This Amended and Restated Agreement may be executed in
counterparts, all of which shall be considered one and the same Agreement and
each of which shall be deemed an original.
 
IN WITNESS WHEREOF, the Company and Summit have each caused this Amended and
Restated Agreement to be executed in its corporate name by its corporate officer
thereunto duly authorized, and Employee has hereunto set his hand and seal, as
of the day and year first above written:
 
                        SUMMIT FINANCIAL GROUP, INC.
 
 
                        By: /s/ H. Charles Maddy, III
                        Its: President_____________

 
 
                        CAPITAL STATE BANK, INC.

 
                         By: /s/ H. Charles Maddy, III __   
                         Its: Director___________________
 
 
                         /s/ C. David Robertson_______
                   C. David Robertson
 

 

 

 
 

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Exhibit A
Compensation and Benefits
 
A.
Base Salary. Employee’s base salary shall be $142,700. Upon consummation of the
proposed consolidation of Capital State Bank, Inc. and Summit Community Bank,
Inc., Employee’s base salary shall be increased to $170,000. Thereafter,
Employee’s base salary shall be as mutually agreed upon by Employee and Company.
Employee shall be considered for salary increases on the basis of cost of living
increases and increases in responsibility. In consideration of Employee’s waiver
of future merit raises, Summit has established a Supplemental Executive Benefit
Plan for the benefit of Employee.

 
B.
Bonus. In addition to the base salary provided for herein, Employee shall be
eligible for incentive bonuses subject to goals and criteria to be determined by
the Board of Directors of the Company.

 
C.
Other Compensation. The Company shall provide the following other compensation
to Employee, up to a maximum of $13,000 per year:

 

 
(1)
An amount equal to Employee’s monthly country club dues.

 

 
(2)
An amount equal to the premiums on the life insurance policy held by Employee as
of the effective date of this Amended and Restated Agreement.

 
Employee shall be subject to taxation on such other compensation as required by
the Internal Revenue Code.
 
D.
Vacation. Employee shall be entitled to all paid vacation and holidays and other
paid leave as provided by the Company to other employees.

 
E.
Fringe Benefits. The Company shall afford to Employee the benefit of retirement
plans afforded to all other Company officers, subject to the terms and
conditions thereof. In the event that Employee’s health insurance coverage is
discontinued or becomes unavailable to him for some reason outside the control
of Employee, Employee shall be afforded the opportunity to enroll in the
Company’s health insurance plan; provided, however, that the Company may adjust
the Other Compensation set forth above in Paragraph C in an amount equivalent to
the cost of Employee’s participation in the Company’s health insurance plan.

 
F.
Business Expenses. The Company shall reimburse Employee for all reasonable
expenses incurred by Employee in carrying out his duties and responsibilities,
including but not limited to reimbursing civic club organization dues and
reasonable expenses for customer entertainment.

 
G.
Automobile. The Company shall provide Employee with the use of an automobile for
the employee’s business and personal use. The Company shall be responsible for
expenses associated with the vehicle including but not limited to taxes,
gasoline, licenses, maintenance, repair, insurance and reasonable cellular phone
charges. Employee shall be subject to tax for his personal use of the vehicle in
accordance with the Internal Revenue Code and any applicable state law. Upon
approval of the Company, appropriate replacement vehicles may be provided in the
future.

 
H.
Director’s Fees. The Company shall pay Employee the same director’s fees as are
provided to other inside officer members of the Board of Directors.

 

 
 

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Exhibit B
Change in Control Agreement
 
A.
Definitions. For purposes of this Exhibit B, the following definitions shall
apply:

 
(1) “Change of Control” means
 

 
(a)
a change of ownership of the Company that would have to be reported to the
Securities and Exchange Commission as a Change of Control, including but not
limited to the acquisition by any “person” and/or entity as defined by
securities regulations and law, of direct or indirect “beneficial ownership” as
defined, of twenty-five percent (25%) or more of the combined voting power of
the Company’s then outstanding securities; or

 

 
(b)
the failure during any period of three (3) consecutive years of individuals who
at the beginning of such period constitute the Board for any reason to
constitute at least a majority thereof, unless the election of each director who
was not a director at the beginning of such period has been approved in advance
by directors representing at least two-thirds (2/3) of the directors at the
beginning of the period; or

 

 
(c)
the consummation of a “Business Combination” as defined in the company’s
Articles of Incorporation.

 

 
(2)
“Company” shall mean Summit Financial Group, Inc.

 

 
(3)
“Salary” means the greater of the initial base salary or the average of
Employee’s full earnings reported on IRS Form W-2 for the two full year periods
immediately prior to the date of the consummation of the Change of Control or
for the two full year periods immediately preceding the Date of Termination,
whichever is greater.

 

 
(4)
For purposes of this Exhibit B, “Good Cause” has the same meaning as the term
“cause” set forth in Paragraph 5(B)(2) of the foregoing Employment Agreement.

 

 
(5)
“Disability” means a physical or mental condition rendering Employee
substantially unable to perform the duties of an officer and director of a
banking organization.

 

 
(6)
“Retirement” means termination of employment by Employee in accordance with
Company’s (or its successor’s) retirement plan, including early retirement as
approved by the Board of Directors.

 

 
(7)
“Good Reason” means

 

 
(a)
A Change of Control in the Company (as defined above) and:

 
(i)
a decrease in Employee’s Salary below its level in effect immediately prior to
the date of consummation of the Change of Control, without Employee’s prior
written consent; or

 
(ii)
a material reduction in the importance of Employee’s job responsibilities or
assignment of job responsibilities inconsistent with employee’s responsibility
prior to the Change in Control without Employee’s prior written consent; or

 
(iii)
a geographical relocation of Employee to an office more than 20 miles from
Employee’s location at the time of the Change of Control or the imposition of
travel requirements inconsistent with those existing prior to the Change in
Control without Employee’s prior written consent; or

 

 
(b)
Failure of the Company to obtain assumption of this Change in Control Agreement
by its successor as required by Paragraph E(1) below; or

 

 
(c)
Any removal of Employee from, or failure to re-elect Employee to any of
Employee’s position with Company immediately prior to a Change in Control
(except in connection with the termination of Employee’s employment for Good
Cause, death, Disability or Retirement) without Employee’s prior consent.

 

 
(8)
“Wrongful Termination” means termination of Employee’s employment by the Company
or its affiliates for any reason other than at Employee’s option, Good Cause or
the death, Disability or Retirement of Employee prior to the expiration of
eighteen (18) months after consummation of the Change of Control.

 
B.
Compensation of Employee Upon Termination for Good Reason or Wrongful
Termination within Eighteen (18) Months of a Change in Control. Except as
hereinafter provided, if Employee terminates his employment with the Company for
Good Reason or the Company terminates Employee’s employment in a manner
constituting Wrongful Termination, the Company agrees as follows:

 

 
(1)
The Company shall pay Employee a cash payment equal to Employee’s Salary, on a
monthly basis, multiplied by the number of months between the Date of
Termination and the date that is eighteen (18) months after the date of
consummation of the Change of Control.

 

 
(2)
For the year in which termination occurs, Employee will be entitled to receive
his reasonable share of the Company’s cash bonuses, if any, allocated in
accordance with existing principles and authorized by the Board of Directors.
The amount of Employee’s cash incentive award shall not be reduced due to
Employee not being actively employed for the full year.

 

 
(3)
Employee will continue to participate, without discrimination, for the number of
months between the Date of Termination and the date that is eighteen (18) months
after the date of the consummation of the Change of Control in benefit plans
(such as retirement, disability and medical insurance) maintained after any
Change of Control for employees, in general, of the Company, or any successor
organization, provided Employee’s continued participation is possible under the
general terms and conditions of such plans. In the event Employee’s
participation in any such plan is barred, the Company shall arrange to provide
Employee with benefits substantially similar to those which Employee would have
been entitled had his participation not been barred. However, in no event will
Employee receive from the Company the employee benefits contemplated by this
subparagraph if Employee receives comparable benefits from any other source.

 

 
(4)
Paragraph 6 (Noncompetition and Nonsolicitation) of the foregoing Agreement
shall not apply.

 
C.
Other Employment. Employee shall not be required to mitigate the amount of any
payment provided for in this Change in Control Agreement by seeking other
employment. The amount of any payment provided for in this Change in Control
Agreement shall not be reduced by any compensation earned or benefits provided
(except as set forth in Paragraph B(3) above) as the result of employment by
another employer after the Date of Termination.

 
D.
Rights of Company Prior to the Change of Control. This Change in Control
Agreement shall not effect the right of the Company or Employee to terminate the
foregoing Agreement or the employment of Employee in accordance thereof;
provided, however, that any termination or reduction in salary or benefits that
takes place after discussions have commenced that result in a Change in Control
shall be presumed (without clear and convincing evidence to the contrary) to be
a violation of this Change in Control Agreement entitling Employee to the
benefits hereof, so that any termination by Company shall be deemed to be a
wrongful termination, and all references in this Change in Control Agreement to
Salary shall be deemed to mean the Salary, as defined herein, based on the
earnings Employee would have had prior to any reduction thereof.

 
E.
Successors; Binding Agreement.

 

 
(1)
The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform this Change
in Control Agreement. Failure of the Company to obtain such agreement prior to
the effectiveness of any such succession shall be a breach of the this Change in
Control Agreement and shall entitle Employee to compensation from the Company in
the same amount and on the same terms as he would be entitled to hereunder if he
terminated his employment for Good Reason hereunder.

 

 
(2)
This Change in Control Agreement and all rights of Employee hereunder shall
inure to the benefit of and be enforceable by Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If Employee should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Amended and Restated Agreement to Employee’s devisee, legatee, or other designee
or, if there be no such designee, to Employee’s estate.