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Exhibit 10.2
 
Exhibit A
 
CHANGE IN CONTROL AGREEMENT
 
THIS CHANGE IN CONTROL AGREEMENT (“Agreement”), made and entered into this
_31st_ day of _December_, 2008, by and between Summit Financial Group, Inc. (the
“Company”) and H. Charles Maddy, III (“Maddy”), amends, restates, supersedes and
replaces that certain Change in Control Agreement made and entered into as of
the 4th day of March, 2005;
 
WHEREAS, Company recognizes that Maddy’s contribution to the growth, success and
continued operation of Company has been substantial, and
 
WHEREAS, Company believes it is in the best interest of Company to grant Maddy a
level of security to preserve key management and to assure fair consideration of
any affiliation opportunities that arise, and
 
WHEREAS, the parties hereto, in the interests of clarity and for other reasons
stated herein, and for the purpose of complying with the requirements of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), wish to
amend and restate this Agreement, provided that all provisions applicable to
compliance under Code Section 409A shall be effective as of March 4, 2005, and
provided further that, notwithstanding any other provisions of this amended and
restated Agreement, 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, and (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), Maddy, by executing this Agreement, shall be deemed to have elected
the timing and form of distribution provisions of this amended and restated
Agreement, and to otherwise further revise the Agreement all on or before
December 31, 2008.
 
NOW, THEREFORE, in consideration of the promises and respective covenants and
agreements of the parties herein contained, Company and Maddy agree as follows:
 
A.           Definitions.  For purposes of this Change in Control Agreement, the
following definitions shall apply:
 
(1)           “Change of Control” means with respect to (i) the Company or any
Affiliate for whom Maddy is performing services at the time of the Change in
Control Event; (ii) the Company or any Affiliate that is liable for the payment
to Maddy hereunder (or all corporations liable for the payment if more than one
corporation is liable) but only if either the  compensation payable hereunder is
attributable to the performance of service by Maddy for such corporation (or
corporations) or there is a bona fide business purpose for such corporation or
corporations to be liable for such payment and, in either case, no significant
purpose of making
 

 
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such corporation or corporations liable for such payment is the avoidance of
Federal Income tax; or (iii) a corporation that is a majority shareholder of a
corporation identified in paragraph (i) or (ii) of this section, or any
corporation in a chain of corporations in which each corporation is a majority
shareholder of another corporation in the chain, ending in a corporation
identified in paragraph (i) or (ii) of this section, a Change in Ownership or
Effective Control or a Change in the Ownership of a Substantial Portion of the
Assets of a Corporation as defined in Section 409A of the Code, and the
regulations or guidance issued thereunder, meeting the requirements of a “Change
in Control Event” thereunder.
 
 (2)            “Company” shall mean Summit Financial Group, Inc.
 
(3)           “Employment Agreement” shall mean the Amended and Restated
Employment Agreement dated as of _December 31st______, 2008, by and between
Summit Financial Group, Inc. and H. Charles Maddy, III.
 
(4)           “Salary” means Maddy’s Base Salary as defined in the Employment
Agreement in effect on the date of termination of Maddy’s employment under this
Agreement, or if no Employment Agreement is in effect, Maddy’s Base Salary on
the date of termination of employment hereunder, corresponding to the definition
of Base Salary in the most recent Employment Agreement.
 
(5)           For purposes of this Change in Control Agreement, “Good Cause”
shall mean:  (i) excessive absenteeism without approval of Summit not caused by
disability; (ii) gross or willful neglect of duty resulting in substantial harm
to Summit after Maddy has been given written direction and reasonable time to
perform such duties; or (iii) any acts or omissions on the part of Maddy which
when proven constitute fraud or commission of any criminal act involving the
person or property of others or the public generally.
 
(6)           “Disability” means a physical or mental condition rendering Maddy
substantially unable to perform the duties of an officer and director of a
banking organization.
 
(7)           “Retirement” means termination of employment by Maddy in
accordance with Company’s (or its successor’s) retirement plan, including early
retirement as approved by the Board of Directors.
 
(8)           “Good Reason” means
 
 
(a)
A Change of Control in the Company (as defined above) and:

 
 
(i)
a decrease in Maddy’s overall compensation (including, without limitation,
salary, perquisites, bonuses and other earnings reported on IRS Form W-2, but
excluding a diminution in board fees) below its level in effect immediately
prior to the date of consummation of the Change of Control, without Maddy’s
prior written consent; or

 

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

 
 
(iii)
a geographical relocation of Maddy to an office more than 20 miles from Maddy’s
location at the time of the Change of Control or the imposition of travel
requirements inconsistent with those existing prior to the Change of Control
without Maddy’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 M(1) below; or

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

 
(9)           “Wrongful Termination” means termination of Maddy’s employment by
the Company or its affiliates for any reason other than at Maddy’s option, Good
Cause or the death, Disability or Retirement of Maddy prior to the expiration of
twelve (12) months after consummation of the Change of Control.
 
(10)           “Separation from Service” means the severance of Maddy’s
employment with the Company or any Affiliate for whom Maddy is performing
services at the time of the Change in Control Event for any reason.  Maddy
separates from service with the Company or any Affiliate if he dies, retires,
separates from service because of Maddy’s Disability, or otherwise has a
termination of employment with the Company or any Affiliate.  However, the
employment relationship is treated as continuing intact while Maddy is on
military leave, sick leave, or other bona fide leave of absence if the period of
such leave does not exceed six months, or if longer, so long as Maddy’s right to
reemployment with the Company or any Affiliate is provided either by statute or
by contract.  If the period of leave exceeds six months and Maddy’s right to
reemployment is not provided either by statute or by contract, the employment
relationship is deemed to terminate on the first date immediately following such
six-month period.  Notwithstanding the foregoing, where a leave of absence is
due to any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than six months, where such impairment causes Maddy to be unable to
perform the duties of his position of employment or any substantially similar
position of employment, a 29-month period of absence may be substituted for such
six-month period.  In addition, notwithstanding any of the foregoing, the term
“Separation from Service” shall be interpreted under this Agreement in a manner
consistent with the requirements of Code Section 409A including, but not limited
to:
 

 
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(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
Separation from Service,

 
(ii) in any instance in which Maddy 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 Agreement 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 Maddy shall only be considered to
meet the requirements of a Separation from Service hereunder if Maddy 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 Agreement which
would otherwise apply,
 
(iii) in any instance in which Maddy is an employee and an independent
contractor of the Company or any Affiliate or any combination thereof, Maddy
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 Maddy provides services both as an employee and a member of
the Board of Directors of the Company or any Affiliate or any combination
thereof, the services provided as a director are not taken into account in
determining whether Maddy has had a Separation from Service as an employee under
this Agreement, provided that no plan in which Maddy participates or has
participated in his capacity as a director is an Aggregated Plan, and
 
(iv) a determination of whether a Separation from Service has occurred shall be
made in accordance with Treasury Regulations Section 1.409A-1(h)(4) or any
similar or successor law, regulation or guidance of like import, in the event of
an asset purchase transaction as described therein.
 
B.           Retention of Maddy After Change of Control.  In order to facilitate
management continuity and to promote an orderly transition of ownership, Company
and Maddy agree that after a Change of Control, Maddy shall be employed by the
acquiring company for a period of one (1) year (the “Transition Period”),
commencing upon the date of consummation of the transaction resulting in a
Change of Control.  During the Transition Period, Maddy may terminate his
employment for Good Reason, and the Company may terminate the employment of
Maddy for Good Cause.  If Company terminates Maddy in a manner constituting
Wrongful Termination, or Maddy terminates for Good Reason, Maddy shall be
entitled to receive the compensation set forth in paragraph E below.
 
If the Employment Agreement is still in effect, Maddy shall be employed pursuant
to the terms of Article II and Article V, A-E of the Employment Agreement;
provided, that any additional provisions of Maddy’s Employment Agreement which
by their terms specifically apply to this Change in Control Agreement shall also
apply to Maddy’s employment hereunder and, if the Employment Agreement is no
longer in effect, such provisions shall be deemed to survive and shall be
incorporated by reference into this Change in Control Agreement.
 

 
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All other terms of Maddy’s employment, including without limitation his right to
receive termination payments and the term of his employment, will be controlled
by this Agreement.
 
C.           Compensation of Maddy Upon Separation from Service Due to Death or
Disability During the Transition Period.  In the event of the Separation from
Service of Maddy due to Death or Disability during the Transition Period, Maddy
shall be entitled to three times the greater of (a) Maddy’s Salary in effect
immediately prior to the date of consummation of a Change of Control or (b)
Maddy’s Salary in effect on the date of Separation from Service.  Such payment
shall be made in a lump sum on the date of Separation from Service under this
Agreement, subject to the provisions of Paragraph N herein to the extent
applicable.
 
D.           Compensation of Maddy Upon Separation from Service Due to
Expiration of the Transition Period.  Upon Separation from Service due to the
expiration of the Transition Period, Maddy shall be entitled to be paid an
amount equal to three (3) times the greater of (a) Maddy’s Salary in effect
immediately prior to the date of consummation of a Change of Control or (b)
Maddy’s Salary in effect on the date of Separation from Service.  Such payment
shall be made in a lump sum on the date of Separation from Service under this
Agreement, subject to the provisions of Paragraph N herein to the extent
applicable.
 
E.           Compensation of Maddy Upon Separation from Service Due to Good
Reason or Wrongful Termination during the Transition Period.  Except as
hereinafter provided, if Maddy terminates his employment with the Company during
the Transition Period for Good Reason, resulting in Maddy’s Separation from
Service, or the Company terminates Maddy’s employment during the Transition
Period in a manner constituting Wrongful Termination, resulting in Maddy’s
Separation from Service, the Company agrees as follows:
 
(1)           The Company shall pay Maddy a cash payment equal to three (3)
times the greater of (a) Maddy’s Salary in effect immediately prior to the date
of consummation of a Change of Control or (b) Maddy’s Salary in effect on the
date of Separation from Service.  Such payment shall be made in a lump sum on
the date of Separation from Service under this Agreement, subject to the
provisions of Paragraph N herein to the extent applicable.
 
(2)           Maddy 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 Maddy’s cash incentive
award shall not be reduced due to Maddy not being actively employed for the full
year.  Said cash bonuses, if any, will be paid to Maddy in a lump sum on the
date of Separation from Service, taking into account the provisions of Paragraph
M herein relating to when payments are deemed to be made, and subject to the
provisions of Paragraph N herein to the extent applicable.
 
(3)           Maddy will continue to participate, without discrimination, for
the number of months between the date of Separation from Service and the date
that is thirty-six (36) 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 Maddy, in general, of the
Company, or any successor organization, provided Maddy’s continued participation
is possible under the general terms and conditions of such plans.  In the event
Maddy’s participation in any such plan is barred, the Company shall arrange to
provide Maddy with
 
 
 
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benefits substantially similar to those to which Maddy would have been entitled
had his participation not been barred.  However, in no event will Maddy receive
from the Company the employee benefits contemplated by this subparagraph if
Maddy receives comparable benefits from any other source.  With respect to any
benefits Maddy receives under this Paragraph E(3), the following provisions will
apply:  (i) in-kind benefits provided under this Paragraph E(3) during any
taxable year of Maddy shall not affect the in-kind benefits to be provided under
this Paragraph E(3) in any other taxable year; (ii) if the provision of benefits
under this Paragraph E(3) is to be done by means of reimbursement, the
reimbursement of an eligible benefit expense under this Paragraph E(3) must be
made on or before the last day of Maddy’s taxable year following the taxable
year in which the expense was incurred, (iii) no rights to reimbursement or
in-kind benefits under this Paragraph E(3) shall be subject to liquidation or
exchange for any other benefit, and (iv) benefits provided under this Paragraph
E(3) shall be subject to the provisions of Paragraph N herein to the extent
applicable.
 
(4)           Paragraph F of this Agreement and Section VII of the Employment
Agreement shall not apply.
 
F.           Separation from Service at Maddy’s Option.  Maddy may Separate from
Service within six (6) months after consummation of any Change of
Control without reason at his option by giving at least thirty (30) days’
written notice of his intention to terminate his employment.  In such event,
Maddy shall be entitled to receive a payment equal to 75% of the greater of (a)
Maddy’s Salary in effect immediately prior to the date of consummation of a
Change of Control or (b) Maddy’s Salary in effect on the date of Separation from
Service.  Such payment shall be made in a lump sum on the date of Separation
from Service under this Agreement, subject to the provisions of Paragraph N
herein to the extent applicable.
 
G.           Noncompetition and Nonsolicitation.  In consideration of the
covenants set forth herein, including but not limited to the payment set forth
in paragraphs C, D and E hereof, Maddy agrees as follows:
 
(1)           For a period of three (3) years after expiration of the Transition
Period, provided Maddy’s employment under this Agreement is not sooner
terminated, Maddy shall not, directly or indirectly engage in the business of
banking, in the entire State of West Virginia, in any county or location in
which Summit has operating offices at the time of termination, in the following
designated locations in Virginia (See Exhibit to Paragraphs G(1) and (2)
attached, which is incorporated herein by reference.  This Exhibit was molded to
included the counties where the municipalities are located.), or in any location
identified by Summit in its three-year strategic plan as a location for future
expansion to be adopted by the Board and reviewed and updated at regular
intervals.
 
(2)           For a period of one (1) year after Maddy’s employment with Summit
is terminated for any reason other than Maddy’s Disability, Retirement, Good
Reason or termination at Maddy’s option as provided in Paragraph F hereof, Maddy
shall not, directly or indirectly, engage in the business of banking in the
entire State of West Virginia, in any county or location in which Summit has
operating offices at the time of termination, in the following designated
locations in Virginia (See Exhibit to Paragraphs G(1) and (2)) attached, which
is incorporated herein by reference.  This Exhibit was molded to included the
counties where the
 
 
 
 
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municipalities are located.), or in any location identified by Summit in its
three-year strategic plan as a location for future expansion to be adopted by
the Board and reviewed and updated at regular intervals.
 
(3)           For purposes of Paragraphs G(1) - (2), being engaged in the
business of banking shall mean Maddy’s engaging in any business or activity of
any nature that is competitive with the business of Summit or its affiliates in
the specified geographic area or Maddy’s solicitation of business from clients
with a primary or principal office in the specified geographic area.
 
(4)           In the event that this provision shall be deemed by any Court or
body of competent jurisdiction to be unenforceable in whole or in part by reason
of its extending for too long a period of time, or too great a geographical area
or over too great a range of activities, or is overly broad in any other respect
or for any other reason, then in such event this Agreement shall be deemed
modified and interpreted to extend over only such maximum period of time,
geographical area, or range of activity or otherwise, so as to render these
provisions valid and enforceable, and as so modified, these shall be enforceable
and enforced.
 
H.           Other Employment.  Maddy 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 E(3) above) as the result of
employment by another employer after the date of Separation from Service.
 
I.           Rights of Company Prior to the Change of Control.  This Change in
Control Agreement shall not affect the right of the Company or Maddy to
terminate the foregoing Employment Agreement or the employment of Maddy in
accordance therewith; provided, however, that any termination or reduction in
salary or benefits that takes place after discussions have commenced that result
in a Change of Control shall be presumed (without clear and convincing evidence
to the contrary) to be Good Reason and a violation of this Change in Control
Agreement entitling Maddy to the benefits hereof, provided Maddy Separates from
Service either before or during the Transition Period, and any such termination
by Company resulting in Maddy’s Separation from Service either before or during
the Transition Period 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 Maddy would have had prior
to any reduction thereof.
 
J.           Confidentiality.  Maddy shall not, during the term of this
Agreement or at any time thereafter, directly or indirectly, publish or disclose
to any person or entity any confidential information (other than a Company
employee entitled to know such confidential information) concerning the assets,
customer/client lists, business or affairs of Company, and its affiliates,
including but not limited to any trade secrets, financial data, employee or
customer/client information or organizational structure.  Notwithstanding the
foregoing, nothing herein shall prevent Maddy from utilizing the knowledge and
experience he has acquired in the banking industry including without limitation
the knowledge of producer bonus plans.
 

 
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All files, records, documents, information, letters, notes, media lists,
notebook and similar items relating to the business of Company shall remain the
exclusive property of Company.  Upon the expiration or earlier termination of
this Agreement, or when requested by Company, Maddy shall immediately deliver to
Company all such files, computer data files, records, documents, information and
other items in the possession of or under the control of Maddy.
 
All business produced by Maddy while in the employ of the Company or any
Affiliate thereof is the exclusive property of Company unless specifically
excluded elsewhere in this Agreement.  Maddy shall not, during the term of this
Agreement or any time thereafter, intentionally interfere with any business or
contractual relationship of the Company.
 
K.           Gross-Up Payment.  Notwithstanding anything in this Agreement to
the contrary, in the event it shall be determined that any payment or
distribution by Company and any of its subsidiaries and affiliates to or for the
benefit of Maddy (whether paid or payable or distributed or distributable
pursuant to this Agreement, the Executive Salary Continuation Agreement between
Company and Maddy, the Employment Agreement between Company and Maddy, or any
other agreement, contract, plan or arrangement, but determined without regard to
any additional payments required under this Paragraph K) (any such payments and
distributions collectively referred to as “Payments”), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any similar tax that may hereinafter be imposed or any interest and
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then Company shall pay to Maddy an additional payment (the
“Gross-Up Payment”) equal to one hundred percent (100%) of the Excise Tax and
one hundred percent (100%) of the amount of any federal, state and local income
taxes and Excise Tax imposed on the Gross-Up Payment, all provided that any and
all such Gross-Up Payment or Payments shall be paid to Maddy thirty (30) days
after Maddy remits the taxes with respect to which such Gross-Up Payment is made
and all subject to the provisions of Paragraph N herein to the extent
applicable.
 
All determinations required to be made under this Paragraph K, including whether
a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by the firm of independent accountants selected by Company to audit its
financial statements (the “Accounting Firm”) which shall provide either before
or no later than twenty (20) days after Maddy remits any such taxes, detailed
supporting calculations both to Company and Maddy.  In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a “change in control,” Maddy shall appoint another nationally
recognized accounting firm to make, either before or no later than twenty (20)
days after Maddy remits any such taxes, the determinations required hereunder
(which accounting firm shall then be referred to as the “Accounting Firm”
hereunder).  All fees and expenses of the Accounting Firm shall be borne solely
by Company.
 
L.           Arbitration.  Any dispute between the parties arising out of or
with respect to this Agreement or any of its provisions or Maddy’s employment
with Company, whether sounding in tort or contract, shall be resolved by the
sole and exclusive remedy of binding arbitration.  Maddy hereby waives his right
to a jury trial and his right to receive noneconomic damages.  Arbitration shall
be conducted in Moorefield, West Virginia, in accordance with the rules
 

 
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of the American Arbitration Association (“AAA”).  The parties agree each to
select one arbitrator from an AAA employment panel.  Within ten days after
selection of the second arbitrator, the two arbitrators shall select a third
arbitrator.  The arbitration shall be conducted in accordance with the West
Virginia Rules of Evidence and all discovery issues shall be decided by the
arbitrators.  The panel of arbitrators 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.
 
In any arbitration proceeding between the parties, the losing party shall pay to
the prevailing party all reasonable expenses and costs including attorneys’ fees
incurred by the prevailing party during the arbitration proceeding, provided,
that in the event Maddy becomes entitled to reimbursement under this Paragraph
L, the following provisions shall apply:  (i) reimbursement provided under this
Paragraph L during any taxable year of Maddy shall not affect reimbursement to
be provided under this Paragraph L in any other taxable year; (ii) reimbursement
under this Paragraph L shall be made thirty (30) days after Maddy requests
reimbursement hereunder, provided that in no event shall any payment under this
Paragraph L be made after the last day of Maddy’s taxable year following the
taxable year in which the expense was incurred, (iii) no rights to reimbursement
under this Paragraph L shall be subject to liquidation or exchange for any other
benefit, and (iv) reimbursement provided under this Paragraph L shall be subject
to the provisions of Paragraph N herein, to the extent applicable.  A party
shall be considered a prevailing party if:
 
 
(i)
it initiated the arbitration and substantially obtained the relief it sought,
either through a judgment or the losing party’s voluntary action before
arbitration (after it is scheduled) or judgment;

 
 
(ii)
the other party withdraws its action without substantially obtaining the relief
it sought, or

 
 
(iii)
it did not initiate the arbitration and judgment is entered for either party,
but without substantially granting the relief sought.

 
M.           Date Payments Deemed Made.
 
In accordance with Code Section 409A and to the extent permitted by said Code
Section 409A and the regulations and guidance issued thereunder, any payment to
or on behalf of Maddy under this Agreement shall be treated as having been made
on a date specified in this Agreement if it is made on a later date within
Maddy’s same taxable year as the designated date, or, if later, if made no later
than the fifteenth day of the third month after such designated date provided
that, in any event, Maddy is not permitted, directly or indirectly, to designate
the taxable year of any payment.
 
N.           Six-Month Delay in Payments.
 
Notwithstanding any other provisions of this Agreement, if Maddy is a Specified
Employee (within the meaning of Code Section 409A) on Maddy’s date of Separation
from Service, then if any payment of deferred compensation (within the meaning
of Code Section 409A) is to be made upon or based upon Maddy’s Separation from
Service other than by death,
 

 
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under any provision of this Agreement, and such payment of deferred compensation
is to be made within six months after Maddy’s date of Separation from Service,
other than by death, then such payment shall instead be made on the date which
is six months after such Separation from Service of Maddy (other than by death,)
provided further, however, that in the case of any payment of deferred
compensation which is to be made in installments, with the first such
installment to be paid on or within six months after the date of Separation from
Service other than by death, then in such event all such installments which
would have otherwise been paid within the date which is six months after such
Separation from Service of Maddy (other than by death) shall be delayed,
aggregated, and paid, notwithstanding any other provision of this Agreement, on
the date which is six months after such Separation from Service of Maddy (other
than by death), with the remaining installments to continue thereafter until
fully paid hereunder.  Notwithstanding any of the foregoing, or any other
provision of this Agreement, no payment of deferred compensation upon or based
upon Separation from Service may be made under this Agreement before the date
that is six months after the date of Separation from Service or, if earlier, the
date of death, if Maddy is a Specified Employee on Maddy’s date of Separation
from Service.  This Paragraph N shall only apply to delay the payment of
deferred compensation to Specified Employees as required by Code Section 409A
and the regulations and guidance issued thereunder.
 
O.           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 Maddy, 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
this Change in Control Agreement and shall entitle Maddy 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, provided
that Maddy incurs a Separation from Service within the Transition Period.
 
(2)           This Change in Control Agreement and all rights of Maddy hereunder
shall inure to the benefit of and be enforceable by Maddy’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees.  If Maddy 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
Agreement to Maddy’s devisee, legatee, or other designee or, if there be no such
designee, to Maddy’s estate.
 
P.           Indemnification.  To the fullest extent permitted under West
Virginia law and federal banking law, the Company agrees that it will indemnify
and hold harmless Maddy from and against all costs and expenses, including
without limitation, all court costs and attorney’s fees, incurred by him during
his lifetime in defending any and all claims, demands, proceedings, suits or
actions, actually instituted or threatened, by third parties, involving this
Agreement, its validity or enforceability or with respect to any payments to be
made pursuant thereto; provided, that in the event Maddy becomes entitled to
reimbursement under this Paragraph P, the following provisions shall apply:  (i)
reimbursement provided under this
 

 
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Paragraph P during any taxable year of Maddy shall not affect reimbursement to
be provided under this Paragraph P in any other taxable year; (ii) reimbursement
under this Paragraph P shall be made thirty (30) days after Maddy requests
reimbursement hereunder, provided that in no event shall any payment under this
Paragraph P be made after the last day of Maddy’s taxable year following the
taxable year in which the expense was incurred, (iii) no rights to reimbursement
under this Paragraph P shall be subject to liquidation or exchange for any other
benefit, and (iv) reimbursement provided under this Paragraph P shall be subject
to the provisions of Paragraph N herein, to the extent applicable.
 
Q.           Survival of Change in Control Agreement.  This Change in Control
Agreement shall survive the expiration of the Employment Agreement.
 
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of
the day first written above:
 
SUMMIT FINANCIAL GROUP, INC.

By:           /s/ Oscar M. Bean  ______________

Its:           Chairman______________________

/s/ H. Charles Maddy, III________________
H. CHARLES MADDY, III

 
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Exhibit to Paragraphs G(1) and (2) of Change in Control Agreement

By and Between Summit Financial Group, Inc. and H. Charles Maddy, III, dated
December 31_, 2008.

Designated Virginia Locations

         
Ashburn
         
Charlottesville
         
Fredericksburg
         
Leesburg
         
Purcellville
         
Warrenton

*  
The designation of the municipality expressly includes the county in which the
municipality is located.

 
 
 
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