EXHIBIT 10.12
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Employment Agreement”) is
made and entered into on this 26 day of December, 2008, effective as of the 1st
day of July, 2008, by and among SUMMIT COMMUNITY BANK, INC. (the “Bank”), SUMMIT
FINANCIAL GROUP, INC. (“Summit FGI”) and BRADFORD E.  RITCHIE (the “Employee”).
 
WHEREAS, the Bank has offered employment to Employee subject to certain terms
and conditions hereinafter set forth and Employee has indicated his willingness
to accept such employment,
 
WHEREAS, Employee, Summit FGI and Bank executed an employment agreement July 7,
2008, effective as of July 1, 2008;
 
WHEREAS, under Paragraph 18 said employment agreement may be modified by a
writing signed by all the parties thereto; 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 Employment Agreement, provided that, notwithstanding any
other provisions of this Employment Agreement, this amendment applies only to
amounts that would not otherwise be payable in 2008 and shall not cause 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), Employee, by executing this Employment Agreement, shall be deemed to
have elected the timing and form of distribution provisions of this Employment
Agreement, and to otherwise further revise the Employment Agreement all on or
before December 31, 2008.
 
NOW THEREFORE, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, the Bank, Summit FGI and Employee
contract and agree as follows:
 
1.           Definitions.  The following definitions in addition to any terms
otherwise defined herein, shall apply to designated phrases used in this
Employment Agreement.
 
 
 
 

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(a)
“Change of Control”  shall mean with respect to (i) Bank, Summit FGI or an
Affiliate for whom the Employee is performing services at the time of the Change
in Control Event; (ii) Bank, Summit FGI or any Affiliate that is liable for the
payment to the Employee hereunder (or all corporations liable for the payment if
more than one corporation is liable) but only if either the deferred
compensation is attributable to the performance of service by the Employee for
Bank, Summit FGI or such corporation (or corporations) or there is a bona fide
business purpose for Bank, Summit FGI or such corporation or corporations to be
liable for such payment and, in either case, no significant purpose of making
Bank, Summit FGI or 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
Paragraph, 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 Paragraph, 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 by the Internal Revenue Service
thereunder, meeting the requirements of a “Change in Control Event” thereunder.

 
 
(b)
“Salary” means Employee’s average of annual base salary for the two full year
periods immediately prior to the date of the consummation of a Change of Control
or for two full year periods immediately preceding the date of Separation from
Service, whichever is greater.

 
 
(c)
“Good Cause” includes (i) Employee’s commission of any act constituting theft,
intentional wrongdoing or fraud; (ii) the conviction of the Employee of a felony
criminal offense in either state or federal court; or (iii) any single act by
Employee constituting gross negligence or that causes material harm to the
reputation, financial condition or property of Summit FGI or the Bank.

 
 
(d)
“Disability” means unable as a result of a physical or mental condition to
perform Employee’s normal duties as Charleston Area President from day to day in
Employee’s usual capacity.

 
 
 
 

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(e)
“Retirement” means Separation from Service by Employee in accordance with Summit
FGI’s and/or the Bank’s retirement plan, including early retirement as approved
by the Board of Directors of Summit FGI and/or the Bank.

 
 
(f)
“Good Reason” means a Change of Control in Summit FGI and/or the Bank and the
occurrence of one or more of the following events prior to the expiration of
twenty-four (24) months after consummation of the Change of Control:

 
(i) a material decrease in the total amount of Employee’s base salary below its
level in effect on the date of consummation of the Change of Control, without
Employee’s prior written consent; or
 
(ii) a material reduction in Employee’s job duties and responsibilities without
Employee’s prior written consent; or
 
(iii) a material geographical relocation of Employee without Employee’s prior
written consent, which shall be deemed to mean relocation to an office more than
twenty (20) miles from Employee’s location at the time of the Change of Control;
or
 
(iv) failure of Summit FGI and/or the Bank to obtain assumption of this
Employment Agreement by its/their successor, which shall be deemed a material
breach of this Employment Agreement; or
 
(v) any purported termination of Employee’s employment which is not effected
pursuant to a notice of termination required in Paragraph 17 of this Employment
Agreement, which shall be deemed a material breach of this Employment Agreement.
 
Provided, that Employee provides notice to the Bank of the existence of the
occurring condition described in this Paragraph 1(f)  no later than ninety (90)
days after the initial occurrence thereof, and the Bank fails to correct or
remedy the condition within thirty (30) days of receipt of such notice.
 
 
(g)
“Wrongful Termination” means termination of Employee’s employment prior to the
expiration of twenty-four (24) months after consummation of a Change of Control
for any reason other than at Employee’s option, Good Cause or the death,
Disability or Retirement of Employee.

 
 
 
 

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(h)
“Separation from Service” means the severance of Employee’s employment with the
Bank, Summit FGI, or any other affiliate for any reason.  Employee separates
from service with the Bank, Summit FGI or any other affiliate if he dies,
retires, separates from service because of the Employee’s Disability, or
otherwise has a termination of employment with the the Bank, Summit FGI or any
other affiliate.  However, the employment relationship is treated as continuing
intact while Employee 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 Employee’s right to reemployment with the the Bank, Summit FGI or any
other affiliate is provided either by statute or by contract.  If the period of
leave exceeds six months and Employee’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 the employee to be unable to perform the
duties of his or her 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 Employment Agreement
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 Employee 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 Employment 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 Employee shall only be considered to
meet the requirements of a Separation from Service hereunder if such Employee
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 Employment Agreement which would otherwise apply;
 
 
 
 

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(iii) in any instance in which Employee is an employee and an independent
contractor of the Bank, Summit FGI or any other affiliate or any combination
thereof, Employee 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 an Employee provides services both as an
employee and a member of the Board of Directors of the Bank, Summit FGI or any
other affiliate or any combination thereof, the services provided as a director
are not taken into account in determining whether the Employee has had a
Separation from Service as an employee under this Employment Agreement, provided
that no plan in which such Employee 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.
 
2.           Special Rules.  The following special rules shall apply to this
Employment Agreement.
 
 
(a)
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 Employee under this Employment
Agreement shall be treated as having been made on a date specified in this
Employment Agreement if it is made on a later date within Employee’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, Employee is not permitted, directly or indirectly, to designate the
taxable year of any payment.

 
 
 
 

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(b)
Six-Month Delay.  Notwithstanding any other provisions of this Employment
Agreement, if Employee is a Specified Employee (within the meaning of Code
Section 409A) on Employee’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 Employee’s Separation from Service other than by death, under
any provision of this Employment Agreement, and such payment of deferred
compensation is to be made within six months after Employee’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 Employee
(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 Employee (other than by death)
shall be delayed, aggregated, and paid, notwithstanding any other provision of
this Employment Agreement, on the date which is six months after such Separation
from Service of Employee (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 Employment Agreement, no payment of
deferred compensation upon or based upon Separation from Service may be made
under this Employment Agreement before the date that is six months after the
date of Separation from Service or, if earlier, the date of death, if Employee
is a Specified Employee on Employee’s date of Separation from
Service.  This Paragraph 2(b) 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.

 
3.           Term.  The term of this Employment Agreement shall be for two (2)
years beginning on July 1, 2008, unless one of the parties terminates this
Employment Agreement as provided herein.  Absent termination by one of the
parties as provided in this Employment Agreement, the term of this Employment
Agreement shall automatically be extended for unlimited additional one (1) year
term(s), in which case any such term shall end one (1) year from the date on
which it is last renewed.
 
 
 
 

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4.           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 Bank as Charleston Area President.  Employee shall devote his
best efforts on a full-time basis to the performance of such duties.
 
5.           Compensation and Benefits.  During the term of this Employment
Agreement, including any extensions, the Bank agrees that Employee’s
compensation and benefits shall be as follows:
 
 
(a)
Base Salary and Signing Bonus.  Employee’s base salary as of the effective date
of this Employment Agreement is $185,000 per year.  Employee shall be considered
for salary increases on the basis of merit on an annual basis, with any future
increases subject to the sole discretion of the Bank.

 
 
(b)
Bonus.  In addition to the base salary provided for herein, Employee shall be
eligible for incentive-based bonuses subject to goals and criteria to be
determined by the Board of Directors of the Bank and/or Summit FGI; provided,
however, that any such plans, if required to be aggregated for Code Section 409A
purposes with this Agreement or any other agreement between Employee and Summit
FGI, Bank, or any affiliate, shall not cause this Agreement to violate Code
Section 409A or the regulations and guidance issued thereunder.

 
 
(c)
Paid Leave.  Employee shall be entitled to all paid leave as provided by the
Bank to other similarly-situated employees.

 
 
(d)
Fringe Benefits.  Except as specified below, the Bank shall afford to Employee
the benefit of all fringe benefits afforded to all other similarly-situated
employees of the Bank, including but not limited to retirement plans, stock
ownership or stock option plans, life insurance, disability, health and accident
insurance benefits or any other fringe benefit plan now existing or hereinafter
adopted by the Bank, subject to the terms and conditions thereof.  Provided,
that any such plans, if required to be aggregated for Code Section 409A purposes
with this Employment Agreement or any other agreement between Employee and
Summit FGI, Bank, or any affiliate, shall not cause this Agreement to violate
Code Section 409A or the regulations and guidance issued thereunder.

 
 
 
 

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(e)
Business Expenses.  The Bank shall reimburse Employee for reasonable expenses
incurred by Employee in carrying out his duties and responsibilities, all
provided such expense is incurred by Employee prior to Separation from Service,
including but not limited to reimbursing civic club organization dues, monthly
country club dues and reasonable expenses for customer entertainment.  The
reimbursement of an eligible expense shall be made by Bank no later than the
last day of Employee’s taxable year during which the expense was incurred, or if
later, the fifteenth day of the third month after such expense was incurred, and
Employee is required to request reimbursement and substantiate any such expense
no later than ten days prior to the last date on which Bank is required to
provide reimbursement for such expense hereunder.  The amount of expenses
eligible for reimbursement under this Paragraph 5(e) during Employee’s taxable
year shall not affect the expenses eligible for reimbursement in any other
taxable year.  The right to reimbursement under this Paragraph 5(e) is not
subject to liquidation or exchange for another benefit.  In addition, the right
to reimbursement of eligible expenses under this Paragraph 5(e) is subject to
the provisions of Paragraph 2(b) to the extent applicable.

 
6.           At-Will Employment.  This Employment Agreement does not alter the
fact that the employment of Employee may be terminated without cause by either
Employee or the Bank at any time.  Any such termination in and of itself shall
not be viewed as a breach of this Employment Agreement; rather, the Employee
shall be entitled to all of the benefits and be subject to all of the
obligations of this Employment Agreement according to its terms.
 
7.           Termination for Other than Good Cause.
 
 
(a)
If the Bank terminates Employee’s employment for other than Good Cause,
resulting in Employee’s Separation from Service, and Paragraph 9 of this
Employment Agreement does not apply, the Bank hereby agrees to pay Employee a
cash payment equal to one (1) year of Employee’s Salary, as severance, and said
cash payment shall be paid in a lump sum on the date of Employee’s Separation
from Service hereunder, subject to the provisions of Paragraph 2(b) to the
extent applicable.

 
 
 
 

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(b)
If the Bank terminates Employee’s employment for other than Good Cause,
resulting in Employee’s Separation from Service,  and Paragraph 9 of this
Employment Agreement does not apply, then for the period beginning on the date
of Employee’s Separation from Service hereunder and ending on the last date of
the term of this Agreement then in effect, Employee will be entitled to receive
his reasonable share of Summit FGI’s and/or the Bank’s cash bonuses earned as of
the last day of employment, if any, allocated in accordance with existing
policies and procedures and authorized by the Board of Directors of Summit FGI
and/or the Bank; any such bonus so paid to Employee hereunder for any quarter
shall be paid on the last day of the quarter to which such bonus relates,
subject to the provisions of Paragraph 2(b) to the extent applicable.  The
amount of Employee’s cash incentive award shall not be reduced due to Employee
not being actively employed for the full period.

 
 
(c)
The severance compensation set forth in this Paragraph 7 shall not be
duplicative of any compensation to which Employee may be entitled pursuant to
Paragraph 9 of this Employment Agreement.  In the event that Employee is
entitled to compensation pursuant to Paragraph 9 of this Employment Agreement,
this Paragraph 7 shall not apply.

 
8.           Termination for Good Cause.  Subject to the provisions of Paragraph
9 below, if Employee terminates his employment with the Bank for any reason or
the Bank terminates Employee’s employment for Good Cause, Employee shall not be
entitled to any compensation other than that which is earned and payable as of
the date of Separation from Service, which shall be paid to Employee in
accordance with normal  payroll procedures.
 
9.           Termination for Good Reason or Wrongful Termination.
 
 
(a)
Except as hereinafter provided, if Employee terminates his employment with the
Bank for Good Reason or the Bank terminates Employee’s employment in a manner
constituting Wrongful Termination, resulting in Employee’s Separation from
Service,  the Bank hereby agrees to pay Employee a cash payment equal to
Employee’s Salary, on a monthly basis, multiplied by the number of months
between the date of Separation from Service and the date that is twenty-four
(24) months after the earlier of (i) the date of Separation from Service
and (ii) the date of consummation of Change in Control; provided that in no
event shall Employee receive a lump sum payment that is less than 100% of his
annual base salary and said cash payment shall be paid in a lump sum on the date
of Employee’s Separation from Service hereunder, subject to the provisions of
Paragraph 2(b) to the extent applicable.

 
 
 
 

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(b)
If  Employee terminates his employment with the Bank for Good Reason or the Bank
terminates Employee’s employment in a manner constituting Wrongful Termination,
resulting in Employee’s Separation from Service, then for the period beginning
on the date of Employee’s Separation from Service hereunder and ending on the
last date of the term of this Employment Agreement then in effect, Employee will
be entitled to receive his reasonable share of Summit FGI’s and/or the Bank’s
cash bonuses earned as of the last day of employment, if any, allocated in
accordance with existing policies and procedures and authorized by the Board of
Directors of Summit FGI and/or the Bank; any such bonus so paid to Employee
hereunder for any quarter shall be paid on the last day of the quarter to which
such bonus relates, subject to the provisions of Paragraph 2(b) to the extent
applicable.  The amount of Employee’s cash incentive award shall not be reduced
due to Employee not being actively employed for the full period.

 
 
(c)
If compensation pursuant to Paragraph 9(a) is payable, Employee will continue to
participate, without discrimination, for the number of months between the date
of Separation from Service and the date that is twenty-four (24) months after
the date of the consummation of the Change of Control in (i) any medical
insurance plan maintained after any Change of Control for employees, in general,
of Summit FGI and/or the Bank and/or any successor organization(s), provided
Employee’s continued participation is possible under the general terms and
conditions of such plan, and provided that, notwithstanding any other provision
of this paragraph 9(c), such participation in such plan shall be limited to the
shorter of (a) the number of months between the date of Separation from Service
and the date that is twenty-four (24) months after the date of the consummation
of the Change of Control and (b) the period of time, if any, during which the
Employee would be entitled (or would but for this Agreement, be entitled) to
continuation coverage under a group health plan of Bank under Code Section 4980B
(sometimes referred to as “COBRA”) if the service provider elected such coverage
and paid the applicable premiums, and (ii) any disability insurance plan
maintained after any Change of Control for employees, in general, of Summit FGI
and/or the Bank and/or any successor organization(s), provided Employee’s
continued participation is possible under the general terms and conditions of
such plan.  In the event Employee’s participation in any such plan is barred,
Summit FGI and/or the Bank shall arrange to provide Employee with benefits
substantially similar to those which Employee would have been entitled had his
participation not been barred, but only for the respective periods of time
specified in the preceding sentence.  However, in no event will Employee receive
from Summit FGI and/or the Bank the employee benefits contemplated by this
section if Employee receives comparable benefits from any other source.  Also,
notwithstanding any other provisions of this Paragraph 9(c), (i) any expenses
eligible for reimbursement hereunder, or in-kind benefits provided during any
taxable year of Employee may not affect the expenses eligible for reimbursement,
or in-kind benefits to be provided in any other taxable year, (ii) the
reimbursement of an eligible expense under this Paragraph 9(c) must be made on
or before the last day of the Employee’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 9(c) shall be subject to liquidation or exchange
for any other benefit, and (iv) benefits provided under this Paragraph 9(c)
shall be subject to the provisions of Paragraph 2(b) to the extent applicable.

 
 
 
 

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(d)
The compensation set forth in this Paragraph 9 shall not be duplicative of any
compensation to which Employee may be entitled pursuant to Paragraph 7 of this
Employment Agreement.

 
10.           Other Employment.  Employee shall not be required to mitigate the
amount of any payment provided for in this Employment Agreement by seeking other
employment.  The amount of any payment provided for in this Employment Agreement
shall not be reduced by any compensation earned or benefits provided (except as
set forth in Paragraph 9(c) above) as the result of employment by another
employer after the date of termination.
 
11.           Rights of Summit FGI Prior to the Change of Control.  This
Employment Agreement shall not affect the right of Summit FGI or the Bank to
terminate Employee, or to reduce the salary or benefits of Employee, with or
without Good Cause, prior to any Change of Control; provided, however, any
termination resulting in Employee’s Separation from Service for any reason other
than at Employee’s option, Good Cause or the death, Disability or Retirement of
Employee that takes place before any Change of Control but after discussions
have commenced that result in a Change of Control shall be presumed to be a
Wrongful Termination, absent clear and convincing evidence to the contrary.
 
 
 
 

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12.           Noncompetition and Nonsolicitation.  In consideration of the
covenants set forth herein, including but not limited to the compensation set
forth in Paragraphs 5, 7 and 9 above, Employee agrees as follows:
 
 
(a)
For the entire duration of Employee’s employment with the Bank and/or Summit
FGI, and for two (2) years following the termination under Paragraphs 8 or 9 of
this Employment Agreement or for one (1) year following the termination under
Paragraph 7 of this Employment Agreement (the “Restricted Period”), Employee
shall not (i) within a seventy-five (75) mile radius of the Bank location in
which Employee worked directly or indirectly engage in any business or activity
of any nature whatsoever that is competitive with the business of the Bank
and/or Summit FGI or (ii) sell or solicit the sale of, any services related
thereto, directly or indirectly, to any of the Bank’s customers or clients
within the State of West Virginia, the Commonwealth of Virginia or any other
states in which the Bank and/or Summit FGI conduct such business or sells
services in the future.

 
 
(b)
Without limitation of the foregoing, during the Restricted Period Employee shall
not serve as a proprietor, partner, officer, director, stockholder, employee,
sales representative or consultant for any organization, company or business
entity of any type that engages in any business or activity of any nature
whatsoever, that engages in any activity described in Paragraph 12(a) above
provided however that this provision will not prohibit Employee from (i) owning
bonds, non-voting preferred stock or up to five percent (5%) of the outstanding
common stock of any such entity if such common stock is publicly traded, or
(ii) accepting a position with a nationally- recognized professional services
firm, provided that in such capacity, Employee does not render services,
directly or indirectly, to any client or customer of such firm that engages in
any business or activity described in Paragraph 12(a), above.

 
 
 
 

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(c)
Employee acknowledges and agrees that in the event of the breach or threatened
breach of this provision, the harm and damages that will be suffered by Summit
FGI and the Bank are not susceptible of calculation or determination with a
reasonable degree of certainty, and cannot be fully remedied by an award of
money damages or other remedy at law.  Employee further acknowledges and agrees
that considering Employee’s relevant background, education and experience,
Employee will be able to earn a livelihood without violating the foregoing
restrictions.  In addition to any and all other rights and remedies available to
Summit FGI and/or the Bank in the event of any threatened, actual or continuing
breach of this covenant not to compete, Employee consents to and acknowledges
Summit FGI and/or the Bank’s right and option to seek and obtain in any court of
competent jurisdiction a preliminary and/or permanent injunction in respect of
any threatened, actual or continuing breach of the covenant not to compete set
forth herein.

 
 
(d)
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 overly broad in any other respect or
for any other reason, then and in such event this Employment Agreement shall be
deemed modified and interpreted to extend over only such maximum period of time,
geographical area or range of activities, or otherwise, so as to render these
provisions valid and enforceable, and as so modified, these provisions shall be
enforceable and enforced.

 
 
(e)
The Paragraph 12 shall not apply in any respect to Employee in the event of the
consummation of a Change in Control unless Employee agrees otherwise in writing.

 
13.           Confidential Information.
 
 
(a)
Employee agrees not to use, publish or otherwise disclose (except as Employee’s
Bank duties may require), either during or at any time subsequent to his/her
employment, any secret, proprietary or confidential information or data of the
Bank and/or Summit FGI or any information or data of others that the Bank and/or
Summit FGI are obligated to maintain in confidence.  Employee understands that
the use, publication or other disclosure of such information may violate privacy
rights, as well as expose the Bank and/or Summit FGI to financial loss,
competitive disadvantage and/or embarrassment.  Employee also understands that
it is Employee’s duty to take adequate care to ensure that such secret,
proprietary or confidential information is not used, published or otherwise
disclosed by others.

 
 
 
 

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(b)
Employee also agrees upon any termination of his/her employment to deliver to
the Bank promptly all items that belong to the Bank and/or Summit FGI or that by
their nature are for the use of employees of the Bank and/or Summit FGI only,
including, without limitation, all written and other materials that are of a
secret, proprietary or confidential nature relating to the business of the Bank,
Summit FGI and/or Summit FGI’s affiliates.  All business developed and produced
by Employee while in the employ of Summit FGI and/or the Bank is the exclusive
property of Summit FGI and/or the Bank unless specifically excluded in this
Agreement.  Employee shall not, during the term of this Agreement or any time
thereafter, intentionally interfere with any business or contractual
relationship of Summit FGI and/or the Bank.

 
 
(c)
For purposes of this Employment Agreement, the terms “secret” or confidential”
are used in the ordinary sense and do not refer to official security
classifications of the United States Government.  Without limitation, examples
of materials, information and data that are considered to be of a secret or
confidential nature are for purposes of this Employment Agreement include but
are not limited to drawings, manuals, customer lists, notebooks, reports,
models, inventions, formulas, processes, machines, compositions, computer
programs, accounting methods, business plan, bonus programs and information
systems including such materials, information and data that are in
machine-readable form.

 
14.           No Prior Obligation:  Other than this Employment Agreement,
Employee represents that there are no agreements, covenants or arrangements,
whether written or oral, in effect which would prevent him from rendering
service to Summit FGI and/or the Bank during the term of this employment and he
has not made and will not make any commitments, become associated, either
directly or indirectly, in any manner, as partner, officer, director,
stockholder, advisor, employee or in any other capacity in any business or
organization, unless such activity complies with Summit FGI’s Code of
Ethics.  Employee expressly agrees to indemnify and hold harmless Summit FGI and
the Bank and their affiliates, and Summit FGI’s and the Bank’s and their
affiliates’ directors, officers and employees from any and all liability
resulting from or arising under the breach of this representation and
warranty.  This indemnification is in addition to and not in substitution of
rights Summit FGI and/or the Bank may have against Employee at common law or
otherwise.
 
 
 
 

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15.           Successors; Binding Agreement; Exclusive Remedy.
 
 
(a)
Summit FGI and/or the Bank will 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 Summit FGI and/or the Bank,
by agreement in form and substance satisfactory to Employee, to expressly assume
and agree to perform this Employment Agreement.

 
 
(b)
This Employment 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
Employment Agreement to Employee’s devisee, legatee, or other designee or, if
there be no such designee, to Employee’s estate.

 
 
(c)
This Employment Agreement shall represent the exclusive and only remedy of
Employee in the event a termination occurs after a Change in Control.  Summit
FGI, the Bank and Employee agree that it is impossible to determine with any
reasonable accuracy the amount of prospective damages to either party should
Employee be terminated or terminate his employment during the term of this
Employment Agreement.  Summit FGI, the Bank and Employee agree that the payment
provided herein is reasonable and not a penalty, based upon the facts and
circumstances of the parties at the time of entering this Employment Agreement,
and with due regard to future expectations.

 
16.           Arbitration.  Except for any dispute arising out of the
obligations set forth in Paragraph 12 of this Employment Agreement, any dispute
between the parties arising out of or with respect to this Employment Agreement
or any of its provisions or Employee’s employment with the Bank shall be
resolved by the sole and exclusive remedy of binding arbitration.  Unless
otherwise agreed by the parties, the arbitration shall be conducted in
Moorefield, West Virginia under the auspices of, and in accordance with the
rules of the American Arbitration Association.  Any decision issued by an
arbitrator in accordance with this provision shall be final and binding on the
parties thereto and not subject to appeal or civil litigation.
 
 
 
 

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17.           Notice.  For the purposes of this Employment Agreement, notices,
demands and other communications provided for in the Employment Agreement shall
be in writing and shall be deemed to have been duly given when delivered or
(unless otherwise specified) mailed by the United States registered mail, return
receipt requested, postage prepaid, addressed as follows:
 
If to Employee:  119 Cornwall Lane, Charleston, WV  25314

If to the Bank:  PO Box 680, Moorefield, WV  26836
 
If to Summit FGI:  PO Box 179, Moorefield, WV  26836
 
or such other address as any party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
 
18.           Miscellaneous.  No provisions of this Employment Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and authorized officers of Summit FGI
and the Bank, all provided that (i) no modification, waiver or discharge shall
be effective if it would, if effective, cause this Employment Agreement 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 modification, waiver or discharge, and (ii) the provisions of
this paragraph 18 are irrevocable.  No waiver by either party hereto at any time
of any breach by the other hereto of, or compliance with, any condition or
provisions of this Employment Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or any prior or subsequent time.
 
19.           Validity.  The invalidity or unenforceability of any provision or
provisions of this Employment Agreement shall not affect the validity or
enforceability of any other provisions of this Employment Agreement, which shall
remain in full force and effect.
 
 
 
 

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IN WITNESS WHEREOF, the parties have caused this Employment Agreement to be
signed as of the day and year first above written.
 
 
          SUMMIT COMMUNITY BANK, INC.
 
          By:    /s/ H. Charles Maddy, III                   

          Its:       Co-Chairman                                     

          SUMMIT FINANCIAL GROUP, INC.
 
          By:    /s/ H. Charles Maddy, III                  

          Its:     President                                             

                 /s/ Bradford E. Ritchie                             
          BRADFORD E. RITCHIE