execsalcont.htm


    
      

      

    



    Exhibit
10.5

    


    FORM
OF EXECUTIVE SALARY CONTINUATION AGREEMENT THAT SUPERSEDES AND REPLACES THE
EXECUTIVE SALARY CONTINUATION AGREEMENT

    EFFECTIVE
JANUARY 1, 2006

    


    THIS AGREEMENT, made and
entered into as of the 1st day of January, 2008, provided, however, that all
provisions applicable to compliance under Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) shall be effective as of January 1, 2005,
by and between Summit Financial Group, Inc., a corporation organized and
existing under the laws of the State of West Virginia (hereinafter referred to
as the “Company”), and _____________________, an Executive of the Company
(hereinafter referred to as the “Executive”).

    


    WHEREAS, the Company and the
Executive are currently parties to an Executive Salary Continuation Agreement
signed on July 19, 2007 and effective January 1, 2006 (which superseded and
replaced the original Agreement, an Executive Supplemental Retirement Plan
effective the 25th day
of January, 2002, and a subsequent amendment thereto), that provides for the
payment of certain benefits.  This Executive Salary Continuation
Agreement and the benefits provided hereunder shall supersede and replace the
existing Executive Salary Continuation Agreement and the benefits provided
thereby;

    


    WHEREAS, the Executive has
been and continues to be a valued Executive of the Company who is a member of a
select group of management or a highly-compensated employee of the
Company;

    


    WHEREAS, the purpose of this
Agreement is to further the growth and development of the Company by providing
the Executive with supplemental retirement income, and thereby encourage the
Executive’s productive efforts on behalf of the Company and the Company’s
shareholders, and to align the interests of the Executive and those
shareholders;

    


    WHEREAS, it is the desire of
the Company and the Executive to enter into this Agreement under which the
Company will agree to make certain payments to the Executive at retirement or
the Executive’s Beneficiary in the event of the Executive’s death pursuant to
this Agreement; and

    


    WHEREAS, the Company intends
this Agreement to comply with Final Regulations and Transition Relief
promulgated by the Internal Revenue Service pursuant to Code Section 409A, and
accordingly, notwithstanding any other provisions of this 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 such Transition Relief to not be treated as a change in the form
and timing of a payment under Code Section 409A(a)(4) or an acceleration of a
payment under Code Section 409A(a)(3), the Executive, by executing this
Agreement, shall be deemed to have elected the


    
      
         


      

      
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    form and
timing of distribution provisions of this Agreement, on or before December 31,
2008.

    


     

    ACCORDINGLY, it is intended
that the Agreement be “unfunded” for purposes of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) and not be construed to provide
income to the participant or beneficiary under the Code, particularly Section
409A of the Code and guidance or regulations issued thereunder, prior to actual
receipt of benefits; and

     

    THEREFORE, it is agreed as
follows:

    


     

    
      	
              I.

            	
              EFFECTIVE
      DATE

            


    

     

    Except as
otherwise provided herein, the Effective Date of this Agreement shall be January
1, 2008, provided,
however, that all provisions applicable to compliance under Code Section 409A
shall be effective as of January 1, 2005.

    


    II.           FRINGE
BENEFITS

     

    The
salary continuation benefits provided by this Agreement are granted by the
Company as a fringe benefit to the Executive and are not part of any salary
reduction plan or an arrangement deferring a bonus or a salary
increase.  The Executive has no option to take any current payment or
bonus in lieu of these salary continuation benefits except as set forth
hereinafter.

    


    III.           DEFINITIONS

     

    
      	
               
      

            	
              A.

            	
              Retirement
      Date:

            


    

    If the
Executive remains in the continuous employ of the Company until at least the
Executive’s Normal Retirement Age, (except as otherwise set forth in Paragraph
IX,) and provided that no determination of Disability of Executive, at any time
prior to Executive’s Normal Retirement Age, has been made, (regardless of any
return to active service of Executive subsequent to any such determination of
Disability,) the Executive’s Retirement Date shall be the date on which the
Executive attains the age of sixty-five (65) years or has a Separation from
Service, whichever is later.

    


    
      	
               
      

            	
              B.

            	
              Normal Retirement
      Age:

            


    

    Normal
Retirement Age shall mean the date on which the Executive attains age sixty-five
(65).

    


    C.           Plan
Year:

    Any
reference to “Plan Year” shall mean a calendar year from January 1 to December
31.  In the year of implementation, the term “Plan Year” shall mean
the period from the effective date to December 31 of the year of the effective
date.


    
      
         


      

      
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    D.           Termination of
Employment:

    Termination
of Employment shall mean voluntary resignation of employment by the Executive,
or the Company’s discharge of the Executive without cause (i.e., a discharge of the
Executive by the Company that does not satisfy the definition of discharge “for
cause” set forth in Subparagraph III [F]).

    


    E.           Separation from
Service:

    “Separation
from Service” shall mean that the Executive has experienced a Termination of
Employment from the Company.  However, the employment relationship is
treated as continuing intact while the Executive 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 the Executive’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 the
Executive’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 Executive 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:

    


    (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 of Employment or Separation from Service,

    


    (ii) in
any instance in which the Executive 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 Executive shall only be considered to
meet the requirements of a Separation from Service hereunder if such Executive
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,


    
      
         


      

      
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    (iii) in
any instance in which Executive is an employee and an independent contractor of
the Company or any Affiliate or both, the Executive 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 Executive
provides services both as an employee and a member of the Board of Directors of
the Company or any Affiliate or both or any combination thereof, the services
provided as a director are not taken into account in determining whether the
Executive has had a Separation from Service as an employee under this Agreement,
provided that no plan in which Executive 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.

    


    
      	
              F.  

            	
              Discharge for
      Cause:

            


    

    The term
“for cause” shall mean for the conviction of Executive for commission of a
felony against the Company or any Affiliate.  If a dispute arises as
to discharge “for cause,” such dispute shall be resolved by arbitration as set
forth in this Executive Plan.  In the alternative, if the Executive is
permitted to resign due to conviction of a felon as described above, the Board
of Directors may vote to deny all benefits.  A majority decision by
the Board of Directors is required for forfeiture of the Executive’s benefits
under the preceding sentence.

    


    
      	
              G.  

            	
              Change of
      Control:

            


    

     “Change
of Control” shall mean with respect to (i) the Company or an Affiliate for whom
the Executive 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 the
Executive 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 Executive for Company or such
corporation (or corporations) or there is a bona fide business purpose for
Company or such corporation or corporations to be liable for such payment and,
in either case, no significant purpose of making Company 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 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 by the
Internal Revenue Service thereunder, meeting the requirements of a “Change in
Control Event” thereunder.

     


    
      
         


      

      
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              H.

            	
              Restriction on Timing
      of Distribution:

            


    

    Notwithstanding
any provision of this Agreement to the contrary, distributions of deferred
compensation (within the meaning of Code Section 409A) under this Plan to the
Executive may not commence earlier than six (6) months after the date of a
Separation from Service if, pursuant to Code Section 409A and the regulations
and guidance thereunder, the Executive is considered a “specified employee” of
the Company if any stock of the Company or any parent thereof is publicly traded
on an established securities market or otherwise.  In the event a
distribution of deferred compensation under this Plan is delayed pursuant to
this paragraph, the originally scheduled payment shall be delayed until six
months after the date of Separation from Service and shall commence instead on
the first day of the seventh month following Separation from Service, as
follows:  if payments are scheduled under this Plan to be made in
installments, all such installment payments which would have otherwise been paid
within six (6) months after the date of a Separation from Service shall be
delayed, aggregated, and paid instead on the first day of the seventh month
after Separation from Service, after which all installment payments shall be
made on their regular schedule; if payment is scheduled under this Plan to be
made in a lump sum, the lump payment shall be delayed until six months after the
date of Separation from Service and instead be made on the first day of the
seventh month after the date of Separation from Service.  This
Subparagraph III [H] 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.

    


    
      	
               
      

            	
              I.

            	
              Beneficiary:

            


    

    The
Executive shall have the right to name a Beneficiary of any benefit payable
under this Agreement on the Executive’s death.  The Executive shall
have the right to name such Beneficiary at any time prior to the Executive’s
death and submit it to the Plan Administrator (or Plan Administrator’s
representative) on the form provided.  Once received and acknowledged
by the Plan Administrator, the form shall be effective.  The Executive
may change a Beneficiary designation at any time by submitting a new form to the
Plan Administrator.  Any such change shall follow the same rules as
for the original Beneficiary designation and shall automatically supersede the
existing Beneficiary form on file with the Plan Administrator.

    


    If the
Executive dies without a valid Beneficiary designation on file with the Plan
Administrator, death benefits shall be paid to the Executive’s
estate.

    


    If the
Plan Administrator determines in its discretion that a benefit is to be paid to
a minor, to a person declared incompetent, or to a person incapable of handling
the disposition of that person’s property, the Plan Administrator may direct
distribution of such benefit to the guardian, legal representative or person
having the care or custody of such minor, incompetent person or incapable
person.  The Plan Administrator may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Any distribution of a benefit shall be a distribution for
the account of the Executive and the


    
      
         


      

      
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    Beneficiary,
as the case may be, and shall be a complete discharge of any liability under the
Agreement for such distribution amount.

    


    
      	
               
      

            	
              J.

            	
              Disability:

            


    

    “Disability”
shall mean the Executive: (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or (ii) is, by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or has lasted or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three (3) months under an accident and
health plan covering employees of the Company.  Medical determination
of Disability may be made by either the Social Security Administration or by the
provider of an accident or health plan covering employees of the
Company.  Upon the request of the Plan Administrator, the Executive
must submit proof to the Plan Administrator of Social Security Administration’s
or the provider’s determination.  Notwithstanding any of the
foregoing, the term “Disability” shall be interpreted under this Agreement in a
manner consistent with the requirements of Code Section 409A and the regulations
and guidance thereunder.

    


    IV.           RETIREMENT
BENEFIT AND POST-RETIREMENT DEATH BENEFIT

     

    Upon
attainment of the Retirement Date, (as set forth in Subparagraph III [A,]
subject to the provisions of Paragraph IX,) the Company shall pay the Executive
an annual benefit equal to One Hundred Twenty Five Thousand ($125,000), the
“Retirement Benefit.”  Said Retirement Benefit shall be paid in equal
monthly installments (1/12th of the
annual benefit) until the death of the Executive.  Said payment shall
commence the first day of the month following (i) the date of such Separation
from Service, or (ii) if applicable, in accordance with the Restriction on
Timing of Distribution, whichever is later.  Upon the death of the
Executive after attainment of the Retirement Date, (as set forth in III [A,]
subject to the provisions of Paragraph IX,) if there is a balance in the accrued
liability retirement account, an amount equal to such balance shall be paid in a
lump sum to the Beneficiary.  Said payment due hereunder shall be made
the first day of the second month following the Executive’s death.

     

    V.           DEATH
BENEFIT PRIOR TO RETIREMENT

     

    In the
event the Executive should die while actively employed by the Company at any
time after the date of this Agreement but prior to the Executive’s Separation
from Service, and prior to any determination of Disability (as provided in
Paragraph X) the Company will pay an amount equal to the accrued balance on the
date of death of the Executive’s accrued liability retirement account in a lump
sum to the Beneficiary.  Said payment due hereunder shall be made the
first day of the second month following the Executive’s death.


    
      
         


      

      
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    VI.           BENEFIT
ACCOUNTING/ACCRUED LIABILITY RETIREMENT ACCOUNT

     

    Notwithstanding
any provision herein to the contrary, the provisions of this Paragraph VI, shall
be effective beginning January 1, 2006.  Prior to the date on which
Executive attains Executive’s Normal Retirement Age, and during the time that
Executive continues in the employment of Company, (or after Separation from
Service but before Executive has attained Normal Retirement Age if a Change in
Control has occurred and Executive has thereafter had a Separation from Service
as set forth in Paragraph IX,) and provided this Agreement is in effect, the
Company shall account for this benefit using Generally Accepted Accounting
Principles (“GAAP”).  Prior to the date on which Executive attains
Executive’s Normal Retirement Age and during the time that Executive continues
in the employment of Company, and prior to any determination of Disability of
Executive prior to Executive attaining Normal Retirement Age, (or after
Separation from Service but before Executive has attained Executive’s Normal
Retirement Age if a Change in Control has occurred and Executive has had a
Separation from Service as set forth in Paragraph IX) and provided this
Agreement is in effect, the Company shall establish an accrued liability
retirement account for the Executive into which appropriate reserves shall be
accrued sufficient so that if the account were increased ratably each year prior
to Executive attaining Normal Retirement Age and during which Executive
continued in the employment of Company (or after Separation from Service but
before Executive has attained Executive’s Normal Retirement Age if a Change in
Control has occurred and Executive has had a Separation from Service as set
forth in Paragraph IX) and using a compound interest rate as set forth in
Schedule A attached hereto and incorporated herein by reference (provided,
however, that such interest rate set forth on Schedule A may be changed, for
purposes of the calculation of the accrued liability retirement account
hereunder, by the Compensation Committee of Company at any time and from time to
time but only in good faith and in a manner that the Compensation Committee of
the Company reasonably determines to be consistent with industry standards at
the time of such change of interest rate herein), sufficient funds would be
available to pay the Retirement Benefit to Executive, still assuming a compound
interest rate as set forth on Schedule A (again provided, however, as stated
above, that such interest rate may be changed, for purposes of the calculation
of the accrued liability retirement account hereunder, by the Compensation
Committee of the Company at any time and from time to time but only in good
faith and in a manner that the Compensation Committee of the Company reasonably
determines to be consistent with industry standards at the time of such change
of interest rate herein,) for the life expectancy of Executive, based upon the
United States Life Insurance Company mortality tables (or tables of a
reasonably comparable life insurance company if such mortality tables are no
longer available) in effect from time to time as such accruals are
made.

     

    The
accrued liability retirement account established hereunder shall be for
accounting and bookkeeping purposes only, and is not, nor shall be construed to
be, an account or trust for the benefit of the Executive.  Once
payments to Executive commence pursuant to Paragraphs IV, VIII, or IX, such
payments shall be applied so as to reduce the balance 

     

    
      
        
           


        

        
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    in the
accrued liability retirement account for purposes of any payout of an amount
equal to the
remaining balance thereof under said Paragraphs.

     

    VII.           VESTING

     

    The
Executive shall be fully vested in the Retirement Benefit for purposes of any
payments to Executive pursuant to Paragraphs IV or IX hereunder.  For
all other purposes, the Executive shall vest in the Retirement Benefit in
accordance with the following schedule from the Effective Date of the original
Agreement.

    


     

    


      
        
          
            
              
                
                  	
                          Total
      Years of Employment

                          with
      the Company from

                          Effective
      Date of

                          Original Agreement
(1/25/02)

                        	
                           

                           

                          
                            Vested (to a maximum of
      100%)

                          

                        
	
                          1

                        	
                          5%

                        
	
                          2

                        	
                          10%

                        
	
                          3

                        	
                          15%

                        
	
                          4

                        	
                          20%

                        
	
                          5

                        	
                          25%

                        
	
                          6

                        	
                          30%

                        
	
                          7

                        	
                          35%

                        
	
                          8

                        	
                          40%

                        
	
                          9

                        	
                          45%

                        
	
                          10

                        	
                          50%

                        
	
                          11

                        	
                          50%

                        
	
                          12

                        	
                          50%

                        
	
                          13

                        	
                          50%

                        
	
                          14

                        	
                          50%

                        
	
                          15

                        	
                          50%

                        
	
                          16

                        	
                          50%

                        
	
                          17

                        	
                          50%

                        
	
                          18

                        	
                          50%

                        
	
                          19

                        	
                          50%

                        
	
                          20
      or more

                        	
                          100%

                        


                

              

            

          

        

      

    

    
 

    VIII.                      BENEFIT
UPON SEPARATION FROM SERVICE PRIOR TO RETIREMENT

     

    A.           Resignation of Employee or
Discharge Without Cause:

     

    Subject
to the provisions of Paragraph IX, (and no payment shall be made under this
Paragraph VIII if the provisions of Paragraph IX are applicable,) in the event
that the Executive shall incur a Separation from Service prior to Normal
Retirement Age, and prior to any determination of Disability, then the Company
shall pay to the Executive an annual benefit equal to the vested percentage of
the Retirement Benefit, as provided in Paragraph IV (the “Vested
Benefit”).  Said Vested Benefit shall be paid in equal monthly
installments (1/12th of the annual 

     

    
      
        
           


        

        
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    Vested
Benefit) commencing the first day of the month following (i) the date of
attainment
of Normal Retirement Age or (ii) if applicable, in accordance with the
Restriction on Timing of Distribution, whichever is later, until the death of
the Executive.

     

    Upon the
death of the Executive after commencement of payments provided for in this
paragraph, if there is a balance remaining in the accrued liability retirement
account, an amount equal to such balance shall be paid in a lump sum to the
Beneficiary.  Said payment due hereunder shall be made the first day
of the second month following the Executive’s death.

     

    In the
event the Executive’s death should occur after Separation from Service under
this Section VIII but prior to the commencement of payments provided for in this
paragraph, an amount equal to the balance in the accrued liability retirement
account shall be paid in a lump sum to the Beneficiary.  Said payment
due hereunder shall be made the first day of the second month following the
decease of the Executive.

     

    B.           Discharge For Cause or Upon
Vote to Deny All Benefits:

    


    In the
event the Executive shall be discharged for cause at any time, or should the
Board vote to deny all benefits following a discharge for cause as set forth in
Subparagraph III [F], this Agreement shall terminate and all benefits provided
herein shall be forfeited.

     

    


    IX.           CHANGE
OF CONTROL

     

    If the
Executive suffers a Separation from Service prior to attaining Normal Retirement
Age and within two years after a Change of Control (provided that there has been
no determination of Disability prior to such Separation from Service), then the
Executive shall receive the Retirement Benefit described in Paragraph IV as if
the Executive had been continuously employed by the Company until the
Executive’s Normal Retirement Age, except that payments under this
Paragraph IX shall be paid in equal monthly installments commencing the first
day of the month following (i) the date of attainment of Normal Retirement Age
or (ii) if applicable, in accordance with the Restriction on Timing of
Distribution, whichever is later, until the death of the
Executive.  The Executive will also remain eligible for all promised
death benefits in this Agreement.  In addition, no sale, merger or
consolidation of the Company shall take place unless the new or surviving entity
expressly acknowledges the obligations under this Agreement and agrees to abide
by its terms.

    


    X.   DISABILITY

     

           In the
event that a determination of Disability is made respecting the Executive,
during any period of employment prior to Executive attaining Normal Retirement
Age (and the 

     

    
      
         


      

      
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                Executive,
      notwithstanding any other provision of this Agreement, including but not
      limited to any provision of Subparagraph III [J,] shall not be
      considered disabled for purposes of this Paragraph X if the Executive has
      had a Separation from Service prior to such Disability, without returning
      to active employment with the Company and being actively employed with the
      Company at the time of such Disability, even if such Separation of Service
      has taken place after a Change in Control and Executive, although no
      longer employed by Company, may be eligible for a Retirement Benefit
      pursuant to Paragraph IX or otherwise), the Company shall establish an
      account (hereinafter sometimes referred to as the “Disability Account”) in
      an amount equal to the balance as of the date of Disability of Executive
      of the accrued
      liability retirement account established on the Executive’s behalf
      pursuant to this Agreement, (provided that the Company shall be required
      to do so only once for each Executive, and with
      respect to an Executive who has a determination of Disability prior to
      Normal Retirement Age and who returns to active employment with the
      Company and a subsequent determination of Disability, also prior to Normal
      Retirement Age, is made respecting the Executive, the Company shall not be
      required to establish a Disability Account other than any Disability
      Account established upon the first determination of Disability of the
      Executive.)  Interest at a rate equivalent to the Moody’s
      Seasoned Baa Corporate Bond Yield per annum then in effect (or if no such
      rate is then published or in effect, then at the rate equivalent to the
      yield of reasonably comparable instruments selected by the Compensation
      Committee of the Company) shall be accrued and added to the Disability
      Account and distributions subtracted
      therefrom until complete distribution hereunder.  Upon Executive
      attaining Normal Retirement Age after a determination of Disability, the
      Company shall distribute to the Executive, (commencing on the first day of
      the month following the date the Executive attains the Executive’s Normal
      Retirement Age, and subject to the ‘Restriction on Timing of Distribution’
      as defined in this Agreement,) an amount equal to the balance in the
      Disability Account of Executive in One Hundred Twenty (120) equal monthly
      installments.  In the event of the death of Executive after a
      determination of Disability and regardless of whether Executive has
      attained Normal Retirement Age, any portion of any Disability Account of
      Executive not yet distributed to Executive hereunder shall be distributed
      in a lump sum to the Beneficiary.  Said payment due hereunder
      shall be made the first day of the second month following the Executive’s
      death.  After a determination of Disability prior to Executive’s
      Normal Retirement Age, no other benefits than those set forth in this
      Paragraph X will be owed or payable to the Executive or any Beneficiary
      under this Agreement under any circumstances, including but not limited
      to, during the period of Disability, upon death, upon attaining Normal
      Retirement Age or Retirement Date, or in the event of any subsequent
      return to active service or subsequent period of
      Disability.  The Disability Account established hereunder shall
      be for accounting and bookkeeping purposes only, and is not, nor shall be
      construed to be, an account or trust for the benefit of the
      Executive.  Once payments to Executive commence pursuant to this
      Paragraph X, such payments shall be applied so as to reduce the balance in
      the Disability Account for purposes of any payout of an amount equal to
      the remaining balance
thereof.

              

            


    

    


    
      	
               XI.

            	
              RESTRICTION
      UPON FUNDING

            


    

     

    
      	
               
      

            	
              The
      Company shall have no obligation to set aside, earmark or entrust any fund
      or 

            


    


    
      
         


      

      
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              money
      with which to pay its obligations under this Executive
      Plan.  The Executive, their beneficiary(ies), or any successor
      in interest shall be and remain simply a general creditor of the Company
      in the same manner as any other creditor having a general claim for
      matured and unpaid compensation.

            


    

    


    The
Company reserves the absolute right, at its sole discretion, to either fund the
obligations undertaken by this Executive Plan or to refrain from funding the
same and to determine the extent, nature and method of such
funding.  Should the Company elect to fund this Executive Plan, in
whole or in part, through the purchase of life insurance, mutual funds,
disability policies or annuities, the Company reserves the absolute right, in
its sole discretion, to terminate such funding at any time, in whole or in
part.  At no time shall any Executive be deemed to have any lien,
right, title or interest in any specific funding investment or assets of the
Company.

    


    If the
Company elects to invest in a life insurance, disability or annuity policy on
the life of the Executive, then the Executive shall assist the Company by freely
submitting to a physical exam and supplying such additional information
necessary to obtain such insurance or annuities.

     

    XII.         
MISCELLANEOUS

     

    
      	
               
      

            	
              A.

            	
              Alienability and
      Assignment Prohibition:

            


    

    


    Neither
the Executive, nor the Executive’s surviving spouse, nor any other
beneficiary(ies) under this Executive Plan shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, commute, modify or
otherwise encumber in advance any of the benefits payable hereunder nor shall
any of said benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance owed by the Executive or the
Executive’s beneficiary(ies), nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise.  In the event the
Executive or any beneficiary attempts assignment, commutation, hypothecation,
transfer or disposal of the benefits hereunder, the Company’s liabilities shall
forthwith cease and terminate.

    


    
      	
               
      

            	
              B.

            	
              Binding Obligation of
      the Company and any Successor in
  Interest:

            


    

     

    The
Company shall not merge or consolidate into or with another corporation, firm,
bank or person or sell substantially all of its assets to another corporation,
bank, firm or person until such corporation, bank, firm or person expressly
agree, in writing, to assume and discharge the duties and obligations of the
Company under this Executive Plan.  This Executive Plan shall be
binding upon the parties hereto, their successors, beneficiaries, heirs and
personal representatives.

     

    
      	
               
      

            	
              C.

            	
              Amendment or
      Revocation:

            


    

    


    It is
agreed by and between the parties hereto that, during the lifetime of the



    
      
         


      

      
        11

        
          

        

      

      
         


      

    


    Executive,
this Agreement may be amended or revoked at any time or times, in whole or in
part, by the mutual written consent of the Executive and the
Company.  Any such amendment shall not be effective to decrease or
restrict any Executive’s accrued benefit under this Agreement, determined as of
the date of amendment, unless agreed to in writing by the Executive, and
provided further, no amendment shall be made, or if made, shall be effective, if
such amendment would cause the Agreement to violate Code Section
409A.  In the event this Agreement is terminated, such termination
shall not cause acceleration of a distribution of benefits, except under limited
circumstances as permitted under Code Section 409A and the regulations and
guidance issued thereunder (e.g., 30 days before or 12
months after a Change of Control event, upon termination of all arrangements of
the same type, or upon corporate dissolution or bankruptcy).

    


    
      	
               
      

            	
              D.

            	
              Gender:

            


    

    


    Whenever
in this Executive Plan words are used in the masculine or neuter gender, they
shall be read and construed as in the masculine, feminine or neuter gender,
whenever they should so apply.

    


    
      	
               
      

            	
              E.

            	
              Headings:

            


    

    


    Headings
and subheadings in this Executive Plan are inserted for reference and
convenience only and shall not be deemed a part of this Executive
Plan.

    


    
      	
               
      

            	
              F.

            	
              Applicable
      Law:

            


    

    


    The laws
of the State of West Virginia shall govern the validity and interpretation of
this Agreement.

    


    
      	
               
      

            	
              G.

            	
              Partial
      Invalidity:

            


    

    


    If any
term, provision, covenant, or condition of this Executive Plan is determined by
an arbitrator or a court, as the case may be, to be invalid, void, or
unenforceable, such determination shall not render any other term, provision,
covenant, or condition invalid, void, or unenforceable, and the Executive Plan
shall remain in full force and effect notwithstanding such partial
invalidity.

    


    
      	
               
      

            	
              H.

            	
              Not a Contract of
      Employment:

            


    

    


    This
Agreement shall not be deemed to constitute a contract of employment between the
parties hereto, nor shall any provision hereof restrict the right of the Company
to discharge the Executive, or restrict the right of the Executive to terminate
employment.

    



    
      
         


      

      
        12

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              I.

            	
              Tax
      Withholding:

            


    

    


    The
Company shall withhold any taxes that are required to be withheld, under
federal, state or local tax laws, including without limitation under Section
409A of the Code and regulations thereunder, from the benefits provided under
this Agreement.  The Executive acknowledges that the Company’s sole
liability regarding taxes is to forward any amounts withheld to the appropriate
taxing authority(ies).

    


    
      	
               
      

            	
              J.

            	
              Opportunity to Consult
      with Independent Advisors:

            


    

    


    The
Executive acknowledges that he has been afforded the opportunity to consult with
independent advisors of his choosing including, without limitation, accountants
or tax advisors and counsel regarding both the benefits granted to him under the
terms of this Agreement and the:  (i) terms and conditions which may
affect the Executive’s right to these benefits; and (ii) personal tax effects of
such benefits including, without limitation, the effects of any federal or state
taxes, Section 280G of the Code, Section 409A of the Code and guidance or
regulations thereunder, and any other taxes, costs, expenses or liabilities
whatsoever related to such benefits, which in any of the foregoing instances the
Executive acknowledges and agrees shall be the sole responsibility of the
Executive notwithstanding any other term or provision of this
Agreement.  The Executive further acknowledges and agrees that the
Company shall have no liability whatsoever related to any such personal tax
effects or other personal costs, expenses, or liabilities applicable to the
Executive and further specifically waives any right for himself or herself, and
his or her heirs, beneficiaries, legal representative, agents, successor and
assign to claim or assert liability on the part of the Company related to the
matters described above in this paragraph.  The Executive further
acknowledges that he has read, understands and consents to all of the terms and
conditions of this Agreement, and that he enters into this Agreement with a full
understanding of its terms and conditions.

    


    
      	
               
      

            	
              K.

            	
              Permissible
      Acceleration Provision:

            


    

    


    Under
Code Section 409A(a)(3), a payment of deferred compensation may not be
accelerated except as provided in regulations by the Code.  Certain
permissible payment accelerations include payments necessary to comply with a
domestic relations order, payments necessary to comply with certain conflict of
interest rules, payments intended to pay employment taxes, and certain de
minimis payments related to the Executive’s termination of the Executive’s
interest in the plan.  Any permissible payment accelerations under
this Agreement shall be at the discretion of Company and shall be consistent
with the requirements of Code Section 409A and the regulations and guidance
issued thereunder.

    


    



    
      
         


      

      
        13

        
          

        

      

      
         


      

    


           
L.           Supersede and Replace Entire
Agreement:

    


    This
Agreement shall supersede the Executive Salary Continuation Agreement signed on
July 19, 2007 and effective January 1, 2006 (which superseded and replaced the
original Agreement, an Executive Supplemental Retirement Plan effective January
25, 2002) and shall replace the entire Agreement of the parties pertaining to
this particular Executive Salary Continuation Agreement.

    


    


    
      	
              XIII.  

            	
              ADMINISTRATIVE
      AND CLAIMS PROVISION

            


    

     

    
      	
               
      

            	
              A.

            	
              Plan
      Administrator:

            


    

    


    The “Plan
Administrator” of this Executive Plan shall be Summit Financial
Group.  As Plan Administrator, the Company shall be responsible for
the management, control and administration of the Executive Plan.  The
Plan Administrator may delegate to others certain aspects of the management and
operation responsibilities of the Executive Plan including the employment of
advisors and the delegation of ministerial duties to qualified
individuals.

     

    B.           Claims
Procedure:

    


    a.           Filing a Claim for
Benefits:

    


    Any
insured, beneficiary, or other individual, (“Claimant”) entitled to benefits
under this Executive Plan will file a claim request with the Plan
Administrator.  The Plan Administrator will, upon written request of a
Claimant, make available copies of all forms and instructions necessary to file
a claim for benefits or advise the Claimant where such forms and instructions
may be obtained.  If the claim relates to disability benefits, then
the Plan Administrator shall designate a sub-committee to conduct the initial
review of the claim (and applicable references below to the Plan Administrator
shall mean such sub-committee).

    


    
      	
               
      

            	
              b.

            	
              Denial of
      Claim:

            


    

    


    
      	
               
      

            	
              A
      claim for benefits under this Executive Plan will be denied if the Company
      determines that the Claimant is not entitled to receive benefits under the
      Executive Plan.  Notice of a denial shall be furnished the
      Claimant within a reasonable period of time after receipt of the claim for
      benefits by the Plan Administrator.  This time period shall not
      exceed more than ninety (90) days after the receipt of the properly
      submitted claim.  In the event that the claim for benefits
      pertains to disability, the Plan Administrator shall provide written
      notice within forty-five (45) days.  However, if the Plan
      Administrator determines, in its discretion, that an extension of time for
      processing the claim is required, such extension
  shall

            


    


    
      
         


      

      
        14

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              not
      exceed an additional ninety (90) days.  In the case of a claim
      for disability benefits, the forty-five (45) day review period may be
      extended for up to thirty (30) days if necessary due to circumstances
      beyond the Plan Administrator’s control, and for an additional thirty (30)
      days, if necessary.  Any extension notice shall indicate the
      special circumstances requiring an extension of time and the date by which
      the Plan Administrator expects to render the determination on
      review.

            


    

    


    
      	
               
      

            	
              c.

            	
              Content of
      Notice:

            


    

    


    
      	
               
      

            	
              The
      Plan Administrator shall provide written notice to every Claimant who is
      denied a claim for benefits which notice shall set forth the
      following:

            


    

    


    
      	
               
      

            	
              (i.)

            	
              The
      specific reason or reasons for the
denial;

            


    

    


    
      	
               
      

            	
              (ii.)

            	
              Specific
      reference to pertinent Executive Plan provisions on which the denial is
      based;

            


    

    


    
      	
               
      

            	
              (iii.)

            	
              A
      description of any additional material or information necessary for the
      Claimant to perfect the claim, and any explanation of why such material or
      information is necessary; and

            


    

    


    
      	
               
      

            	
              (iv.)

            	
              Any
      other information required by applicable regulations, including with
      respect to disability benefits.

            


    

    


    
      	
               
      

            	
              d.

            	
              Review
      Procedure:

            


    

    


    
      	
               
      

            	
              The
      purpose of the Review Procedure is to provide a method by which a Claimant
      may have a reasonable opportunity to appeal a denial of a claim to the
      Plan Administrator for a full and fair review.  The Claimant, or
      his duly authorized representative,
may:

            


    

    


    
      	
               
      

            	
              (i.)

            	
              Request
      a review upon written application to the Plan Administrator. Application
      for review must be made within sixty (60) days of receipt of written
      notice of denial of claim.  If the denial of claim pertains to
      disability, application for review must be made within one hundred eighty
      (180) days of receipt of written notice of the denial of
      claim;

            


    

    


    
      	
               
      

            	
              (ii.)

            	
              Review
      and copy (free of charge) pertinent Executive Plan documents, records and
      other information relevant to the Claimant’s claim for
      benefits;

            


    

    


    
      	
               
      

            	
              (iii.)

            	
              Submit
      issues and concerns in writing, as well as documents, records, and other
      information relating to the
claim.

            


    


    
      
         


      

      
        15

        
          

        

      

      
         


      

    


    


    
      	
               
      

            	
              e.

            	
              Decision on
      Review:

            


    

    


    
      	
               
      

            	
              A
      decision on review of a denied claim shall be made in thefollowing
      manner:

            


    

    


    
      	
               
      

            	
              (i.)

            	
              The
      Plan Administrator may, in its sole discretion, hold a hearing on the
      denied claim.  If the Claimant’s initial claim is for disability
      benefits, any review of a denied claim shall be made by members of the
      Plan Administrator other than the original decision maker(s) and such
      person(s) shall not be a subordinate of the original decision
      maker(s).  The decision on review shall be made promptly, but
      generally not later than sixty (60) days after receipt of the application
      for review.  In the event that the denied claim pertains to
      disability, such decision shall not be made later than forty-five (45)
      days after receipt of the application for review.  If the Plan
      Administrator determines that an extension of time for processing is
      required, written notice of the extension shall be furnished to the
      Claimant prior to the termination of the initial sixty (60) day
      period.  In no event shall the extension exceed a period of
      sixty (60) days from the end of the initial period.  In the
      event the denied claim pertains to disability, written notice of such
      extension shall be furnished to the Claimant prior to the termination of
      the initial forty-five (45) day period.  In no event shall the
      extension exceed a period of thirty (30) days from the end of the initial
      period.  The extension notice shall indicate the special
      circumstances requiring an extension of time and the date by which the
      Plan Administrator expects to render the determination on
      review.

            


    

    


    
      	
               
      

            	
              (ii.)

            	
              The
      decision on review shall be in writing and shall include specific reasons
      for the decision written in an understandable manner with specific
      references to the pertinent Executive Plan provisions upon which the
      decision is based.

            


    

    


    
      	
               
      

            	
              (iii.)

            	
              The
      review will take into account all comments, documents, records and other
      information submitted by the Claimant relating to the claim without regard
      to whether such information was submitted or considered in the initial
      benefit determination.  Additional considerations shall be
      required in the case of a claim for disability benefits.  For
      example, the claim will be reviewed without deference to the initial
      adverse benefits determination and, if the initial adverse benefit
      determination was based in whole or in part on a medical judgment, the
      Plan Administrator will consult with a health care professional with
      appropriate training and experience in the field of medicine involving the
      medical

            


    


    
      
         


      

      
        16

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              judgment.  The
      health care professional who is consulted on appeal will not be the same
      individual who was consulted during the initial determination or the
      subordinate of such individual.  If the Plan Administrator
      obtained the advice of medical or vocational experts in making the initial
      adverse benefits determination (regardless of whether the advice was
      relied upon), the Plan Administrator will identify such
      experts.

            


    

    


    
      	
               
      

            	
              (iv.)

            	
              The
      decision on review will include a statement that the Claimant is entitled
      to receive, upon request and free of charge, reasonable access to, and
      copies of, all documents, records or other information relevant to the
      Claimant’s claim for benefits.

            


    

    


    
      	
               
      

            	
               f.

            	
              Exhaustion of
      Remedies:

            


    

    


    
      	
               
      

            	
              A
      Claimant must follow the claims review procedures under this Executive
      Plan and exhaust his or her administrative remedies before taking any
      further action with respect to a claim for
  benefits.

            


    

    


    
      	
                            
       C.     

            	
              Arbitration:

            


    

    


    If
claimants continue to dispute the benefit denial based upon completed
performance of this Executive Plan or the meaning and effect of the terms and
conditions thereof, then claimants may submit the dispute to an Arbitrator in
West Virginia for final arbitration.  The Arbitrator shall be selected
by mutual agreement of the Company and the claimants.  The Arbitrator
shall operate under the rules then in effect of the American Arbitration
Association.  The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the decision
of such Arbitrator with respect to any controversy properly submitted to it for
determination.

    


    Where a
dispute arises as to the Company’s discharge of the Executive “for cause,” such
dispute shall likewise be submitted to arbitration as above described and the
parties hereto agree to be bound by the decision thereunder.

     

    XIV.         TERMINATION
OR MODIFICATION OF AGREEMENT BY REASON OFCHANGES IN THE LAW, RULES OR
REGULATIONS

     

    The
Company is entering into this Agreement upon the assumption that certain
existing tax laws, rules and regulations will continue in effect in their
current form.  If any said assumptions should change and said change
has a detrimental effect on this Executive Plan, then the Company reserves the
right to terminate or modify this Agreement accordingly, but only to the extent
necessary to conform this Agreement to the provisions and requirements of any
applicable law (including ERISA and the Code, including, but not limited to
Section 409A of the Code and regulations thereunder).


    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    Upon a
Change of Control, the provisions of Paragraph IX respecting assumption of the
obligations of this Agreement by the successor entity shall apply.

     

     

        IN WITNESS
WHEREOF, the parties hereto acknowledge that each has carefully read this
Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming
copy.

     

    SUMMIT
FINANCIAL GROUP, INC.

                                   Moorefield,
West Virginia

    


    


    /s/ Teresa D.
Ely                                                                                       By: /s/ H. Charles Maddy,
III               
President

    Witness                                                                                               (Company Officer
other than Insured)    Title

    


    


    


    ______________________                                            _______________________  

               
WITNESS                                                                                                             
  EMPLOYEE

        

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    SCHEDULE
A

     

    to

    EXECUTIVE
SALARY CONTINUATION AGREEMENT

    BETWEEN
SUMMIT FINANCIAL GROUP INC.

    AND
_____________________________

     

    


    This Schedule A to the Executive Salary
Continuation Agreement between Summit Financial Group, Inc. and
________________________ sets forth the rate of interest under Section VI of the
Agreement for purposes of determining the accrued liability reserve and is
incorporated as a part of the Agreement.  This Schedule A is effective
January 1, 2006, and shall remain in effect unless amended or revised according
to the provisions set forth in Section VI of the Agreement.

    


                                                            Interest
Rate                                           6.28%

    

 

    19