dramendempagt.htm


     

     

    
      

      

    

    
 

    Exhibit
10.7

     

    AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

     

    THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) made in duplicate
originals this _22nd_ day of _December_, 2008, and
effective as of July 1, 2004 (unless specifically stated otherwise), is between
SUMMIT FINANCIAL GROUP, INC. (“Summit”), SUMMIT COMMUNITY BANK, INC., successor
in interest to Capital State Bank, Inc., (the “Company”), and C. DAVID ROBERTSON
(“Employee”).

     

    WHEREAS,
the Company offers the terms and conditions of employment hereinafter set forth
and the Employee has indicated his willingness to accept such terms and
conditions in consideration of his employment with the Company;

     

    WHEREAS,
Employee, Summit and Company executed an amended and restated employment
agreement on May 6, 2004, effective July 1, 2004;

     

    WHEREAS,
under Paragraph 15 said amended and restated employment agreement may be amended
by a writing signed by all the parties hereto; and

     

    WHEREAS,
the parties hereto, in the interests of clarity and for other reasons stated
herein, and for the purpose of complying with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), wish to amend and
restate this Agreement, provided that all provisions applicable
to compliance under Code Section 409A shall be effective as of January 1, 2005,
and provided further that, notwithstanding any other provisions of this amended
and restated Agreement, this amendment applies only to amounts that would not
otherwise be payable in 2006, 2007 or 2008 and shall not cause (i) an amount to
be paid in 2006 that would not otherwise be payable in such year, (ii) an amount
to be paid in 2007 that would not otherwise be payable in such year, and (iii)
an amount to be paid in 2008 that would not otherwise be payable in such year,
and to the extent necessary to qualify under Transition Relief issued under said
Code Section 409A to not be treated as a change in the form and timing of a
payment under section 409A(a)(4) or an acceleration of a payment under section
409A(a)(3), Employee, by executing this Agreement, shall be deemed to have
elected the timing and form of

     


    
      
         


      

      
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distribution
provisions of this amended and restated Agreement, and to otherwise further
revise the Agreement all on or before December 31, 2008.

     

    NOW,
THEREFORE, in consideration of the mutual promises and covenants made in this
Amended and Restated Agreement, the parties agree as follows:

     

    1.           Employment.  The Company
hereby employs Employee and Employee hereby accepts employment with the Company
as President and Chief Executive Officer of the Company and member of the Board
of Directors of the Company upon the terms and conditions set forth herein
effective July 1, 2004, or such earlier date as the parties may mutually agree,
and as Executive Officer of the Company and Co-Chairman of the Board of
Directors of the Company effective June 20, 2007.

     

    2.           Term.  The term of this
Amended and Restated Agreement shall be for five (5) years from the original
effective date of July 1, 2004, unless one of the parties terminates this
Amended and Restated Agreement as provided herein.  Upon termination
of the original term of the Agreement, the Board of Directors of the Company
shall review the Agreement at least annually, and may, with the consent of the
Employee, extend this term of employment for additional one (1) year term(s), in
which case such term shall end one (1) year from the date on which it is last
renewed.

     

    3.           Duties.  Employee shall
perform and have all of the duties and responsibilities that may be assigned to
him from time to time by the Board of Directors of the
Company.  Employee shall devote his best efforts on a full-time basis
to the performance of such duties.

     

    4.           Compensation
and Benefits.  During the term
of employment, the Company agrees to pay Employee a base salary and to provide
benefits as set forth in Exhibit A, which is attached hereto and incorporated
herein by reference.

     

    5.           Termination
by the Company or Employee.  The employment of
Employee with the Company may be terminated by any one of the following means,
in which case Employee shall be entitled to such compensation as is described
below:

     


    
      
         


      

      
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    A.           Mutual
Agreement.  The Employee’s employment may be terminated by
mutual agreement of the parties upon such terms and conditions as they may
agree; provided, that
if such mutual agreement provides for any payments or in-kind benefits to be
paid or granted to Employee it shall be in writing, and provided further, that such
written mutual agreement, if required to be aggregated for Code Section 409A
purposes with this Agreement or any other agreement between Employee and Summit,
Company, or any affiliate, shall not cause this Agreement to violate Code
Section 409A or the regulations and guidance issued thereunder.

     

    
      	
               
      

            	
              B.

            	
              For
      Cause.

            


    

     

    
      	
               
      

            	
              (1)

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

            


    

     

    
      	
               
      

            	
              (2)

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

            


    

     

    
      	
               
      

            	
              (a)

            	
              Employee’s
      negligence, malfeasance or misfeasance in the performance of Employee’s
      duties that can reasonably be expected to have an adverse impact upon the
      business and affairs of the Company, including but not limited to
      (i) failure of Employee to ensure the overall quality of the
      

            


    

     


    
      
         


      

      
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              Company’s
      loan portfolio is maintained at a level which is satisfactory to the Board
      of Directors of the Company, and (ii) failure of the Employee to
      ensure that the Company’s loan loss experience remains at a level which is
      satisfactory to the Company’s Board of
  Directors;

            


    

     

    
      	
               
      

            	
              (b)

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

            


    

     

    
      	
               
      

            	
              (c)

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

            


    

     

    
      	
               
      

            	
              (d)

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

            


    

     

    
      	
               
      

            	
              (e)

            	
              The
      death of Employee during the term of this Amended and Restated Agreement,
      in which event the Company shall pay to the estate of the Employee any
      compensation for services rendered but unpaid prior to the Employee’s date
      of death.  Such payment shall be made in a lump sum on the first
      day of the second month following Employee’s date of
  death.

            


    

     

    
      	
               
      

            	
              (3)

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

            


    

     

    
      	
               
      

            	
              (4)

            	
              In
      the event that Company terminates Employee’s employment for cause (other
      than death) as defined above, which results in Employee’s Separation from
      Service, Employee shall be entitled to


            


    

     


    
      
         


      

      
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              be
      paid his regular salary and benefits up to the date of Separation from
      Service, but not any additional compensation.  Any payment to
      Employee pursuant to this Paragraph 5(B)(4) shall be paid in a lump sum on
      the date of Employee’s Separation from Service, subject to the provisions
      of Paragraph 7(D) to the extent
applicable.

            


    

     

    
      	
               
      

            	
              C.

            	
              Not for
      Cause.  Employee’s employment may be terminated by the
      Company for any reason not specified in Paragraph 5(B) above so long as
      Employee is given thirty (30) days advance written notice (or payment in
      lieu thereof).  In the event of a termination pursuant to this
      Paragraph 5(C) which results in Employee’s Separation from Service,
      Employee shall be entitled to payment from the Company equivalent to the
      base salary compensation set forth in this Amended and Restated Agreement
      for the remaining term of the Agreement or severance pay equal to six (6)
      months of base salary payments, whichever is greater.  Any
      payment to Employee pursuant to this Paragraph 5(C) shall be paid in a
      lump sum on the date of Employee’s Separation from Service, subject to the
      provisions of Paragraph 7(D) to the extent
  applicable.

            


    

     

    
      	
               
      

            	
              D.

            	
              Change in
      Control.  Exhibit B hereto sets forth the rights and
      responsibilities of the parties in the event of a change in control, as
      defined therein, and is incorporated herein by reference. Provided, that if
      Employee is entitled to payments upon Separation from Service under this
      Agreement and also under Exhibit B hereto, the provisions of Exhibit B
      shall apply in lieu of the provisions of this
  Agreement.

            


    

     

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

     

    
      	
               
      

            	
              A.

            	
              For
      a period of three (3) years after Employee’s employment with the Company
      is terminated by Employee for any reason other
  than

            


    

     


    
      
         


      

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

            


    

     

    
      	
               
      

            	
              B.

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

            


    

     

    
      	
               
      

            	
              C.

            	
              Employee
      further recognizes and acknowledges that in the event of the termination
      of Employee’s employment with the Company for any reason other than
      Employee’s disability, (1) a breach of the obligations and conditions set
      forth herein will irreparably harm and damage the Company; (2) an award of
      money damages may not be adequate to remedy such harm; and (3) considering
      Employee’s relevant background, education and experience, Employee
      believes that he will be able to earn a livelihood without violating the
      foregoing restrictions.  Consequently, Employee agrees that, in
      the event that Employee breaches any of the covenants set forth in this
      Paragraph 6, the Company and/or its affiliates shall be entitled to both a
      preliminary and permanent injunction in order to prevent the continuation
      of such harm and to recover money damages,


            


    

     


    
      
         


      

      
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              insofar
      as they can be determined, including, without limitation, all costs and
      attorneys’ fees incurred by the Company in enforcing the provisions of
      this Paragraph 6.  Such relief may be sought notwithstanding the
      arbitration provision set forth in Paragraph 10
  below.

            


    

     

    7.           Definitions
and Special Rules.  For purposes of
this Agreement and its Exhibits, including the Change in Control Agreement
attached hereto as Exhibit B, the following definitions and special rules shall
apply:

     

    
      	
               
      

            	
              A.

            	
              “Disability”
      shall mean a physical or mental condition rendering Employee substantially
      and permanently unable to perform the duties of an officer and director of
      a banking organization.

            


    

     

    
      	
               
      

            	
              B.

            	
              “Separation from
      Service” means the severance of Employee’s employment with Summit,
      Company, or any other affiliate for any reason.  Employee
      separates from service with Summit, Company or any other affiliate if he
      dies, retires, separates from service because of Employee’s Disability, or
      otherwise has a termination of employment with Summit, Company 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
      Summit, Company 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 Employee to be unable to perform the duties of his position of
      employment or any substantially 

            


    

     


    
      
         


      

      
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              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 Separation from Service,

            


    

    
      	
               
      

            	
              (ii)

            	
              in
      any instance in which 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 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 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 Agreement which would otherwise
      apply,

            


    

    
      	
               
      

            	
              (iii)

            	
              in
      any instance in which Employee is an employee and an independent
      contractor of Summit, Company 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 Employee provides
      services both as an employee and a member of the Board of Directors of
      Summit, Company or any other affiliate or any combination thereof, the
      services provided as a

            


    


    
      
         


      

      
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                director
      are not taken into account in determining whether Employee has had a
      Separation from Service as an employee under this Agreement, provided that
      no plan in which 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.

            


    

     

    
      	
               
      

            	
              C.

            	
              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 Agreement or its Exhibits A and B shall be treated as having been
      made on a date specified in this Agreement or in Exhibit A or B 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.

            


    

     

    
      	
               
      

            	
              D.

            	
              Six-Month
      Delay.  Notwithstanding any other provisions of this
      Agreement or its Exhibits, including the Change in Control Agreement
      attached hereto as Exhibit B, 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
      Agreement or of said Change in Control 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,
  

            


    

     


    
      
         


      

      
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              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
      Agreement or any other provision of said Change in Control 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 or under said Change in
      Control Agreement, as the case may be.  Notwithstanding any of
      the foregoing, or any other provision of this Agreement or of said Change
      in Control Agreement, no payment of deferred compensation upon or based
      upon Separation from Service may be made under this Agreement or under
      said Change in Control 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 7(D) 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.

            


    

     

    8.           Notices.  Any notice
required or permitted to be given under this Amended and Restated Agreement
shall be sufficient if in writing and sent by registered or certified mail
listed herein; in the case of Employee, to the following address:  206
Georgetown Place, Charleston, West Virginia 25314; in the case of Summit
and the Company, addressed to H. Charles Maddy, III, in care of Summit Financial
Group, Inc., 300 North Main Street, Moorefield, WV 26836.  Any notice sent
pursuant to this paragraph shall be effective when deposited in the
mail.

     


    
      
         


      

      
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    9.           Confidential
Information.  Employee shall
not, during the term of this Amended and Restated Agreement or at any time
thereafter, directly or indirectly, publish or disclose to any person or entity
any confidential information concerning the assets, business or affairs of the
Company, including but not limited to any trade secrets, financial data,
employee or customer/client information or organizational
structure.

     

    10.           Arbitration.  Any dispute
between the parties arising out of or with respect to this Amended and Restated
Agreement or any of its provisions or Employee’s employment with the Company
shall be resolved by the sole and exclusive remedy of binding
arbitration.  Arbitration shall be conducted in Charleston, West
Virginia in accordance with the rules of the American Arbitration Association
(“AAA”).  The parties agree to select one arbitrator from an AAA
employment panel.  The arbitration shall be conducted in accordance
with the West Virginia Rules of Evidence and all discovery issues shall be
decided by the arbitrator.  The arbitrator shall supply a written
opinion and analysis of the matter submitted for arbitration along with the
decision.  The arbitration decision shall be final and subject to
enforcement in the local circuit court.

     

    11.           Entire
Agreement. This Amended and
Restated Agreement constitutes the entire Agreement between the parties and
shall supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and may not be
changed or amended except by an instrument in writing to be executed by each of
the parties hereto.

     

    12.           Severability.  If any provision
hereof, or any portion of any provision hereof, is held to be invalid, illegal
or unenforceable, all other provisions shall remain in force and effect as if
such invalid, illegal or unenforceable provision or portion thereof had not been
included herein.  If any provision or portion of any provision of this
Amended and Restated Agreement is so broad as to be unenforceable, such
provision or a portion thereof shall be interpreted to be only so broad as is
enforceable.

     

    13.           Headings.  The headings
contained in this Amended and Restated Agreement are included for convenience or
reference only and shall have no effect on the construction, meaning or
interpretation of this Amended and Restated Agreement.

     


    
      
         


      

      
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    14.           Governing
Law.  The laws of the
State of West Virginia shall govern the interpretation and enforcement of this
Amended and Restated Agreement.

     

    15.           Amendments. Any amendments to the
Agreement must be in writing and signed by all parties hereto except that
extensions of the term of this Agreement under Paragraph 2 above, may be
evidenced by minutes of a meeting of the Board of Directors, provided that (i) no
amendment to this Agreement shall be effective if it would, if effective, cause
this 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 amendment and (ii) the provisions
of this Paragraph 15 are irrevocable.

     

    16.           Wavier of
Breach.  No requirement of
this Amended and Restated Agreement may be waived except by a written document
signed by the party adversely affected.  A waiver of a breach of any
provision of the Agreement by any party shall not be construed as a waiver of
subsequent breaches of that provision.

     

    17.           Counterparts.  This Amended and
Restated Agreement may be executed in counterparts, all of which shall be
considered one and the same Agreement and each of which shall be deemed an
original.

     


    
      
         


      

      
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    IN
WITNESS WHEREOF, the Company and Summit have each caused this Amended and
Restated Agreement to be executed in its corporate name by its corporate officer
thereunto duly authorized, and Employee has hereunto set his hand and seal, as
of the day and year first above written:

     

    
      	
               
      

            	
              SUMMIT
      FINANCIAL GROUP, INC.

            


    

    


    


    
      	
               
      

            	
              By:

            	
              /s/ H. Charles Maddy,
      III   

            


    

    


    


    
      	
               
      

            	
              Its:

            	
              President      

            


    

    


    


    
      	
               
      

            	
              SUMMIT
      COMMUNITY BANK, INC.

            


    

    


    
 

    
      	
               
      

            	
              By:

            	
              /s/ H. Charles Maddy,
      III

            


    

    
 

    


    
      	
               
      

            	
              Its:

            	
              Co-Chairman

            


    

    


    


    
      	
               
      

            	
              /s/ C. David
      Robertson

            


    

                     C.
David Robertson


    
      
         


      

      
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    Exhibit
A

    Compensation
and Benefits

     

    
      	
              A.

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

            


    

     

    
      	
              B.

            	
              Bonus.  In
      addition to the base salary provided for herein, Employee shall be
      eligible for incentive bonuses subject to goals and criteria to be
      determined by the Board of Directors of the Company; 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, Company, or any affiliate, shall not cause this Agreement to
      violate Code Section 409A or the regulations and guidance issued
      thereunder.

            


    

     

    
      	
              C.

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

            


    

     

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

     

    
      	
               
      

            	
              (2)

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

            


    

     

    Employee
shall be subject to taxation on such other compensation as required by the
Internal Revenue Code. The benefits
provided under this Exhibit A Paragraph C during Employee’s taxable year shall
not affect the benefits to be provided in any other taxable year.  The
right to benefits under this Exhibit A Paragraph C is not subject to liquidation
or exchange for another benefit.  In addition, the right to benefits
under this Exhibit A Paragraph C is subject to the provisions of Paragraph 7(D)
of the Employment Agreement, to the extent applicable.  The benefits
under this Exhibit A Paragraph C shall cease upon Separation from Service
of Employee.

     

    
      	
              D.

            	
              Vacation.  Employee
      shall be entitled to all paid vacation and holidays and other paid leave
      as provided by the Company to other
employees.

            


    

     

    
      	
              E.

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

            


    

     


    
      
         


      

      
        14

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              Code
      Section 409A purposes with this Agreement or any other agreement between
      Employee and Summit, Company, or any affiliate, shall not cause this
      Agreement to violate Code Section 409A or the regulations and guidance
      issued thereunder.

            


    

     

    
      	
              F.

            	
              Business
      Expenses.  The Company shall reimburse Employee for all
      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 and reasonable expenses for customer
      entertainment. The reimbursement of an eligible expense shall be made
      by Company 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 Company is required to provide
      reimbursement for such expense hereunder.  The amount
      of expenses eligible for reimbursement under this Exhibit A Paragraph F
      during Employee’s taxable year shall not affect the expenses eligible for
      reimbursement in any other taxable year.  The right to
      reimbursement under this Exhibit A Paragraph F is not subject to
      liquidation or exchange for another benefit.  In addition, the
      right to reimbursement of eligible expenses under this Exhibit A Paragraph
      F is subject to the provisions of Paragraph 7(D) of the Employment
      Agreement, to the extent
applicable.

            


    

     

    
      	
              G.

            	
              Automobile.  The
      Company shall provide Employee with the use of an automobile for the
      employee’s business and personal use.  The Company shall be
      responsible for expenses associated with the vehicle including but not
      limited to taxes, gasoline, licenses, maintenance, repair, insurance and
      reasonable cellular phone charges.  Employee shall be subject to
      tax for his personal use of the vehicle in accordance with the Internal
      Revenue Code and any applicable state law.  Upon approval of the
      Company, appropriate replacement vehicles may be provided in the
      future. The benefits
      provided under this Exhibit A Paragraph G during Employee’s taxable year
      shall not affect the benefits to be provided in any other taxable
      year.  The right to benefits under this Exhibit A Paragraph G is
      not subject to liquidation or exchange for another benefit.  In
      addition, the right to benefits under this Exhibit A Paragraph G is
      subject to the provisions of Paragraph 7(D) of the Employment Agreement,
      to the extent applicable.  The benefits under this Exhibit A
      Paragraph G shall cease upon Separation from Service of
      Employee.

            


    

     

    
      	
              H.

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

            


    

     


    
      
         


      

      
        15

        
          

        

      

      
         


      

    


    Exhibit
B

    Change
in Control Agreement

     

    
      	
              A.

            	
              Definitions.  For
      purposes of this Exhibit B, the following definitions shall
      apply:

            


    

     

    
      	
               
      

            	
              (1)

            	
              “Change
      of Control” means with respect to (i) the Company or any Affiliate for
      whom Employee 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
      Employee hereunder (or all corporations liable for the payment if more
      than one corporation is liable) but only if either the compensation
      payable hereunder is attributable to the performance of service by
      Employee for such corporation (or corporations) or there is a bona fide
      business purpose for such corporation or corporations to be liable for
      such payment and, in either case, no significant purpose of making such
      corporation or corporations liable for such payment is the avoidance of
      Federal Income tax; or (iii) a corporation that is a majority shareholder
      of a corporation identified in paragraph (i) or (ii) of this section, or
      any corporation in a chain of corporations in which each corporation is a
      majority shareholder of another corporation in the chain, ending in a
      corporation identified in paragraph (i) or (ii) of this section, a Change
      in Ownership or Effective Control or a Change in the Ownership of a
      Substantial Portion of the Assets of a Corporation as defined in Section
      409A of the Code, and the regulations or guidance issued thereunder,
      meeting the requirements of a “Change in Control Event”
      thereunder.

            


    

     

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

     

    
      	
               
      

            	
              (3)

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

            


    

     

    
      	
               
      

            	
              (4)

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

            


    

     

    
      	
               
      

            	
              (5)

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

            


    

     

    
      	
               
      

            	
              (6)

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

            


    

     

    
      	
               
      

            	
              (7)

            	
              “Good
      Reason” means

            


    

     

    
      	
               
      

            	
              (a)

            	
              A
      Change of Control in the Company (as defined above) followed
      by:

            


    

     


    
      
         


      

      
        16

        
          

        

      

      
         


      

    

     

    
      	
               
      

            	
              (i)

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

            


    

     

    
      	
               
      

            	
              (ii)

            	
              a
      material reduction in the importance of Employee’s job responsibilities,
      or assignment of job responsibilities inconsistent with employee’s
      responsibilities prior to the Change in Control 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 20 miles from Employee’s location at the time of the Change of
      Control, or the imposition of travel requirements materially inconsistent
      with those existing prior to the Change in Control without Employee’s
      prior written consent; or

            


    

     

    
      	
               
      

            	
              (b)

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

            


    

     

    
      	
               
      

            	
              (c)

            	
              Any
      material reduction in the Employee’s authority, duties, or
      responsibilities, which shall be deemed to include removal of Employee
      from, or failure to re-elect Employee to, any of Employee’s position with
      Company immediately prior to a Change in Control (except in connection
      with the termination of Employee’s employment for Good Cause, death,
      Disability or Retirement) without Employee’s prior
  consent.

            


    

     

    Provided, that Employee
provides notice to the Company of the existence of the occurring condition
described in this Paragraph A(7) no later than ninety (90) days after the
initial occurrence thereof, and the Company fails to correct or remedy the
condition within thirty (30) days of receipt of such notice.

     

    
      	
               
      

            	
              (8)

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

            


    

     

    
      	
               
      

            	
              (9)

            	
              “Separation
      from Service” means the severance of Employee’s employment with Company or
      any affiliate for any reason.  Employee separates from service
      with Company or any affiliate if he dies, retires, separates from service
      because of Employee’s Disability, or otherwise has a termination of
      employment with Company or any 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 Company or any
      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

            


    

     


    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              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 Employee 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 Separation from Service,

            


    

     

    
      	
               
      

            	
              (ii)

            	
              in
      any instance in which 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 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 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 Agreement which would otherwise
      apply,

            


    

     

    
      	
               
      

            	
              (iii)

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

            


    

     


    
      
         


      

      
        18

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              B.

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

            


    

     

    
      	
               
      

            	
              (1)

            	
              The
      Company shall pay Employee a cash payment equal to Employee’s Salary, on a
      monthly basis, multiplied by the number of months between the date of
      Separation from Service and the date that is eighteen (18) months after
      the date of consummation of the Change of Control.  Such payment
      shall be made in a lump sum on the date of Separation from Service,
      subject to the provisions of Paragraph 7(D) of the foregoing Employment
      Agreement to the extent applicable.

            


    

     

    
      	
               
      

            	
              (2)

            	
              For
      the year in which Separation from Service occurs, Employee will be
      entitled to receive his reasonable share of the Company’s cash bonuses, if
      any, allocated in accordance with existing principles and authorized by
      the Board of Directors.  The amount of Employee’s cash incentive
      award shall not be reduced due to Employee not being actively employed for
      the full year.  Said cash bonuses, if any, will be paid to
      Employee in a lump sum on the date of Separation from Service, taking into
      account the provisions of Paragraph 7(C) of the foregoing Employment
      Agreement relating to when payments are deemed to be made, and subject to
      the provisions of Paragraph 7(D) of the foregoing Employment Agreement to
      the extent applicable.

            


    

     

    
      	
               
      

            	
              (3)

            	
              Employee
      will continue to participate, without discrimination, for the number of
      months between the date of Separation from Service and the date that is
      eighteen (18) months after the date of the consummation of the Change of
      Control in benefit plans (such as retirement, disability and medical
      insurance) maintained after any Change of Control for employees, in
      general, of the Company, or any successor organization, provided
      Employee’s continued participation is possible under the general terms and
      conditions of such plans.  In the event Employee’s participation
      in any such plan is barred, the Company shall arrange to provide Employee
      with benefits substantially similar to those to which Employee would have
      been entitled had his participation not been barred, but only for the
      period of time specified in the preceding sentence.  However, in
      no event will Employee receive from the Company the employee benefits
      contemplated by this subparagraph if Employee receives comparable benefits
      from any other source.  With respect to any benefits Employee
      receives under this Paragraph B(3), the following provisions will
      apply:  (i) in-kind benefits provided under this Paragraph B(3)
      during any taxable year of Employee shall not affect the in-kind benefits
      to be provided under this Paragraph B(3) in any other taxable year; (ii)
      if the provision of benefits under this Paragraph B(3) is to be done by
      means of reimbursement, the reimbursement of an eligible benefit expense
      under this Paragraph B(3) must be made on or before the last day of
      Employee’s taxable

            


    

     


    
      
         


      

      
        19

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              year
      following the taxable year in which the expense was incurred, (iii) no
      rights to reimbursement or in-kind benefits under this Paragraph B(3)
      shall be subject to liquidation or exchange for any other benefit, and
      (iv) benefits provided under this Paragraph B(3) shall be subject to the
      provisions of Paragraph 7(D) of the foregoing Employment Agreement to the
      extent applicable.

            


    

     

    
      	
               
      

            	
              (4)

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

            


    

     

    
      	
              C.

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

            


    

     

    
      	
              D.

            	
              Rights of Company
      Prior to the Change of Control.  This Change in Control
      Agreement shall not affect the right of the Company or Employee to
      terminate the foregoing Employment Agreement or the employment of Employee
      in accordance therewith; provided, however, that any termination or
      reduction in salary or benefits that takes place after discussions have
      commenced that result in a Change in Control shall be presumed (without
      clear and convincing evidence to the contrary) to be a violation of this
      Change in Control Agreement entitling Employee to the benefits hereof, so
      that any such termination by Company resulting in Employee’s Separation
      from Service either before or within eighteen (18) months after a Change
      in Control shall be deemed to be a Wrongful Termination, and all
      references in this Change in Control Agreement to Salary shall be deemed
      to mean the Salary, as defined herein, based on the earnings Employee
      would have had prior to any reduction
thereof.

            


    

     

    
      	
              E.

            	
              Successors; Binding
      Agreement.

            


    

     

    
      	
               
      

            	
              (1)

            	
              The
      Company shall require any successor (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all
      of the business and/or assets of the Company, by agreement in form and
      substance satisfactory to Employee, to expressly assume and agree to
      perform this Change in Control Agreement.  Failure of the
      Company to obtain such agreement prior to the effectiveness of any such
      succession shall be a material breach of this Change in Control Agreement
      and shall entitle Employee to compensation from the Company in the same
      amount and on the same terms as he would be entitled to hereunder if he
      terminated his employment for Good Reason hereunder, provided that Employee
      incurs a Separation from Service within eighteen (18) months after a
      Change in Control, and provided further that
      the notice and time to correct provisions of Paragraph A(7) herein are
      satisfied.

            


    

     

    
      	 
      


    

    
      	
               
      

            	
              (2)

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

            


    

     

     

    
 20