execoffamendempagmt.htm


    Exhibit  10.4

     

    FORM OF AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

     

    THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Employment Agreement”) is made
and entered into on this _____ day of ________, 2008, effective as of
January 3, 2006 (unless specifically stated otherwise), by and among SUMMIT
FINANCIAL GROUP, INC. (“Summit FGI”), a West Virginia corporation, and
______________________ (the “Employee”).

     

    WHEREAS,
Summit FGI offers the terms and conditions of employment hereinafter set forth
and Employee accepts such terms and conditions in consideration of his
employment with Summit FGI; and

     

    WHEREAS,
Employee and Summit FGI executed an employment agreement on January 3, 2006;
and

     

    WHEREAS,
under Paragraph 18 said employment agreement may be modified by a writing signed
by all the parties thereto; and

     

    WHEREAS,
the parties hereto, in the interests of clarity and for other reasons stated
herein, and for the purpose of complying with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), wish to amend and
restate this Employment Agreement, provided that all provisions applicable
to compliance under Code Section 409A shall be effective as of January 3, 2006,
and provided further that, notwithstanding any other provisions of this amended
and restated Employment 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 Employment Agreement,
shall be deemed to

     


    
      
         


      

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

     

    NOW
THEREFORE, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, Summit FGI and Employee contract and
agree as follows:

     

    1.           Definitions
and Special Rules.  The following
definitions and special rules, in addition to any terms otherwise defined
herein, shall apply to this Employment Agreement.

     

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

     

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

     


    
      
         


      

      
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    (c)           “Good
Cause” includes (i) Employee’s continued poor work performance after written
notice of and reasonable opportunity to correct deficiencies;
(ii) Employee’s behavior outside or on the job which affects the ability of
management of Summit FGI or its affiliates or co-workers to perform their
jobs and that is not corrected after reasonable written warning; (iii)
Employee’s failure to devote reasonable time to the job that is not corrected
after reasonable warning; (iv) any other significant deficiency in performance
by Employee that is not corrected after reasonable warning; (v) Employee’s
repeated 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 Summit FGI or its affiliates, provided, however
that if in the reasonable judgment of the Board of Directors of Summit FGI, the
damage incurred by Summit FGI as a result of Employee’s conduct is capable of
being substantially corrected, Summit FGI will give Employee thirty (30) days’
advance notice of its intention to terminate for Good Cause under this section
and a reasonable opportunity to cure the cause of the possible termination to
the reasonable satisfaction of Summit FGI; (vi) Employee’s commission of any act
constituting theft, intentional wrongdoing or fraud; (vii) the conviction of the
Employee of a felony criminal offense in either state or federal court; (viii)
any single act by Employee constituting gross negligence or that causes material
harm to the reputation, financial condition or property of Summit FGI or
its affiliates.

     

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

     

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

     

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

     

    (i) a
material decrease in the total amount of Employee’s base salary below its level
in effect on the date of consummation of the Change of Control, without
Employee’s prior written consent; or

     


    
      
         


      

      
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    (ii) a
material reduction in Employee’s job duties and responsibilities without
Employee’s prior written consent; or

     

    (iii) a
material geographical relocation of Employee without Employee’s prior
written consent, which shall be deemed to mean relocation to an office more than
twenty (20) miles from Employee’s location at the time of the Change of Control;
or

     

    (iv)
failure of Summit FGI to obtain assumption of this Employment Agreement by its
successor, which shall be deemed a material breach of this Employment Agreement;
or

     

    (v) any
purported termination of Employee’s employment which is not effected pursuant to
a notice of termination required in Paragraph 15 of this Employment Agreement,
which shall be deemed a material breach of this Employment
Agreement.

     

    Provided, that Employee
provides notice to Summit FGI of the existence of the occurring condition
described in this Paragraph 1(f) no later than ninety (90) days after the
initial occurrence thereof, and Summit FGI fails to correct or remedy the
condition within thirty (30) days of receipt of such notice.

     

    (g)           “Wrongful
Termination” means termination of Employee’s employment prior to the expiration
of twenty-four (24) months after consummation of a Change of Control for any
reason other than at Employee’s option, Good Cause or the death, Disability or
Retirement of Employee.

     

    (h)           “Separation
from Service” means the severance of Employee’s employment with Summit FGI or
any other affiliate for any reason.  Employee separates from service
with Summit FGI or any other affiliate if he dies, retires, separates from
service because of the Employee’s Disability, or otherwise has a termination of
employment with Summit FGI or any other affiliate.  However, the
employment relationship is treated as continuing intact while Employee is on
military leave, sick leave, or other bona fide leave of absence if
the period of such leave does not exceed six months, or if longer, so long as
Employee’s right to

     


    
      
         


      

      
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reemployment
with Summit FGI or any other affiliate is provided either by statute or by
contract.  If the period of leave exceeds six months and Employee’s
right to reemployment is not provided either by statute or by contract, the
employment relationship is deemed to terminate on the first date immediately
following such six-month period. Notwithstanding the foregoing, where a leave of
absence is due to any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than six months, where such impairment causes the employee to
be unable to perform the duties of his or her position of employment or any
substantially similar position of employment, a 29-month period of absence may
be substituted for such six-month period.  In addition,
notwithstanding any of the foregoing, the term “Separation from Service” shall
be interpreted under this Employment Agreement in a manner consistent with the
requirements of Code Section 409A including, but not limited to:

     

    (i) an
examination of the relevant facts and circumstances, as set forth in Code
Section 409A and the regulations and guidance thereunder, in the case of any
performance of services or availability to perform services after a purported
termination or Separation from Service;

     

    (ii) in
any instance in which such Employee is participating or has at any time
participated in any other plan which is, under the aggregation rules of Code
Section 409A and the regulations and guidance issued thereunder, aggregated with
this Employment Agreement and with respect to which amounts deferred hereunder
and under such other plan or plans are treated as deferred under a single plan
(hereinafter sometimes referred to as an “Aggregated Plan” or together as the
“Aggregated Plans”), then in such instance Employee shall only be considered to
meet the requirements of a Separation from Service hereunder if such Employee
meets (a) the requirements of a Separation from Service under all such
Aggregated Plans and (b) the requirements of a Separation from Service under
this Employment Agreement which would otherwise apply;

     


    
      
         


      

      
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    (iii) in
any instance in which Employee is an employee and an independent contractor of
Summit FGI or any other affiliate or any combination thereof, Employee must
have a Separation from Service in all such capacities to meet the requirements
of a Separation from Service hereunder, although, notwithstanding the foregoing,
if an Employee provides services both as an employee and a member of the Board
of Directors of Summit FGI or any other affiliate or any combination thereof,
the services provided as a director are not taken into account in determining
whether the Employee has had a Separation from Service as an employee under this
Employment Agreement, provided that no plan in which such Employee
participates or has participated in his capacity as a director is an Aggregated
Plan; and

     

    (iv) a
determination of whether a Separation from Service has occurred shall be made in
accordance with Treasury Regulations Section 1.409A-1(h)(4) or any similar or
successor law, regulation or guidance of like import, in the event of an asset
purchase transaction as described therein.

     

    (i)           Date Payments Deemed
Made.  In accordance with Code Section 409A and to the extent
permitted by said Code Section 409A and the regulations and guidance issued
thereunder, any payment to or on behalf of Employee under this Employment
Agreement shall be treated as having been made on a date specified in this
Employment Agreement if it is made on a later date within Employee’s same
taxable year as the designated date, or, if later, if made no later than
the fifteenth day of the third month after such designated date provided
that, in any event, Employee is not permitted, directly or indirectly, to
designate the taxable year of any payment.

     

    (j)           Six-Month
Delay.  Notwithstanding any other provisions of this Employment
Agreement, if Employee is a Specified Employee (within the meaning of Code
Section 409A) on Employee’s date of Separation from Service, then if any payment
of deferred compensation (within the meaning of Code Section 409A) is to be made
upon or based upon Employee’s Separation from Service other than by death, under
any provision of this

     


    
      
         


      

      
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Employment
Agreement, and such payment of deferred compensation is to be made within six
months after Employee’s date of Separation from Service, other than by death,
then such payment shall instead be made on the date which is six months after
such Separation from Service of Employee (other than by death,) provided
further, however, that in the case of any payment of deferred compensation which
is to be made in installments, with the first such installment to be paid on or
within six months after the date of Separation from Service other than by
death, then in such event all such installments which would have otherwise
been paid within the date which is six months after such Separation from Service
of Employee (other than by death) shall be delayed, aggregated, and paid,
notwithstanding any other provision of this Employment Agreement, on the date
which is six months after such Separation from Service of Employee (other than
by death), with the remaining installments to continue thereafter until fully
paid hereunder.  Notwithstanding any of the foregoing, or any other
provision of this Employment Agreement, no payment of deferred compensation upon
or based upon Separation from Service may be made under this Employment
Agreement before the date that is six months after the date of Separation from
Service or, if earlier, the date of death, if Employee is a Specified Employee
on Employee’s date of Separation from Service.  This Paragraph
1(j) 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.

     

    2.           Term.  The initial term
of this Employment Agreement shall be for three (3) years, unless terminated
sooner as provided herein.  Absent termination by one of the parties
as provided in this Employment Agreement, the term of this Employment Agreement
shall automatically be extended for unlimited additional one (1) year term(s),
in which case 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 of the Chief Financial
Officer or such duties and obligations that may be assigned to him from time to
time by the Chief Executive Officer and/or the Board of Directors of Summit FGI;
provided any material changes to Employee’s duties or obligations have been
determined by the Board of Directors and/or the Chief Executive Officer in their
reasonable discretion to be commensurate with duties and obligations that might
be assigned to other similarly-situated executive officers of the
Company.  No later than five (5) days after the Company
materially

     


    
      
         


      

      
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changes
Employee’s duties or obligations, Employee will give the Company written notice
if he believes a breach of this section has occurred and Company shall have a
reasonable opportunity to cure the cause of the possible
breach.  Failure by Employee to give the notice required under this
section shall constitute a waiver of his rights to claim a breach of this
section arising from the specific duties or obligations then at issue. If it is
determined through arbitration that the Company has breached this provision,
then in consideration of the compensation and benefits set forth herein, Company
and Employee agree that any damages received by Employee shall be limited to the
amount Employee would be entitled to had he been terminated not for Good Cause
under paragraph 6 of this Agreement.

     

    Employee’s
duties shall include, but not be limited to, managing the asset liability and
investment risk of Summit FGI, and overseeing the financial reporting and
disclosure obligations of Summit FGI.  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 this Employment Agreement, including any extensions, Summit FGI agrees that
Employee’s compensation and benefits shall be as follows:

     

    (a)           Base
Salary.  Employee’s base salary shall be not less than One
Hundred Fifty Thousand Dollars ($150,000) per year, paid on a semi-monthly
basis.  Employee shall be considered for salary increases on the basis
of merit on an annual basis, with any future increases subject to the sole
discretion of Summit FGI.

     

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

     

    (c)           Paid
Leave.  Employee shall be entitled to all paid leave as
provided by Summit FGI to other similarly-situated officers.

     


    
      
         


      

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

     

    (e)           Business
Expenses.  Summit FGI shall reimburse Employee for reasonable
expenses incurred by Employee in carrying out his duties and responsibilities,
all provided such expense is incurred by Employee prior to Separation from
Service, including but not limited to reimbursing civic club organization
dues and reasonable expenses for customer entertainment. The reimbursement
of an eligible expense shall be made by Summit FGI 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 Summit FGI is required to provide
reimbursement for such expense hereunder.  The amount
of expenses eligible for reimbursement under this Paragraph 4(e) during
Employee’s taxable year shall not affect the expenses eligible for reimbursement
in any other taxable year.  The right to reimbursement under this
Paragraph 4(e) is not subject to liquidation or exchange for another
benefit.  In addition, the right to reimbursement of eligible expenses
under this Paragraph 4(e) is subject to the provisions of Paragraph 1(j) to
the extent applicable.

     

    (f)           Automobile.  Summit
FGI shall provide Employee with the use of an automobile for the Employee’s
business and personal use.  Summit FGI 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 Chief Executive Officer of Summit FGI,
appropriate replacement vehicles shall be provided in the future, but in no
event less frequently than every

     


    
      
         


      

      
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third
model year.  If Employee Separates from Service not for Good Cause, or
if Employee Separates from Service for Good Reason, or if Summit FGI terminates
Employee’s employment in a manner constituting Wrongful Termination which
results in Employee’s Separation from Service, then Employee shall be entitled
to retain the vehicle provided hereunder and title thereto shall be
transferred to Employee on the date of Employee’s Separation from Service, but
in all other respects the benefits provided under this Paragraph 4(f) shall
cease upon Employee’s Separation from Service.  In addition,
notwithstanding anything to the contrary herein, the following provisions will
apply with respect to benefits provided under this Paragraph
4(f):  (i) in-kind benefits provided under this Paragraph 4(f) during
any taxable year of Employee shall not affect the in-kind benefits to be
provided under this Paragraph 4(f) in any other taxable year; (ii) if the
provision of benefits under this Paragraph 4(f) is to be done by means of
reimbursement, the reimbursement of an eligible benefit expense under this
Paragraph 4(f) must be made on or before the last day of Employee’s taxable year
following the taxable year in which the expense was incurred, (iii) no rights to
reimbursement or in-kind benefits under this Paragraph 4(f) shall be subject to
liquidation or exchange for any other benefit, and (iv) benefits provided under
this Paragraph 4(f) shall be subject to the provisions of Paragraph 1(j) to the
extent applicable.

     

    5.           Termination
for Good Cause.  Subject to the
provisions of Paragraph 7 below, if Employee terminates his employment with
Summit FGI for any reason or Summit FGI terminates Employee’s employment for
Good Cause, Employee shall not be entitled to any compensation other than that
which is earned and payable as of the effective date of termination of
employment, which shall be paid to Employee in accordance with Summit FGI’s
normal payroll procedures.

     

    6.           Termination
Not for Good Cause.  Employee’s
employment may be terminated by Summit FGI for any reason permitted under
applicable law 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 resulting in Employee’s Separation from Service,
subject to the provisions of Paragraph 7 below, Employee shall be entitled to
payment from Summit FGI equal to the base salary compensation set forth in this
Employment Agreement for the remaining term of the Employment Agreement, or
severance pay equal to 100% of his then current annual

     


    
      
         


      

      
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base
salary, whichever is greater.  Said cash payment shall be paid in a
lump sum on the date of Employee’s Separation from Service, subject to the
provisions of Paragraph 1(j) to the extent applicable.  The severance
compensation set forth in this Paragraph 6 shall not be duplicative of any
compensation to which Employee may be entitled pursuant to Paragraph 7 of this
Employment Agreement.  In the event that Employee is entitled to
compensation pursuant to Paragraph 7 of this Employment Agreement, this
Paragraph 6 shall not apply.

     

    7.           Termination for Good Reason
or Wrongful Termination, or at Employee’s Option Upon Change of
Control.

     

    (a)           Except
as hereinafter provided, if Employee terminates his employment with Summit FGI
for Good Reason or Summit FGI terminates Employee’s employment in a manner
constituting Wrongful Termination, resulting in Employee’s Separation from
Service, Summit FGI hereby agrees to pay Employee a cash payment equal to
Employee’s Salary, on a monthly basis, multiplied by the number of months
between the date of Separation from Service and the date that is
twenty-four (24) months after the date of consummation of Change of Control;
provided that in no event shall Employee receive a lump sum payment that is less
than 100% of his Salary.  Said cash payment shall be paid in a lump
sum on the date of Employee’s Separation from Service, subject to the provisions
of Paragraph 1(j) to the extent applicable.  In addition, Employee
shall have the right to terminate his employment without reason at his option
within six (6) months after a Change of Control, resulting in Employee’s
Separation from Service, by giving written notice of termination.  In
this case, Employee will be entitled to receive a cash payment equal to seventy
five percent of his Salary, and said cash payment shall be paid in a lump sum on
the date of Employee’s Separation from Service, subject to the provisions of
Paragraph 1(j) to the extent applicable.

     

    (b)           For
the year in which Employee terminates his employment with Summit FGI for Good
Reason or Summit FGI terminates Employee’s employment in a manner constituting
Wrongful Termination, resulting in Employee’s Separation from Service, Employee
will be entitled to receive his reasonable share of Summit FGI’s cash bonuses
and employee benefit plan contributions, if any, allocated in accordance with
existing policies and procedures and authorized by the Board of Directors of
Summit FGI prior to the Change in Control.  The amount of Employee’s
cash incentive award shall not be reduced due to Employee not being

     


    
      
         


      

      
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actively
employed for the full year.  Such bonuses, if any, shall be paid to
Employee in a lump sum on the date of Employee’s Separation from Service,
taking into account the provisions of Paragraph 1(i), and subject to the
provisions of Paragraph 1(j) to the extent applicable.

     

    (c)           If
compensation pursuant to Paragraph 7(a) is payable, Employee will continue to
participate, without discrimination, for the number of months between the date
of Separation from Service and the date that is twenty-four (24) months after
the date of the consummation of the Change of Control, in benefit plans (such as
retirement, disability and medical insurance) maintained after any Change of
Control for employees, in general, of Summit FGI and/or any successor
organization(s), 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, Summit FGI shall arrange to
provide Employee with benefits substantially similar to those which
Employee would have been entitled had his participation not been
barred, but only for the period of time specified in the preceding
sentence.  Notwithstanding the foregoing, if Employee terminates his
employment after a Change of Control without reason at his option, as permitted
under Paragraph 7(a), then Employee shall be entitled to receive the employee
benefits contemplated in this Paragraph 7(c) only for a period of six (6) months
after the date of Separation from Service.  However, in no event will
Employee receive from Summit FGI the employee benefits contemplated by this
Paragraph 7(c) if Employee receives comparable benefits from any other
source.  With respect to any benefits Employee receives under this
Paragraph 7(c), the following provisions will apply:  (i) in-kind
benefits provided under this Paragraph 7(c) during any taxable year of Employee
shall not affect the in-kind benefits to be provided under this Paragraph 7(c)
in any other taxable year; (ii) if the provision of benefits under this
Paragraph 7(c) is to be done by means of reimbursement, the reimbursement of an
eligible benefit expense under this Paragraph 7(c) must be made on or before the
last day of Employee’s taxable year following the taxable year in which the
expense was incurred, (iii) no rights to reimbursement or in-kind benefits under
this Paragraph 7(c) shall be subject to liquidation or exchange for any other
benefit, and (iv) benefits provided under this Paragraph 7(c) shall be subject
to the provisions of Paragraph 1(j) to the extent applicable.

     


    
      
         


      

      
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    (d)           The
compensation set forth in this Paragraph 7 shall not be duplicative of any
compensation to which Employee may be entitled pursuant to Paragraph 6 of this
Employment Agreement.

     

    8.           Other
Employment. Employee shall not be
required to mitigate the amount of any payment provided for in this Employment
Agreement by seeking other employment.  The amount of any payment
provided for in this Employment Agreement shall not be reduced by any
compensation earned or benefits provided (except as set forth in Paragraph 7(c)
above) as the result of employment by another employer after the date of
termination.

     

    9.           Rights of
Summit
FGI Prior to
the Change of Control.  This Employment
Agreement shall not affect the right of Summit FGI to terminate Employee, or to
reduce the salary or benefits of Employee, with or without Good Cause, prior to
any Change of Control; provided, however, any termination resulting in
Employee’s Separation from Service for any reason other than at Employee’s
option, Good Cause or the death, Disability or Retirement of Employee that takes
place before any Change of Control but after discussions have commenced that
result in a Change of Control shall be presumed to be a Wrongful Termination,
absent clear and convincing evidence to the contrary.

     

    10.           Noncompetition
and Nonsolicitation.  In consideration
of the covenants set forth herein, including but not limited to the compensation
set forth in Paragraphs 4, 6 and 7 above, Employee agrees as
follows:

     

    (a)           For
the entire duration of Employee’s employment with Summit FGI and for two (2)
years following the termination of such employment for any reason by either
Employee or Summit FGI (the “Restricted Period”), Employee shall not
(i) within a seventy-five (75) mile radius of Summit FGI and/or its
affiliates directly or indirectly engage in any business or activity of any
nature whatsoever that is competitive with the business of Summit FGI or its
affiliates or (ii) sell or solicit the sale of, any services or products
related thereto, directly or indirectly, to any of Summit FGI’s or its
affiliates’ customers or clients within the State of West Virginia, the
Commonwealth of Virginia or any other states in which Summit FGI and/or its
affiliates conducts such business or sells services in the
future.  Notwithstanding the foregoing, this noncompetition covenant
shall not apply to the business and activities conducted by Summit

     


    
      
         


      

      
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Mortgage,
a division of Shenandoah Valley National Bank, unless such business and
activities are conducted in the State of West Virginia, Virginia or any other
state in which other affiliates of Summit FGI also engage in any business or
activity or sell or solicit services in the future.

     

    (b)           Without
limitation of the foregoing, during the Restricted Period, Employee shall not
serve as a proprietor, partner, officer, director, stockholder, employee, sales
representative or consultant for any organization, company or business entity of
any type that engages in any business or activity of any nature whatsoever
described in Paragraph 10(a) above, provided however that this provision will
not prohibit Employee from (i) owning bonds, non-voting preferred stock or up to
five percent (5%) of the outstanding common stock of any such entity if such
common stock is publicly traded, or (ii) accepting a position with a
nationally- recognized professional services firm, provided that in such
capacity, Employee does not render services, directly or indirectly, to any
client or customer of such firm that engages in any business or activity
described in Paragraph 10(a), above.

     

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

     

    (d)           In
the event that this provision shall be deemed by any court or body of competent
jurisdiction to be unenforceable in whole or in part by reason of its extending
for too long a period of time, or too great a geographical area or over too
great a range of activities, or overly broad in any other respect or for any
other reason, then and in such event this Employment
Agreement shall be deemed modified and interpreted to extend over only such


    
       

      
        
          
          

        

        
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maximum
period of time, geographical area or range of activities, or otherwise, so as to
render these provisions valid and enforceable, and as so modified, these
provisions shall be enforceable and enforced.

    

     

    (e)           This
Paragraph 10 shall not apply in any respect to Employee, unless Employee agrees
otherwise in writing, in the event of the consummation of a Change in Control or
in the event of Employee’s termination by Summit FGI for other than Good
Cause.

     

    11.           Confidential
Information.

     

    (a)           Employee
agrees not to use, publish or otherwise disclose (except as Employee’s duties
may require), either during or at any time subsequent to his/her employment, any
secret, proprietary or confidential information or data of Summit FGI or any
information or data of others that Summit FGI or its affiliates is obligated to
maintain in confidence.  Employee understands that the use,
publication or other disclosure of such information may violate privacy rights,
as well as expose Summit FGI or its affiliates to financial loss, competitive
disadvantage and/or embarrassment.  Employee also understands that it
is Employee’s duty to take adequate care to ensure that such secret, proprietary
or confidential information is not used, published or otherwise disclosed by
others.  Notwithstanding the foregoing, nothing herein shall prevent
Employee from utilizing the knowledge and experience he has acquired in the
banking industry.

     

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

     


    
      
         


      

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

     

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

     

    13.           Successors; Binding
Agreement; Exclusive
Remedy.

     

    (a)           Summit
FGI will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business stock
and/or assets of Summit FGI, by agreement in form and substance satisfactory to
Employee, to expressly assume and agree to perform this Employment
Agreement.

     

    (b)           This
Employment Agreement and all rights of Employee hereunder shall inure to the
benefit of and be enforceable by Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees.  If Employee should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the

     


    
      
         


      

      
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terms of
this Employment Agreement to Employee’s devisee, legatee, or other designee or,
if there be no such designee, to Employee’s estate.

     

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

     

    14.           Arbitration. Except for any dispute
arising out of the obligations set forth in Paragraph 10 of this Employment
Agreement, any dispute between the parties arising out of or with respect to
this Employment Agreement or any of its provisions or Employee’s employment with
Summit FGI shall be resolved by the sole and exclusive remedy of binding
arbitration.  Unless otherwise agreed by the parties, the arbitration
shall be conducted in Moorefield, West Virginia under the auspices of, and in
accordance with the rules of the American Arbitration
Association.  Any decision issued by an arbitrator in accordance with
this provision shall be final and binding on the parties thereto and not subject
to appeal or civil litigation.

     

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

     

    If to
Employee:                                               _____________________

     

    _____________________

     

    _____________________

     


    
      
         


      

      
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    If to
Summit
FGI:                                             Summit Financial Group,
Inc.

                                          Attn:  H.
Charles Maddy, III, President & CEO

                                          P. O. Box 179

                                         Moorefield, WV  26836

     

    or such
other address as any party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.

     

    16.           Indemnification.  To the fullest
extent permitted under applicable West Virginia law and federal banking law,
Summit FGI agrees that it will indemnify and hold Employee harmless from and
against all costs and expenses, including without limitation, all court costs
and attorney’s fees, incurred by Employee during his lifetime in defending any
and all claims, demands, proceedings, suits or actions actually instituted or
threatened by third parties involving this Employment Agreement, its validity or
enforceability or with respect to payments to be made pursuant thereto; provided, that in the event
Employee becomes entitled to reimbursement under this Paragraph 16, the
following provisions shall apply:  (i) reimbursement provided under
this Paragraph 16 during any taxable year of Employee shall not affect
reimbursement to be provided under this Paragraph 16 in any other taxable year;
(ii) reimbursement under this Paragraph 16 shall be made thirty (30) days after
Employee requests reimbursement hereunder, provided that in no event
shall any payment under this Paragraph 16 be made after the last day of
Employee’s taxable year following the taxable year in which the expense was
incurred, (iii) no rights to reimbursement under this Paragraph 16 shall be
subject to liquidation or exchange for any other benefit, and (iv) reimbursement
provided under this Paragraph 16 shall be subject to the provisions of Paragraph
1(j) to the extent applicable.

     

    17.           Additional
Payment by Summit
FGI.

     

    a.           Gross-Up Payment.  Notwithstanding
anything in this Employment Agreement to the contrary, in the event it shall be
determined that any payment or distribution by Summit FGI and any of its
subsidiaries and affiliates to or for the benefit of Employee (whether paid or
payable or distributed or distributable pursuant to this Employment Agreement,
the Executive Salary Continuation Agreement between Summit FGI and
Employee, or any other agreement, contract, plan or arrangement, but determined
without regard to any additional payments required under this Paragraph 17) (any
such payments and distributions collectively referred to as

     


    
      
         


      

      
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“Payments”),
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended, or any similar tax that may hereinafter be
imposed or any interest and penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then Summit FGI shall pay to
Employee an additional payment (the “Gross-Up Payment”) equal to one hundred
percent (100%) of the Excise Tax and one hundred percent (100%) of the amount of
any federal, state and local income taxes and Excise Tax imposed on the Gross-Up
Payment, all provided that any and all such Gross-Up Payment or Payments shall
be paid to Employee thirty (30) days after Employee remits the taxes with
respect to which such Gross-Up Payment is made, all subject to the provisions of
Paragraph 1(j) to the extent applicable.

     

    b.           Determination of Gross-Up
Payment.  All determinations required to be made under this
paragraph 17 including whether a Gross-Up Payment is required and the amount of
such Gross-Up Payment, shall be made by the firm of independent accountants
selected by Summit FGI to audit its financial statements (the “Accounting Firm”)
which shall provide either before or no later than twenty (20) days after
Employee remits any such taxes, detailed supporting calculations both to
Summit FGI and Employee.  In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting a
“change in control,” Employee shall appoint another nationally recognized
accounting firm to make, either before or no later than twenty (20) days after
Employee remits any such taxes, the determinations required hereunder (which
accounting firm shall then be referred to as the “Accounting Firm”
hereunder).  All fees and expenses of the Accounting Firm shall be
borne solely by Summit FGI.

     

    18.           Miscellaneous.  No provisions of
this Employment Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by Employee and
authorized officers of Summit FGI, all provided that (i) no
modification, waiver or discharge shall be effective if it would, if
effective, cause this Employment Agreement to violate Code Section 409A and the
regulations and guidance thereunder or cause any amount of compensation or
payment hereunder to be subject to a penalty tax under Code Section 409A and the
regulations and guidance issued thereunder, which amount of compensation or
payment would not have been subject to a penalty tax under Code Section 409A and
the regulations and guidance thereunder in the absence of such
modification, waiver or

     


    
      
         


      

      
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discharge,
and (ii) the provisions of this paragraph 18 are irrevocable.  No
waiver by either party hereto at any time of any breach by the other hereto of,
or compliance with, any condition or provisions of this Employment Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or any prior or subsequent
time.

     

    19.           Validity.  The invalidity or
unenforceability of any provision or provisions of this Employment Agreement
shall not affect the validity or enforceability of any other provisions of this
Employment Agreement, which shall remain in full force and effect.

     

    IN WITNESS WHEREOF, the
parties have caused this Employment Agreement to be signed as of the day and
year first above written.

     

    SUMMIT
FINANCIAL GROUP, INC.

     

    By:  /s/ H. Charles Maddy,
III                 

     

    Its:
 President                                           

    


    


    


                                                                           

                                      EMPLOYEE NAME


     

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