rmamendempagt.htm


     

    
      

      

    

    
 

     

    Exhibit
10.6

     

    AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

     

    THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) made in duplicate
originals this _29th__ day of _December_, 2008, and
effective August 1, 1998 (unless specifically stated otherwise), is between
SUMMIT FINANCIAL GROUP, INC., formerly known as South Branch Valley Bancorp,
Inc., (“Summit”), SUMMIT COMMUNITY BANK, INC. (the “Company”), and RONALD MILLER
(“Employee”).

     

    WHEREAS,
Summit is forming a subsidiary entity (the “Virginia Bank”) for purposes of
conducting banking operations in the Commonwealth of Virginia;

     

    WHEREAS,
Summit 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 Summit;

     

    WHEREAS,
Employee and Summit executed an employment agreement on August 1, 1998, which
was thereafter amended July 1, 2000 to provide for the waiver of future merit
raises in exchange for establishment of a Supplemental Executive Retirement Plan
by Summit for the benefit of Employee;

     

    WHEREAS,
under Paragraph 15 said 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

     


    
      
         


      

      
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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 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
Agreement, the parties agree as follows:

     

    1.           Employment. The
Company and Summit hereby employ Employee and Employee hereby accepts employment
as President, Chief Executive Officer and Chairman of the Board of Directors of
the Virginia Bank until June 15, 2007, and thereafter as President and Chief
Executive Officer of the Company, and as a member of the Board of Directors of
the Company, upon the terms and conditions set forth herein.

     

    2.           Term. The
term of this Agreement shall be for three (3) years commencing on July 1, 2000,
and ending on June 30, 2003, unless one of the parties terminates this Agreement
as provided herein.  On July 1, 2003, and every three years thereafter
(the “Anniversary Date”), the Agreement shall renew automatically for an
additional three years unless either the Board of Directors of Company or
Employee gives contrary written notice to the other no later than the
Anniversary Date.  References herein to the term of this Agreement
shall refer both to the initial term and successive terms.

     

    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.

     


    
      
         


      

      
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    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:

     

    
      	
               
      

            	
              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 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 Agreement, the term “cause” shall be defined as
      follows:

            


    

     


    
      
         


      

      
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              (a)

            	
              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
      the Company;

            


    

     

    
      	
               
      

            	
              (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 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 be paid his regular salary and
      benefits up to the date of Separation from Service, but not any additional
      compensation.  Any
payment

            


    

     


    
      
         


      

      
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              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 permitted under
      applicable law 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 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.

            	
              Employee
      Resignation. Employee
      recognizes and understands the vital role he plays in the Company’s
      establishment of the Virginia Bank, and therefore agrees not to resign
      from employment during the initial three-year term of this Agreement
      except in the event of his disability.  If the Employee resigns
      in violation of this commitment, Employee agrees to comply with the
      restrictions set forth in Paragraph 6
below.

            


    

     

    
      	
               
      

            	
              E.

            	
              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.

            


    

     


    
      
         


      

      
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              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 Employee’s disability,
      Employee shall not, directly or indirectly, engage in the business of
      banking in the City of Winchester or the County of Frederick,
      Virginia.  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 permanent disability rendering him unable to
      perform the duties of an officer or director of a banking organization,
      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,

            


    

     


    
      
         


      

      
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              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, 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 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 statute or by contract, the employment relationship
      is deemed to terminate on the first date immediately following such
      six-month period.

            


    

     


    
      
         


      

      
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              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,

            


    

     


    
      
         


      

      
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              (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.

            


    

     

    
      	
               
      

            	
              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.

            


    

     


    
      
         


      

      
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              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, 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

            


    

     


    
      
         


      

      
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              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 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: Post Office
Box 384, Strasburg, Virginia 22657.  In the case of the Company
to the President addressed to H. Charles Maddy, Ill in care of South Branch
Valley Bancorp, Inc., P.O. Box 680, Moorefield, WV 26836.  Any
notice sent pursuant to this paragraph shall be effective when deposited in the
mail.

     

    9.           Confidential
Information. Employee
shall not, during the term of this Agreement or at any time thereafter, directly
or indirectly, publish or disclose to any person or entity any confidential
information 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 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 Martinsburg, 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
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.

     


    
      
         


      

      
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    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 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 Agreement are included for convenience or reference
only and shall have no effect on the construction, meaning or interpretation of
this Agreement.

     

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

     

    15.           Amendments. Any
amendments to the Agreement must be in writing and signed by all parties hereto,
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.           Waiver of
Breach. No
requirement of this 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
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 has caused this 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/ Ronald F.
Miller                                                                        

                                Ronald
Miller


    
      
         


      

      
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Exhibit A

    Compensation
and Benefits

     

    
      	
              A.

            	
              Base
      Salary. Employee’s
      starting base salary shall be Seventy-five Thousand Dollars ($75,000) per
      year.  As of the date that the Virginia Bank opens for business,
      the base salary shall be increased to One Hundred Thousand Dollars
      ($100,000) per year.  Effective March 1, 2000, Employee’s base
      salary shall be One Hundred Twenty-five Thousand Dollars ($125,000) per
      year.  Employee shall be considered for salary increases on the
      basis of cost of living increases, beginning with the year ended December
      31, 2000.  In consideration of Employee’s waiver of future merit
      raises, Company has established a Supplemental Executive Benefit Plan for
      the benefit of Employee.

            


    

     

    
      	
              B.

            	
              Bonus. In addition to
      the base salary provided for herein, beginning at year end 2001, Employee
      shall be eligible for incentive bonuses subject to goals and criteria to
      be determined by the Board of Directors of the Company; provided, that any such
      plans, if required to be aggregated for Code Section 409A purposes with
      this Agreement or any other agreement between Employee and Company or any
      affiliate, shall not cause this Agreement to violate Code Section 409A or
      the regulations and guidance issued
thereunder.

            


    

     

    
      	
              C.

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

            


    

     

    
      	
              D.

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

            


    

     

    
      	
               
      

            	
              (1)

            	
              The
      Company shall pay 65% of the actual premiums paid by the Company for
      Employee’s health and accident insurance benefits and Employee shall be
      responsible for the remaining 35% of the actual
  premiums.

            


    

     

    
      	
               
      

            	
              (2)

            	
              The
      Company shall provide life insurance for the Employee in the amount of
      $100,000.

            


    

     

    
      	
              E.

            	
              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

            


    

     


    
      
         


      

      
        14

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              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 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 Exhibit A Paragraph E is not subject to
      liquidation or exchange for another benefit.  In addition, the
      right to reimbursement of eligible expenses under this Exhibit A Paragraph
      E is subject to the provisions of Paragraph 7(D) of the Employment
      Agreement, to the extent
applicable.

            


    

     

    
      	
              F.

            	
              Automobile. The Company shall
      purchase from Employee in 1998 the 1996 Buick Ultra owned by him as of the
      execution of this Agreement and provide such vehicle for the employee’s
      business and personal use.  The purchase price of the vehicle
      shall be agreed upon between the Company’s President and
      Employee.  Following the purchase, 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 F 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 F is
      not subject to liquidation or exchange for another benefit.  In
      addition, the right to benefits under this Exhibit A Paragraph F is
      subject to the provisions of Paragraph 7(D) of the Employment Agreement,
      to the extent applicable.  The benefits under this Exhibit A
      Paragraph F shall cease upon Separation from Service of
      Employee.

            


    

     

    
      	
              G.

            	
              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 $75,000 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.

            


    

     


    
      
         


      

      
        16

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              (7)

            	
              “Good
      Reason” means

            


    

     

    
      	
               
      

            	
              (a)

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

            


    

     

    
      	
               
      

            	
              (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 positions 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(6) 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

            


    

     


    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              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 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

            


    

     


    
      
         


      

      
        18

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              (iv)

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

            


    

     

    
      	
              B.

            	
              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

            


    

     


    
      
         


      

      
        19

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              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 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)

            	
              In
      the event Employee becomes entitled to any payments or distributions under
      this Change in Control Agreement or any other plan or program of the
      Company, if any such payments or distributions will be subject to the tax
      (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), the
      Company shall pay to employee an additional amount or amounts (each, a
      “Gross Up Payment”), such that the net amount or amounts retained by
      Employee, after deduction of any Excise Tax on any of the above-described
      payments or distributions and any federal, state and local income tax and
      excise tax upon payment provided for by this section, shall be equal to
      the amount of such payments or distributions prior to the imposition of
      such Excise Tax. 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 7(D) of the foregoing Employment Agreement to the
      extent applicable.

            


    

     

    
      	
               
      

            	
              (5)

            	
              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

            


    

     


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              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(6) 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.

            


    

     



    


    
21