Document:

SFG stock option agree

    Exhibit
      10.3

    

    FORM
      OF

    SUMMIT
      FINANCIAL GROUP, INC.

    NON-QUALIFIED
      STOCK OPTION GRANT AGREEMENT

    FOR
      OFFICERS

    

    (Installment
      Vesting)

    

    
      	
              1.

            	
              Grant
                of Option.
                Subject to the terms and conditions of this Non-Qualified Stock Option
                Grant Agreement (“Agreement”) and the South Branch Valley Bancorp, Inc.
                1998 Officer Stock Option Plan (“Plan”), dated ____________, 200__, which
                has been adopted by SUMMIT FINANCIAL GROUP, INC., a West Virginia
                corporation (Corporation) (successor by name change to South Branch
                Valley
                Bancorp, Inc.) and which is incorporated herein by reference, an
                Option to
                purchase a total of _____ shares of $2.50 par value common stock
                of the
                Corporation’s Common Stock at a price of ___________________ Dollars and
                ___ Cents ($______) per share is hereby granted to _____________________
                (Participant) as of the date of this Agreement as affixed below with
                its
                execution (Date of Grant).

            

    

     

    
      	
              2.

            	
              Installment
                Exercise.
                Subject to any conflicting limitations in the Agreement, the Option
                shall
                become vested and exercisable in five (5) installments for the following
                percentage of the total number of Common Stock shares under the Option,
                on
                or after the following Date of Vesting indicated, in cumulative
                fashion:

            

    

     

    
      	
               

              Number
                of Shares

            	
               

              Date
                of Vesting

            	
               

              Date
                of Termination

            	
               

              %
                Total Number of Common Stock Shares Under
                Option

            
	
               

              a.

            	 	 	 
	
               

              b.

            	 	 	 
	
               

              c.

            	 	 	 
	
               

              d.

            	 	 	 
	
               

              e.

            	 	 	 
	
               

              f.

            	 	 	 
	
               

              g.

            	 	 	 
	
               

              h.

            	 	 	 
	
               

              i.

            	 	 	 
	
               

              j.

            	 	 	 

    

    

    Participant
      agrees to exercise the Option in increments of not less than fifty (50)
      shares.

     

    
      	
              3.

            	
              Termination
                of Option.

            

    

     

    
      	 	
              (a)

            	
              The
                Option and all rights granted under this Agreement with respect to
                the
                Option, to the extent not previously exercised, shall terminate and
                become
                null and void on and after the _______anniversary of the Date of
                Vesting.

            

    

     

    
      	 	
              (b)

            	
              If
                a
                Participant’s continuous employment shall terminate by reason of his/her
                retirement from the corporation or its subsidiaries at a retirement
                date
                authorized by the Committee, the retired Participant shall become
                one
                hundred percent (100%) vested in any installment of the Option not
                yet one
                hundred percent (100%) vested that Participant has been granted under
                the
                Plan as of that date. With respect to any installment of the Option
                that
                becomes exercisable as a result of the acceleration of Vesting under
                this
                section (b), Participant shall exercise such installment within one
                year
                of Participant’s retirement date.

            

    

     

    
      	 	
              (c)

            	
              Notwithstanding
                any other provisions of this Agreement or the Plan, if Participant
                is
                convicted of a felony against the Bank, any unvested portion of the
                Option
                shall immediately terminate and be
                void.

            

    

     

    
      	
              4.

            	
              Exercise
                of Option.
                Subject to paragraph 3 of this Agreement, Participant may exercise
                the
                Option with respect to all or any part of the number of shares then
                exercisable under this Agreement by giving the President & Treasurer
                of the Corporation written notice of intent to exercise, of the number
                of
                shares to be purchased, the exercise date, and making full payment
                of the
                Option price, all in accordance with Section 8 of the
                Plan.

            

    

     

    
      	
              5.

            	
              Adjustment
                of and Changes in Stock of the Corporation.
                In
                the event of a Reorganization, recapitalization, change of shares,
                stock
                split, spin-off, stock dividend, reclassification, subdivision or
                combination of shares, merger, consolidation, rights offering, or
                any
                other change in the corporate structure or shares of capital stock
                of the
                Corporation, the Committee shall make such adjustment as it deems
                appropriate in the number and kind of shares of stock subject to
                the
                Option or in the Option price; provided, however, that no such adjustment
                shall give Participant any additional benefits under the
                Option.

            

    

     

    
      	
              6.

            	
              No
                Rights of Stockholders.
                Neither Participant nor any personal representative of Participant
                shall
                be, or shall have any of the rights and privileges of, a stockholder
                of
                the Corporation with respect to any shares of stock purchasable or
                issuable upon the exercise of the Option, in whole or in part, prior
                to
                the date of exercise of the Option.

            

    

     

    
      	
              7.

            	
              Nontransferability
                of Option.
                This
                Option may not be transferred in any manner and may be exercised
                only by
                Participant while he is an employee of the Corporation or its subsidiary.
                In the event of (i) any attempt by Participant to alienate, assign,
                pledge, hypothecate, or otherwise dispose of the Option, except as
                provided in this Agreement, or (ii) the levy of any attachment, execution,
                or similar process upon the rights or interests conferred by this
                Agreement, the Corporation may terminate the Option by notice to
                Participant and upon such notice the Option shall become null and
                void.
                The terms of this Option shall be binding upon the executors,
                administrators, heirs, successors, and assigns of
                Participant.

            

    

     

    
      	
              8.

            	
              Amendment
                of Option.
                The
                Option may be amended by the Board or the Committee at any time (i)
                if the
                Board or the Committee determines, in its sole discretion, that amendment
                is necessary or advisable in light of any addition to or change in
                the
                Code or in the regulations issued thereunder, or any federal or state
                securities law or other law or regulation, which change occurs after
                the
                Date of Grant and by its terms applies to the Option; or (ii) other
                than
                in the circumstances described in clause (i), with the consent of
                Participant.

            

    

     

    
      	
              9.

            	
              Notice.
                Any
                notice to the Corporation provided for in this instrument shall be
                addressed to it in care of its President and Treasurer at its principal
                office in the state of West Virginia, and any notice to Participant
                shall
                be addressed to Participant at the current address shown on the
                Corporation’s records. Any notice shall be deemed to be duly given if and
                when properly addressed and posted by registered or certified mail,
                postage prepaid.

            

    

     

    
      	
              10.

            	
              Incorporation
                of Plan by Reference.
                The
                Option is granted pursuant to the terms of the Plan, the terms of
                which
                are incorporated herein by reference, and the Option shall in all
                respects
                be interpreted in accordance with the Plan. The Committee shall interpret
                and construe the Plan and this instrument, and its interpretations
                and
                determinations shall be conclusive and binding on the parties to
                this
                Agreement and any other person claiming an interest under the Agreement,
                with respect to any issue arising under it or the Plan. Unless otherwise
                expressly stated herein, in the event of any inconsistency between
                the
                terms of the plan and this Agreement, the terms of the Plan shall
                control.
                The headings of the paragraphs of this Agreement have been included
                for
                convenience of reference only, and not to be considered a part hereof
                and
                shall in no way restrict the terms or provisions
                hereof.

            

    

     

    
      	
              11.

            	
              Governing
                Law.
                The
                validity, construction, interpretation, and effect of this instrument
                shall exclusively be governed by and determined in accordance with
                the law
                of the state of West Virginia, except to the extent preempted by
                federal
                law, which shall to that extent
                govern.

            

    

     

    IN
      WITNESS
      WHEREOF, the Corporation has caused its duly authorized officers to execute
      and
      attest this Summit Financial Group, Inc. Non Qualified Stock Option Grant
      Agreement, and to apply the corporate seal hereto, and Participant has placed
      his signature, effective as of the Date of Grant.

     

    

    CORPORATION:

    SUMMIT
      FINANCIAL GROUP, INC.

    

    

    By:
      ____________________________________

             
                    Oscar
      Bean

    Its: Chairman
      of
      the Board

    

    

    Attest:
      __________________________________

    

    Title:
      ____________________________________

    

    

    Participant
      acknowledges receipt of a copy of the Plan, a copy of which is attached, and
      represents that he/she is familiar with the terms and provisions of the Plan.
      Participant hereby accepts this Option subject to all the terms and provisions
      of the Plan. Participant hereby agrees to accept as binding, conclusive, and
      final all decisions and interpretations of the Committee, and, where applicable,
      the Board, upon any questions arising under the Plan.

     

    Dated: __________________________

    

    

    PARTICIPANT:

    __________________________________

     

    

    

    Sworn
      and
      subscribed before me this _____ day of _________________, _____.

    

    

    __________________________________

    Notary
      Public

    

    

    My
      Commission expires: __________________________.SFG amend stock option

    

    EXHIBIT
      10.4 

    FORM
      OF FIRST
      AMENDMENT TO NON-QUALIFIED STOCK OPTION GRANT AGREEMENT

     

    THIS
      FIRST
      AMENDMENT TO NON-QUALIFIED STOCK OPTION GRANT AGREEMENT (this
      “Amendment”), entered into as of the ___ day of May, 2006, and effective as of
      December __, 2005, by and between SUMMIT FINANCIAL GROUP, INC., a West Virginia
      corporation and bank holding company (“Summit”) and [name
      of officer],
      (“Participant”). 

     

    W
      I T N E S
      S E T H:

     

    WHEREAS,
      on
      December 7, 2004, Summit and Participant entered into that certain Summit
      Financial Group, Inc. Non Qualified Stock Option Grant Agreement (the “Option
      Agreement”) whereby Summit granted Participant an option to purchase a total of
[number
      of shares underlying option]
      shares of
      $2.50 par value common stock of Summit’s Common Stock at a price of Fifty-One
      Dollars and Eighty-Five Cents ($51.85) (the “Option”), subject to the terms and
      conditions of the Summit Financial Group, Inc. 1998 Officer Stock Option Plan
      (the “Plan”), dated May 5, 1998, which was adopted by Summit and which was
      incorporated by reference; and

     

    WHEREAS,
      on
      December 15, 2004, Summit effectuated a two-for-one stock split of its Common
      Stock which caused the number of shares underlying the Option to double and
      the
      exercise price of each share to decrease to Twenty-Five Dollars and Ninety-Three
      Cents ($25.93); and

     

    WHEREAS,
      the
      Financial Accounting Standards Board adopted SFAS 123R which requires companies
      to recognize expense relative to options vesting after January 1, 2006;
      and

     

    WHEREAS,
      based on the changes to the accounting rules, on December 6, 2005, the
      Compensation and Nominating Committee accelerated the vesting schedule set
      forth
      in the Option Agreement so that all of the shares underlying the Option that
      were not already vested became fully vested on December 6, 2005;
      and

     

    WHEREAS,
      the
      Compensation and Nominating Committee imposed a restriction on the sale of
      the
      stock underlying the Option that prohibits the Participant from selling any
      portion of the stock underlying the Option until the original date on which
      the
      option would have vested had Summit not accelerated the vesting; and

     

    WHEREAS,
      Summit and the Participant desire to enter into this Amendment to evidence
      the
      Participant’s consent to the acceleration of the vesting schedule in the Option
      Agreement and the restriction on the sale of stock underlying the Option.

     

    NOW
      THEREFORE, for in consideration of the Premises and mutual covenants, agreements
      and undertakings, and for other good and valuable consideration, the receipt
      and
      sufficiency of which are hereby acknowledged, the parties covenant and agree
      as
      follows:

     

    1. Acceleration
      of Vesting Schedule.
      Effective
      as of December 6, 2005, the vesting schedule in paragraph 2 of the Option
      Agreement is hereby amended to provide that all of the shares underlying the
      Option that were not already vested as of December 6, 2005, are fully vested
      and
      exercisable as of December 6, 2005. 

     

    2. Restrictions
      on the Sale of Stock Underlying the Option.
      Effective
      as of December 6, 2005, the Participant hereby agrees not sell the stock
      underlying the Option until the original date that that portion of the Option
      would have become vested and exercisable (as set forth in paragraph 2 of the
      Option Agreement). The Participant hereby agrees that this restriction is
      reasonable in light of Summit’s acceleration of the vesting schedule applicable
      to the Option.

     

    3. Incorporation
      of Plan by Reference.
      The
      Option
      is granted pursuant the terms of the Plan, the terms of which are incorporated
      herein by reference, and the Option shall in all respects be interpreted in
      accordance with the Plan. The Compensation and Nominating Committee shall
      interpret and construe the Plan, the Option Agreement and this Amendment, and
      its interpretations and determinations shall be conclusive and binding on the
      parties to this Amendment and any other person claiming an interest under the
      Option Agreement as amended by this Amendment, with respect to any issue arising
      under it or the Plan. Unless otherwise expressly stated herein, in the event
      of
      any inconsistency between the terms of the plan, the Option Agreement, and
      this
      Amendment, the terms of the Plan shall control. 

     

    4. Enforceable
      Documents.
      Except as
      modified herein, all terms and conditions of the Option Agreement, as the same
      may be supplemented, modified, amended or extended from time to time, are and
      shall remain in full force and effect. 

     

    5. Authority.
      The
      undersigned are duly authorized by all required action or agreement to enter
      into this Amendment. 

     

    6. Modifications
      to Amendment.
      This
      Amendment may be amended or modified only by an instrument or document in
      writing signed by the person or entity against whom enforcement is
      sought.

     

    7. Governing
      Law.
      This
      Amendment, and any documents executed in connection herewith or as required
      hereunder, and the rights and obligations of the undersigned hereto and thereto,
      shall be governed by, construed and enforced in accordance with the laws of
      the
      State of West Virginia.

     

    IN
      WITNESS
      WHEREOF, the parties hereto have duly executed and delivered this Agreement
      as
      of the date first written above.

     

    

    SUMMIT
      FINANCIAL GROUP, INC. 

    

    By: ___________________________________

    

     

    Its: ________________________________

     

    __________________________________________

    [name
      of Participant]

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