Document:

hcmexecsalcontagmt.htm

     

    
      

      

    

     

    
 

    Exhibit
10.3

    

    EXECUTIVE
SALARY CONTINUATION AGREEMENT THAT SUPERSEDES AND REPLACES THE EXECUTIVE SALARY
CONTINUATION AGREEMENT EFFECTIVE JULY 1, 2006

    

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

    

    WHEREAS, the Bank and the
Executive are currently parties to an Executive Salary Continuation Agreement
signed on July 19, 2007 and effective January 1, 2006 (which superseded and
replaced the original Agreement, an Executive Supplemental Retirement Plan
effective May 7, 1999), that provides for the payment of certain
benefits.  This Executive Salary Continuation Agreement (“Agreement”
or “Executive Plan”) and the benefits provided hereunder shall supersede and
replace the existing Executive Salary Continuation Agreement and the benefits
provided thereby;

    

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

    

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

    

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

    

    WHEREAS, the Bank intends this
Agreement to comply with Final Regulations and Transition Relief promulgated by
the Internal Revenue Service pursuant to Code Section 409A, and accordingly,
notwithstanding any other provisions of this Agreement, this amendment applies
only to amounts that would not otherwise be payable in 2006, 2007 or 2008 and
shall not cause (i) an amount to be paid in 2006 that would not otherwise be
payable in such year, (ii) an amount to be paid in 2007 that would not otherwise
be payable in such year, and (iii) an amount to be paid in 2008 that would not
otherwise be payable in such year, and to the extent necessary to qualify under
such Transition Relief to not be treated as a change in the form and timing of a
payment under Code Section 409A(a)(4) or an acceleration of a payment under Code
Section 409A(a)(3), the Executive, by executing this Agreement, shall be deemed
to have elected the form and timing of distribution provisions of this
Agreement, on or before December 31, 2008.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

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

    

    THEREFORE, it is agreed as
follows:

    

    
      	
              I.  

            	
              EFFECTIVE
      DATE

            

    

     

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

    

    II.           FRINGE
BENEFITS

     

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

    

    III.           DEFINITIONS

     

    
      	
               
      

            	
              A.

            	
              Retirement
      Date:

            

    

    If the
Executive remains in the continuous employ of the Bank until at least the
Executive’s Normal Retirement Age, (except as otherwise set forth in Paragraph
IX,) and provided that no determination of Disability of Executive, at any time
prior to Executive’s Normal Retirement Age, has been made, (regardless of any
return to active service of Executive subsequent to any such determination of
Disability,) the Executive’s Retirement Date shall be the date on which the
Executive attains the age of sixty-three (63) years or has a Separation from
Service, whichever is later.

    

    
      	
               
      

            	
              B.

            	
              Normal Retirement
      Age:

            

    

    Normal
Retirement Age shall mean the date on which the Executive attains age
sixty-three (63).

    

    C.           Plan
Year:

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

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    D.           Termination of
Employment:

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

    

    E.           Separation from
Service:

    “Separation
from Service” shall mean that the Executive has experienced a Termination of
Employment from the Bank.  However, the employment relationship is
treated as continuing intact while the Executive is on military leave, sick
leave, or other bona fide leave of absence if the period of such leave does not
exceed six months, or if longer, so long as the Executive’s right to
reemployment with the Bank or any Affiliate is provided either by statute or by
contract.  If the period of leave exceeds six months and the
Executive’s right to reemployment is not provided either by statute or by
contract, the employment relationship is deemed to terminate on the first date
immediately following such six-month period.  Notwithstanding the
foregoing, where a leave of absence is due to any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than six months, where such
impairment causes the Executive to be unable to perform the duties of his
position of employment or any substantially similar position of employment, a
29-month period of absence may be substituted for such six-month
period.  In addition, notwithstanding any of the foregoing, the term
“Separation from Service” shall be interpreted under this Agreement in a manner
consistent with the requirements of Code Section 409A including, but not limited
to:

    

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

    

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

    

    
      
         

      

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

    

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

     

    
      	
            	
              F.

            	
              Discharge for
      Cause:

            

    

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

     

    
      	
            	
              G.

            	
              Change of
      Control:

            

    

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

     

    
      
         

      

      
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                H.

              	
                Restriction on Timing
      of Distribution:

              

      

    

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

    

    
      	
               
      

            	I.	
              Beneficiary:

            

    

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

    

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

    

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

    
      
         

      

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

    

    
      	
               
      

            	
              J.

            	
              Disability:

            

    

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

    

    IV.           RETIREMENT
BENEFIT AND POST-RETIREMENT DEATH BENEFIT

     

    Upon
attainment of the Retirement Date, (as set forth in Subparagraph III [A,]
subject to the provisions of Paragraph IX,) the Bank shall pay the Executive an
annual benefit equal to One Hundred Seventy Five Thousand ($175,000), the
“Retirement Benefit.”  Said Retirement Benefit shall be paid in equal
monthly installments (1/12th of the
annual benefit) until the death of the Executive.  Said payment shall
commence the first day of the month following (i) the date of such Separation
from Service, or (ii) if applicable, in accordance with the Restriction on
Timing of Distribution, whichever is later.  Upon the death of the
Executive after attainment of the Retirement Date, (as set forth in III [A,]
subject to the provisions of Paragraph IX,) if there is a balance in the accrued
liability retirement account, an amount equal to such balance shall be paid in a
lump sum to the Beneficiary.  Said payment due hereunder shall be made
the first day of the second month following the Executive’s death.

     

    V.           DEATH
BENEFIT PRIOR TO RETIREMENT

     

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

    
      
         

      

      
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    VI.           BENEFIT
ACCOUNTING/ACCRUED LIABILITY RETIREMENT ACCOUNT

    
 

    Notwithstanding
any provision herein to the contrary, the provisions of this Paragraph VI, shall
be effective beginning January 1, 2007.  Prior to the date on which
Executive attains Executive’s Normal Retirement Age, and during the time that
Executive continues in the employment of Bank, (or after Separation from Service
but before Executive has attained Normal Retirement Age if a Change in Control
has occurred and Executive has thereafter had a Separation from Service as set
forth in Paragraph IX,) and provided this Agreement is in effect, the Bank shall
account for this benefit using Generally Accepted Accounting Principles
(“GAAP”).  Prior to the date on which Executive attains Executive’s
Normal Retirement Age and during the time that Executive continues in the
employment of Bank, and prior to any determination of Disability of Executive
prior to Executive attaining Normal Retirement Age, (or after Separation from
Service but before Executive has attained Executive’s Normal Retirement Age if a
Change in Control has occurred and Executive has had a Separation from Service
as set forth in Paragraph IX) and provided this Agreement is in effect, the Bank
shall establish an accrued liability retirement account for the Executive into
which appropriate reserves shall be accrued sufficient so that if the account
were increased ratably each year prior to Executive attaining Normal Retirement
Age and during which Executive continued in the employment of Bank (or after
Separation from Service but before Executive has attained Executive’s Normal
Retirement Age if a Change in Control has occurred and Executive has had a
Separation from Service as set forth in Paragraph IX) and using a compound
interest rate as set forth in Schedule A attached hereto and incorporated herein
by reference (provided, however, that such interest rate set forth on Schedule A
may be changed, for purposes of the calculation of the accrued Liability
retirement account hereunder, by the Compensation Committee of Bank at any time
and from time to time but only in good faith and in a manner that the
Compensation Committee of the Bank reasonably determines to be consistent with
industry standards at the time of such change of interest rate herein),
sufficient funds would be available to pay the Retirement Benefit to Executive,
still assuming a compound interest rate as set forth on Schedule A (again
provided, however, as stated above, that such interest rate may be changed, for
purposes of the calculation of the accrued liability retirement account
hereunder, by the Compensation Committee of the Bank at any time and from time
to time but only in good faith and in a manner that the Compensation Committee
of the Bank reasonably determines to be consistent with industry standards at
the time of such change of interest rate herein,) for the life expectancy of
Executive, based upon the United States Life Insurance Company mortality
tables (or tables
of a reasonably comparable life insurance company if such mortality tables are
no longer available) in effect from time to time as such accruals are
made.

     

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

     

    
      
         

      

      
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    VII.          VESTING

    
 

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

    

 

    
      
        
          
            
              
                
                  	
                          Total
      Years of Employment

                        	 
      
	
                          with
      the Bank from the

                        	 
      
	
                          Effective
      Date of the

                        	 
      
	
                          Original Agreement (5/7/99)

                        	
                          Vested (to a maximum of
    100%)

                        
	 
      	
                          1

                        	
                          5%

                        
	 
      	
                          2

                        	
                          10%

                        
	 
      	
                          3

                        	
                          15%

                        
	 
      	
                          4

                        	
                          20%

                        
	 
      	
                          5

                        	
                          25%

                        
	 
      	
                          6

                        	
                          30%

                        
	 
      	
                          7

                        	
                          35%

                        
	 
      	
                          8

                        	
                          40%

                        
	 
      	
                          9

                        	
                          45%

                        
	 
      	
                          10

                        	
                          50%

                        
	 
      	
                          11

                        	
                          50%

                        
	 
      	
                          12

                        	
                          50%

                        
	 
      	
                          13

                        	
                          50%

                        
	 
      	
                          14

                        	
                          50%

                        
	 
      	
                          15

                        	
                          50%

                        
	 
      	
                          16

                        	
                          50%

                        
	 
      	
                          17

                        	
                          50%

                        
	 
      	
                          18

                        	
                          50%

                        
	 
      	
                          19

                        	
                          100%

                        
	 
      	
                          20
      or more

                        	
                          100%

                        

                

              

            

          

        

      

    

    VIII.                      BENEFIT
UPON SEPARATION FROM SERVICE PRIOR TO RETIREMENT

     

    A.           Resignation of Employee or
Discharge Without Cause:

    Subject
to the provisions of Paragraph IX, (and no payment shall be made under this
Paragraph VIII if the provisions of Paragraph IX are applicable,) in the event
that the Executive shall incur a Separation from Service prior to Normal
Retirement Age, and prior to any determination of Disability, then the Bank
shall pay to the Executive an annual benefit equal to the vested percentage of
the Retirement Benefit, as provided in Paragraph IV (the “Vested
Benefit”).  Said Vested Benefit shall be paid in equal monthly
installments (1/12th of the annual Vested Benefit) commencing the first day of
the month following (i) the date of attainment of Normal Retirement Age or (ii)
if applicable, in accordance with the Restriction on Timing of Distribution,
whichever is later, until the death of the Executive.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

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

    

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

    

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

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

    

    IX.           CHANGE
OF CONTROL

     

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

    

    X.   DISABILITY

     

    In the
event that a determination of Disability is made respecting the Executive,
during any period of employment prior to Executive attaining Normal Retirement
Age (and the Executive, notwithstanding any other provision of this Agreement,
including but not limited to any provision of Subparagraph III [J,] shall not be
considered disabled for purposes of this Paragraph X if the Executive has had a
Separation from Service prior to such Disability, without returning to active
employment with the Bank and being actively employed with the Bank at the time
of such Disability, even if such Separation of Service has taken place after a
Change in Control and Executive, although no longer employed by Bank, may be
eligible for a Retirement Benefit pursuant to Paragraph IX or
otherwise),

     

    
      
         

      

      
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    the Bank
shall establish an account (hereinafter sometimes referred to as the “Disability
Account”) in an amount equal to the balance as of the date of Disability of
Executive of the accrued liability retirement account established on the
Executive’s behalf pursuant to this Agreement, (provided that the Bank shall be
required to do so only once for each Executive, and with respect to an Executive
who has a determination of Disability prior to Normal Retirement Age and who
returns to active employment with the Bank and a subsequent determination of
Disability, also prior to Normal Retirement Age, is made respecting the
Executive, the Bank shall not be required to establish a Disability Account
other than any Disability Account established upon the first determination of
Disability of the Executive.)  Interest at a rate equivalent to the
Moody’s Seasoned Baa Corporate Bond Yield per annum then in effect (or if no
such rate is then published or in effect, then at the rate equivalent to the
yield of reasonably comparable instruments selected by the Compensation
Committee of the Bank) shall be accrued and added to the Disability Account and
distributions subtracted therefrom until complete distribution
hereunder.  Upon Executive attaining Normal Retirement Age after a
determination of Disability, the Bank shall distribute to the Executive,
(commencing on the first day of the month following the date the Executive
attains the Executive’s Normal Retirement Age, and subject to the ‘Restriction
on Timing of Distribution’ as defined in this Agreement,) an amount equal to the
balance in the Disability Account of Executive in One Hundred Twenty (120) equal
monthly installments.  In the event of the death of Executive after a
determination of Disability and regardless of whether Executive has attained
Normal Retirement Age, any portion of any Disability Account of Executive not
yet distributed to Executive hereunder shall be distributed in a lump sum to the
Beneficiary.  Said payment due hereunder shall be made the first day
of the second month following the Executive’s death.  After a
determination of Disability prior to Executive’s Normal Retirement Age, no other
benefits than those set forth in this Paragraph X will be owed or payable to the
Executive or any Beneficiary under this Agreement under any circumstances,
including but not limited to, during the period of Disability, upon death, upon
attaining Normal Retirement Age or Retirement Date, or in the event of any
subsequent return to active service or subsequent period of
Disability.  The Disability Account established hereunder shall be for
accounting and bookkeeping purposes only, and is not, nor shall be construed to
be, an account or trust for the benefit of the Executive.  Once
payments to Executive commence pursuant to this Paragraph X, such payments shall
be applied so as to reduce the balance in the Disability Account for purposes of
any payout of an amount equal to the remaining balance thereof.

     

    
      	
              XI.

            	
              RESTRICTION
      UPON FUNDING

            

    

     

    
      	
               
      

            	
              The
      Bank shall have no obligation to set aside, earmark or entrust any fund or
      money with which to pay its obligations under this Executive
      Plan.  The Executive, their beneficiary(ies), or any successor
      in interest shall be and remain simply a general creditor of the Bank in
      the same manner as any other creditor having a general claim for matured
      and unpaid compensation.

            

    

    

    The Bank
reserves the absolute right, at its sole discretion, to either fund the
obligations undertaken by this Executive Plan or to refrain from funding the
same and to determine

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

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

    

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

    

    XII.           MISCELLANEOUS

     

    
      	
               
      

            	
              A.

            	
              Alienability and
      Assignment Prohibition:

            

    

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

     

    
      	
               
      

            	
              B.

            	
              Binding Obligation of
      the Bank and any Successor in
Interest:

            

    

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

    

    
      	
               
      

            	
              C.

            	
              Amendment or
      Revocation:

            

    

    It is
agreed by and between the parties hereto that, during the lifetime of the
Executive, this Agreement may be amended or revoked at any time or times, in
whole or in part, by the mutual written consent of the Executive and the
Bank.  Any such amendment shall not be effective to decrease or
restrict any Executive’s accrued benefit under this Agreement, determined as of
the date of amendment, unless agreed to in writing by the Executive, and
provided further, no amendment shall be made, or if made, shall be effective, if
such amendment would cause the Agreement to violate Code Section
409A.  In the event this Agreement is terminated, such termination
shall not cause acceleration of a distribution of benefits, except under limited
circumstances as permitted under Code Section 409A and the regulations and
guidance issued thereunder (e.g., 30 days before
or

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    12 months
after a Change of Control event, upon termination of all arrangements of the
same type, or upon corporate dissolution or bankruptcy).

    

    
      	
               
      

            	
              D.

            	
              Gender:

            

    

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

    

    
      	
               
      

            	
              E.

            	
              Headings:

            

    

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

    

    
      	
               
      

            	
              F.

            	
              Applicable
      Law:

            

    

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

    

    
      	
               
      

            	
              G.

            	
              Partial
      Invalidity:

            

    

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

    

    
      	
               
      

            	
              H.

            	
              Not a Contract of
      Employment:

            

    

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

    

    
      	
               
      

            	
              I.

            	
              Tax
      Withholding:

            

    

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

    

    
      	
               
      

            	
              J.

            	
              Opportunity to Consult
      with Independent Advisors:

            

    

    The
Executive acknowledges that he has been afforded the opportunity to consult with
independent advisors of his choosing including, without limitation, accountants
or tax advisors and counsel regarding both the benefits granted to him under the
terms of this Agreement and the:  (i) terms and conditions which may
affect the Executive’s right to these benefits; and (ii) personal tax effects of
such benefits including, without limitation, the effects of any federal or state
taxes, Section 280G of the Code, Section 409A of the Code and guidance or
regulations thereunder, and any other taxes, costs, expenses or liabilities
whatsoever related to such benefits, which in any of the foregoing instances the
Executive

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    acknowledges
and agrees shall be the sole responsibility of the Executive notwithstanding any
other term or provision of this Agreement.  The Executive further
acknowledges and agrees that the Bank shall have no liability whatsoever related
to any such personal tax effects or other personal costs, expenses, or
liabilities applicable to the Executive and further specifically waives any
right for himself or herself, and his or her heirs, beneficiaries, legal
representative, agents, successor and assign to claim or assert liability on the
part of the Bank related to the matters described above in this
paragraph.  The Executive further acknowledges that he has read,
understands and consents to all of the terms and conditions of this Agreement,
and that he enters into this Agreement with a full understanding of its terms
and conditions.

    

    
      	
               
      

            	
              K.

            	
              Permissible
      Acceleration Provision:

            

    

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

    

    L.           Supersede and Replace Entire
Agreement:

    This
Agreement shall supersede the Executive Salary Continuation Agreement signed on
July 19, 2007 and effective January 1, 2006 (which superseded and replaced the
original Agreement, an Executive Supplemental Retirement Plan effective May 7,
1999), and shall replace the entire Agreement of the parties pertaining to this
particular Executive Salary Continuation Agreement.

    

    
      	
              XIII.  

            	
              ADMINISTRATIVE
      AND CLAIMS PROVISION

            

    

     

    
      	
               
      

            	
              A.

            	
              Plan
      Administrator:

            

    

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

     

    B.           Claims
Procedure:

    a.           Filing a Claim for
Benefits:

    

    Any
insured, beneficiary, or other individual, (“Claimant”) entitled to benefits
under this Executive Plan will file a claim request with the Plan
Administrator.  The Plan Administrator will, upon written request of
a

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    Claimant,
make available copies of all forms and instructions necessary to file a claim
for benefits or advise the Claimant where such forms and instructions may be
obtained.  If the claim relates to disability benefits, then the Plan
Administrator shall designate a sub-committee to conduct the initial review of
the claim (and applicable references below to the Plan Administrator shall mean
such sub-committee).

    

    
      	
               
      

            	
              b.

            	
              Denial of
      Claim:

            

    

    

    
      	
               
      

            	
              A
      claim for benefits under this Executive Plan will be denied if the Bank
      determines that the Claimant is not entitled to receive benefits under the
      Executive Plan.  Notice of a denial shall be furnished the
      Claimant within a reasonable period of time after receipt of the claim for
      benefits by the Plan Administrator.  This time period shall not
      exceed more than ninety (90) days after the receipt of the properly
      submitted claim.  In the event that the claim for benefits
      pertains to disability, the Plan Administrator shall provide written
      notice within forty-five (45) days.  However, if the Plan
      Administrator determines, in its discretion, that an extension of time for
      processing the claim is required, such extension shall not exceed an
      additional ninety (90) days.  In the case of a claim for
      disability benefits, the forty-five (45) day review period may be extended
      for up to thirty (30) days if necessary due to circumstances beyond the
      Plan Administrator’s control, and for an additional thirty (30) days, if
      necessary.  Any extension notice shall indicate the special
      circumstances requiring an extension of time and the date by which the
      Plan Administrator expects to render the determination on
      review.

            

    

    

    
      	
               
      

            	
              c.

            	
              Content of
      Notice:

            

    

    

    
      	
               
      

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

            

    

    

    
      	
               
      

            	
              (i.)

            	
              The
      specific reason or reasons for the
denial;

            

    

    

    
      	
               
      

            	
              (ii.)

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

            

    

    

    
      	
               
      

            	
              (iii.)

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

            

    

    
      	
               
      

            	
              (iv.)

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

            

    

    

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    d.           Review
Procedure:

    

    
      	
               
      

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

            

    

    

    
      	
               
      

            	
              (i.)

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

            

    

    

    
      	
               
      

            	
              (ii.)

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

            

    

    

    
      	
               
      

            	
              (iii.)

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

            

    

    

    
      	
               
      

            	
              e.

            	
              Decision on
      Review:

            

    

    

    
      	
               
      

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

            

    

    

    
      	
               
      

            	
              (i.)

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

            

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              circumstances
      requiring an extension of time and the date by which the Plan
      Administrator expects to render the determination on
    review.

            

    

    

    
      	
               
      

            	
              (ii.)

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

            

    

    

    
      	
               
      

            	
              (iii.)

            	
              The
      review will take into account all comments, documents, records and other
      information submitted by the Claimant relating to the claim without regard
      to whether such information was submitted or considered in the initial
      benefit determination.  Additional considerations shall be
      required in the case of a claim for disability benefits.  For
      example, the claim will be reviewed without deference to the initial
      adverse benefits determination and, if the initial adverse benefit
      determination was based in whole or in part on a medical judgment, the
      Plan Administrator will consult with a health care professional with
      appropriate training and experience in the field of medicine involving the
      medical judgment.  The health care professional who is consulted
      on appeal will not be the same individual who was consulted during the
      initial determination or the subordinate of such individual.  If
      the Plan Administrator obtained the advice of medical or vocational
      experts in making the initial adverse benefits determination (regardless
      of whether the advice was relied upon), the Plan Administrator will
      identify such experts.

            

    

    

    
      	
               
      

            	
              (iv.)

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

            

    

    

    
      	
               
      

            	
              f.

            	
              Exhaustion of
      Remedies:

            

    

    

    
      	
               
      

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

            

    

    

    
      	 	
              C.  

            	
              Arbitration:

            

    

    If
claimants continue to dispute the benefit denial based upon completed
performance of this Executive Plan or the meaning and effect of the terms and
conditions thereof, then claimants may submit the dispute to an Arbitrator in
West Virginia for final arbitration.  The Arbitrator shall be selected
by mutual agreement of the Bank and the claimants.  The Arbitrator
shall operate under the rules then in effect of the American Arbitration
Association.  The parties hereto 

     

     

    
      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    

     

     

     

    agree
that they and their heirs, personal representatives, successors and assigns
shall be
bound by the decision of such Arbitrator with respect to any controversy
properly submitted to it for determination.

    

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

     

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

     

        The Bank is
entering into this Agreement upon the assumption that certain existing tax laws,
rules and regulations will continue in effect in their current
form.  If any said assumptions should change and said change has a

        detrimental
effect on this Executive Plan, then the Bank reserves the right to terminate or
modify this Agreement accordingly, but only to the extent necessary to conform
this Agreement to the provisions and requirements of 

        any
applicable law (including ERISA and the Code, including, but not limited to
Section 409A of the Code and regulations thereunder).

     

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

     

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

     

    SUMMIT
COMMUNITY BANK

                          Moorefield, West
Virginia

    

    

    /s/ Kristie M.
Cost                                                                   By: /s/ Oscar M.
Bean                 Chairman

    Witness                                                                                            (Bank Officer
other than Insured)    Title

    

    

    

    /s/ Kristie M.
Cost                                                                                      /s/ H. Charles Maddy,
III

    Witness                                                                                            H.
Charles Maddy, III

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    SCHEDULE
A

    to

    EXECUTIVE
SALARY CONTINUATION AGREEMENT

    BETWEEN
SUMMIT COMMUNITY BANK

    AND
H. CHARLES MADDY, III

     

    

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

    

    Interest
Rate                                           6.28%

    
 

     

    18execoffamendempagmt.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

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
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.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (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

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (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

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
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

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    
“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

     

    20

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