EMPLOYMENT AGREEMENT
Exhibit
10.6
THIS
EMPLOYMENT AGREEMENT is made
and
entered into on this
17th day
of October
,
2005, by
and among SUMMIT FINANCIAL GROUP, INC. (“Summit FGI”), a West Virginia
corporation, and XXXXXXX X. XXXXXXXX (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 the Company; and
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.
The
following definitions in addition to any terms otherwise defined herein, shall
apply to designated phrases used in this Employment Agreement.
(a)
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“Change
of Control” means (i) a change of ownership of Summit FGI that would have
to be reported to the Securities and Exchange Commission as a change
of
control, including but not limited to the acquisition by any “person”
and/or entity as defined by securities regulations and law, of direct
or
indirect “beneficial ownership,” as defined, of twenty-five percent (25%)
or more of the combined voting power of Summit FGI’s then outstanding
securities; or (ii) the failure during any period of three (3) consecutive
years of individuals who at the beginning of such period constitute
the
Board of Directors of Summit FGI for any reason to constitute at
least a
majority thereof, unless the election of each director who was not
a
director at the beginning of such period has been approved by at
least
two-thirds (2/3) of the directors at the beginning of the period.
In no
event shall corporate restructuring of Summit FGI and/or its affiliates
be
construed as a “change in control” absent one or more of the conditions
set forth above.
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(b)
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“Salary”
means Employee’s average of full earnings reported on IRS Form W-2 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
effective date of termination, whichever is
greater.
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(c)
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“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; (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.
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(d)
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“Disability”
means unable as a result of a physical or mental condition to perform
Employee’s normal duties as Senior Vice President from day to day in
Employee’s usual capacity.
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(e)
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“Retirement”
means termination of employment by Employee in accordance with Summit
FGI’s ’s retirement plan, including early retirement as approved by the
Board of Directors of Summit FGI .
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(f)
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“Good
Reason” means: (i) a Change of Control in Summit FGI and; (ii) a
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 (iii) a material change in Employee’s
job duties and responsibilities without Employee’s prior written consent;
or (iv) a geographical relocation of Employee to an office more than
twenty (20) miles from Employee’s location at the time of the Change of
Control without Employee’s prior written consent; or (v) failure of Summit
FGI to obtain assumption of this Employment Agreement by its/their
successor; or (vi) 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.
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(g)
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“Wrongful
Termination” means termination of Employee’s employment prior to the
expiration of eighteen (18) 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.
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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 that may be
assigned to him from time to time by the Chief Executive Officer and/or the
Board of Directors of Summit FGI. Employee’s duties shall include, but not be
limited to, the overall management of Summit FGI’s retail banking operation ,
management of Summit FGI’s deposit product development (commercial and retail),
the successful implementation and management of a new call center, and
management of Summit FGI’s marketing and retail efforts. 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)
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Base
Salary.
Employee’s base salary as of the effective date of this Employment
Agreement is One Hundred Fifty Thousand Dollars ($150,000.00) 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.
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(b)
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Signing
Bonus.
Upon
execution of this Employment Agreement, Employee shall be entitled
to
receive a signing bonus in an amount equal to $30,000 to cover relocation
expenses. Subject to paragraph 6, if within eighteen (18) months
of the
effective date of this Employment Agreement, Employee terminates
his
employment for any reason other than death or Disability, then Employee
shall reimburse Summit FGI the full amount of the signing bonus provided
for herein..
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(c)
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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.
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(d)
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Paid
Leave.
Employee shall be entitled to all paid leave as provided by Summit
FGI to
other similarly-situated officers.
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(e)
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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.
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(f)
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Business
Expenses.
Summit FGI shall reimburse Employee for reasonable expenses incurred
by
Employee in carrying out his duties and responsibilities, including
but
not limited to reimbursing civic club organization dues and reasonable
expenses for customer entertainment. All such reimbursement shall
be
administered in accordance with the policies and practices established
by
Summit FGI from time to time.
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(g)
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Stock
Options.
Employee will be entitled to receive stock options for a total of
3,500
shares of Summit FGI subject to the terms and conditions of Summit
FGI’s
current Stock Option Plan.
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(h)
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Supplemental
Executive Retirement Benefit.
Summit FGI will provide Employee with a supplemental executive retirement
benefit.
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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.
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, Employee shall be entitled to payment from Summit FGI equal
to
the base salary compensation set forth in this Agreement for the remaining
term
of the Agreement, or severance pay equal to 100% of his annual base salary,
whichever is greater.
7. Termination
for Good Reason, Wrongful Termination, or at Employee’s
Option.
(a)
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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, 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 effective date of
termination and the date that is eighteen (18) 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
annual
base salary. Employee shall have the right to terminate his employment
without reason at his option by giving written notice of termination
within six (6) months of a Change of Control. In this case, Employee
will
be entitled to receive a lump sum equal to six months of his annual
base
salary.
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(b)
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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, 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. The
amount of Employee’s cash incentive award shall not be reduced due to
Employee not being actively employed for the full
year.
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(c)
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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 Termination and the date that is eighteen (18) months
after
the date of the consummation of the Change of Control in benefit
plans
(such as retirement, disability and medical insurance) maintained
after
any Change of Control for employees, in general, of 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. 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 Agreement for a period
of six
(6) months after termination. However, in no event will Employee
receive
from Summit FGI the employee benefits contemplated by this section
if
Employee receives comparable benefits from any other
source.
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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 for
any reason other than at Employee’s option, Good Cause or the death, Disability
or Retirement of Employee that takes place 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)
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For
the entire duration of Employee’s employment with Summit FGI and for three
(3) 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 affiliate 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 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 conducts such business or sells
services
in the future.
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(b)
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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, that engages in any activity described in
Paragraph
10(a) above.
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(c)
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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.
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(d)
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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 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.
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(e)
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The
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.
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11. Confidential
Information.
(a)
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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.
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(b)
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Employee
also agrees that 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.
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(c)
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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, processes,
machines, compositions, computer programs, accounting methods, business
plans and information systems including such materials, information
and
data that are in machine-readable
form.
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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, or do any act in conflict with the interest of
Company, its subsidiaries or affiliates. Employee expressly agrees to indemnify
and hold harmless Company, its affiliates, and Company’s and its affiliates’ and
directors, officers and employees from any and all liability resulting from
or
arising under the breach of this representation and warranty. This indemnify
is
in addition to and not in substitution of rights Company may have against
Employee at common law or otherwise.
13. Successors;
Binding Agreement; Exclusive Remedy.
(a)
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Summit
FGI will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of
the
business and/or assets of Summit FGI, by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform
this
Employment Agreement.
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(b)
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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 terms of this Employment Agreement to Employee’s
devisee, legatee, or other designee or, if there be no such designee,
to
Employee’s estate.
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(c)
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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.
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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 Xxxxxxxx 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: Xxxxxxx
Xxxxxxxx
000 Xxxxxxxx Xxxx Xx., Xxxxxxxxxx, XX 00000
If
to Summit
FGI: Summit
Financial Group, Inc
Attn:
H. Xxxxxxx Xxxxx, III, President & CEO
P. O. Xxx 000
Xxxxxxxxxx, XX 00000
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. 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. 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.
17. 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. Xxxxxxx Xxxxx, III
Its:
President
/s/
Xxxxxxx
X.
Xxxxxxxx
XXXXXXX
X.
XXXXXXXX