Exhibit A CHANGE IN CONTROL AGREEMENT
Exhibit
10.2
Exhibit A
THIS
CHANGE IN CONTROL AGREEMENT (“Agreement”), made and entered into this _31st_ day of _December_, 2008, by
and between Summit Financial Group, Inc. (the “Company”) and H. Xxxxxxx Xxxxx,
III (“Maddy”), amends, restates, supersedes and replaces that certain Change in
Control Agreement made and entered into as of the 4th day of
March, 2005;
WHEREAS,
Company recognizes that Maddy’s contribution to the growth, success and
continued operation of Company has been substantial, and
WHEREAS,
Company believes it is in the best interest of Company to xxxxx Xxxxx a level of
security to preserve key management and to assure fair consideration of any
affiliation opportunities that arise, and
WHEREAS,
the parties hereto, in the interests of clarity and for other reasons stated
herein, and for the purpose of complying with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), wish to amend and
restate this Agreement, provided that all provisions applicable
to compliance under Code Section 409A shall be effective as of March 4, 2005,
and provided further that, notwithstanding any other provisions of this amended
and restated Agreement, this amendment applies only to amounts that would not
otherwise be payable in 2006, 2007 or 2008 and shall not cause (i) an amount to
be paid in 2006 that would not otherwise be payable in such year, (ii) an amount
to be paid in 2007 that would not otherwise be payable in such year, and (iii)
an amount to be paid in 2008 that would not 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), Maddy, by executing this Agreement, shall be deemed to have elected
the timing and form of distribution provisions of this amended and restated
Agreement, and to otherwise further revise the Agreement all on or before
December 31, 2008.
NOW,
THEREFORE, in consideration of the promises and respective covenants and
agreements of the parties herein contained, Company and Maddy agree as
follows:
A. Definitions. For
purposes of this Change in Control Agreement, the following definitions shall
apply:
(1) “Change
of Control” means with respect to (i) the Company or any Affiliate for whom
Maddy is performing services at the time of the Change in Control Event; (ii)
the Company or any Affiliate that is liable for the payment to Maddy hereunder
(or all corporations liable for the payment if more than one corporation is
liable) but only if either the compensation payable hereunder is
attributable to the performance of service by Maddy for such corporation (or
corporations) or there is a bona fide business purpose for such corporation or
corporations to be liable for such payment and, in either case, no significant
purpose of making
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such corporation or corporations liable for such payment is the avoidance of Federal Income tax; or (iii) a corporation that is a majority shareholder of a corporation identified in paragraph (i) or (ii) of this section, or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in paragraph (i) or (ii) of this section, a Change in Ownership or Effective Control or a Change in the Ownership of a Substantial Portion of the Assets of a Corporation as defined in Section 409A of the Code, and the regulations or guidance issued thereunder, meeting the requirements of a “Change in Control Event” thereunder.
(2) “Company”
shall mean Summit Financial Group, Inc.
(3) “Employment
Agreement” shall mean the Amended and Restated Employment Agreement dated as of
_December
31st______, 2008, by and between Summit Financial Group, Inc. and H.
Xxxxxxx Xxxxx, III.
(4) “Salary”
means Maddy’s Base Salary as defined in the Employment Agreement in effect on
the date of termination of Maddy’s employment under this Agreement, or if no
Employment Agreement is in effect, Maddy’s Base Salary on the date of
termination of employment hereunder, corresponding to the definition of Base
Salary in the most recent Employment Agreement.
(5) For
purposes of this Change in Control Agreement, “Good Cause” shall
mean: (i) excessive absenteeism without approval of Summit not caused
by disability; (ii) gross or willful neglect of duty resulting in substantial
harm to Summit after Maddy has been given written direction and reasonable time
to perform such duties; or (iii) any acts or omissions on the part of Maddy
which when proven constitute fraud or commission of any criminal act involving
the person or property of others or the public generally.
(6) “Disability”
means a physical or mental condition rendering Maddy substantially unable to
perform the duties of an officer and director of a banking
organization.
(7) “Retirement”
means termination of employment by Maddy in accordance with Company’s (or its
successor’s) retirement plan, including early retirement as approved by the
Board of Directors.
(8) “Good
Reason” means
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(a)
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A
Change of Control in the Company (as defined above)
and:
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(i)
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a
decrease in Maddy’s overall compensation (including, without limitation,
salary, perquisites, bonuses and other earnings reported on IRS Form W-2,
but excluding a diminution in board fees) below its level in effect
immediately prior to the date of consummation of the Change of Control,
without Maddy’s prior written consent;
or
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(ii)
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a
material reduction in the importance of Maddy’s job responsibilities or
assignment of job responsibilities inconsistent with Maddy’s
responsibility prior to the Change of Control without Maddy’s prior
written consent; or
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(iii)
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a
geographical relocation of Maddy to an office more than 20 miles from
Maddy’s location at the time of the Change of Control or the imposition of
travel requirements inconsistent with those existing prior to the Change
of Control without Maddy’s prior written consent;
or
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(b)
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Failure
of the Company to obtain assumption of this Change in Control Agreement by
its successor as required by Paragraph M(1) below;
or
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(c)
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Any
removal of Maddy from, or failure to re-elect Maddy to any of Maddy’s
positions with Company immediately prior to a Change of Control (except in
connection with the termination of Maddy’s employment for Good Cause,
death, Disability or Retirement) without Maddy’s prior
consent.
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(9) “Wrongful
Termination” means termination of Maddy’s employment by the Company or its
affiliates for any reason other than at Maddy’s option, Good Cause or the death,
Disability or Retirement of Xxxxx xxxxx to the expiration of twelve (12) months
after consummation of the Change of Control.
(10) “Separation
from Service” means the severance of Maddy’s employment with the Company or any
Affiliate for whom Maddy is performing services at the time of the Change in
Control Event for any reason. Maddy separates from service with the
Company or any Affiliate if he dies, retires, separates from service because of
Maddy’s Disability, or otherwise has a termination of employment with the
Company or any Affiliate. However, the employment relationship is
treated as continuing intact while Maddy 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 Maddy’s right to reemployment with the Company or any Affiliate is
provided either by statute or by contract. If the period of leave
exceeds six months and Maddy’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 Maddy 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:
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(i) an examination of the relevant facts and circumstances, as set forth in Code Section 409A and the regulations and guidance thereunder, in the case of any performance of services or availability to perform services after a purported Separation from Service, |
(ii) in
any instance in which Maddy 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 Maddy shall only be considered to meet the requirements of
a Separation from Service hereunder if Maddy meets (a) the requirements of a
Separation from Service under all such Aggregated Plans and (b) the requirements
of a Separation from Service under this Agreement which would otherwise
apply,
(iii) in
any instance in which Maddy is an employee and an independent contractor of the
Company or any Affiliate or any combination thereof, Maddy 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
Maddy provides services both as an employee and a member of the Board of
Directors of the Company or any Affiliate or any combination thereof, the
services provided as a director are not taken into account in determining
whether Maddy has had a Separation from Service as an employee under this
Agreement, provided that no plan in which Maddy 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.
B. Retention of Maddy After
Change of Control. In order to facilitate management
continuity and to promote an orderly transition of ownership, Company and Maddy
agree that after a Change of Control, Maddy shall be employed by the acquiring
company for a period of one (1) year (the “Transition Period”), commencing upon
the date of consummation of the transaction resulting in a Change of
Control. During the Transition Period, Maddy may terminate his
employment for Good Reason, and the Company may terminate the employment of
Maddy for Good Cause. If Company terminates Maddy in a manner
constituting Wrongful Termination, or Maddy terminates for Good Reason, Maddy
shall be entitled to receive the compensation set forth in paragraph E
below.
If the
Employment Agreement is still in effect, Maddy shall be employed pursuant to the
terms of Article II and Article V, A-E of the Employment Agreement; provided, that any additional
provisions of Maddy’s Employment Agreement which by their terms specifically
apply to this Change in Control Agreement shall also apply to Maddy’s employment
hereunder and, if the Employment Agreement is no longer in effect, such
provisions shall be deemed to survive and shall be incorporated by reference
into this Change in Control Agreement.
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All other terms of Maddy’s employment, including without limitation his right to receive termination payments and the term of his employment, will be controlled by this Agreement.
C. Compensation of Maddy Upon
Separation from Service Due to Death or Disability During the Transition
Period. In the event of the Separation from Service of Maddy
due to Death or Disability during the Transition Period, Maddy shall be entitled
to three times the greater of (a) Maddy’s Salary in effect immediately prior to
the date of consummation of a Change of Control or (b) Maddy’s Salary in effect
on the date of Separation from Service. Such payment shall be made in
a lump sum on the date of Separation from Service under this Agreement, subject
to the provisions of Paragraph N herein to the extent applicable.
D. Compensation of Maddy Upon
Separation from Service Due to Expiration of the Transition
Period. Upon Separation from Service due to the expiration of
the Transition Period, Maddy shall be entitled to be paid an amount equal to
three (3) times the greater of (a) Maddy’s Salary in effect immediately prior to
the date of consummation of a Change of Control or (b) Maddy’s Salary in effect
on the date of Separation from Service. Such payment shall be made in
a lump sum on the date of Separation from Service under this Agreement, subject
to the provisions of Paragraph N herein to the extent applicable.
E. Compensation of Maddy Upon
Separation from Service Due to Good Reason or Wrongful Termination during the
Transition Period. Except as hereinafter provided, if Maddy
terminates his employment with the Company during the Transition Period for Good
Reason, resulting in Maddy’s Separation from Service, or the Company terminates
Maddy’s employment during the Transition Period in a manner constituting
Wrongful Termination, resulting in Maddy’s Separation from Service, the Company
agrees as follows:
(1) The
Company shall pay Maddy a cash payment equal to three (3) times the greater of
(a) Maddy’s Salary in effect immediately prior to the date of consummation of a
Change of Control or (b) Maddy’s Salary in effect on the date of Separation from
Service. Such payment shall be made in a lump sum on the date of
Separation from Service under this Agreement, subject to the provisions of
Paragraph N herein to the extent applicable.
(2) Maddy
will be entitled to receive his reasonable share of the Company’s cash bonuses,
if any, allocated in accordance with existing principles and authorized by the
Board of Directors. The amount of Maddy’s cash incentive award shall
not be reduced due to Maddy not being actively employed for the full
year. Said cash bonuses, if any, will be paid to Maddy in a lump sum
on the date of Separation from Service, taking into account the provisions of
Paragraph M herein relating to when payments are deemed to be made, and subject
to the provisions of Paragraph N herein to the extent applicable.
(3) Maddy
will continue to participate, without discrimination, for the number of months
between the date of Separation from Service and the date that is thirty-six (36)
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 Maddy, in general, of the Company, or any successor
organization, provided Maddy’s continued participation is possible under the
general terms and conditions of such plans. In the event Maddy’s
participation
in any such plan is barred, the Company shall arrange to provide Maddy with
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benefits
substantially similar to those to which Maddy would have been entitled had his
participation not been barred. However, in no event will Maddy
receive from the Company the employee benefits contemplated by this subparagraph
if Maddy receives comparable benefits from any other source. With
respect to any benefits Maddy receives under this Paragraph E(3), the following
provisions will apply: (i) in-kind benefits provided under this
Paragraph E(3) during any taxable year of Maddy shall not affect the in-kind
benefits to be provided under this Paragraph E(3) in any other taxable year;
(ii) if the provision of benefits under this Paragraph E(3) is to be done by
means of reimbursement, the reimbursement of an eligible benefit expense under
this Paragraph E(3) must be made on or before the last day of Maddy’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 E(3) shall be
subject to liquidation or exchange for any other benefit, and (iv) benefits
provided under this Paragraph E(3) shall be subject to the provisions of
Paragraph N herein to the extent applicable.
(4) Paragraph
F of this Agreement and Section VII of the Employment Agreement shall not
apply.
F. Separation from Service at
Maddy’s Option. Maddy may Separate from Service within six (6)
months after consummation of any Change of Control without reason at his
option by giving at least thirty (30) days’ written notice of his intention to
terminate his employment. In such event, Maddy shall be entitled to
receive a payment equal to 75% of the greater of (a) Maddy’s Salary in effect
immediately prior to the date of consummation of a Change of Control or
(b) Maddy’s Salary in effect on the date of Separation from
Service. Such payment shall be made in a lump sum on the date of
Separation from Service under this Agreement, subject to the provisions of
Paragraph N herein to the extent applicable.
G. Noncompetition and
Nonsolicitation. In consideration of the covenants set forth
herein, including but not limited to the payment set forth in paragraphs C, D
and E hereof, Maddy agrees as follows:
(1) For
a period of three (3) years after expiration of the Transition Period, provided
Maddy’s employment under this Agreement is not sooner terminated, Maddy shall
not, directly or indirectly engage in the business of banking, in the entire
State of West Virginia, in any county or location in which Summit has operating
offices at the time of termination, in the following designated locations in
Virginia (See Exhibit to Paragraphs G(1) and (2) attached, which is incorporated
herein by reference. This Exhibit was molded to included the counties
where the municipalities are located.), or in any location identified by Summit
in its three-year strategic plan as a location for future expansion to be
adopted by the Board and reviewed and updated at regular intervals.
(2) For
a period of one (1) year after Maddy’s employment with Summit is terminated for
any reason other than Maddy’s Disability, Retirement, Good Reason or termination
at Maddy’s option as provided in Paragraph F hereof, Maddy shall not, directly
or indirectly, engage in the business of banking in the entire State of West
Virginia, in any county or location in which Summit has operating offices at the
time of termination, in the following designated locations in Virginia (See
Exhibit to Paragraphs G(1) and (2)) attached, which is incorporated
herein by reference. This Exhibit was molded to included the counties
where the
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municipalities
are located.), or in any location identified by Summit in its three-year
strategic plan as a location for future expansion to be adopted by the Board and
reviewed and updated at regular intervals.
(3) For
purposes of Paragraphs G(1) - (2), being engaged in the business of banking
shall mean Maddy’s engaging in any business or activity of any nature that is
competitive with the business of Summit or its affiliates in the specified
geographic area or Maddy’s solicitation of business from clients with a primary
or principal office in the specified geographic area.
(4) 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 is overly broad in any other respect or for any
other reason, then in such event this Agreement shall be deemed modified and
interpreted to extend over only such maximum period of time, geographical area,
or range of activity or otherwise, so as to render these provisions valid and
enforceable, and as so modified, these shall be enforceable and
enforced.
H. Other
Employment. Maddy shall not be required to mitigate the amount
of any payment provided for in this Change in Control Agreement by seeking other
employment. The amount of any payment provided for in this Change in
Control Agreement shall not be reduced by any compensation earned or benefits
provided (except as set forth in Paragraph E(3) above) as the result of
employment by another employer after the date of Separation from
Service.
I. Rights of Company Prior to
the Change of Control. This Change in Control Agreement shall
not affect the right of the Company or Maddy to terminate the foregoing
Employment Agreement or the employment of Maddy in accordance therewith;
provided, however, that any termination or reduction in salary or benefits that
takes place after discussions have commenced that result in a Change of Control
shall be presumed (without clear and convincing evidence to the contrary) to be
Good Reason and a violation of this Change in Control Agreement entitling Maddy
to the benefits hereof, provided Maddy Separates from Service either before or
during the Transition Period, and any such termination by Company resulting in
Maddy’s Separation from Service either before or during the Transition Period
shall be deemed to be a Wrongful Termination, and all references in this Change
in Control Agreement to Salary shall be deemed to mean the Salary, as defined
herein, based on the earnings Maddy would have had prior to any reduction
thereof.
J. Confidentiality. Maddy
shall not, during the term of this Agreement or at any time thereafter, directly
or indirectly, publish or disclose to any person or entity any confidential
information (other than a Company employee entitled to know such confidential
information) concerning the assets, customer/client lists, business or affairs
of Company, and its affiliates, including but not limited to any trade secrets,
financial data, employee or customer/client information or organizational
structure. Notwithstanding the foregoing, nothing herein shall
prevent Maddy from utilizing the knowledge and experience he has acquired in the
banking industry including without limitation the knowledge of producer bonus
plans.
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All
files, records, documents, information, letters, notes, media lists, notebook
and similar items relating to the business of Company shall remain the exclusive
property of Company. Upon the expiration or earlier termination of
this Agreement, or when requested by Company, Maddy shall immediately deliver to
Company all such files, computer data files, records, documents, information and
other items in the possession of or under the control of Maddy.
All
business produced by Maddy while in the employ of the Company or any Affiliate
thereof is the exclusive property of Company unless specifically excluded
elsewhere in this Agreement. Maddy shall not, during the term of this
Agreement or any time thereafter, intentionally interfere with any business or
contractual relationship of the Company.
X. Xxxxx-Up
Payment. Notwithstanding anything in this Agreement to the
contrary, in the event it shall be determined that any payment or distribution
by Company and any of its subsidiaries and affiliates to or for the benefit of
Maddy (whether paid or payable or distributed or distributable pursuant to this
Agreement, the Executive Salary Continuation Agreement between Company and
Maddy, the Employment Agreement between Company and Maddy, or any other
agreement, contract, plan or arrangement, but determined without regard to any
additional payments required under this Paragraph K) (any such payments and
distributions collectively referred to as “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 Company shall pay to Maddy 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 Maddy thirty (30) days
after Maddy remits the taxes with respect to which such Gross-Up Payment is made
and all subject to the provisions of Paragraph N herein to the extent
applicable.
All
determinations required to be made under this Paragraph K, 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 Company to audit its
financial statements (the “Accounting Firm”) which shall provide either before
or no later than twenty (20) days after Maddy remits any such taxes, detailed
supporting calculations both to Company and Maddy. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting a “change in control,” Maddy shall appoint another
nationally recognized accounting firm to make, either before or no later than
twenty (20) days after Maddy 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 Company.
L. Arbitration. Any
dispute between the parties arising out of or with respect to this Agreement or
any of its provisions or Maddy’s employment with Company, whether sounding in
tort or contract, shall be resolved by the sole and exclusive remedy of binding
arbitration. Maddy hereby waives his right to a jury trial and his
right to receive noneconomic damages. Arbitration shall be conducted
in Moorefield, West Xxxxxxxx, in accordance with the rules
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of the American Arbitration Association (“AAA”). The parties agree each to select one arbitrator from an AAA employment panel. Within ten days after selection of the second arbitrator, the two arbitrators shall select a third arbitrator. The arbitration shall be conducted in accordance with the West Virginia Rules of Evidence and all discovery issues shall be decided by the arbitrators. The panel of arbitrators shall supply a written opinion and analysis of the matter submitted for arbitration along with the decision. The arbitration decision shall be final and subject to enforcement in the local circuit court.
In any
arbitration proceeding between the parties, the losing party shall pay to the
prevailing party all reasonable expenses and costs including attorneys’ fees
incurred by the prevailing party during the arbitration proceeding, provided, that in the event
Maddy becomes entitled to reimbursement under this Paragraph L, the following
provisions shall apply: (i) reimbursement provided under this
Paragraph L during any taxable year of Maddy shall not affect reimbursement to
be provided under this Paragraph L in any other taxable year; (ii) reimbursement
under this Paragraph L shall be made thirty (30) days after Maddy requests
reimbursement hereunder, provided that in no event
shall any payment under this Paragraph L be made after the last day of Maddy’s
taxable year following the taxable year in which the expense was incurred, (iii)
no rights to reimbursement under this Paragraph L shall be subject to
liquidation or exchange for any other benefit, and (iv) reimbursement provided
under this Paragraph L shall be subject to the provisions of Paragraph N herein,
to the extent applicable. A party shall be considered a prevailing
party if:
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(i)
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it
initiated the arbitration and substantially obtained the relief it sought,
either through a judgment or the losing party’s voluntary action before
arbitration (after it is scheduled) or
judgment;
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(ii)
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the
other party withdraws its action without substantially obtaining the
relief it sought, or
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(iii)
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it
did not initiate the arbitration and judgment is entered for either party,
but without substantially granting the relief
sought.
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M. 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 Maddy under this Agreement shall be treated as having been made
on a date specified in this Agreement if it is made on a later date within
Maddy’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, Maddy is not permitted, directly or indirectly, to designate
the taxable year of any payment.
N. Six-Month Delay in
Payments.
Notwithstanding
any other provisions of this Agreement, if Maddy is a Specified Employee (within
the meaning of Code Section 409A) on Maddy’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 Maddy’s Separation from Service other
than by death,
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under any provision of this Agreement, and such payment of deferred compensation is to be made within six months after Maddy’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 Maddy (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 Maddy (other than by death) shall be delayed, aggregated, and paid, notwithstanding any other provision of this Agreement, on the date which is six months after such Separation from Service of Maddy (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 Agreement, no payment of deferred compensation upon or based upon Separation from Service may be made under this Agreement before the date that is six months after the date of Separation from Service or, if earlier, the date of death, if Maddy is a Specified Employee on Maddy’s date of Separation from Service. This Paragraph N 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.
O. Successors; Binding
Agreement.
(1) The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance satisfactory to
Maddy, to expressly assume and agree to perform this Change in Control
Agreement. Failure of the Company to obtain such agreement prior to
the effectiveness of any such succession shall be a breach of this Change in
Control Agreement and shall entitle Maddy to compensation from the Company in
the same amount and on the same terms as he would be entitled to hereunder if he
terminated his employment for Good Reason hereunder, provided that Maddy incurs
a Separation from Service within the Transition Period.
(2) This
Change in Control Agreement and all rights of Maddy hereunder shall inure to the
benefit of and be enforceable by Maddy’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Maddy should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Maddy’s devisee, legatee, or other designee or, if there be no such
designee, to Maddy’s estate.
P. Indemnification. To
the fullest extent permitted under West Virginia law and federal banking law,
the Company agrees that it will indemnify and hold harmless Maddy from and
against all costs and expenses, including without limitation, all court costs
and attorney’s fees, incurred by him during his lifetime in defending any and
all claims, demands, proceedings, suits or actions, actually instituted or
threatened, by third parties, involving this Agreement, its validity or
enforceability or with respect to any payments to be made pursuant thereto;
provided, that in the
event Maddy becomes entitled to reimbursement under this Paragraph P, the
following provisions shall apply: (i) reimbursement provided under
this
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Paragraph P during any taxable year of Maddy shall not affect reimbursement to be provided under this Paragraph P in any other taxable year; (ii) reimbursement under this Paragraph P shall be made thirty (30) days after Maddy requests reimbursement hereunder, provided that in no event shall any payment under this Paragraph P be made after the last day of Maddy’s taxable year following the taxable year in which the expense was incurred, (iii) no rights to reimbursement under this Paragraph P shall be subject to liquidation or exchange for any other benefit, and (iv) reimbursement provided under this Paragraph P shall be subject to the provisions of Paragraph N herein, to the extent applicable.
Q. Survival of Change in
Control Agreement. This Change in Control Agreement shall
survive the expiration of the Employment Agreement.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the
day first written above:
SUMMIT
FINANCIAL GROUP, INC.
By: /s/ Xxxxx X.
Xxxx ______________
Its: Chairman______________________
/s/ H. Xxxxxxx Xxxxx,
III________________
H.
XXXXXXX XXXXX, III
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Exhibit
to Paragraphs G(1) and (2) of Change in Control Agreement
By and
Between Summit Financial Group, Inc. and H. Xxxxxxx Xxxxx, III, dated December 31_,
2008.
Designated
Virginia Locations
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Ashburn
|
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Charlottesville
|
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Fredericksburg
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Leesburg
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Purcellville
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Warrenton
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*
|
The
designation of the municipality expressly includes the county in which the
municipality is located.
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