SUMMIT FINANCIAL GROUP, INC. 2009 OFFICER STOCK OPTION PLAN FORM OF QUALIFIED STOCK OPTION GRANT AGREEMENT (Installment Vesting)
Exhibit
10.4
SUMMIT
FINANCIAL GROUP, INC. 2009 OFFICER STOCK OPTION PLAN
(Installment
Vesting)
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1.
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Grant of Option. Subject
to the terms and conditions of this Qualified Stock Option Grant Agreement
(“Agreement”) and the 2009 Officer Stock Option Plan (“Plan”), dated
____________, 2009, which has been adopted by SUMMIT FINANCIAL GROUP,
INC., a West Virginia corporation (“Corporation”) and which is
incorporated herein by reference, an Option to purchase a total of _____
shares of $2.50 par value common stock of the Corporation’s Common Stock
at a price of ___________________ Dollars and ___ Cents ($______) per
share is hereby granted to _____________________ (“Participant”) as of the
date of this Agreement as affixed below with its execution (“Date of
Grant”).
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2.
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Inclusion of
Parent, Subsidiary and Successor Corporations. For purposes of this Agreement,
employment by a parent and or subsidiary of the Corporation shall be
considered employment by the Corporation. As used in this
Section, the term “Corporation” shall include the parent and all present
and future subsidiaries of the Corporation as defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended or replaced
from time to time (“Code”). This Agreement shall be binding
upon any successor or successors of the Corporation and reference herein
to the Corporation, unless clearly inapplicable, shall be deemed to
include any such successor or successors of the
Corporation.
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3.
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Qualified
Stock Option. This Option is intended to qualify
as an option of the type described in Section 422 of the Code (“Qualified
Stock Option”).
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4.
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Installment
Exercise. Subject to any limitations in the Plan and
Agreement, the Qualified Stock Option shall become vested and exercisable
prior
to the tenth anniversary of the date of grant (hereinafter the “Expiration
Date”) in five (5) installments for the following percentage of the
total number of Common Stock shares under the Option, on or after the
following Date of Vesting indicated, in cumulative
fashion:
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Number
of Shares
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Date
of Vesting
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Date
of Termination
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%
Total Number of Common Stock Shares Under Option
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a.
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b.
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c.
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d.
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e.
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f.
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g.
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h.
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i.
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j.
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Participant
agrees to exercise the Option in increments of not less than fifty (50)
shares.
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5.
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Termination of
Option.
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(a)
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The
Option and all rights granted under this Agreement with respect to the
Option, to the extent not previously exercised, shall terminate and become
null and void on and after the _______anniversary of the Date of Vesting;
provided, however, that the Option may
not be exercised at any time on or after the Expiration
Date.
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(b)
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Continuous
Employment Required. Except
as otherwise provided in this Section, a Participant must be an employee
of the Corporation from the date of grant of a Qualified Stock Option
until the date that is three (3) months prior to the exercise of the
Qualified Stock Option. If a Participant is terminated due to a
permanent disability, said Participant must be an employee of the
Corporation from the grant of a Qualified Stock Option until one (1) year
prior to the exercise of the Qualified Stock Option. An
employment relationship will be treated as continuing while the
Participant is on military leave, sick leave or other bona fide leave of
absence if the period of leave does not exceed ninety (90) days, or, if
longer, the Participant’s right to re-employment is guaranteed either by
statute or by contract. Employment shall be defined in
accordance with the provisions of Section 1.421-1(h) of the Income Tax
Regulations or any successor regulations, and if this Option shall be
assumed or a new Option substituted therefore in a transaction to which
Code Section 424(a) applies, employment by such successor corporation
shall be considered for all purposes of this Option to be Employment by
the Corporation.
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(c)
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Termination. In
the event of termination of the employment of a Participant prior to the
Expiration Date by either the Participant or the Corporation to whom an
Option has been granted under the Plan, other than a termination of
employment by reason of retirement (as defined in subsection (d) of this
Section 5), permanent disability (as defined in subsection (e) of this
Section 5), or death, the Participant may exercise such Vested Options
until the earlier of (i) the expiration of the stated term of the Option,
or (ii) a period of ninety (90) days from the date of such
termination.
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(d)
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Retirement. If a Participant’s continuous
employment with the Corporation terminates by reason of his or her
retirement, pursuant to the definition in the Plan, from the Corporation
at a retirement date authorized by the Committee prior to the Expiration
Date, the retired
Participant shall become one hundred percent (100%) Vested in any
installment of the Option not yet one hundred percent
(100%) Vested that Participant has been granted under the Plan as of his
or her date of retirement in accordance with this subsection
(d). A
Participant may exercise such Vested Options until the earlier of (i) the
expiration of the stated term of the Option, or (ii) for a period of
ninety (90) days from the date of such
retirement.
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(e)
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Permanent
Disability. If a Participant’s continuous employment
terminates prior to the Expiration Date by reason of a permanent
disability, as defined in Code Section 22(e)(3) of the Code, as amended
from time to time, and as determined by the Committee in its discretion
based upon such documentation and information as the Committee may require
the Participant to submit for purposes of establishing permanent
disability pursuant to this subsection (e) of Section 5, then such Option
of the Participant may be exercised with respect to the number of shares
covered by the Participant’s Option that were Vested immediately prior to
the date of such permanent disability as determined by the
Committee. A Participant who is determined to be permanently
disabled pursuant to this subsection (e) of Section 5 may exercise such
Vested Options until the earlier of (i) the expiration of the stated term
of the Option, or (ii) one (1) year after a Participant’s continuous
employment with the Corporation is terminated by reason of a permanent
disability as established pursuant to this subsection (e) of Section
5.
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(f)
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Death. If
a Participant’s continuous employment with the Corporation terminates by
reason of his or her death prior to the Expiration Date, then to the
extent that the Participant would have been entitled to exercise the
Option immediately prior to his or her death, such Option of the deceased
Participant may be exercised during the period the Option would have been
exercisable if the deceased Participant had not died and had remained in
employment, by the person or
persons
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(including
his or her estate) to whom his or her rights under such Option shall have
passed by will or by laws of descent and
distribution. Notwithstanding the previous sentence, a
Participant must be an employee of the Corporation (i) at the time of the
Participant’s death or (ii) within three (3) months of the Participant’s
death to entitle the person or persons (including his or her estate) to
whom his or her rights under such Option shall have passed by will or by
laws of descent and distribution to exercise said
Option.
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6.
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Exercise of
Option. Subject to Section 5 of this Agreement,
Participant may exercise the Option with respect to all or any part of the
number of shares then exercisable under this Agreement by giving the
Committee written notice of intent to exercise, of the number of shares to
be purchased, the exercise date, and making full payment of the Option
price, all in accordance with Sections 8 and 9 of the
Plan.
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7.
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Adjustment
of and Changes in Stock of the Corporation. Pursuant
to Section 11 of the Plan, in the event of a reorganization,
recapitalization, change of shares, stock split, spin-off, stock dividend,
reclassification, subdivision or combination of shares, merger,
consolidation, rights offering, or any other change in the corporate
structure or shares of capital stock of the Corporation, the Committee
shall make such adjustment as it deems appropriate in the number and kind
of shares of stock subject to the Option or in the Option
price. All provided, however, that any such adjustments shall
be accomplished so that such Qualified Stock Option shall continue to be
an incentive stock option within the meaning of Code Section
422. However, in no event shall this Section 7 be construed to
permit a modification (including a replacement) of an Option if such
modification either: (i) would result in accelerated
recognition of income or imposition of additional tax under Code Section
409A; or (ii) would cause the Option subject to the modification (or cause
a replacement Option) to be subject to Code Section 409A; and provided,
further, that such adjustment shall be made in accordance with Code
Section 424(h).
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8.
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Change of
Control. Pursuant
to Sections 11(b) and 12 of the Plan, in the event of a Change of
Control, the Participant shall become one hundred percent (100%) Vested as
of the date of such Change of Control in all Options granted hereunder and
all such Options shall become exercisable regardless of the number of
years that have passed since the Date of Grant and regardless of any
vesting provisions in this Agreement to the contrary. All
provided that the Participant must be an employee on the date the Change
of Control is deemed to have occurred in order to have the vesting of
outstanding Options accelerated. Notwithstanding any provision
in this Section to the contrary, no extension to the Term of an Option
shall be extended beyond the original Term of said
Option.
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9.
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No Rights of
Stockholders. Neither Participant nor any personal
representative of Participant shall be, or shall have any of the rights
and privileges of, a stockholder of the Corporation with respect to any
shares of stock purchasable or issuable upon the exercise of the Option,
in whole or in part, prior to the date of exercise of the
Option.
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10.
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Employment Not
Affected. Nothing contained in the Plan or this Option
shall be construed or deemed by any person under any circumstances to bind
the Corporation to continue the employment of the Participant for the
period within which this Option may be
exercised.
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11.
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Nontransferability of
Option. Except
as provided in Section 5 of this Agreement, no rights granted under this
Agreement or any Option hereunder may be transferred in any manner as this
Option is personal and may be exercised only by Participant while
he or she is an employee of the Corporation. In the event of
(i) any attempt by Participant to alienate, assign, pledge, hypothecate,
or otherwise dispose of the Option, except as provided in this Agreement,
or (ii) the levy of any attachment, execution, or similar process upon the
rights or interests conferred by this Agreement, the Corporation may
terminate the Option by notice to Participant and upon such notice the
Option shall become null and void. The terms of this Option
shall be binding upon the executors, administrators, heirs, successors,
and assigns of Participant.
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12.
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Limitations on Disposition of
Qualified Stock Option Shares. It is understood and
intended that this Option shall qualify as a Qualified Stock Option, an
option of the type described in Section 422 of the Code. The
Participant understands that to obtain the benefits of a Qualified Stock
Option, no sale or other
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disposition
may be made of any shares acquired upon exercise of the Option within one
year after the day of the transfer of such shares to him or her, nor
within two years after the grant of the Option, subject to the exceptions
described in Sections 7(h) and 10(d) of the Plan. If the
Participant intends to dispose, or does dispose (whether by sale,
exchange, gift, transfer or otherwise), of any such shares within said
periods, he or she will notify the Corporation in writing within ten days
after such disposition.
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13.
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Amendment
of Option. The Option may be amended by the
Board or the Committee at any time (i) if the Board or the Committee
determines, in its sole discretion, that amendment shall deem necessary or
advisable, or to conform to any change in any law or regulation applicable
thereto; or (ii)
other than in the circumstances described in clause (i), with the consent
of Participant. All provided that
(i) no such amendment or modification shall be effective if it would
cause this Agreement
to violate Code Sections 409A and/or 422 and the regulations and guidance
thereunder and consequently cause this Agreement to be subject to 409A or
cause any Qualified Stock Option granted hereunder to be treated as a Non
Qualified Stock Option.
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14.
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Notice. Any notice to the Corporation
provided for in this instrument shall be addressed to it in care of its
President at its principal office in West Virginia, and any notice to the
Participant shall be addressed to the Participant at the current address
shown on the payroll records of the Corporation. Any notice
shall be deemed to be duly given if and when properly addressed and posed
by registered or certified mail, postage
prepaid.
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15.
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Incorporation of Plan by
Reference. The Option is granted pursuant to the terms
of the Plan, the terms of which are incorporated herein by reference, and
the Option shall in all respects be interpreted in accordance with the
Plan. The Committee shall interpret and construe the Plan and
this instrument, and its interpretations and determinations shall be
conclusive and binding on the parties to this Agreement and any other
person claiming an interest under the Agreement, with respect to any issue
arising under it or the Plan. Unless otherwise expressly stated
herein, in the event of any inconsistency between the terms and conditions
of the Plan and this Agreement, the terms of the Plan shall
control. Any defined term used in this Agreement is, unless
specifically defined otherwise, given the meaning as defined in the
Plan.
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16.
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Construction. If
any provision of this Agreement is held to be illegal or void, such
illegality or invalidity shall not affect the remaining provisions of the
Agreement, but shall be fully severable, and the Agreement shall be
construed and enforced as if the illegal or invalid provisions had never
been inserted. For all purposes of the Agreement, where the
context permits, the singular shall include the plural, and the plural
shall include the singular. All decisions of the Board or the
Committee upon questions regarding the Agreement shall be conclusive and
binding on all persons. The headings of the paragraphs of this
Agreement have been included for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of
the terms of provisions hereof.
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17.
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Governing
Law. The validity, construction, interpretation, and
effect of this instrument shall exclusively be governed by and determined
in accordance with the law of the State of West Virginia, except to the
extent preempted by federal law, which shall to that extent
govern.
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IN
WITNESS WHEREOF, the Corporation has caused its duly authorized officers to
execute and attest this Qualified Stock Option Grant Agreement, and to apply the
corporate seal hereto, and Participant has placed his or her signature,
effective as of the Date of Grant.
CORPORATION:
SUMMIT FINANCIAL
GROUP, INC.
By:
_____________________________________
Xxxxx
Xxxx
Its: Chairman
of the Board
Attest:
___________________________________
Title:
____________________________________
Participant
acknowledges receipt of a copy of the Plan, a copy of which is attached, and
represents that he or she is familiar with the terms and provisions of the
Plan. Participant hereby accepts this Option subject to all the terms
and provisions of the Plan. Participant hereby agrees to accept as
binding, conclusive, and final all decisions and interpretations of the
Committee, and, where applicable, the Board, upon any questions arising under
the Plan.
Dated: __________________________
PARTICIPANT:
__________________________________
Sworn and subscribed
before me this _____ day of _________________, 20___.
__________________________________
Notary
Public
My Commission
expires: __________________________.
