Exhibit 10.6
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Agreement”) made in duplicate originals this _
29th __ day of _ December _, 2008, and effective
August 1, 1998 (unless specifically stated otherwise), is between
SUMMIT FINANCIAL GROUP, INC., formerly known as South Branch Valley
Bancorp, Inc., (“Summit”), SUMMIT COMMUNITY BANK, INC.
(the “Company”), and RONALD MILLER
(“Employee”).
WHEREAS, Summit is forming a subsidiary entity
(the “Virginia Bank”) for purposes of conducting
banking operations in the Commonwealth of Virginia;
WHEREAS, Summit offers the terms and conditions
of employment hereinafter set forth and the Employee has indicated
his willingness to accept such terms and conditions in
consideration of his employment with Summit;
WHEREAS, Employee and Summit executed an
employment agreement on August 1, 1998, which was thereafter
amended July 1, 2000 to provide for the waiver of future merit
raises in exchange for establishment of a Supplemental Executive
Retirement Plan by Summit for the benefit of Employee;
WHEREAS, under Paragraph 15 said employment
agreement may be amended by a writing signed by all the parties
hereto; 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 January 1, 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), Employee, 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 mutual
promises and covenants made in this Agreement, the parties agree as
follows:
1.
Employment . The Company and Summit
hereby employ Employee and Employee hereby accepts employment as
President, Chief Executive Officer and Chairman of the Board of
Directors of the Virginia Bank until June 15, 2007, and thereafter
as President and Chief Executive Officer of the Company, and as a
member of the Board of Directors of the Company, upon the terms and
conditions set forth herein.
2.
Term . The term of this Agreement shall
be for three (3) years commencing on July 1, 2000, and ending on
June 30, 2003, unless one of the parties terminates this Agreement
as provided herein. On July 1, 2003, and every three
years thereafter (the “Anniversary Date”), the
Agreement shall renew automatically for an additional three years
unless either the Board of Directors of Company or Employee gives
contrary written notice to the other no later than the Anniversary
Date. References herein to the term of this Agreement
shall refer both to the initial term and successive
terms.
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 Board of Directors of the
Company. 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 employment, the Company agrees to pay Employee a base
salary and to provide benefits as set forth in Exhibit A, which is
attached hereto and incorporated herein by reference.
5.
Termination by the Company or Employee .
The employment of Employee with the Company may
be terminated by any one of the following means, in which case
Employee shall be entitled to such compensation as is described
below:
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Mutual
Agreement .
The Employee’s employment may be terminated by mutual
agreement of the parties upon such terms and conditions as they may
agree; provided , that if such mutual agreement provides for
any payments or in-kind benefits to be paid or granted to Employee
it shall be in writing, and provided further , that such
written mutual agreement, if required to be aggregated for Code
Section 409A purposes with this Agreement or any other agreement
between Employee and Company, or any affiliate, shall not cause
this Agreement to violate Code Section 409A or the regulations and
guidance issued thereunder.
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The
Employee’s employment may be terminated by the Company for
cause consisting of one or more of the reasons specified in
Paragraph 5(B)(2)(a) - (e) below; provided, however, that if the
cause of termination is for a reason specified in Paragraph
5(B)(2)(a) below, and if in the reasonable judgment of the Board of
Directors of the Company the damage incurred by the Company as a
result of Employee’s conduct constituting cause is damage of
a type that is capable of being substantially reversed and
corrected, the Company shall give Employee thirty (30) days advance
notice of the Company’s intention to terminate his employment
for cause and a reasonable opportunity to cure the cause of the
possible termination to the satisfaction of the Company.
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For purposes of
this Agreement, the term “cause” shall be defined as
follows:
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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
the Company;
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Employee’s commission of any act
constituting theft, intentional wrongdoing or fraud;
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The conviction
of the Employee of a felony criminal offense in either state or
federal court;
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Any single act
by Employee constituting gross negligence or which causes material
harm to the reputation, financial condition or property of the
Company; or
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The death of
Employee during the term of this Agreement, in which event the
Company shall pay to the estate of the Employee any compensation
for services rendered but unpaid prior to the Employee’s date
of death. Such payment shall be made in a lump sum on
the first day of the second month following Employee’s date
of death.
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The Board of
Directors of the Company shall determine, in its sole discretion,
whether any acts and/or omissions on the part of Employee
constitute “cause” as defined
above. Notwithstanding the foregoing, Employee shall be
entitled to arbitrate a finding of the Board of Directors of
“cause” in accordance with Paragraph 9
hereof.
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In the event
that Company terminates Employee’s employment for cause
(other than death) as defined above, which results in
Employee’s Separation from Service, Employee shall be
entitled to be paid his regular salary and benefits up to the date
of Separation from Service, but not any additional
compensation. Any payment
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to Employee
pursuant to this Paragraph 5(B)(4) shall be paid in a lump sum on
the date of Employee’s Separation from Service, subject to
the provisions of Paragraph 7(D) to the extent
applicable.
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Not for
Cause .
Employee’s employment may be terminated by the Company for
any reason permitted under applicable law not specified in
Paragraph 5(B) above 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 5(C)
which results in Employee’s Separation from Service, Employee
shall be entitled to payment from the Company equivalent to the
base salary compensation set forth in this Agreement for the
remaining term of the Agreement or severance pay equal to six (6)
months of base salary payments, whichever is
greater. Any payment to Employee pursuant to this
Paragraph 5(C) shall be paid in a lump sum on the date of
Employee’s Separation from Service, subject to the provisions
of Paragraph 7(D) to the extent applicable.
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Employee
Resignation .
Employee recognizes and understands the vital role he
plays in the Company’s establishment of the Virginia Bank,
and therefore agrees not to resign from employment during the
initial three-year term of this Agreement except in the event of
his disability. If the Employee resigns in violation of
this commitment, Employee agrees to comply with the restrictions
set forth in Paragraph 6 below.
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Change in
Control .
Exhibit B hereto sets forth the rights and
responsibilities of the parties in the event of a change in
control, as defined therein, and is incorporated herein by
reference. Provided, that if Employee is entitled to
payments upon Separation from Service under this Agreement and also
under Exhibit B hereto, the provisions of Exhibit B shall apply in
lieu of the provisions of this Agreement.
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Noncompetition and
Nonsolicitation .
In
consideration of the covenants set forth herein, including but not
limited to the severance pay set forth in Paragraph 5 and Exhibit
A, Employee agrees as follows:
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For a period of
three (3) years after Employee’s employment with the Company
is terminated by Employee for any reason other than
Employee’s disability, Employee shall not, directly or
indirectly, engage in the business of banking in the City of
Winchester or the County of Frederick, Virginia. For
purposes of this Paragraph 6(A), being engaged in the business of
banking shall mean Employee’s presence or work in a bank
office in the specified geographic area or Employee’s
solicitation of business from clients with a primary or principle
office in the specified geographic area.
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During
Employee’s employment by the Company and for three (3) years
after Employee’s employment with the Company is terminated by
Employee for any reason other than Employee’s permanent
disability rendering him unable to perform the duties of an officer
or director of a banking organization, Employee shall not, on his
own behalf or on behalf of any other person, corporation or entity,
either directly or indirectly, solicit, induce, recruit or cause
another person in the employ of the Company or its affiliates to
terminate his or her employment for the purpose of joining,
associating or becoming an employee with any business which is in
competition with any business or activity engaged in by the Company
or its affiliates.
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Employee
further recognizes and acknowledges that in the event of the
termination of Employee’s employment with the Company for any
reason other than Employee’s disability, (1) a breach of the
obligations and conditions set forth herein will irreparably harm
and damage the Company; (2) an award of money damages may not be
adequate to remedy such harm; and (3) considering Employee’s
relevant background,
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education and
experience, Employee believes that he will be able to earn a
livelihood without violating the foregoing restrictions.
Consequently, Employee agrees that, in the event that Employee
breaches any of the covenants set forth in this Paragraph 6, the
Company and/or its affiliates shall be entitled to both a
preliminary and permanent injunction in order to prevent the
continuation of such harm and to recover money damages, insofar as
they can be determined, including, without limitation, all costs
and attorneys’ fees incurred by the Company in enforcing the
provisions of this Paragraph 6. Such relief may be
sought notwithstanding the arbitration provision set forth in
Paragraph 10 below.
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7.
Definitions and Special Rules . For
purposes of this Agreement and its Exhibits, including the
Change in Control Agreement attached hereto as Exhibit B, the
following definitions and special rules shall apply:
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“
Disability ” shall mean a physical or mental condition
rendering Employee substantially and permanently unable to perform
the duties of an officer and director of a banking
organization.
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“
Separation from Service ” means the severance of
Employee’s employment with Company or any affiliate for any
reason. Employee separates from service with Company or
any affiliate if he dies, retires, separates from service because
of Employee’s Disability, or otherwise has a termination of
employment with Company or any 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 reemployment with Company or any 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.
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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 Employee
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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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,
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in any instance
in which 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 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 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 Agreement
which would otherwise apply,
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in any instance
in which Employee is an employee and an independent contractor of
Company or any 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 Employee provides services both
as an employee and a member of the Board of Directors of Company or
any affiliate or any combination thereof, the services provided as
a director are not taken into account in determining whether
Employee has had a Separation from Service as an employee under
this Agreement, provided that no plan in which Employee
participates or has participated in his capacity as a director is
an Aggregated Plan, and
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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.
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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 Agreement or its Exhibits A and B
shall be treated as having been made on a date specified in this
Agreement or in Exhibit A or B 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.
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Six-Month
Delay . Notwithstanding any other
provisions of this Agreement or its Exhibits, including the Change
in Control Agreement attached hereto as Exhibit B, 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 Agreement or of said Change in Control 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
with
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