AMENDED AND RESTATED
SUMMIT FINANCIAL GROUP, INC.
1998 OFFICER STOCK OPTION PLAN
Witnesseth this 1998 OFFICER STOCK OPTION PLAN dated as of the _____ day of
_______, 2003, by SUMMIT FINANCIAL GROUP, INC. ("Corporation"), a West Virginia
corporation:
1. PURPOSE OF PLAN. The purpose of this 1998 Officer Stock Option Plan
("Plan") is to further the success of the Corporation and its
subsidiaries by making stock of the Corporation available for purchase
by officers of the Corporation or its subsidiaries through stock option
grants. The Plan provides an additional incentive to such officers to
continue in the Corporation's service and give them a greater interest
as stockholders in the success of the Corporation.
2. REFERENCE, CONSTRUCTION, AND DEFINITIONS. Unless otherwise indicated,
all references made in this Plan shall be to articles, sections and
subsections of this Plan. This Plan shall be construed in accordance
with the laws of the state of West Virginia. The headings and
subheadings in this Plan have been inserted for convenience of
reference only and are to be ignored in construction of the provision
of this Plan. In the construction of this Plan, the masculine shall
include the feminine and singular the plural, wherever appropriate. The
following terms shall have the meanings set forth opposite such terms:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday on which the Corporation's Common Stock is
available for purchase or sale.
(c) "Change of Control" means (a) a report is filed with the
Securities and Exchange Commission (the "SEC") on Schedule 13D
or Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Exchange Act, disclosing
that any "person", as such term is used in section 13(d) and
Section 14(d)(2) of the Exchange Act, other than the company or
any company employee benefit plan, is or has become a beneficial
owner, directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined
voting power of the Company's then outstanding securities; (b)
the Company files a report or proxy statement with the SEC
pursuant to the Exchange Act disclosing in response to Item 1 of
Form 8-K thereunder or Item 6(e) of Schedule 14A thereunder that
a Change of Control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing
contract or transaction; (c) the Company is merged or
consolidated with another corporation and, as a result thereof,
securities representing less than fifty percent (50%) of the
combined voting power of the surviving or resulting
corporation's securities (or of the securities of a parent
corporation in case of a merger in which the surviving or
resulting corporation becomes a wholly owned subsidiary of the
parent corporation) are owned in the aggregate by holders of the
Company's securities immediately prior to such merger or
consolidation; (d) all or substantially all of the assets of the
Company are sold in a single transaction or a series of related
transactions to a single purchaser or a group of affiliated
purchasers; or (e) during any period of twenty-four (24)
consecutive months, individuals who were Directors of the
Company at the beginning of such period cease to constitute at
least a majority of the Company's board unless the election, or
nomination for election by the Company's shareholders, of more
than one-half of any new Directors of the Company was approved
by a vote of at least two-thirds of the Directors of the Company
then still in office who were Directors of the Company at the
beginning of such twenty-four (24) month period, either actually
or by prior operation of this clause (e). A Change of Control
shall not include any transaction described in the definition of
Change of Control in connection with which the Corporation
executes a letter of intent or similar agreement with another
company within one year from the effective date of the Plan. The
date of a Change of Control shall be deemed to be the date of
the earlier of the date of (i) consummation of the transaction
involving the Change of Control, or (ii) the execution of a
definitive agreement by the Corporation involving a transaction
deemed to be a Change of Control; .
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" means the Committee of the Board appointed by the
Board to administer the Plan as constituted from time to time
in accordance with Section 4(a); provided, however, that if
the Committee shall not be in existence, the term "Committee"
shall mean the Board.
(f) "Common Stock" means the common stock ($2.50 par value) of the
Corporation.
(g) "Corporation" means Summit Financial Group, Inc., a West
Virginia banking corporation.
(h) "Date of Grant" means the date on which an option is granted
under the Plan.
(i) "Effective Date" means the date on which the Plan is approved
and adopted by the shareholders of the Corporation.
(j) "Fair Market Value" means the value of Common Stock (i) if
listed on an established stock exchange, based on its price on
such exchange at the close of business on the date in question;
(ii) if traded on a reasonably active basis but not listed on an
established stock exchange, based on its price as reflected on
the NASDAQ Inter-dealer Quotation System of the National
Association of Securities Dealers, Inc. at the close of business
on the date in question; (iii) if the Common Stock is not traded
on any United States securities exchange but is traded on any
formal over-the-counter quotation system in general use in the
United States, the value per share shall be the mean of the
closing prices reported on the last five (5) Business Days on
which the common stock traded prior to the date of grant.
(k) "Non Qualified Stock Option" means an Option which is not of the
type described in Section 422(b) or 423(b) of the Code.
(l) "Option" means an option to purchase a share or shares of the
Corporation's par value Common Stock.
(m) "Option Agreement" means the written agreement to be entered
into by the Corporation and the Participant, as provided in
Section 6 hereof.
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(n) "Participant" means any officer of the Corporation or its
subsidiaries designated by the Committee and approved by the
Board to receive a stock option grant pursuant to this Plan.
(o) "Plan" means this 1998 Officer Stock Option Plan.
(p) "Retirement" shall mean termination of employment by the
Participant (i) at the age of 65 or more, or (ii) after
twenty-five years of service with the Corporation.
(q) "Term" means the period during which a particular Option may
be exercised in accordance with Section 8(b) hereof.
(r) "Vest" or "Vesting" means the date, event, or act prior to
which an Option, in whole or in part, is not exercisable, and
as a consequence of which the Option, in whole or in part,
becomes exercisable for the first time.
3. STOCK SUBJECT TO PLAN. Subject to the provisions of Sections 6, 7, and
8, there shall be reserved for issuance or transfer upon the exercise
of Options to be granted from time to time under the Plan an aggregate
of one hundred twenty thousand (120,000) shares of Common Stock, which
shares may be in whole or in part, as the Board shall from time to time
determine, authorized and unissued shares of Common Stock, or issued
shares of Common Stock which shall have been reacquired by the
Corporation. If any Option granted under the Plan shall expire,
terminate, or be canceled for any reason without having been exercised
in full, the unpurchased shares subject thereto shall again be
available for the purpose of the Plan.
4. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. Actions by
the Committee for purposes of this Plan shall be by not less
than a majority of its members. Any decision or determination
reduced to writing and signed by all Committee members shall
be fully as effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee shall
report all action taken by it to the Board.
(b) The Board may authorize the Committee to administer the Plan.
In the event the Board elects to administer the Plan, the
Board shall have the power and authority otherwise delegated
to the Committee in the Plan documents and all acts performed
by the Committee under the Plan shall be performed by the
Board.
(c) The Committee shall have authority in its discretion, but
subject to the express provisions of the Plan:
(1) to determine Participants to whom Option may be granted;
(2) to determine the time or times when Option may be
granted;
(3) to determine the purchase price of the Common Stock
covered by each Option grant;
(4) to determine the number of shares of Common Stock to
be subject to each Option;
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(5) to determine when an Option can be exercised and
whether in whole or in installments as the result of
a Vesting schedule triggered by the passage of time
or the attainment of performance goals set by the
Committee and approved by the Board;
(6) to prescribe, amend, or rescind rules and regulations
relating to the Plan;
(7) to determine any other terms and provisions and any
related amendments to the individual Option
Agreements, which need not be identical for each
Participant, including such terms and provisions and
amendments as shall be required in the judgment of
the Committee to conform to any change in any law or
regulation applicable thereto, and with particular
regard to any changes in or effect of the Code and
the regulations thereunder; and
(8) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
5. PARTICIPATION. Options may be granted to officers employed by the
Corporation or its subsidiaries. In determining the officers to whom
Options may be granted and the number of shares to be covered by each
grant, the Committee may take into account the nature of the services
rendered by the respective officers, their present and potential
contributions to the Corporation's success, and such other factors as
the Committee in its discretion shall deem relevant. Options may be
granted to officers who currently hold Corporate stock or who hold or
have held Options under this Plan.
6. OPTION GRANTS AND LIMITS.
(a) Nothing contained in this Plan or in any resolution adopted or
to be adopted by the Board shall constitute the granting of
any Option hereunder. The granting of an Option pursuant to
the Plan shall take place only when a written Option Agreement
shall have been duly executed and delivered by or on behalf of
the Corporation and the officer (or his duly authorized
attorney-in-fact) in whom such Option is to be granted.
(b) During the Participant's lifetime, any Option granted under
this Plan shall be exercisable only by the Participant or any
guardian or legal representative of the Participant, and the
Option shall not be transferable except, in case of the death of
the Participant, by will or the laws of descent and distribution
,nor shall the Option be subject to attachment, execution, or
other similar process. In the event of (i) any attempt by the
Participant to alienate, assign, pledge, hypothecate, or
otherwise dispose of the Option, except as provided in this
Plan, or (ii) the levy of any attachment, execution, or similar
process upon the rights or interests conferred by the Option,
the Corporation may terminate the Option by notice to the
Participant and upon such notice the Option shall become null
and void.
(c) Each Option Agreement shall include a Vesting schedule
describing the date, event, or act upon which an Option shall
Vest, in whole or in part, with respect to all or a specified
portion of the shares covered by such Option. This condition
shall not impose upon the Corporation any obligation to retain
the Participant in its employ for any period.
(d) Options shall be limited to Non Qualified Stock Options.
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7. OPTION PRICES. The Option price to be paid by the Participants to the
Corporation for each share purchased upon the exercise of the Option
shall be not less than the Fair Market Value of the share on the date
the Option is granted. In no event may an Option be granted under the
Plan if the Option price per share is less than the par value of a
share.
8. EXERCISE OF OPTIONS.
(a) A Participant may exercise any Option granted under this Plan
with respect to all or any part of the number of shares then
exercisable under the terms of the written Option Agreement by
giving the Committee written notice of intent to exercise. The
notice of exercise shall specify the number of shares to be
purchased under the Option and the date of exercise.
(b) Each Option granted under the Plan shall be exercisable only
during a Term established by the Committee as set forth in the
applicable Option Agreement.
(c) Full payment of the option price for the shares purchased
shall be made by the Participant on or before the exercise
date specified in the notice of exercise. Payment of the
purchase price of any shares with respect to which the Option
is being exercised shall be (i) cash, (ii) certified check to
the order of the Corporation, or (iii) shares of Common Stock
of the Corporation valued at the Fair Market Value on such
Business Day as the Option or portion thereof is exercised.
(d) The Corporation shall not be required to deliver certificates
for such shares until full payment of the Option price has been
made. On or as soon as is practicable after the exercise date
specified in the Participant's notice and upon full payment of
the Option price, the Corporation shall cause to be delivered to
the Participant a certificate or certificates for the shares
then being purchased (out of previously unissued Common Stock or
reacquired Common Stock, as the Corporation may elect). The
exercise of the Option and the resulting obligation of the
Corporation to deliver Common Stock shall, however, be subject
to the condition that the listing, registration, or
qualification of the Option or the shares upon any securities
exchange or under any state or federal law, or the consent, or
approval of any governmental regulatory body shall have been
effected or obtained free of any conditions not acceptable to
the Committee.
(e) If the Participant fails to pay for any of the shares
specified in such notice or fails to accept delivery of the
shares, his right to purchase such shares may be terminated by
the Corporation. The date specified in the Participant's
notice as the date of exercise shall be deemed the date of
exercise of the Option, provided that payment in full for the
shares to be purchased upon such exercise shall have been
received by such date.
(f) The holder of an Option shall not have any of the rights of a
stockholder with respect to the shares subject to the Option
until such shares shall be issued or transferred to him upon
the exercise of his Option.
(g) Notwithstanding the foregoing, any shares that may be
purchased as of the Effective Date, pursuant to the terms of
any Option granted prior to the Effective Date, shall continue
thereafter to be purchasable pursuant to the exercise of such
Option.
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9. TERMINATION, DISABILITY, OR DEATH OF OPTION HOLDER. The ability to
exercise Options under this Plan shall be conditioned as follows:
(a) Exercise During and After Employment. Unless otherwise
provided in the terms of an Option, an Option may be exercised
by the Participant while he is an employee if it is vested and
if he has maintained since the date of the grant of the Option
continuous status as an employee.
In the event of termination of the employment of a Participant
by either the Participant or the Corporation to whom an Option
has been granted under the Plan, other than a termination by
reason of Retirement, permanent disability, or death (all as
more fully described below), the Participant may (unless
otherwise provided in his or her Option Agreement) exercise
his or her Option at any time within six months after such
termination, or such other time as the Committee may
authorize, but in no event after ten years from the date of
the granting thereof, with respect to, the number of shares
covered by his or her Option which were Vested at the date of
termination of employment.
(b) Exercise Upon Retirement. Unless otherwise provided in the
terms of an Option, if a Participant's continuous employment
shall terminate by reason of his Retirement, at a retirement
date authorized by the Committee, from the Corporation or its
subsidiaries, a retired Participant shall be come one hundred
percent (100%) Vested in any Option he has been granted under
the Plan as of that date, and he may exercise the otherwise
exercisable Option anytime within one year of his retirement
date.
(c) Exercise Upon Permanent Disability. Unless otherwise provided
in the terms of an Option, if a Participant's continuous
employment shall terminate by reason of a permanent disability
(as determined by the Participant establishing to the
Committee his disability as defined in Code Section 22(e))(3)
of the Code, as amended from time to time), then such Option
of the disabled Participant may be exercised with respect to
the number of shares covered by the Participant's Option that
were Vested immediately prior to that disability. Such Option
of the permanently disabled Participant may be exercised
during the period the Option would have been exercisable if
the permanently disabled Participant had not been permanently
disabled and had remained in employment.
(d) Exercise Upon Death. Unless otherwise provided in the terms of
an Option, if a Participant's continuous employment shall
terminate by reason of his death, then to the extent that the
Participant would have been entitled to exercise the Option
immediately prior to his 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 (including his estate) to whom his rights under such
Option shall have passed by will or by laws of descent and
distribution.
10. ADJUSTMENTS.
(a) In the event that the outstanding shares of Common Stock are
hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of
the Corporation or of another corporation, by reason of a
recapitalization, reclassification, stock split-up, combination
of shares or dividend or other distribution payable in capital
stock, appropriate adjustment shall be made by the Committee in
the number and kind of shares for which Options may be granted
under the Plan. In addition, the Committee shall make
appropriate adjustment in the number and kind of shares as to
which outstanding Options, or portions thereof then unexercised,
shall be exercisable, to the end that the proportionate interest
of the holder of the Option shall, to the extent practicable, be
maintained as before the occurrence of such event. Such
adjustment in outstanding Options shall be made without change
in the total price applicable to the unexercised portion of the
Option but with a corresponding adjustment in the Option price
per share.
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(b) In the event of a Change of Control, any Option under the Plan
shall terminate as of a date to be fixed by the Committee,
provided that not less than ninety (90) days' written notice
of the date so fixed shall be given to each Participant, and
each such Participant shall have the right during such period
to exercise any of his or her Options as to all or any part of
the shares covered thereby including shares as to which such
Options would not otherwise be exercisable by reason of any
insufficient lapse of time.
(c) Adjustment and determinations under this Section 10 shall be
made by the Committee, whose decisions as to what adjustments
or determinations shall be made, and the extent thereof, shall
be final, binding, and conclusive.
11. CHANGE OF CONTROL. Notwithstanding any other Plan provisions or grant
term, in the event of a Change of Control, all Options granted
hereunder shall become Vested and exercisable regardless of the number
of years that have passed since the Date of Grant and regardless of any
vesting provisions in the Option Agreements.
12. AMENDMENT AND TERMINATION. Unless the Plan shall theretofore have been
terminated as hereinafter provided, no Option shall be granted
thereunder after the tenth (10th) anniversary of the Effective Date.
All other Plan provisions shall remain in effect with respect to
Options granted prior to the tenth (10th) anniversary of the Effective
Date. The Board may terminate the Plan or make such modifications or
amendments thereof as it shall deem advisable, or to conform to any
change in any law or regulation applicable thereto, including without
limitation (a) increasing the maximum number of shares to which Options
may be granted under the Plan, subject to shareholder approval, (b)
changing the class of employees eligible to be granted Options, subject
to shareholder approval, (c) increasing the periods during which
Options may be granted or Options may be exercised, or (d) providing
for the administration of the Plan in a manner which may avoid, without
the consent of the Participant to whom any Option shall theretofore
have been granted, adversely affecting the rights of such Participant
under such grant.
13. RESTRICTIONS ON ISSUING SHARES. The transfer of a share of Common Stock
upon the exercise of each Option shall be subject to the condition that
if at any time the Corporation shall determine in its discretion that
the satisfaction of withholding tax or other withholding liabilities,
or that the listing, registration or qualification of any shares
otherwise deliverable upon any securities exchange or under any state
or federal law, or that the consent or approval of such regulatory
body, is necessary or desirable as a condition, of, or in connection
with, such transfer of shares pursuant thereto, then in any such event,
such transfer shall not be effective unless such withholding, listing,
registration, qualification, consent, or approval shall have been
effected or obtained under conditions acceptable to the Corporation.
14. USE OF PROCEEDS. The proceeds received from the sale of Common Stock
pursuant to the exercise of Options granted under the Plan shall be
added to the Corporation's general funds and used for general corporate
purposes.
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15. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as members of the Board or as members
of the Committee, the members of the Committee shall be indemnified by
the Corporation against all costs and expenses reasonable incurred by
them in connection with any action, suit, or proceeding to which they
or any of them may be party by reason of any action taken or failure to
act under or in connection with the Plan, or any Option and against all
amounts paid by them in settlement thereof (provided such settlement is
approved by legal counsel selected by the Corporation) or paid by them
in satisfaction of a judgment in any such action, suit, or proceeding,
except a judgment based upon a finding of bad faith. Upon the
institution of any such action, suit, or proceeding, a Committee member
shall notify the Corporation in writing, giving an opportunity, at its
own expense, to handle and defend the same before such Committee member
undertakes to handle it on his own behalf.
16. EFFECTIVENESS OF THE PLAN. The Plan shall become effective as of the
Effective Date.
17. MISCELLANEOUS.
(a) Employment Not Affected. Neither the granting of an Option nor
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its exercise shall be construed as granting to the Participant
any right with respect to continuance of his employment with
the Corporation or its subsidiaries. Except as may otherwise
be limited by a written agreement between the Corporation or
its subsidiaries and the Participant, the right of the
Corporation or its subsidiaries to terminate at will the
Participant's employment with it at any time (whether by
dismissal, discharge, retirement, or otherwise) is
specifically reserved by the Corporation or its subsidiaries
as the employer or on behalf of the employer (whichever the
case may be) and acknowledged by the Participant.
(b) Binding on Successors and Assigns. This Plan shall be binding
---------------------------------
on the Corporation, its successors and assigns.
(c) Notice. Any notice to the Corporation provided for in this
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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.
(d) Construction. If any provision of the Plan or any Option
------------
Agreement is held to be illegal or void, such illegality or
invalidity shall not affect the remaining provisions of the Plan
or Option Agreement, but shall be fully severable, and the Plan
or Option Agreement shall be construed and enforced as if said
illegal or invalid provisions had never been inserted herein.
For all purposes of the Plan, where the context permits, the
singular shall include the plural, and the plural shall include
the singular. Headings of Articles and Sections herein are
inserted only for convenience of reference and are not to be
considered in the construction of the Plan. The laws of the
State of West Virginia shall govern, control and determine all
questions of law arising with respect to the Plan and the
interpretation and validity of its respective provisions.
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SUMMIT FINANCIAL GROUP, INC.
By: _________________________________
H. Charles Maddy, III
President
Attest: _______________________
Teresa Sherman
Title: Assistant Secretary
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