f8kofficerstockoptplan.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
__________________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported):
May 14,
2009
Summit Financial Group,
Inc.
(Exact
name of registrant as specified in its charter)
West
Virginia No.
0-16587 55-0672148
(State or other
jurisdiction
of (Commission File
Number) (I.R.S.
Employer
incorporation
or
organization)
Identification
No.)
300
North Main Street
Moorefield, West Virginia
26836
(Address
of Principal Executive Offices)
(304)
530-1000
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name or address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Section
5 – Corporate Governance and Management
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Item
5.02(e)
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers
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On May
14, 2009, Summit Financial Group, Inc. (“Summit”) held its 2009 Annual Meeting
of Shareholders, where Summit’s shareholders approved the Summit Financial
Group, Inc. 2009 Officer Stock Option Plan (the “Officer Plan”). The
Officer Plan had been approved by Summit’s Board of Directors on February 12,
2009, subject to shareholder approval. The Officer Plan replaces the
1998 Officer Stock Option Plan (the “1998 Plan”) which expired on May 5,
2008.
The
Officer Plan provides for the granting of options (individually referred to as
“Stock Option”) for up to 350,000 shares of Summit Common Stock, of which up to
100,000 shares may be issued under the Officer Plan for Qualified Stock
Options. Options issued under the Officer Plan shall consist of
non-qualified stock options and stock options qualified under Section 422(b) of
the Internal Revenue Code of 1986, as amended (the “Code”). The
NASDAQ listing standards required shareholder approval of the Officer
Plan. The Officer Plan is not subject to the Employee
Retirement Income Security Act of 1974 (“ERISA”).
The
full text of the Officer Plan is attached hereto as Exhibit 10.1. The key terms of the Officer Plan are
summarized below.
Common
Stock Available
The total
number of shares of Common Stock that may be issued under the Officer Plan shall
not exceed in the aggregate three hundred fifty thousand (350,000) shares, which
shares may be in whole or in part, as the Board shall from time to time
determine, authorized but unissued shares of Common Stock, or issued shares of
Common Stock which have been reacquired by the Company. The maximum
number of shares of Common Stock that may be issued under the Officer Plan
through a qualified stock option is one hundred thousand (100,000).
Types
of Awards
The
Officer Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Code and non-qualified stock
options. No tandem options will be issued under the Officer
Plan. A tandem option would occur if both options were to be granted
at the same time and where the exercise of one option affects the right to
exercise the other option.
Eligibility
for Participation
Only
officers of Summit and its subsidiaries may be granted non-qualified stock
options under the Officer Plan. Approximately 25 officers of Summit
are eligible to be granted non-qualified stock options under the Officer
Plan.
Qualified
stock options may be granted to key employees of the Company or its
subsidiaries. For purposes of the Officer Plan, the term employees is
defined pursuant to Code Section 3401(c) and the
regulations
issued thereunder and excludes independent contractors and directors of the
Company. The term key employees means employees of Summit or its
subsidiaries who hold the office of vice president or
higher. Approximately 20 key employees of Summit are eligible to be
granted qualified stock options under the Officer Plan.
Any
participant at the time a qualified stock option is granted cannot own stock
having more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any subsidiary. This ten percent
(10%) stock ownership limit does not apply if, at the time the qualified stock
option is granted:
(1) the
qualified stock option price is at least one hundred and ten percent (110%) of
the stock's Fair Market Value (as defined below) on the date of grant;
and
(2) the
qualified stock option, by its terms, is not exercisable more than five years
after the date granted.
Administration
The
Officer Plan is administered by a Committee of the Board appointed by the Board,
however, the Board reserves the right to administer the Officer Plan in its
discretion. The Committee has discretion, subject to the express
provisions of the Officer Plan to: (i) determine the officers to whom
options may be granted; (ii) determine the time or times when options may
be granted; (iii) determine the purchase price of the Common Stock covered by
each option; (iv) determine the number of shares to be subject to each option;
(v) determine when an option may 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; (vi) prescribe, amend, or rescind rules and regulations relating to
the Officer Plan; (vii) determine any other terms and provisions and any related
amendments of the individual Option Agreements, which need not be identical for
each participating officer, 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 Internal Revenue Code and the regulations
thereunder; and (viii) to make all other determinations deemed necessary or
advisable for the administration of the Officer Plan. The Officer
Plan provides for indemnification of Committee members as described more fully
in the Officer Plan and in addition to any other rights of indemnity otherwise
applicable.
Option
Agreement
Each
Stock Option granted under the Officer Plan will be evidenced by an Option
Agreement between the Company and the officer. These agreements will
contain the terms on which the option can be exercised.
Option
Price
The
option price for purchasing a share of Common Stock will not be less than the
Fair Market Value of the Common Stock on the date the option is
granted. In no event will an option be granted under the Officer Plan
if the Option per share price is less than the par value of a share of Common
Stock.
“Fair
Market Value” means (i) if the Common Stock is listed on an established
securities exchange, the value per share shall be based on the arithmetic mean
of its closing prices reported on such exchange at the close of business for the
last five (5) most recent Business Days on which the Common Stock traded prior
to the date of grant; provided however, if the Common Stock did not trade for
five (5) Business Days during the continuous thirty (30) day period immediately
prior to the date of grant, then the Fair Market Value shall be the arithmetic
mean of the closing prices reported on such exchange at the
close of
business for the Business Days on which the common stock traded during said
thirty (30) day period or if the Common Stock did not trade during said thirty
(30) day period, then the Fair Market Value shall equal the closing price
reported on such exchange at the close of business on the last trading day
before the date of the grant; (ii) if the Common Stock is not listed on any
United States securities exchange but is traded on any formal over-the-counter
quotation system which reports quotations from more than one broker or dealer in
the United States, the value per share shall be based on the simple average of
the closing prices reported on the last five (5) Business Days on which the
Common Stock traded prior to the date of grant provided however, if the Common
Stock did not trade for five (5) Business Days during a continuous thirty (30)
day period immediately prior to the date of grant, then the Fair Market Value
shall be the arithmetic mean of the closing prices reported on such exchange at
the close of business for the Business Days on which the common stock traded
during said thirty (30) day period or if the Common Stock did not trade during
said thirty (30) day period, then the Fair Market Value shall equal the closing
price reported on such exchange at the close of business on the last trading day
before the date of the grant; or (iii) if the Common Stock is not readily
tradable on an established securities exchange, the value per share shall be
based on a reasonable valuation method that conforms to the requirements of
Internal Revenue Code Section 409A.
The
option price can be paid by cash, certified check, or by surrender of previously
acquired shares of Common Stock valued at Fair Market Value on the business date
the option is exercised.
Stock
Holding Period Upon Exercise of Qualified Options
Upon the
transfer of stock pursuant to the exercise of a qualified stock option, the
participating Officer shall not make a disposition of the share of stock so
transferred before the later of the expiration of: (1) the two (2)
year period from the date of grant of the qualified stock option under which the
stock was transferred; or (2) the one (1) year period from the date of transfer
of the share of stock to the participating Officer. An impermissible
disposition by an Officer will be considered a disqualifying disposition under
Code Sections 422 and 421 and the regulations issued thereunder. This
limitation will not apply if during the required holding period an insolvent
Officer transfers stock acquired through the exercise of a qualified stock
option (i) to a trustee, receiver or other fiduciary, or (ii) for the benefit of
creditors, in a bankruptcy or insolvency proceeding, subject to the limitations
of Code Section 422.
Restrictions
on Issuing Shares
The
transfer of a share of Summit Common Stock upon the exercise of an Option will
be subject to the condition that if at any time the Company determines 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 to transfer the
shares, in any such event, the transfer will not be effective unless the
withholding, listing, registration, qualification, consent, or approval has been
effected or obtained under conditions acceptable to the Company.
Adjustments
Subject
to any applicable federal law limitations and requirements, the Committee will
make appropriate adjustment in the number and kind of shares for which options
may be granted under the Officer Plan as well as appropriate adjustment to
outstanding options under the Officer Plan if the outstanding shares of Summit
Common Stock are increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of Summit 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. Any adjustments to outstanding options will be made to the end
that the proportionate interest of the holder of the option will, to the extent
practicable, be maintained as before the occurrence of such event and will 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. Any adjustments to a qualified stock option will be made
so that the option continues to be an incentive stock option within the meaning
of Code Section 422.
Officer
Plan Effective Date and Expiration
The Officer Plan was effective on May
14, 2009, the date of its approval by the shareholders of Summit.
The
Officer Plan will automatically terminate on May 14, 2019, the tenth anniversary
of the date of shareholder approval of the Officer Plan. The term of
Stock Options granted before such tenth anniversary may continue beyond that
date.
Option
Expiration
Each
stock option will automatically expire after ten (10) years, unless a shorter
expiration term is granted by the Board. No Stock Option may be
exercised by any person after expiration.
Any
qualified stock option granted under the Officer Plan must be exercised prior to
the expiration of (i) ten (10) years from the date the option is granted or (ii)
five (5) years from the date the option is granted to an employee who owns at
least ten percent (10%) of the Company.
Option
Termination
In the
event of a participating officer’s termination of employment by either the
participating officer or the Company, other than a termination by reason of
retirement, permanent disability, or death, all as more fully described in the
Officer Plan, an officer may exercise the stock option until the shorter of (i)
the expiration of the stated term of the Option; (ii) in the case of
non-qualified stock options for a period of one (1) year from his or her
termination date; or (iii) in the case of qualified stock options for a period
of ninety (90) days from the date of such termination.
In the
event of Retirement, as defined in the Officer Plan, a participating
officer will become one hundred percent (100%) vested in any Stock Option he or
she has been granted under the Officer Plan. Such Officer may
exercise the Stock Option until the shorter of (i) the expiration of the stated
term of the Option; (ii) in the case of non-qualified stock options, for a
period of one (1) year from the date of retirement; or (iii) in the case of
qualified stock options, for a period of ninety (90) days from the date of
retirement.
In the
event of permanent disability, as defined in the Officer
Plan, to the extent that the Officer would have been entitled to
exercise the Stock Option immediately prior to the disability, such option may
be exercised with respect to the number of shares that were vested during the
period the Stock Option could have been exercised if the director had not been
disabled. A qualified stock option must be exercised within one (1)
year after termination of employment by reason of a permanent
disability.
In the
event of death, to the extent the Officer would have been entitled to exercise
the Stock Option immediately prior to his or her death, such Stock Option may be
exercised during the period the option would have been exercisable if the
deceased Officer had not died, by the person or persons (including his or her
estate) to whom his or her rights shall have passed by will or by
laws of descent and distribution. In the case of qualified stock
options, an Officer must be an employee of the corporation or its subsidiaries
(i) at the time of the Officer’s death; or (ii) within three months of the
Officer’s death.
Amendment
and Termination of the Officer Plan
The Board
of Directors may at any time amend or terminate the Officer
Plan. Among other things, the Board may (a) increase the maximum
number of shares to which options may be granted, subject to approval by the
shareholders and the limitations applicable to issuance of qualified stock
options or non-qualified stock options; (b) change the class of employees
eligible to be granted non-qualified stock options, subject to shareholder
approval; (c) increase the period during which non-qualified options may be
granted, subject to the limitations applicable to the issuance of non-qualified
stock options; or (d) provide for the administration of the Officer Plan in a
manner which may avoid, without the consent of the officer to whom any option
theretofore shall have been granted, adversely affecting the rights of such
officer under such grant. Notwithstanding the foregoing, no amendment
will be effective if it would cause the Officer Plan to violate Code Sections
409A and 422 and the regulations and guidance thereunder and consequently cause
this Plan to be subject to 409A or cause any qualified stock option issued
hereunder to be treated as a non-qualified stock option.
Registration
of Common Stock
Summit
will register the shares issued under the Officer Plan under applicable federal
and state securities law, unless an exemption is available.
Initial
Option Grants
The
Committee will award options to eligible officers of the Company. The
options will be nonassignable and nontransferable. All options are
subject to all terms of the Officer Plan, including but not limited to, those
related to employment status, change in corporate structure, restrictions on
exercise, and a vesting schedule for options granted.
Resale
of Common Stock by Officer Plan Participants
Participants
who exercise options and receive Summit Common Stock under the Officer Plan may
resell the Common Stock received without restriction if they are not affiliates
of Summit. Those participants who are affiliates will be subject to
the resale provisions of Rule 144 under the Securities Act of 1933, as
amended.
Participants
who exercise qualified stock options and receive Summit Common Stock under the
Officer Plan are prohibiting from disposing the shares before the later of the
expiration of:
(1) the
two (2) year period from the date of grant of the qualified stock option under
which the stock was transferred; or
(2) the
one (1) year period from the date of transfer of the share of stock to the
participant.
If a
participant does not comply with the above stock holding period any such
disposition will be considered a disqualifying disposition pursuant to Code
Section 422 and 421 and the regulations issued thereunder.
The
holding periods described above are not applicable if during the required
holding period an insolvent participant transfers stock acquired through the
exercise of a qualified stock option (i) to a trustee, receiver or other
fiduciary, or (ii) for the benefit of creditors, in a bankruptcy or
insolvency
Change
of Control Provisions
If there
is a change of control of Summit (as defined in the Officer Plan), all options
granted shall become immediately vested and exercisable regardless of the number
of years that have passed since the
date of
grant. In addition, upon a change of control, all options granted
will terminate as of a date to be fixed by the Committee as long as at least
ninety (90) days’ written notice of the termination date is given to each
participating Officer, in which event, each such Officer will have the right
during that period to exercise any of his or her options, except that no
extension of the term of an option will be granted.
Generally,
a “Change of Control” occurs if (i) any individual, firm, corporation or other
entity (other than the Company or its employee benefit plans) 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; (ii) the Company files a report or
proxy statement with the Securities and Exchange Commission disclosing 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; (iii) 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 are owned in
the aggregate by holders of the Company’s securities immediately prior to such
merger or consolidation; (iv) 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 group of affiliated purchasers; or (v) 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 (v). Under the Officer Plan, Change of Control does
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
Officer Plan.
Section
9 – Financial Statements and Exhibits
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Item
9.01
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Financial
Statements and Exhibits
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(d) Exhibits
10.1 Summit
Financial Group, Inc. 2009 Officer Stock Option Plan (incorporated by reference
to Appendix A to Summit Financial Group, Inc.’s Proxy Statement filed on April
8, 2009).
SIGNATURE
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
SUMMIT FINANCIAL
GROUP, INC.
Date: May
19, 2009
By: __________________________
Julie R. Cook
Vice President
&
Chief Accounting
Officer