AMENDED AND RESTATED EMPLOYMENT AGREEMENT

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THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”), made and entered into this _ 31st __ day of _ December _, 2008, amends and restates that certain Employment Agreement made and entered into as of the 4th day of March, 2005, by and between H. Charles Maddy, III (“Maddy”) and Summit Financial Group, Inc., a West Virginia corporation and bank holding company (“Summit”).

WHEREAS, Maddy is Chief Executive Officer and a Director of Summit and Chairman and a Director of Summit Community Bank, Inc., a state banking association (“Bank”), and

WHEREAS, the Board of Directors of Summit believe that it is in the best interests of Summit and its subsidiaries to enter into this Agreement with Maddy to ensure continuity of leadership and to ensure that Summit and its subsidiaries will have the benefit of his services as an employee of Summit and any of its affiliated companies for a reasonable period of time in the future, and

WHEREAS, Maddy is willing to provide the herein described services to Summit and its affiliates, and

WHEREAS, under Article X Section C this Agreement may be amended by a writing signed by all the parties hereto, and

WHEREAS, the parties have agreed to extend the term of this Agreement to March 4, 2012, 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, for and in consideration of the premises, their mutual promises, and the other good and valuable consideration herein specified, the receipt of which is hereby acknowledged by the parties hereto, the parties agree as follows:

Summit employs Maddy and Maddy accepts employment as Chief Executive Officer of Summit. All employment shall be in accordance with and subject to the terms and conditions of this Agreement and is sometimes herein referred to as the “Employment.”

A.            Chief Executive Officer of Summit .  Maddy, as Chief Executive Officer of Summit, shall report to and shall be responsible only to the Board of Directors of Summit, and he shall have direction and control of the duties and responsibilities of all other Summit officers and employees, regardless of the title or position of any such other officer or employee, except that Summit’s Internal Auditor shall report to and shall be responsible only to the Board of Directors. As Chief Executive Officer, Maddy will perform all the duties and shall have all the responsibilities normally imposed upon and held by the Chief Executive Officer of a bank holding company. Maddy shall have the duty and responsibility of carrying out and executing the business policies of Summit as established from time to time by the Board of Directors, and he shall have such other specific duties and responsibilities relating to Summit and its affiliates as may be assigned to him from time to time by the Board of Directors.

B.            Full Time Employment - Best Efforts .  Maddy shall devote full time and his best efforts at all times to the performance of his duties for Summit and its subsidiaries.  He shall not be employed by, nor shall he devote any of his time and efforts to the furtherance of interests of any other person, firm or corporation except Summit, Summit’s subsidiaries and such other entities as may be approved by the Board of Directors of Summit.  Nothing herein shall preclude Maddy’s current level of activity with respect to Mountain Lion Land Development LLC and the management by Maddy of his personal investment portfolio.  It is contemplated that Maddy shall serve in banking, business, civic and social activities that will consume some part of his time and efforts, and such activities are encouraged and expected by Summit as part of Maddy’s position with Summit and as part of the banking, business, civic and social communities of the State of West Virginia and Virginia, and nationally.  The provisions of this Agreement are not intended to restrict such activities by Maddy so long as such activities do not interfere with his duties and responsibilities as defined in this Agreement.

A.            Term of Employment, Term of Agreement .  The term of employment of Maddy by Summit shall be until March 4, 2012, and this Agreement shall remain in force and effect during such period unless sooner terminated or extended as provided herein.  The term of this Agreement shall extend until all obligations under this Agreement have been fully performed by Maddy and Summit.

B.            Extension of Term of Employment .  The Board of Directors or a committee designated by the Board of Directors of Summit shall review this Agreement at least annually, and may, with the approval of Maddy, extend the term of this Agreement annually for additional one (1) year periods (so that the actual term of this Agreement will always be between two and three years).

C.            “Separation from Service” Defined .  “Separation from Service” means the severance of Maddy’s employment with Summit, Bank, or any other affiliate for any reason.  Maddy separates from service with Summit, Bank or any other affiliate if he dies, retires, separates from service because of Maddy’s Disability, or otherwise has a termination of employment with Summit, Bank or any other 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 Summit, Bank or any other 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:

(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 Summit, Bank or any other 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 Summit, Bank or any other 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.

The employment of Maddy may be terminated by any one of the following prior to the expiration of its normal term, provided that unless otherwise agreed to by the parties, all employment by both Summit and Bank shall be terminated simultaneously and termination of employment by either Summit or Bank shall automatically terminate employment with the other in which case Maddy shall be entitled to the benefits due and payable upon termination set forth elsewhere herein:

A.            Mutual Agreement .  By mutual agreement of the parties upon such terms and conditions as they may agree.

B.            Death .  Automatically and without action by either party, upon the death of Maddy.

C.            Disability .  By Summit upon the legal disability of Maddy, which shall mean that Maddy shall be unable to perform his duties by reason of any mental or physical disability which is expected to last at least six (6) months or result in death, as certified by Maddy’s physician and as approved by Summit.

D.            For Cause .  By Summit for cause upon giving Maddy thirty (30) days advance notice of such termination, specifying the cause of termination. For purposes of this Agreement, “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; (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; or (iv) Maddy’s negligence, malfeasance or misfeasance in the performance of Maddy’s duties that can reasonably be expected to have an adverse impact on the business of Summit or its affiliates, including but not limited to the reasonable financial objectives established by the Board of Directors of Summit.

E.            Change of Control .  By Maddy or Summit as set forth in the Change in Control Agreement upon a Change of Control as defined in the Change in Control Agreement attached hereto as Exhibit A.

F.            Breach by Summit .  By Maddy in the event of a material breach by Summit of any of the terms or conditions of this Agreement, in which case the noncompetition and nonsolicitation provisions set forth in Section VII of this Agreement shall not apply.

G.            Insolvency, Etc .  By Maddy, in the event of the business failure, insolvency, bankruptcy, or assignment for the benefit of creditors of or by Summit or Bank not attributable to Maddy, in which case the noncompetition and nonsolicitation provisions set forth in Section VII of this Agreement shall not apply.

V.           COMPENSATION AND REIMBURSEMENTS

A.            Base Salary .  Summit shall pay Maddy for his service to both Summit and Bank, a base salary at an annual rate not less than $350,000, payable in equal semi-monthly installments (the “Base Salary”).  Maddy’s performance shall be evaluated by the Nominating and Compensation Committee of Summit at least once each twelve month period, and such evaluation shall be the basis of determining whether the compensation payable to Maddy shall be increased in the judgment of such committee directors.  Upon review and extension of the Agreement as provided in Section III, above, the Base Salary shall be adjusted to reflect any increase in compensation above the initial base salary in effect for that year.  All references to Base Salary in this Agreement and the Change in Control Agreement shall include subsequent increases.  No decreases in the Base Salary shall be permitted during the term.  In addition, for service as a member of the Boards of Directors of Summit or any of Summit’s subsidiaries or affiliates, or their respective committees, Maddy shall receive such sums as may be paid to members and officers of such boards for their services.

B.            Incentive Pay .  In addition to the Base Salary herein provided for, Maddy shall be entitled to receive incentive compensation from Summit in accordance with plans adopted by its Board of Directors; provided , however, that any such plans, if required to be aggregated for Code Section 409A purposes with this Agreement or any other agreement between Maddy and Summit, Bank, or any affiliate, shall not cause this Agreement to violate Code Section 409A or the regulations and guidance issued thereunder.  The Board of Directors agrees that Mr. Maddy’s bonus opportunities will not be less than the opportunities currently available to him under the Summit bonus plan in place at the time of execution of this Agreement or any extension thereof.

C.            Fringe Benefits .  Summit shall afford to Maddy the benefit of all fringe benefits afforded to other Summit or bank officers, such as pension, life insurance, health and accident insurance benefits, vacation and sick leave; provided , however, that any such fringe benefits, if required to be aggregated for Code Section 409A purposes with this Agreement or any other agreement between Maddy and Summit, Bank, or any affiliate, shall not cause this Agreement to violate Code Section 409A or the regulations and guidance issued thereunder.

D.            Club and Organization Membership and Dues .  Summit shall maintain the cost of stock or membership certificate and the cost of the initiation fee for memberships for a family (general membership) in one or more country clubs in the trade areas of Summit, which Maddy shall select, plus dues, assessments and other costs of maintaining such memberships. Summit shall also pay Maddy’s membership fees and dues in banking, business, civic, professional (including continuing professional education requirement to maintain his public accountant’s license), and social organizations in which Maddy is a participating member.  The benefits provided under this Article V Section D during Maddy’s taxable year shall not affect the benefits to be provided in any other taxable year.  The right to benefits under this Article V