2009 OFFICER STOCK OPTION PLAN

WITNESSETH this 2009 OFFICER STOCK OPTION PLAN dated as of the 14 ^th day of May, 2009, by SUMMIT FINANCIAL GROUP, INC. (“Corporation”), a West Virginia corporation:

1.             PURPOSE OF PLAN .  The purpose of this 2009 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.  The provisions of the Plan are intended to satisfy the requirements of Section 16(b) of the Securities Exchange Act of 1934, and shall be interpreted in a manner consistent with the requirements thereof, as now or hereafter construed, interpreted, and applied by regulations, rulings, and cases.  The Plan is also designated so that options granted hereunder intended to comply with the requirements for “performance-based” compensation under Section 162(m) of the Code may comply with such requirements.  The creation and implementation of the Plan shall not diminish or prejudice other compensation plans or programs approved from time to time by the Board.  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 (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. 

 (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.

(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 2009 Officer Stock Option Plan.

(p)        “Qualified Stock Option” means an Option which is of the type described in Section 422(b) of the Code.

(q)        “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.

(r)        “Term” means the period during which a particular Option may be exercised in accordance with Section 9(b) hereof.

(s)        “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, 8 and 9, 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 three hundred and fifty thousand (350,000) 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.  The maximum aggregate number of shares that can be issued under the Plan through a Qualified Stock Option is one hundred thousand (100,000).

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 Committee may delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under

            the Plan. All decisions, determinations, and interpretations of the Committee shall be final and binding on all Participants under this Plan.

(c)        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.

(d)        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 (notwithstanding anything in this Plan to the contrary, no Options shall be granted with a option price of less than Fair Market Value);

(4)       to determine the number of shares of Common Stock to be subject to each Option;

(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.  Non Qualified Stock Options may be granted to officers who currently hold Corporate stock or who hold or have held Options under this Plan.  Qualified Stock Options may be granted to key employees of the Corporation or its subsidiaries.  The term employees for purposes of participating in a Qualified Stock Option is defined pursuant to Code Section 3401(c) and the regulations issued thereunder and excludes independent contractors and directors of the Corporation in their capacity as such.  The term “ key employees” means employees of Summit or its subsidiaries who hold the office of vice president or higher.

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 or her 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 legally appointed guardian or legal representative of the Participant, subject to the limitations of Code Section 422, 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)           Each Option granted pursuant to the Plan shall be evidenced by an Option A