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EXHIBIT 10.1

this note does not represent a deposit and is not insured by the federal deposit
insurance corporation or any other governmental agency.  this note represents an
unsecured obligation of summit financial group, inc.

this note has not been registered under the securities act of 1933, as amended
(the “act”), or registered or qualified under the securities laws of any state,
and the holder hereof cannot make any sale, assignment or other transfer of any
such note except pursuant to an offering of such note duly registered under the
act and registered or qualified under any applicable state securities laws, or
under such other circumstances as in the opinion of counsel for or satisfactory
to the company shall not, at the time, require registration under the act and/or
registration or qualification under any state securities laws.

$5,000,000                                                                                                                                                                                         March
30, 2009

SUMMIT FINANCIAL GROUP, INC.
10% Subordinated Promissory Note Due March 31, 2019

FOR VALUE RECEIVED, the undersigned, SUMMIT FINANCIAL GROUP, INC., a West
Virginia corporation (the “Company”), hereby promises to pay to the order of
ALLEGHENY WOOD PRODUCTS, INC. or registered assigns (the “Holder”), the
principal sum of FIVE MILLION DOLLARS ($5,000,000) on March 31, 2019 and to pay
interest on the unpaid balance thereof at the rate of 10% per annum, as provided
for herein.

Section 1.              Definitions.

Section 1.1.           As used herein, the term “Business Day” shall mean any
day other than a Saturday, a Sunday or other day on which commercial banks in
Moorefield, West Virginia are authorized by law to close.

Section 1.2.           Interest Payment Date shall have the meaning provided in
Section 3.

Section 1.3.           As used herein, the term “Junior Securities” means (i)
shares of Common Stock of the Company, (ii) shares of any other class or classes
of capital stock of the Company, (iii) any other non-debt securities of the
Company (whether or not such other securities are convertible into Junior
Securities of the Company), or (iv) debt securities of the Company (other than
this Note) as to which, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such debt
securities are not Senior Indebtedness with respect to, or do not rank  pari
passu with, this Note.

Section 1.4.           As used herein, the term “Note” shall mean this Note.

Section 1.5.           Note Register shall have the meaning provided in Section
9.1.

Section 1.6.           Notice of Redemption shall have the meaning provided in
Section 6.2.

Section 1.7.           As used herein, “Redemption Date” shall mean the date
specified in the Notice of Redemption on which the company shall return all or a
portion of the Notes.
 
 
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Section 1.8.           Redemption Price shall have the meaning provided in
Section 6.1.

Section 1.9.           As used herein, “Senior Indebtedness” shall mean shall
mean any obligation of the Company to its general creditors and the principal
(and premium, if any) and interest on the following whether now outstanding or
subsequently incurred, assumed or created, including (i) indebtedness of the
Company for money borrowed or purchased, similar obligations arising from
off-balance sheet guarantees and direct credit substitutes, and obligations
associated with derivative products such as interest and foreign exchange rate
contracts, commodity contracts, and similar arrangements and (ii) any deferrals,
renewals, extensions and refundings of any such Senior Indebtedness; other than
(i) any indebtedness or obligation as to which, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligation (A) is not Senior Indebtedness with respect to the Note or
(B) ranks pari passu with this Note, and (ii) indebtedness evidenced by this
Note.

Section 1.10          As used herein, the “Special Record Date” shall mean the
date fixed by the Company to determine holders of record of this Note which date
shall not be more than 15 days nor less than 10 days prior to the date of the
proposed payment of defaulted interest pursuant to Section 3.

Section 2.              Principal.  The principal amount of this Note shall be
due and payable on March 31, 2019.  Payment of the principal shall be made by
check mailed to the address of the Holder of this Note as it appears in the Note
Register to be maintained by the Company.

Section 3.              Interest.  Interest on this Note shall begin to accrue
on the date hereof and shall be due and payable monthly in arrears on the first
day of each month during the term hereof (each an “Interest Payment Date”),
commencing May 1, 2009 (or the next Business Day following such date, in the
event such date is not a Business Day).  Interest will accrue based on the
actual number of days that principal is outstanding over a year of 360
days.  Payments of interest will be made on the Interest Payment Dates to the
person in whose name this Note is registered at the close of business on the
Regular Record Date which shall be the 15th day of each month next preceding
such Interest Payment Date.

Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid (i) to the person in whose name this Note is registered at the close of
business on a Special Record Date for the proposed payment of such defaulted
interest (to be fixed as described below), notice whereof shall be sent to the
Holder of this Note by first-class, postage prepaid mail at his address as it
appears in the Note Register not less than 10 days prior to such Special Record
Date or (ii) in any other lawful manner.  Subject to the foregoing provision,
each Note delivered upon registration of transfer of, or in exchange for or in
lieu of, any other Note shall carry the rights to accrue interest and to
accrued, but unpaid, interest which were carried by such other Note.  Payment
of  interest is to be made by check mailed to the address of the person entitled
thereto as it appears in the Note Register to be maintained by the Company.

Section 4.              Subordination/Ranking.

Section 4.1.           (a) All payments of principal and interest pursuant to
this Note shall be subordinated, in the manner and to the extent provided in
this Note, to the prior payment in full of all “Senior Indebtedness.”  The
Company covenants and agrees that, anything herein to the contrary
notwithstanding, the indebtedness evidenced by this Note is subordinate and
junior in right of payment to all Senior Indebtedness to the extent provided
herein, and the Holder of this Note, by such Holder’s acceptance hereof,
likewise covenants and agrees to the subordination herein provided and shall be
bound by the provisions hereof.  Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of these subordination provisions
irrespective of any amendment, modification or waiver of any term of the Senior
Indebtedness or extension or renewal of the Senior Indebtedness.

 
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(b)           In the event that the Company shall default in the payment of any
principal of (or premium, if any), or interest on, any Senior Indebtedness when
the same become due and payable, whether at maturity or at a date fixed for
prepayment or by declaration of acceleration or otherwise, then, upon written
notice of such default to the Company by the holder(s) of Senior Indebtedness or
any trustee therefor, unless and until such default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of (or premium, if any), or interest on, this
Note, or in respect of any redemption, repayment, retirement, purchase or other
acquisition of this Note.

(c)           In the event of

 
(i)
any insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition or other similar proceeding relating to the Company,
its creditors or its property,

 
(ii)
any proceeding for the liquidation, dissolution or other winding up of the
Company, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings,

 
(iii)
any assignment by the Company for the benefit of creditors, or

 
(iv)
any other marshaling of the assets of the Company,

all Senior Indebtedness (including any interest thereon, whether accruing before
or after the commencement of any such proceedings) shall first be paid in full
before any payment or distribution, whether in cash, securities or other
property, shall be made to any Holder of this Note on account of the principal
of, or interest on, this Note.  Any payment or distribution, whether in cash,
securities or other property which would otherwise (but for these subordination
provisions) be payable or deliverable in respect of this Note shall be paid or
delivered directly to the holders of Senior Indebtedness in accordance with the
priorities then existing among such holders until all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall have been paid in full.  In the event of any such proceeding,
after payment in full of all sums owing with respect to Senior Indebtedness, the
Holder of this Note, together with the holders of any obligations of the Company
ranking on a parity with this Note, shall be entitled to be paid from the
remaining assets of the Company the amounts at the time due and owing on account
of unpaid principal of (and premium, if any, and interest on, this Note and such
other obligations before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any capital stock or any
obligations of the Company ranking junior to this Note and such other
obligations.

(d)           In the event that, notwithstanding the foregoing, any payment or
distribution of any character or any security, whether in cash, securities or
other property shall be received by any Holder of this Note in contravention of
any of the terms hereof, such payment or distribution or security shall be
received in trust for the benefit of, and shall be paid over or delivered and
transferred to, the holders of the Senior Indebtedness at the time outstanding
in accordance with the priorities then existing among such holders for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all such Senior Indebtedness in full.  In the event of
the failure of any such Holder to endorse or assign any such payment,
distribution or security, each holder of Senior Indebtedness is hereby
irrevocably authorized to endorse or assign the same.

(e)           Nothing contained herein shall impair, as between the Company and
the Holder of this Note, the obligation of the Company to pay such Holder the
principal of, (and premium, if any) and

 
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interest on, this Note or prevent such Holder from exercising all rights, powers
and remedies otherwise permitted by applicable law or hereunder upon a default
or Event of Default (as defined in Section 8 hereof) hereunder, all subject to
the rights of the holders of the Senior Indebtedness to receive cash, securities
or other property otherwise payable or deliverable to the Holders of this Note.

Section 4.2.           Senior Indebtedness shall not be deemed to have been paid
in full unless the holders thereof shall have received cash, securities or other
property equal to the amount of such Senior Indebtedness then outstanding.  Upon
the payment in full of all Senior Indebtedness, the Holder of this Note together
with all other subordinated debt of the Company ranking on a parity therewith
shall be subrogated to all rights of any holders of Senior Indebtedness to
receive any further payments or distributions applicable to the Senior
Indebtedness until the indebtedness evidenced by this Note shall have been paid
in full, and such payments or distributions received by the Holder thereof, by
reason of such subrogation, of cash, securities or other property which
otherwise would be paid or distributed to the holders of Senior Indebtedness,
shall, as between the Company and its creditors other than the holders of Senior
Indebtedness, on the one hand, and such Holders on the other hand, be deemed to
be a payment by the Company on account of Senior Indebtedness and not on account
of this Note.  No present or future holder of any Senior Indebtedness shall be
prejudiced in the right to enforce subordination of the indebtedness evidenced
by this Note by any act or failure to act on the part of the Company.

Section 4.3.           The provisions of this Note shall not impair any rights,
remedies or powers of any secured creditor of the Company in respect of any
security interest.  The securing of any obligations of the Company otherwise
ranking on a parity with this Note or ranking junior to such Note shall not be
deemed to prevent such obligations from constituting, respectively, obligations
ranking on a parity with such Note or ranking junior to such Note.

Section 4.4.           No modification or amendment of the subordination
provisions of Section 4 hereof in a manner adverse to the holders of Senior
Indebtedness may be made without the consent of all holders of Senior
Indebtedness.

Section 4.5.           This Note shall rank pari passu with the Company’s
Variable Rate Subordinated Debt Security Due October 15, 2015.  This Note shall
rank senior to (i) the Company’s Floating Rate Junior Subordinated Debt
Securities due 2032, (ii) the Company’s Junior Debt Securities Due 2034 and
(iii) the Company’s Floating Rate Junior Subordinated Notes due 2036.

Section 5.              Certain Covenants.

Section 5.1.           Company May Consolidate, Etc. Only on Certain Terms.  The
Company shall not consolidate or merge into any other person or convey, transfer
or lease its properties and assets substantially as an entirety to any person,
and the Company shall not permit any person to consolidate with or merge into
the Company, unless, in case the Company shall consolidate with or merge into
another person or convey, transfer or lease its properties and assets
substantially as an entirety to any person, the person formed by such
consolidation or into which the Company is merged or the person which acquires
by conveyance or transfer, or which leases, the properties and assets of the
Company substantially as an entirety shall be a corporation, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, in form satisfactory to the Company, the due and punctual
payment of the principal of (and premium, if any), and interest on, all of the
Notes and the performance or observance of every covenant of the Notes on the
part of the Company to be performed or observed.

Section 5.2.           So long as any principal remains outstanding hereunder,
the Company will not, without the prior written consent of the Holder, which
consent will not be unreasonably withheld, enter into any transactions involving
the acquisition of a bank or bank or bank holding company.

 
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Section 6.              Optional Redemption.

Section 6.1.           This Note (or any successor Note) may be redeemed at the
election of the Company, as a whole or from time to time in part, on any
Interest Payment Date on or after April 1, 2014 at the then outstanding
principal amount of the Note (the “Redemption Price”).  The Redemption Price
will be delivered to the Holder, together with accrued, but unpaid, interest to
the Redemption Date.

Section 6.2.           Notice of Redemption shall be in writing and sent by
first-class mail, postage prepaid, not less than 30 nor more than 60 days prior
to the Redemption Date, to the Holder at such Holder’s address appearing in the
Note Register.

All Notices of Redemption shall state:

(a)           the Redemption Date,

(b)           the Redemption Price,

 
(c)
in the case of partial redemption of the Note, the principal amount to be
redeemed,

 
(d)
that on the Redemption Date the Redemption Price will become due and payable
upon such Note to be redeemed and that interest thereon will cease to accrue on
and after said date, and

 
(e)
the place or places where any such Note is to be surrendered for payment of the
Redemption Price.

Any immaterial defect in said notice shall not affect the validity of the
proceedings for the redemption of any other Note or portion thereof.  Any notice
that is mailed in the manner herein provided shall be conclusively presumed to
have been given whether or not the Holder receives said notice.

Section 6.3.           Prior to any Redemption Date, the Company shall segregate
and hold in trust an amount of money sufficient to pay the Redemption Price of,
and accrued, but unpaid, interest on, any Note which is to be redeemed on that
date.

Notice of redemption having been given as aforesaid, any Note so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Note
shall cease to bear interest.  Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
provided, however, that installments of interest payable on an Interest Payment
Date occurring prior to or on the Redemption Date shall be payable to the
Holders of such Note registered as such at the close of business on the relevant
Regular Record Date.

If any Note called for redemption shall not be so paid upon surrender thereof
for redemption, the principal (and premium, if any) shall, until paid, bear
interest from the Redemption Date at the rate borne by the Note.

Section 6.4.           Any Note which is to be redeemed only in part shall be
surrendered at the principal office of the Company (with, if the Company so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company duly executed by, the Holder thereof or his

 
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attorney duly authorized in writing), and the Company shall execute and deliver
to the Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.

Section 7.              Affirmative Covenants.

Section 7.1.           The Company will use its best efforts to preserve and
keep in full force and effect its corporate existence and maintain all rights,
licenses and permits necessary to the proper conduct of its business.

Section 7.2.           The Company will at all times keep proper books of record
and account in which full, true and correct entries will be made of all of its
dealings, businesses and affairs in accordance with sound accounting practices.

Section 7.3.           The Company will not (1) declare or pay any dividend or
make any other distribution on any Junior Securities of the Company, except
dividends or distributions payable in Junior Securities of the Company, or (2)
make any special or extraordinary payments to any of the Company’s shareholders,
employees, or directors or their affiliates, or (3) purchase, redeem or
otherwise acquire or retire for value any Junior Securities of the Company,
except Junior Securities acquired upon conversion thereof into other Junior
Securities of the Company, or (4) permit a subsidiary of the Company to
purchase, redeem or otherwise acquire or retire for value any Junior Securities
of the Company or make any special or extraordinary payments to any of the
Company’s shareholders, employees or directors or their affiliates, if, at the
time such dividend, distribution, purchase, redemption, other acquisition or
payment is effected, a default in the payment of any interest upon any Note when
it becomes due and payable or a default in the payment of the principal of (or
premium, if any, on) any Note at its maturity shall have occurred and be
continuing.

Section 7.4            In the event that the Company issues additional
subordinated debt in the future, the Company commits that this Note will rank
pari passu with all such future subordinated debt issuances.

Section 8.              Default Provisions.  Upon the occurrence of any one or
more of the following events (herein called “Events of Default”), whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law, pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body:

(a)           the entry of a decree or an order for relief in respect of the
Company by a court having jurisdiction in the premises in an involuntary case
under the federal bankruptcy law, as now or hereafter constituted, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days, or

(b)           the commencement by the Company of a voluntary case under the
federal bankruptcy laws, as now or hereafter constituted, or the consent by the
Company to the entry of a decree or order for relief in an involuntary case
under such law, or

(c)           the appointment of a receiver for Summit Community Bank, the
Company’s wholly-owned subsidiary,
 
then the Holder of this Note, at any time thereafter that such Event of Default
is continuing, by notice in writing mailed or delivered to the Company, declare
the unpaid principal of all this Note and all interest then accrued, but unpaid,
on such Note immediately due and payable, and such principal and interest shall

 
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thereupon become and be immediately due and payable, without presentation,
demand, protest, notice of protest or other notice of dishonor, all of which are
hereby expressly waived by the Company.

In case any one or more defaults under this Note shall occur and be continuing,
the Holder of this Note may, to the extent permitted by law, proceed to protect
and enforce the rights of such Holder either by suit in equity and/or by action
at law, whether for the specific performance of any covenant or agreement
contained in this Note or in the aid of the exercise of any power granted in
this Note, or proceed to obtain a judgment or any other relief whatsoever
appropriate to the action or proceeding, or proceed to enforce any other legal
or equitable right of the Holder of this Note.

Section 9.              Registration, Registration of Transfer and Exchange.

Section 9.1            The Company shall cause to be kept at the principal
office of the Company a register (the register maintained in such office being
herein sometimes collectively referred to as the “Note Register”) in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of this Note and of transfers of this Note, subject
to applicable state and federal securities laws.  Upon surrender for
registration of transfer of the Note at the principal office of the Company, the
Company shall execute and deliver, in the name of the designated transferee or
transferees, one or more new Notes in minimum denominations of $1,000 and
integral multiples of $1,000.

At the option of the Holder, this Note may be exchanged for other Notes of any
authorized denominations and of a like aggregate principal amount, upon
surrender of this Note for such exchange.  Whenever the Note is so surrendered
for exchange, the Company shall execute and deliver the Note which the Holder
making the exchange is entitled to receive.

All Notes issued upon any registration of transfer or exchange shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits as the Notes surrendered upon such registration of transfer or
exchange.  Every Note presented or surrendered for registration of transfer or
exchange shall (if so required by the Company) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company duly executed, by the Holder thereof or his attorney duly authorized in
writing.  No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes.

The Company shall not be required (i) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the day of the mailing of a Notice of Redemption of Notes selected for
redemption under Section 6.1 and ending at the close of business on the day of
such mailing, or (ii) to register the transfer of or exchange of any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.

Section 9.2.           If any mutilated Note is surrendered to the Company, the
Company shall execute and deliver in exchange therefor a new Note of like tenor
and principal amount and bearing a number not contemporaneously outstanding.  If
there shall be delivered to the Company (i) evidence to its satisfaction of the
destruction, loss or theft of any Note and (ii) such security or indemnity as
may be required by it to save the Company and any agent harmless, then, in the
absence of notice to the Company that such Note has been acquired by a bona fide
purchaser, the Company shall execute and deliver, in lieu of any such destroyed,
lost or stolen Note, a new Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.  In case any such mutilated,
destroyed, lost or stolen Note has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new Note, pay such Note.

 
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Upon the issuance of any new Note under this Section, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith.

Every new Note issued pursuant to this Section in lieu of any destroyed, lost or
stolen Note shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Note shall be at any
time enforceable by anyone.

The provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes.

Section 9.3.           If an Event of Default shall have occurred and be
continuing, a Holder shall have a right to do either or both of the following
for a purpose reasonably related to such Holder’s interest as a Holder:  (a)
inspect and copy the Note Register during usual business hours upon five (5)
business days’ prior written demand upon the Company; or (b) obtain from the
Company, upon written demand and upon the tender of a reasonable charge therefor
(the amount of which charge shall be stated to the Holder by the Company upon
request), a copy of the Note Register as of the most recent date for which it
has been compiled or as of a date specified by the Holder subsequent to the date
of demand.  The Note Register shall be made available on or before the later of
five (5) business days after the demand is received or the date specified
therein as the date as of which the Note Register is to be compiled.

Section 10.            Governing Law.

This Note shall be governed by and for all purposes shall be construed in
accordance with the laws of the State of West Virginia, without regard to its
choice of law principles.

                                             SUMMIT FINANCIAL GROUP, INC.

 
By:
/s/  Robert S. Tissue
 

 
Print Name:
Robert S. Tissue
 

 
Title:
Senior Vice President, Chief Financial Officer

Witness:

_/s/ Teresa D. Ely___________
Corporate Secretary
 

 

 
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