exhib104qualstkooptinst.htm


    Exhibit
10.4

    


    SUMMIT
FINANCIAL GROUP, INC. 2009 OFFICER STOCK OPTION PLAN

    FORM
OF QUALIFIED STOCK OPTION GRANT AGREEMENT

    


    (Installment
Vesting)

    


    
      	
               
      

            	
              1.

            	
              Grant of Option. Subject
      to the terms and conditions of this Qualified Stock Option Grant Agreement
      (“Agreement”) and the 2009 Officer Stock Option Plan (“Plan”), dated
      ____________, 2009, which has been adopted by SUMMIT FINANCIAL GROUP,
      INC., a West Virginia corporation (“Corporation”) and which is
      incorporated herein by reference, an Option to purchase a total of _____
      shares of $2.50 par value common stock of the Corporation’s Common Stock
      at a price of ___________________ Dollars and ___ Cents ($______) per
      share is hereby granted to _____________________ (“Participant”) as of the
      date of this Agreement as affixed below with its execution (“Date of
      Grant”).

            


    

     

    
      	
              2.

            	
              Inclusion of
      Parent, Subsidiary and Successor Corporations.  For purposes of this Agreement,
      employment by a parent and or subsidiary of the Corporation shall be
      considered employment by the Corporation.  As used in this
      Section, the term “Corporation” shall include the parent and all present
      and future subsidiaries of the Corporation as defined in Sections 424(e)
      and 424(f) of the Internal Revenue Code of 1986, as amended or replaced
      from time to time (“Code”).  This Agreement shall be binding
      upon any successor or successors of the Corporation and reference herein
      to the Corporation, unless clearly inapplicable, shall be deemed to
      include any such successor or successors of the
      Corporation.

            


    

     

    
      	
              3.

            	
              Qualified
      Stock Option.  This Option is intended to qualify
      as an option of the type described in Section 422 of the Code (“Qualified
      Stock Option”).

            


    

     

    
      	
              4.

            	
              Installment
      Exercise.  Subject to any limitations in the Plan and
      Agreement, the Qualified Stock Option shall become vested and exercisable
      prior
      to the tenth anniversary of the date of grant (hereinafter the “Expiration
      Date”) in five (5) installments for the following percentage of the
      total number of Common Stock shares under the Option, on or after the
      following Date of Vesting indicated, in cumulative
  fashion:

            


    

     

    
      	
              Number
      of Shares

            	
              Date
      of Vesting

            	
              Date
      of Termination

            	
              %
      Total Number of Common Stock Shares Under Option

            
	
              a.

            	 
      	 
      	 
      
	
              b.

            	 
      	 
      	 
      
	
              c.

            	 
      	 
      	 
      
	
              d.

            	 
      	 
      	 
      
	
              e.

            	 
      	 
      	 
      
	
              f.

            	 
      	 
      	 
      
	
              g.

            	 
      	 
      	 
      
	
              h.

            	 
      	 
      	 
      
	
              i.

            	 
      	 
      	 
      
	
              j.

            	 
      	 
      	 
      


    

    


    Participant
agrees to exercise the Option in increments of not less than fifty (50)
shares.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    
      	
              5.

            	
              Termination of
      Option.

            


    

     

    
      	
               
      

            	
              (a)

            	
              The
      Option and all rights granted under this Agreement with respect to the
      Option, to the extent not previously exercised, shall terminate and become
      null and void on and after the _______anniversary of the Date of Vesting;
      provided, however, that the Option may
      not be exercised at any time on or after the Expiration
      Date.

            


    

     

    
      	
               
      

            	
              (b)

            	
              Continuous
      Employment Required.  Except
      as otherwise provided in this Section, a Participant must be an employee
      of the Corporation from the date of grant of a Qualified Stock Option
      until the date that is three (3) months prior to the exercise of the
      Qualified Stock Option.  If a Participant is terminated due to a
      permanent disability, said Participant must be an employee of the
      Corporation from the grant of a Qualified Stock Option until one (1) year
      prior to the exercise of the Qualified Stock Option.  An
      employment relationship will be treated as continuing while the
      Participant is on military leave, sick leave or other bona fide leave of
      absence if the period of leave does not exceed ninety (90) days, or, if
      longer, the Participant’s right to re-employment is guaranteed either by
      statute or by contract.  Employment shall be defined in
      accordance with the provisions of Section 1.421-1(h) of the Income Tax
      Regulations or any successor regulations, and if this Option shall be
      assumed or a new Option substituted therefore in a transaction to which
      Code Section 424(a) applies, employment by such successor corporation
      shall be considered for all purposes of this Option to be Employment by
      the Corporation.

            


    

     

    
      	
               
      

            	
              (c)

            	
              Termination.  In
      the event of termination of the employment of a Participant prior to the
      Expiration Date by either the Participant or the Corporation to whom an
      Option has been granted under the Plan, other than a termination of
      employment by reason of retirement (as defined in subsection (d) of this
      Section 5), permanent disability (as defined in subsection (e) of this
      Section 5), or death, the Participant may exercise such Vested Options
      until the earlier of (i) the expiration of the stated term of the Option,
      or (ii) a period of ninety (90) days from the date of such
      termination.

            


    

     

    
      	
               
      

            	
              (d)

            	
              Retirement.  If a Participant’s continuous
      employment with the Corporation terminates by reason of his or her
      retirement, pursuant to the definition in the Plan, from the Corporation
      at a retirement date authorized by the Committee prior to the Expiration
      Date, the retired
      Participant shall become one hundred percent (100%) Vested in any
      installment of the Option not yet one hundred percent
      (100%) Vested that Participant has been granted under the Plan as of his
      or her date of retirement in accordance with this subsection
      (d).  A
      Participant may exercise such Vested Options until the earlier of (i) the
      expiration of the stated term of the Option, or (ii) for a period of
      ninety (90) days from the date of such
  retirement.

            


    

     

    
      	
               
      

            	
              (e)

            	
              Permanent
      Disability.  If a Participant’s continuous employment
      terminates prior to the Expiration Date by reason of a permanent
      disability, as defined in Code Section 22(e)(3) of the Code, as amended
      from time to time, and as determined by the Committee in its discretion
      based upon such documentation and information as the Committee may require
      the Participant to submit for purposes of establishing permanent
      disability pursuant to this subsection (e) of Section 5, then such Option
      of the Participant may be exercised with respect to the number of shares
      covered by the Participant’s Option that were Vested immediately prior to
      the date of such permanent disability as determined by the
      Committee.  A Participant who is determined to be permanently
      disabled pursuant to this subsection (e) of Section 5 may exercise such
      Vested Options until the earlier of (i) the expiration of the stated term
      of the Option, or (ii) one (1) year after a Participant’s continuous
      employment with the Corporation is terminated by reason of a permanent
      disability as established pursuant to this subsection (e) of Section
      5.

            


    

     

    
      	
               
      

            	
              (f)

            	
              Death.  If
      a Participant’s continuous employment with the Corporation terminates by
      reason of his or her death prior to the Expiration Date, then to the
      extent that the Participant would have been entitled to exercise the
      Option immediately prior to his or her 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 or her estate) to whom his or her rights under such Option shall have
      passed by will or by laws of descent and
      distribution.  Notwithstanding the previous sentence, a
      Participant must be an employee of the Corporation (i) at the time of the
      Participant’s death or (ii) within three (3) months of the Participant’s
      death to entitle the person or persons (including his or her estate) to
      whom his or her rights under such Option shall have passed by will or by
      laws of descent and distribution to exercise said
  Option.

            


    

     

    
      	
              6.

            	
              Exercise of
      Option.  Subject to Section 5 of this Agreement,
      Participant may exercise the Option with respect to all or any part of the
      number of shares then exercisable under this Agreement by giving the
      Committee written notice of intent to exercise, of the number of shares to
      be purchased, the exercise date, and making full payment of the Option
      price, all in accordance with Sections 8 and 9 of the
  Plan.

            


    

     

    
      	
              7.

            	
              Adjustment
      of and Changes in Stock of the Corporation.  Pursuant
      to Section 11 of the Plan, in the event of a reorganization,
      recapitalization, change of shares, stock split, spin-off, stock dividend,
      reclassification, subdivision or combination of shares, merger,
      consolidation, rights offering, or any other change in the corporate
      structure or shares of capital stock of the Corporation, the Committee
      shall make such adjustment as it deems appropriate in the number and kind
      of shares of stock subject to the Option or in the Option
      price.  All provided, however, that any such adjustments shall
      be accomplished so that such Qualified Stock Option shall continue to be
      an incentive stock option within the meaning of Code Section
      422.  However, in no event shall this Section 7 be construed to
      permit a modification (including a replacement) of an Option if such
      modification either:  (i) would result in accelerated
      recognition of income or imposition of additional tax under Code Section
      409A; or (ii) would cause the Option subject to the modification (or cause
      a replacement Option) to be subject to Code Section 409A; and provided,
      further, that such adjustment shall be made in accordance with Code
      Section 424(h).

            


    

     

    
      	
              8.

            	
              Change of
      Control.  Pursuant
      to Sections 11(b) and 12 of the Plan, in the event of a Change of
      Control, the Participant shall become one hundred percent (100%) Vested as
      of the date of such Change of Control in all Options granted hereunder and
      all such Options shall become exercisable regardless of the number of
      years that have passed since the Date of Grant and regardless of any
      vesting provisions in this Agreement to the contrary.  All
      provided that the Participant must be an employee on the date the Change
      of Control is deemed to have occurred in order to have the vesting of
      outstanding Options accelerated.  Notwithstanding any provision
      in this Section to the contrary, no extension to the Term of an Option
      shall be extended beyond the original Term of said
  Option.

            


    

     

    
      	
              9.

            	
              No Rights of
      Stockholders.  Neither Participant nor any personal
      representative of Participant shall be, or shall have any of the rights
      and privileges of, a stockholder of the Corporation with respect to any
      shares of stock purchasable or issuable upon the exercise of the Option,
      in whole or in part, prior to the date of exercise of the
      Option.

            


    

     

    
      	
              10.

            	
              Employment Not
      Affected.  Nothing contained in the Plan or this Option
      shall be construed or deemed by any person under any circumstances to bind
      the Corporation to continue the employment of the Participant for the
      period within which this Option may be
  exercised.

            


    

     

    
      	
              11.

            	
              Nontransferability of
      Option.  Except
      as provided in Section 5 of this Agreement, no rights granted under this
      Agreement or any Option hereunder may be transferred in any manner as this
      Option is personal and may be exercised only by Participant while
      he or she is an employee of the Corporation.  In the event of
      (i) any attempt by Participant to alienate, assign, pledge, hypothecate,
      or otherwise dispose of the Option, except as provided in this Agreement,
      or (ii) the levy of any attachment, execution, or similar process upon the
      rights or interests conferred by this Agreement, the Corporation may
      terminate the Option by notice to Participant and upon such notice the
      Option shall become null and void.  The terms of this Option
      shall be binding upon the executors, administrators, heirs, successors,
      and assigns of Participant.

            


    

     

    
      	
              12.

            	
              Limitations on Disposition of
      Qualified Stock Option Shares.  It is understood and
      intended that this Option shall qualify as a Qualified Stock Option, an
      option of the type described in Section 422 of the Code.  The
      Participant understands that to obtain the benefits of a Qualified Stock
      Option, no sale or other

            


    

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              disposition
      may be made of any shares acquired upon exercise of the Option within one
      year after the day of the transfer of such shares to him or her, nor
      within two years after the grant of the Option, subject to the exceptions
      described in Sections 7(h) and 10(d) of the Plan.  If the
      Participant intends to dispose, or does dispose (whether by sale,
      exchange, gift, transfer or otherwise), of any such shares within said
      periods, he or she will notify the Corporation in writing within ten days
      after such disposition.

            


    

     

    
      	
              13.

            	
              Amendment
      of Option. The Option may be amended by the
      Board or the Committee at any time (i) if the Board or the Committee
      determines, in its sole discretion, that amendment shall deem necessary or
      advisable, or to conform to any change in any law or regulation applicable
      thereto; or (ii)
      other than in the circumstances described in clause (i), with the consent
      of Participant.  All provided that
      (i) no such amendment or modification shall be effective if it would
      cause this Agreement
      to violate Code Sections 409A and/or 422 and the regulations and guidance
      thereunder and consequently cause this Agreement to be subject to 409A or
      cause any Qualified Stock Option granted hereunder to be treated as a Non
      Qualified Stock Option.

            


    

     

    
      	
              14.

            	
              Notice. Any notice to the Corporation
      provided for in this 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.

            


    

     

    
      	
              15.

            	
              Incorporation of Plan by
      Reference.  The Option is granted pursuant to the terms
      of the Plan, the terms of which are incorporated herein by reference, and
      the Option shall in all respects be interpreted in accordance with the
      Plan.  The Committee shall interpret and construe the Plan and
      this instrument, and its interpretations and determinations shall be
      conclusive and binding on the parties to this Agreement and any other
      person claiming an interest under the Agreement, with respect to any issue
      arising under it or the Plan.  Unless otherwise expressly stated
      herein, in the event of any inconsistency between the terms and conditions
      of the Plan and this Agreement, the terms of the Plan shall
      control.  Any defined term used in this Agreement is, unless
      specifically defined otherwise, given the meaning as defined in the
      Plan.

            


    

     

    
      	
              16.

            	
              Construction.  If
      any provision of this Agreement is held to be illegal or void, such
      illegality or invalidity shall not affect the remaining provisions of the
      Agreement, but shall be fully severable, and the Agreement shall be
      construed and enforced as if the illegal or invalid provisions had never
      been inserted.  For all purposes of the Agreement, where the
      context permits, the singular shall include the plural, and the plural
      shall include the singular.  All decisions of the Board or the
      Committee upon questions regarding the Agreement shall be conclusive and
      binding on all persons.  The headings of the paragraphs of this
      Agreement have been included for convenience of reference only, are not to
      be considered a part hereof and shall in no way modify or restrict any of
      the terms of provisions hereof.

            


    

     

    
      	
              17.

            	
              Governing
      Law.  The validity, construction, interpretation, and
      effect of this instrument shall exclusively be governed by and determined
      in accordance with the law of the State of West Virginia, except to the
      extent preempted by federal law, which shall to that extent
      govern.

            


    

     

    IN
WITNESS WHEREOF, the Corporation has caused its duly authorized officers to
execute and attest this Qualified Stock Option Grant Agreement, and to apply the
corporate seal hereto, and Participant has placed his or her signature,
effective as of the Date of Grant.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    CORPORATION:

                                    SUMMIT FINANCIAL
GROUP, INC.

    


    


                                    By:
_____________________________________

                                    Oscar
Bean

                                    Its:           Chairman
of the Board

    


    


                                    Attest:
___________________________________

    


                                    Title:
____________________________________

    


    


     

    


     

    Participant
acknowledges receipt of a copy of the Plan, a copy of which is attached, and
represents that he or she is familiar with the terms and provisions of the
Plan.  Participant hereby accepts this Option subject to all the terms
and provisions of the Plan.  Participant hereby agrees to accept as
binding, conclusive, and final all decisions and interpretations of the
Committee, and, where applicable, the Board, upon any questions arising under
the Plan.

     

    Dated:                      __________________________

    


    


    PARTICIPANT:

                                    __________________________________

    


    


    


                                    Sworn and subscribed
before me this _____ day of _________________, 20___.

    


    


                                    __________________________________

                                    Notary
Public

    


    


    
      	 
      


    

                                    My Commission
expires:  __________________________.