Document:

Exhibit 10.1

Exhibit 10.1

JO-ANN STORES, INC.

2008 INCENTIVE COMPENSATION PLAN

Effective June 11, 2008

Amended by Board as of April 7, 2010;
Ratified by
Shareholders June 10, 2010

1. Purpose

The purpose of this Plan is to enable the Company to attract and retain qualified employees
and non-employee Directors, to provide incentives, and to reward performance. To achieve this
purpose, this Plan provides the authority to grant Awards payable in Shares, in cash, or in a
combination of Shares and cash. This Plan was adopted by the Board of Directors of the Company on
April 2, 2008, subject to shareholder approval, which occurred on June 11, 2008. This Plan was
amended and restated by the Board of Directors of the Company, without shareholder approval being
required, on April 7, 2010.

2. Definitions

(a) “Affiliate and Associate” — These terms have the meanings given to them in Rule 12b-2
under the Exchange Act.

(b) “Award” — A grant of Stock Appreciation Rights, Stock Awards, Stock Options, Incentive
Compensation Awards, or other incentives under this Plan.

(c) “Board of Directors” — The Board of Directors of the Company.

(d) “Cause” — The occurrence of any one or more of the following (unless otherwise prescribed
by the Committee in a grant agreement): (i) the willful and continued failure by the Participant to
substantially perform his normal duties (other than any such failure resulting from Participant’s
disability), after a written demand for substantial performance is delivered to the Participant
that specifically identifies the manner in which the Committee believes that the Participant has
not substantially performed his duties, and the Participant has failed to remedy the situation
within thirty (30) business days of receiving such notice; (ii) the Participant’s conviction for
committing an act of fraud, embezzlement, theft, or other criminal act constituting a felony; or
(iii) the willful engaging by the Participant in gross negligence materially and demonstrably
injurious to the Company. However, no act or failure to act on the Participant’s part shall be
considered “willful” unless done, or omitted to be done, by the Participant not in good faith and
without reasonable belief that his action or omission was in or not opposed to the best interest of
the Company.

 

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(e) “Change in Control” — A “Change in Control” will be deemed to occur, with respect to any
Award granted prior to April 7, 2010, if at any time after the date of the adoption of this Plan
(unless otherwise prescribed by the Committee in a grant agreement):

(i) Any person (other than the Company, any of its Subsidiaries, any employee benefit
plan or employee stock ownership plan of the Company, or any person organized, appointed, or
established by the Company for or pursuant to the terms of any such plan), alone or together
with any of its affiliates, becomes the beneficial owner of fifteen percent (15%) or more
(but less than fifty percent (50%)) of the Voting Shares then outstanding;

(ii) Any person (other than the Company, any of its Subsidiaries, any employee benefit
plan or employee stock ownership plan of the Company, or any person organized, appointed, or
established by the Company for or pursuant to the terms of any such plan), alone or together
with any of its affiliates, becomes the beneficial owner of fifty percent (50%) or more of
the Voting Shares then outstanding;

(iii) Any person commences or publicly announces an intention to commence a tender
offer or exchange offer the consummation of which would result in the person becoming the
beneficial owner of fifteen percent (15%) or more of the Voting Shares then outstanding;

(iv) At any time during any period of twenty-four (24) consecutive months, individuals
who were Directors at the beginning of the 24-month period no longer constitute a majority
of the members of the Board of Directors, unless the election, or the nomination for
election by the Company’s shareholders, of each Director who was not a Director at the
beginning of the period is approved by at least a majority of the Directors who (x) are in
office at the time of the election or nomination, and (y) were Directors at the beginning of
the period;

(v) A record date is established for determining shareholders entitled to vote upon (x)
a merger or consolidation of the Company with another corporation in which those persons who
are shareholders of the Company immediately before the merger or consolidation are to
receive or retain less than sixty percent (60%) of the stock of the surviving or continuing
corporation, (y) a sale or other disposition of all or substantially all of the assets of
the Company, or (z) the dissolution of the Company; or

(vi) (x) the Company is merged or consolidated with another corporation and those
persons who were shareholders of the Company immediately before the merger or consolidation
receive or retain less than sixty percent (60%) of the stock of the surviving or continuing
corporation, (y) there occurs a sale or other disposition of all or substantially all of the
assets of the Company, or (z) the Company is dissolved.

 

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Notwithstanding anything herein to the contrary, if an event described in clause (ii),
clause (iv), or clause (vi) above occurs, the occurrence of that event will constitute an
irrevocable Change in Control. Furthermore, notwithstanding anything herein to the contrary,
if an event described in clause (iii) occurs, and the Board of Directors either approves
such offer or takes no action with respect to such offer, then the occurrence of that event
will constitute an irrevocable Change in Control. On the other hand, notwithstanding
anything herein to the contrary, if an event described in clause (i) or clause (v) above
occurs, or if an event described in clause (iii) occurs and the Board of Directors does not
either approve such offer or take no action with respect to such offer as described in the
preceding sentence, and a majority of those members of the Board of Directors who were
Directors prior to such event determine, within the 90-day period beginning on the date such
event occurs, that the event should not be treated as a Change in Control, then, from and
after the date that determination is made, that event will be treated as not having
occurred. If no such determination is made, a Change in Control resulting from any of the
events described in the immediately preceding sentence will constitute an irrevocable Change
in Control on the 91st day after the occurrence of the event.

A “Change in Control” will be deemed to occur, with respect to any Award granted on or after
April 7, 2010, if at any time on or after such date (unless otherwise prescribed by the Committee
in a grant agreement):

(i) Any person (other than the Company, any of its Subsidiaries, any employee benefit
plan or employee stock ownership plan of the Company, or any person organized, appointed, or
established by the Company for or pursuant to the terms of any such plan), alone or together
with any of its affiliates, becomes the beneficial owner of thirty percent (30%) or more
(but less than fifty percent (50%)) of the Voting Shares then outstanding;

(ii) Any person (other than the Company, any of its Subsidiaries, any employee benefit
plan or employee stock ownership plan of the Company, or any person organized, appointed, or
established by the Company for or pursuant to the terms of any such plan), alone or together
with any of its affiliates, becomes the beneficial owner of fifty percent (50%) or more of
the Voting Shares then outstanding;

(iii) At any time during any period of twenty-four (24) consecutive months, individuals
who were Directors at the beginning of the 24-month period no longer constitute a majority
of the members of the Board of Directors, unless the election, or the nomination for
election by the Company’s shareholders, of each Director who was not a Director at the
beginning of the period is approved by at least a majority of the Directors who (x) are in
office at the time of the election or nomination, and (y) were Directors at the beginning of
the period; or

 

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(iv) (x) the Company is merged or consolidated with another corporation and those
persons who were shareholders of the Company immediately before the merger or consolidation
receive or retain less than sixty percent (60%) of the stock of the surviving or continuing
corporation, (y) there occurs a sale or other disposition of all or substantially all of the
assets of the Company, or (z) the Company is dissolved.

Notwithstanding anything herein to the contrary, if an event described in clause (ii),
clause (iii), or clause (iv) above occurs, the occurrence of that event will constitute an
irrevocable Change in Control. Notwithstanding anything herein to the contrary, if an event
described in clause (i) above occurs, and a majority of those members of the Board of
Directors who were Directors prior to such event determine, within the 90-day period
beginning on the date such event occurs, that the event should not be treated as a Change in
Control, then, from and after the date that determination is made, that event will be
treated as not constituting a Change in Control. If no such determination is made, a Change
in Control resulting from an event described in clause (i) above will constitute an
irrevocable Change in Control on the 91st day after the occurrence of the event.

(f) “Code” — The Internal Revenue Code of 1986, or any law that supersedes or replaces it, as
amended from time to time.

(g) “Committee” — The Compensation Committee of the Board of Directors, or any other
committee of the Board of Directors that the Board of Directors authorizes to administer this Plan.

(h) “Company” — Jo-Ann Stores, Inc., an Ohio corporation, and its successors.

(i) “Date of Grant” — The date as of which an Award is determined to be effective and is
granted pursuant to the Plan, either as specified in rules adopted by the Committee with respect to
this Plan or as designated in a resolution of the Committee. The Date of Grant shall not be earlier
than the date of the resolution and action therein by the Committee or the date specified in the
Committee’s rules.

(j) “Director” — A director of the Company.

(k) “Equity Restructuring” — A non-reciprocal transaction between the Company and its
shareholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization
through a large, nonrecurring cash dividend, that causes the per-Share value of the Shares
underlying outstanding Awards to change.

(l) “Exchange Act” — Securities Exchange Act of 1934, and any law that supersedes or replaces
it, as amended from time to time.

 

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(m) “Fair Market Value” of Shares — As of any particular date the closing sale price
of the Shares as reported on the New York Stock Exchange Composite Tape or, if not listed on
such exchange, on any other national securities exchange on which the Shares are listed. If the
Shares are not traded as of any given date, the Fair Market Value means the closing price of the
Shares on the principal exchange or market on which the Shares are traded or quoted for the
immediately preceding date on which the Shares were traded or quoted. If there is no regular
public trading market for such Shares, the Fair Market Value shall be the fair market value as
determined in good faith by the Committee. The Committee is authorized to adopt another fair market
value pricing method, provided such method is stated in the grant agreement, and is in compliance
with the fair market value pricing rules set forth in Section 409A of the Code.

(n) “Good Reason” — Means, without the Participant’s express written consent, the occurrence
of any one or more of the following (unless otherwise prescribed by the Committee in a grant
agreement): (i) any material reduction in the Participant’s base compensation and incentive
compensation opportunities (to the extent such incentive compensation opportunities are a regular
and substantial part of the Participant’s base compensation) below the amount in effect immediately
before the Change in Control or, if higher, the amount in effect before any reduction in the
Participant’s base compensation and incentive compensation opportunities made in contemplation of
the Change in Control; (ii) any material reduction in the Participant’s duties, responsibilities,
or position with respect to the Company from the duties, responsibilities, or position as in effect
immediately before the Change in Control or as in effect immediately before any reduction in any
such item made in contemplation of the Change in Control; or (iii) any shift of the Participant’s
principal place of employment with the Company to a location that is more than fifty (50) miles (by
straight line measurement) from the site of the Company’s headquarters in Hudson, Ohio at the
relevant time. The Participant shall have a voluntary termination for Good Reason only if: (i) the
Participant provides written notice to the Company within ninety (90) days after the initial
occurrence of an above event describing in detail the event and stating that the Participant’s
employment will terminate upon a specified date in such notice (the “Good Reason Termination
Date”), which date is not earlier than thirty (30) days after the date such notice is provided to
the Company (the “Notice Delivery Date”) and not later than ninety (90) days after the Notice
Delivery Date, and (ii) the Company does not remedy the event prior to the Good Reason Termination
Date.

(o) “Incentive Compensation Award” — This term has the meaning given to it in Section
6(a)(iv).

(p) “Incentive Compensation Award Payout Level” — The greater of (i) the Participant’s
average Incentive Compensation Award earned over the three (3) full performance periods ended
before the Qualifying Termination or, if the Participant was eligible to earn such a bonus for less
than the last three full performance periods, for the performance periods during which the
Participant was eligible to earn such Incentive Compensation Award immediately prior to the
Qualifying Termination, or (ii) the Participant’s target Incentive Compensation Award established
for the year in which the Qualifying Termination occurs. If the Participant was not eligible to
earn such an Incentive Compensation Award for any performance period ending on or
before the Qualifying Termination, then the Incentive Compensation Payout Level shall be
deemed to equal the Participant’s target Incentive Compensation Award established for the year in
which the Qualifying Termination occurs.

 

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(q) “Participant” — Any person to whom an Award has been granted under this Plan.

(r) “Performance Criteria” — This term has the meaning given to it in Section 7(b).

(s) “Performance Goal” — This term has the meaning given to it in Section 7(a).

(t) “Prior Award” — Any award or grant made pursuant to the Jo-Ann Stores, Inc. 1998 Incentive
Compensation Plan, as amended, that is outstanding and unexercised on the date of adoption of the
Plan.

(u) “Qualified Performance-Based Award” — An Award or portion of an Award that is intended to
satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the
Code.

(v) “Qualifying Termination” — Means either the Company or its Subsidiaries terminates the
Participant’s employment or service without Cause, or the Participant terminates his employment or
service with the Company and its Subsidiaries for Good Reason.

(w) “Restricted Stock” — An Award of Shares that are subject to restrictions or risk of
forfeiture.

(x) “Rule 16b-3” — Rule 16b-3 under the Exchange Act, or any rule that supersedes or replaces
it, as amended from time to time.

(y) “Shares” — Company common shares.

(z) “Stock Appreciation Right” — This term has the meaning given to it in Section 6(a)(i).

(aa) “Stock Award” — This term has the meaning given to it in Section 6(a)(ii).

(bb) “Stock Equivalent Unit” — An Award that is valued by reference to the Fair Market Value
of Shares.

(cc) “Stock Option” — This term has the meaning given to it in Section 6(a)(iii).

(dd) “Subsidiary” — A corporation, limited liability company, business trust, partnership,
joint venture, or other organization of which securities having a majority of the voting power are
owned, directly or indirectly, by the Company; provided, however, that for
purposes of determining whether any individual may be a Participant with respect to any grant of
Stock Options or Stock Appreciation Rights that are intended to be exempt from Section 409A of
the Code, the term “Subsidiary” means any corporation or other entity as to which the Company is an
“eligible issuer of service recipient stock” (within the meaning of Section 409A of the Code).

 

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(ee) “Substitute Awards” — Awards that are granted in assumption of, or in substitution or
exchange for, outstanding awards previously granted by an entity acquired directly or indirectly by
the Company or with which the Company directly or indirectly combines.

3. Eligibility

All non-employee Directors and employees of the Company or any of its Subsidiaries will be
eligible to receive Awards.

4. Administration

(a) Committee. Subject to Sections 4(b) and 4(c), this Plan will be administered by the
Committee. The Committee will, subject to the terms of this Plan, have the authority to: (i)
select the eligible Directors and employees who will receive Awards; (ii) determine the number and
types of Awards to be granted; (iii) determine the terms, conditions, vesting periods, and
restrictions applicable to the Awards; (iv) establish Performance Goals for performance-based
Awards; (v) prescribe the forms of any notices, agreements, or other instruments relating to the
Awards; (vi) grant the Awards; (vii) adopt, alter, and repeal rules governing this Plan; (viii)
interpret the terms and provisions of this Plan and any Awards granted under this Plan; and (ix)
otherwise supervise the administration of this Plan. All decisions by the Committee will be made
with the approval of not less than a majority of its members.

(b) Awards Subject to Section 16(b) of the Exchange Act. Notwithstanding the provisions of
Section 4(a), if any member of the Committee does not qualify as a “Non-Employee Director” within
the meaning of Rule 16b-3, the “Committee” will, for purposes of making any Award that (i)
constitutes a “purchase” of securities within the meaning of Section 16(b) of the Exchange Act by
an individual who is subject to potential liability under Section 16(b) of the Exchange Act and
(ii) does not otherwise qualify for an exemption under Rule 16b-3, be deemed to consist only of
those members of the Committee who qualify as such Non-Employee Directors.

(c) Awards Subject to Section 162(m) of the Code. Notwithstanding the provisions of Section
4(a), if any member of the Committee does not qualify as an “outside director” within the meaning
of Section 162(m) of the Code, the “Committee” will, for purposes of making any Qualified
Performance-Based Awards, be deemed to consist only of those members who qualify as such outside
directors.

(d) Delegation. The Committee may delegate any of its authority to any other person
or persons that it deems appropriate, provided the delegation does not (i) cause this Plan, or
any Awards granted under this Plan, to fail to qualify for the exemption provided by Rule 16b-3,
(ii) result in a reduction in the amount of compensation associated with any Qualified
Performance-Based Award that is deductible for federal income tax purposes under Section 162(m) of
the Code, or (iii) apply to an Award granted to a non-employee Director.

 

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(e) Decisions Final. All decisions by the Committee, and by any other person or persons to
whom the Committee has delegated authority, will be final and binding on all persons.

5. Shares Available under Plan; Limitations on Incentive

(a) Maximum Aggregate Number of Shares. Subject to Sections 5(c) and 5(d), the maximum
aggregate number of Shares that may be issued or delivered under the
Plan is 3,125,000 Shares. Any
Shares that are subject to Awards of Stock Options or Stock Appreciation Rights shall be counted
against this limit as one (1) Share for every one (1) Share delivered under the Award. Any Shares
that are subject to Awards other than Stock Options or Stock Appreciation Rights shall be counted
against this limit as 1.57 Shares for every one (1) Share delivered under those Awards. Shares
issued or delivered under this Plan may consist of authorized and unissued shares, treasury shares,
or shares to be purchased by the Company, as determined by the Committee.

(b) Maximum Number of Shares and Amount of Incentive Compensation Award for Each Participant.
Subject to Sections 5(c) and 5(d), the number of Shares subject to Awards granted to any
Participant, and the amount of any Incentive Compensation Award payable in cash to any Participant,
may not exceed:

(i) With respect to Stock Options, 500,000 Shares in any fiscal year of the
Company.

(ii) With respect to Stock Appreciation Rights, 500,000 Shares in any fiscal
year of the Company.

(iii) With respect to Restricted Stock awards that are Qualified
Performance-Based Awards, 200,000 Shares in any fiscal year of the Company.

(iv) With respect to Stock Awards other than Stock Options and Restricted Stock
that are Qualified Performance-Based Awards, 400,000 Shares in the aggregate in any
fiscal year of the Company.

(v) With respect to Incentive Compensation Awards payable in cash that are
Qualified Performance-Based Awards, the lesser of $2,000,000 or 200% of annual base
salary effective at the time the Performance Goals are established in respect to any
fiscal year of the Company.

(c) Charging of Shares. In addition to the Shares authorized in Section 5(a), if any
Award or Prior Award terminates, expires, is cancelled or is forfeited without having been
exercised, or any Award or Prior Award is settled (or can be paid only) in cash, then the
underlying Shares, to the extent of any such forfeiture, cancellation, termination or cash

 

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settlement, again shall be available for grant under this Plan and credited toward the Plan limit
as set forth in Section 5(a). Any Shares that again become available for grant pursuant to this
paragraph shall be added back as (i) one (1) Share if such Shares were subject to an Award or Prior
Award of Stock Options or Stock Appreciation Rights, and (ii) as 1.57 Shares if such Shares were
subject to Awards or Prior Awards other than Stock Options or Stock Appreciation Rights. Shares
that are tendered, whether by physical delivery or by attestation, to the Company by a Participant
or withheld from the Award or Prior Award by the Company as full or partial payment of the exercise
or purchase price of any Award or Prior Award or in payment of any applicable withholding for
Federal, state, city, local or foreign taxes incurred in connection with the exercise, vesting or
earning of any Award or Prior Award will not become available for future grants under the Plan.
With respect to a Stock Appreciation Right, when such Stock Appreciation Right is exercised and
settled in Shares, the Shares subject to such Stock Appreciation Right shall be counted against the
Shares available for issuance under the Plan as one Share for every one Share subject thereto,
regardless of the number of Shares used to settle the Stock Appreciation Right upon exercise. Any
Substitute Awards granted by the Company shall not reduce the Shares available for Awards under the
Plan and will not count against the limits specified in Section 5(a) above.

(d) Adjustment.

(i) In the event that any dividend or other distribution, reorganization, merger,
consolidation, combination, repurchase, or exchange of Shares or other securities of the Company,
or other change in the corporate structure of the Company affecting the Shares (other than an
Equity Restructuring) occurs such that an adjustment is determined by the Committee (in its sole
discretion) to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust the number and kind of Shares that may be delivered under
the Plan, the exercise price or purchase price per Share and the number of Shares covered by each
outstanding Award, and the Share limits of Sections 5(a) and (b).

(ii) In connection with the occurrence of any Equity Restructuring, and notwithstanding
anything to the contrary in Section 5(d)(i): (A) the number and type of securities subject to each
outstanding Award and the exercise price or purchase price thereof, if applicable, will be
proportionately adjusted, which such adjustments shall be nondiscretionary and shall be final and
binding on the affected Participant and the Company; and (B) the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem appropriate to
reflect such Equity Restructuring with respect to the aggregate number and kind of
 shares that may be issued under the Plan (including, but not limited to, adjustments of the
limitations in Section 5(a) and (b)).

(iii) In no event shall any adjustment be required under this Section 5(d) if the Committee
determines that such action could cause an Award to fail to satisfy the conditions of an applicable
exception from the requirements of Section 409A of the Code or otherwise could subject a
Participant to the additional tax imposed under Section 409A of the Code in respect of an
outstanding Award.

 

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6. Awards

(a) Types of Awards. Awards may include, but are not limited to, the following:

(i) Stock Appreciation Right — A right to receive a payment, in cash or Shares,
equal to the excess of (A) the Fair Market Value of a specified number of Shares on
the date the right is exercised over (B) the Fair Market Value of the Shares on the
date the right is granted, all as determined by the Committee. The grant price of
any Stock Appreciation Rights granted to Participants may not be less than the Fair
Market Value of the Shares subject to the Stock Appreciation Right on the Date of
Grant. The right may be conditioned upon the occurrence of certain events, such as
a Change in Control of the Company, or may be unconditional, as determined by the
Committee. No Stock Appreciation Right may be exercisable more than seven (7) years
after the Date of Grant.

(ii) Stock Award — An Award that is made in Shares, Restricted Stock, or Stock
Equivalent Units. Except as provided in the next sentence, each grant or sale of
Restricted Stock to a Participant (other than a non-employee Director) shall provide
that the Shares covered by such grant or sale shall be subject to a “substantial
risk of forfeiture” within the meaning of Section 83 of the Code for a period of not
less than three (3) years to be determined by the Committee at the Date of Grant,
although the Committee, in its sole discretion, may provide for the pro rata lapse
of restrictions in installments during the restriction period. Each grant or sale of
Stock Awards (including Restricted Stock) that are subject to achievement of one or
more Performance Goals shall have a minimum performance period of at least one (1)
year to be determined by the Committee at the Date of Grant. Stock Equivalent Units
may be payable in cash or in Shares.

(iii) Stock Option — A right to purchase a specified number of Shares, during a
specified period, and at a specified exercise price, all as determined by the
Committee. The exercise price of any Stock Options granted to Participants may not
be less than the Fair Market Value of the Shares subject to the Stock Option on the
Date of Grant. No Stock Option may be exercisable more than seven (7) years after
the Date of Grant. Each grant of Stock Options to a
Participant (other than a non-employee Director) shall specify the period or
periods of continuous service by the Participant that is necessary for the Stock
Options to become exercisable; provided that Stock Options may not become
exercisable sooner than one-third per year over three (3) years.

(iv) Incentive Compensation Award — An Award that, in the discretion of the
Committee, is payable either in Shares or in cash and is contingent upon the
achievement of Performance Goals established by the Committee. Each grant shall have
a minimum performance period of at least one (1) year to be determined by the
Committee at the Date of Grant.

 

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(b) Grant of Awards. More than one Award may be granted to the same Participant.
Awards may be granted singly or in combination or tandem with other Awards.

(c) Substitute Awards. Substitute Awards may be granted under this Plan for grants or
awards held by employees of a company or entity who become employees of the Company or a
Subsidiary as a result of the acquisition, merger or consolidation of the employer company
by or with the Company or a Subsidiary. Except as otherwise provided by applicable law and
notwithstanding anything in the Plan to the contrary, the terms, provisions and benefits of
the Substitute Awards so granted may vary from those set forth in or required or authorized
by this Plan to such extent as the Committee at the time of the grant may deem appropriate
to conform, in whole or part, to the terms, provisions and benefits of grants or awards in
substitution for which they are granted.

(d) Grant Agreements. Each grant of an Award under the Plan shall be evidenced by a
grant agreement, in a form specified by the Committee, which shall set forth the terms and
conditions of the grant and such related matters as the Committee shall, in its sole
discretion, determine, consistent with this Plan. A grant agreement may be in an electronic
medium, may be limited to notation on the books and records of the Company and, unless
determined otherwise by the Committee, need not be signed by a representative of the Company
or a Participant.

7. Performance-Based Awards under Section 162(m) of the Code

(a) Selection of Participants and Establishment of Performance Goals. The Committee will
determine the period of time during which any Award that is performance-based may be earned (which
performance period may not be less than one (1) year). The Committee will also establish, not
later than 90 days after the commencement of the award period (or such earlier or later date as may
be the applicable deadline for the Award to be performance-based for purposes of Section 162(m) of
the Code), one or more performance objectives (“Performance Goals”) to be met as a condition to the
payment of the Award. Performance Goals may be described in terms of Company-wide objectives or
objectives that are related to the performance
of a joint venture, Subsidiary, business unit, division, department, business segment, region
or function and/or that are related to the performance of the individual Participant. The
Performance Goals may be made relative to the performance of other companies or an index covering
multiple companies. The Performance Goals may, in the discretion of the Committee, include a range
of performance objectives (such as minimum, middle, and maximum objectives) the achievement of
which will entitle Participants to receive different amounts of compensation.

 

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(b) Performance Criteria. The Performance Goals applicable to any Qualified
Performance-Based Award will be based on specified levels of or growth in one or more of the
following criteria (“Performance Criteria”): sales, same store sales, earnings, earnings per
Share, return on equity, market price per Share, revenue, operating income, earnings before or
after interest and taxes, operating income before or after interest and taxes, net income, cash
flow, debt to capital ratio, economic value added, return on total capital, return on invested
capital, return on assets, total return to shareholders, earnings before or after interest, taxes,
depreciation, amortization or extraordinary or special items, operating income before or after
interest, taxes, depreciation, amortization or extraordinary or special items, return on
investment, free cash flow, cash flow return on investment (discounted or otherwise), net cash
provided by operations, cash flow in excess of cost of capital, operating margin, profit margin,
contribution margin, and/or strategic business criteria consisting of one or more objectives based
on meeting specified product development, strategic partnering, research and development, market
penetration, geographic business expansion goals, cost targets, customer satisfaction, employee
satisfaction, management of employment practices and employee benefits, supervision of litigation
and information technology, and goals relating to acquisitions or divestitures of subsidiaries,
affiliates and joint ventures. These Performance Criteria may be measured before or after taxes,
interest, depreciation, amortization, discontinued operations, affect of accounting changes,
acquisition expenses, restructuring expenses, non-operating items, or unusual charges, as
determined by the Committee at the time the Performance Goals are established.

8. Deferral of Payment

To the extent permitted by Section 409A of the Code, the Committee may, in its discretion,
permit Participants to defer the payment of some or all of the Shares or cash subject to their
Awards, as well as other compensation or fees, in accordance with procedures established by the
Committee to assure that the recognition of taxable income is deferred under the Code. Deferred
amounts may, to the extent permitted by the Committee, be credited as cash or Stock Equivalent
Units and paid in cash or in Shares. The Committee may also, in its discretion, establish rules
and procedures for the crediting of interest on deferred cash and dividend equivalents on Stock
Equivalent Units. The Committee may also, in its discretion, provide for matching or other grants
in connection with such deferrals. This Section 8 shall not apply to any grant of Stock Options or
Stock Appreciation Rights that are intended to be exempt from Section 409A of the Code.

9. Payment of Exercise Price

The exercise price of a Stock Option and any other Stock Award for which the Committee has
established an exercise price may be paid in cash, by the transfer of Shares, by the surrender of
all or part of an Award (including the Award being exercised), or by a combination of these
methods, as and to the extent permitted by the Committee. The Committee may prescribe any other
method of paying the exercise price that it determines to be consistent with applicable law and the
purpose of this Plan.

 

Page 12

 

10. Taxes Associated with Award

Prior to the payment of an Award, the Company may withhold, or require a Participant to remit
to the Company, an amount sufficient to pay any federal, state, and local taxes associated with the
Award. The Committee may, in its discretion and subject to such rules as the Committee may adopt,
permit a Participant to pay any or all taxes associated with the Award in cash, by the transfer of
Shares, by the surrender of all or part of an Award (including the Award being exercised), or by a
combination of these methods. In no event shall the Fair Market Value of the Shares to be
surrendered pursuant to this Section to satisfy applicable withholding taxes exceed the minimum
amount of taxes required to be withheld or such other amount that will not result in a negative
accounting impact.

11. Termination of Employment

If the employment of a Participant terminates for any reason, all unexercised, deferred, and
unpaid Awards may be exercisable or paid only in accordance with rules established by the
Committee.

12. Termination of Awards under Certain Conditions

The Committee may cancel any unexpired, unpaid, or deferred Award at any time if the
Participant is not in compliance with all applicable provisions of this Plan or with the terms or
conditions of the Award or if the Participant, without the prior written consent of the Company,
engages in any of the following activities:

(i) Renders services to an organization, or engages in a business, that
is, in the judgment of the Committee, in competition with the Company.

(ii) Discloses to anyone outside of the Company, or uses for any purpose other
than the Company’s business, any confidential information or material relating to
the Company, whether acquired by the Participant during or after employment with the
Company.

(iii) Engages in any other conduct or act determined to be injurious,
detrimental or prejudicial to any business, strategy, personnel, reputation or other
significant interest of the Company or any Subsidiary.

The Committee may, in its discretion and as a condition to the exercise of an Award, require a
Participant to acknowledge in writing that he or she is in compliance with all applicable
provisions of this Plan and with the terms and conditions of the Award and has not engaged in any
activities referred to in clauses (i) and (ii) above.

 

Page 13

 

13. Change in Control; Acquisition of the Company

(a) Change in Control. In the event that there is a Change in Control of the Company, and a
Participant incurs a Qualifying Termination during the two (2) year period commencing on the Change
in Control, then unless otherwise determined by the Committee, (i) all Stock Appreciation Rights
and Stock Options then held by the Participant will become fully exercisable and will, to the
extent not otherwise provided in the applicable grant agreements, remain exercisable in accordance
with their terms but in no event for a period less than the lesser of (x) one (1) year following
the Qualifying Termination or (y) the remaining term of such Stock Option or Stock Appreciation
Right (which remaining term shall be determined without regard to such termination of employment),
(ii) all restrictions and conditions applicable to Restricted Stock and other Stock Awards held by
the Participant will be deemed to have been satisfied, and (iii) all Incentive Compensation Awards
held by the Participant will be deemed to have been fully earned at the Incentive Compensation
Award Payout Level.

(b) Acquisition of the Company. With respect to Stock Options and any other Awards that
entitle Participants to receive Shares, in the event of an acquisition of the Company in which the
holders of Shares receive other securities or cash in exchange for their Shares, the Committee may,
in its discretion, arrange for (1) the grant by the acquiror of substitute Stock Options or Awards
that entitle Participants to receive, in lieu of the Shares they otherwise would be entitled to
receive, the securities or cash for which the Shares would have been exchanged in the acquisition
or (2) the cancellation of the Stock Options and other Awards in consideration of the securities or
cash for which the Shares would have been exchanged in the acquisition, net of any exercise price.

14. Amendment or Suspension of this Plan; Amendment of Outstanding Awards

(a) Amendment or Suspension of this Plan. The Board of Directors may at any time and from
time to time, to the extent permitted by Section 409A of the Code, amend, suspend or terminate this
Plan in whole or in part; provided, however, that if an amendment to this Plan (i)
would materially increase the benefits accruing to Participants under this Plan, (ii) would
materially increase the number of securities which may be issued under this Plan, (iii) would
materially modify the requirements for participation in this Plan, or (iv) must otherwise be
approved by the shareholders of the Company in order to comply with applicable law (including
applicable tax laws) or the rules of the New York Stock Exchange or, if the Shares are not traded
on the New York Stock Exchange, the principal national securities exchange or other principal
exchange or market upon which the Shares are traded or quoted, then, such amendment will be
subject to shareholder approval and will not be effective unless and until such approval has been
obtained.

(b) Amendment of Outstanding Awards. Subject to Section 14(c), the Committee may, in its
discretion, amend the terms of any Award, prospectively or retroactively, but no such amendment
may, except as provided in Section 13(b), impair the rights of any Participant without his or her
consent. If permitted by Section 409A of the Code, and except in the case of a Qualified
Performance-Based Award where such action would result in the loss of the otherwise available
exemption of the Award under Section 162(m) of the Code, the Committee may, in whole or in part,
waive any restrictions or conditions applicable to, or accelerate the vesting of, any Award (i) in
case of termination of employment by reason of death, disability or normal or early retirement, or
a Change in Control, or (ii) for any other reason in the case of Awards covering, in the aggregate,
up to 10% of the number of Shares set forth in Section 5(a).

 

Page 14

 

(c) No Re-Pricing. The Board of Directors or the Committee will not, without the further
approval of the shareholders of the Company, authorize the amendment of any outstanding Stock
Option or Stock Appreciation Right to reduce the exercise price or grant price. No Stock Option or
Stock Appreciation Right will be cancelled and replaced with awards having a lower exercise price
or grant price, or for another award, or for cash without further approval of the shareholders of
the Company, except as provided in Sections 5(d) or 13(b). This Section 14(c) is intended to
prohibit the re-pricing of “underwater” Stock Options or Stock Appreciation Rights without
shareholder approval and will not be construed to prohibit the adjustments provided for in Section
5(d) or 13(b) of the Plan.

15. Nonassignability

Unless otherwise determined by the Committee, (i) no Award granted under this Plan may be
transferred or assigned by the Participant to whom it is granted other than by will, pursuant to
the laws of descent and distribution, or pursuant to a qualified domestic relations order and (ii)
an Award granted under this Plan may be exercised, during the Participant’s lifetime, only by the
Participant or by the Participant’s guardian or legal representative.

16. Governing Law

The interpretation, validity, and enforcement of this Plan will, to the extent not otherwise
governed by the Code or the securities laws of the United States, be governed by the laws of the
State of Ohio.

17. Rights of Employees

Nothing in this Plan will confer upon any Participant the right to continued employment by the
Company or limit in any way the Company’s right to terminate any Participant’s employment at will.

18. Effective and Termination Dates

(a) Effective Date. This Plan became effective on the date it was approved by the holders of
a majority of the Shares then outstanding, which occurred on June 11, 2008.

(b) Termination Date. This Plan will continue in effect until June 11, 2018.

 

Page 15

 

19. Compliance with Section 409A of the Code

Awards granted under this Plan shall be designed and administered in such a manner that they
are either exempt from the application of, or comply with, the requirements of Section 409A of the
Code. To the extent that the Committee determines that any Award granted under the Plan is
subject to Section 409A of the Code, the grant agreement shall incorporate the terms and conditions
necessary to avoid the imposition of an additional tax under Section 409A of the Code upon a
Participant. Notwithstanding any other provision of the Plan or any grant agreement (unless the
grant agreement provides otherwise with specific reference to this Section), an Award shall not be
granted, deferred, accelerated, extended, paid out, settled, substituted or modified under this
Plan in a manner that would result in the imposition of an additional tax under Section 409A of the
Code upon a Participant. Although the Company intends to administer the Plan so that Awards will
be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does
not warrant that any Award under the Plan will qualify for favorable tax treatment under Section
409A of the Code or any other provision of federal, state, local, or non-United States law.
Neither the Company, its Subsidiaries, nor their respective directors, officers, employees or
advisers shall be liable to any Participant (or any other individual claiming a benefit through the
Participant) for any tax, interest, or penalties the Participant might owe as a result of the
grant, holding, vesting, exercise, or payment of any Award under the Plan.

 

Page 16Exhibit 10.51

Exhibit 10.51

EMPLOYMENT AND CHANGE-OF-CONTROL AGREEMENT

THIS EMPLOYMENT AND CHANGE-OF-CONTROL AGREEMENT (“Agreement”) made as of the 10th day
of June, 2010, by and between CENTRA BANK, INC., a West Virginia corporation (“Employer”),
and Henry M. Kayes, Jr. (“Employee”), joined in by CENTRA FINANCIAL HOLDINGS, INC., a West Virginia
corporation (“Centra Financial”), and by CENTRA FINANCIAL CORPORATION-MARTINSBURG, INC., a West
Virginia corporation (“CFC”).

WITNESSETH THAT:

WHEREAS, Employer desires to retain the services of Employee as its Executive Vice President
and Chief Credit Officer and President — Centra Financial Corporation-Martinsburg, Inc., and
Employee is willing to make his or her services available to Employer, on the terms and subject to
the conditions set forth herein; and

WHEREAS, Employee acknowledges that this Agreement is a benefit to him or her, that this
Agreement is not required for continued employment with Employer or any affiliate and that Employee
is executing this Agreement voluntarily and of his or her free will and volition.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto
agree as follows:

1. Employment. Employee is hereby employed as Executive Vice President and Chief
Credit Officer of Employer and President — Centra Financial Corporation-Martinsburg, to have such
duties and responsibilities as are commensurate with such position. Employee hereby accepts and
agrees to such employment, subject to the general supervision and pursuant to the orders, advice,
and direction of Employer and its Board of Directors. Employee shall perform such duties as are
customarily performed by one holding such position in other same or similar businesses or
enterprises as that engaged in by Employer, and shall also additionally render such other services
and duties as may be reasonably assigned to him or her from time to time by Employer, consistent
with his position.

2. Term of Agreement. The term of this Agreement (Term) shall commence from and after
the date hereof, and shall terminate on the day next preceding the second anniversary of the date
hereof, except for the provisions of Subsection 4(d), which will survive the term of this Agreement
and shall be for a term of two (2) years (Change-of-Control Term). The Change-of-Control Term will
be automatically extended for one month, on each monthly anniversary date after the date hereof,
that Employee is employed by Employer.

 

 

 

3. Compensation; Other Benefits.

a. For all services rendered by Employee to Employer under this Agreement,
Employer shall pay to Employee, for the two-year period beginning on the date hereof, an annual
salary of $192,500.00, payable in accordance with the payroll practices of Employer applicable to
all officers. This salary may be reviewed for an increase sooner if approved by Employee’s Board of
Directors. Any salary increase payable to Employee shall be determined based on a review of
Employee’s total compensation package, Employer’s performance, the performance of Employee and
market competitiveness. Employee’s annual salary, as it may be adjusted from time to time, will be
his or her base salary for purposes of future calculations of benefits. The base salary for
purposes of future calculation of benefits may not be reduced.

b. Except as modified by this Agreement, Employee shall be entitled to participate in all
compensation or employee benefit plans or programs for which Employee may legally be eligible, and
to receive all benefits, perquisites and emoluments for which executive officers of Employer
generally are eligible under any plan or program now or hereafter established and maintained by
Employer, including group hospitalization, health, dental care, life insurance, travel or accident
insurance, disability plans, tax-qualified or non-qualified pension, savings, thrift,
profit-sharing, bonus and incentive plans, deferred compensation plans, sick-leave plans, and
executive incentive compensation plans, including, without limitation, capital accumulation
programs and stock purchase plans. Employee shall be entitled to four (4) weeks of vacation per
year.

c. Employer shall pay or reimburse Employee for all reasonable travel and other
expenses incurred by Employee (and his or her spouse where there is a legitimate business reason
for his or her spouse to accompany him or her) in connection with the performance of his or her
duties and obligations under this Agreement, subject to Employee’s presentation of appropriate
vouchers in accordance with such procedures as Employer may from time to time establish for
executive officers generally.

4. Termination.

a. Termination of Employment. Except for Just Cause, in the event that
Employee shall suffer a termination of employment by Employer or a material change in title,
position, status, pay or benefits, location of employment or authority or duties, the Employee
shall be entitled to receive two year’s compensation, including base salary for purposes of benefit
calculation, and customary and usual incentives and bonuses (based on the average of the incentives
and bonuses paid to Employee during or for the previous two full years, or if less than two full
years the amount of said incentives and bonuses so paid divided by two, prior to termination)
payable to Employee within ninety (90) days after termination, and all benefits as set forth in
this Agreement, including the benefits provided for in Section 3 hereof, except use of an
automobile and country club membership, will continue to be paid by Employer for a period of two
(2) years or until Employee is employed by a third party who provides or makes available such
benefits to its employees, generally, whichever is earlier. At the time of said termination, this
Agreement shall terminate and the Employer shall be obligated to make the payments as set forth in
this Subsection 4(a) as severance compensation to the Employee.
Provided, however, that the payments provided for herein shall not be payable to Employee in
the event of voluntary termination by Employee, except a voluntary termination by Employee
following a material change in title, position, status, pay or benefits, location of employment or
authority or duties by Employer without Just Cause.

 

2

 

b. Death. If Employee shall die during the Term, this Agreement and the employment
relationship hereunder will automatically terminate on the date of death, which date shall be the
last date of the Term. Notwithstanding this Subsection 4(b), if Employee dies while employed by
Employer, Employee’s estate shall receive Employee’s Compensation as defined in Section 3 herein
for a period of two years. If the Employee shall die while terminated from the Bank and is
receiving payments as set forth in Subsection 4(a) hereinabove, then the Employee’s beneficiaries
shall, at their option, be entitled to receive the remainder of payments due hereunder in a lump
sum. Said amount shall be payable on the first day of the second month following the decease of the
Employee.

c. Just Cause. Employer shall have the right to terminate Employee’s employment under
this Agreement at any time for Just Cause, which termination shall be effective immediately.
Termination for “Just Cause” shall be defined as (i) the willful and/or continued failure of
Employee to perform substantially his or her duties with the Employer to the Employer’s reasonable
satisfaction (other than any such failure resulting from Employee’s incapacity due to illness),
(ii) the willful engaging by Employee in illegal conduct, personal dishonesty, gross personal
misbehavior, or gross misconduct that is demonstrably injurious to Employer, Centra Financial, or
CFC, (iii) the Employee’s conviction of, or plea of guilty or nolo contendere to, a felony
involving moral turpitude, (iv) breach of any fiduciary duty involving personal profit, (v) failure
to pass any legal drug test given by or on behalf of the Employer pursuant to a drug testing policy
applicable to Employer’s employees generally, (vi) a material breach by Employee of this Agreement
or any employment agreement with Employer, or (vii) breach of Section 6 hereof, with a breach to be
determined in Employer’s sole discretion. In the event Employee’s employment under this Agreement
is terminated for Just Cause, Employee shall have no right to receive compensation or other
benefits under this Agreement for any period after such termination.

d. Change of Control. In the event of a Change of Control (as defined below) of
Employer at any time after the date hereof, and there is a termination as defined in Section 4(a)
within 24 months after the Change of Control, Employee shall be entitled to receive any
compensation due but not yet paid through the date of termination and all compensation and benefits
as set forth in Section 4(a) of this Agreement payable within ninety (90) days following such
termination.

 

3

 

A “Change of Control” shall be deemed to have occurred if (i) any person or group of persons
(as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934) together with its
affiliates, excluding employee benefit plans of Employer, is or becomes, directly or indirectly,
the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934) of securities of Employer or Centra Financial representing 50% or more of the combined voting
power of Employer’s then outstanding securities; provided, however, that any public or private
stock issuance by Employer shall not constitute a change of control for purposes hereunder; or
(ii) during the term of this Agreement: (X) as a
result of a
tender offer or exchange offer for the purchase of securities of Employer (other than such an
offer by Employer for its own securities), or (Y) as a result of a proxy contest, merger,
consolidation or sale of assets, and (Z) as a result of either or any combination of the foregoing,
there is a change in the composition of at least one-half of the members of Employer’s Board of
Directors, except new directors whose election or nomination for election by Employer’s
shareholders is approved by a vote of at least a majority of the directors still in office who were
directors at the beginning of such two-year period; or (iii) the shareholders of Employer or Centra
Financial approve a merger or consolidation of Employer or Centra Financial with and into any other
corporation or entity, which entity is the survivor, other than a merger or consolidation which
would result in the voting securities of Employer or Centra Financial outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or being converted into voting
securities of the surviving entity) at least 50% of the combined voting power of the voting
securities of Employer or Centra Financial or such surviving entity outstanding immediately after
such merger or consolidation.

e. Non-Competition. During any period in which or for which Employee receives
compensation pursuant to this Agreement, including any period represented by payments under Section
4(a) hereof, Employee will not directly or indirectly, either as a principal, agent, employer,
stockholder, co-partner or in any other individual or representative capacity whatsoever, engage in
the banking and financial services business, which includes consumer, savings, commercial banking
and the insurance and trust businesses, or the savings and loan or mortgage banking business, or
any other business in which Employer or its Affiliates are engaged, anywhere in any county in which
Employer or its Affiliates have an office, and in any county contiguous to any county in which
Employer or its Affiliates have an office, nor will Employee solicit, or assist any other person in
soliciting, any depositors or customers of Employer or its Affiliates or induce any then or former
employee of Employer or its Affiliates to terminate their employment with Employer or its
Affiliates. The term Affiliate as used in this Agreement means a Person that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under common control with,
another Person. The term Person as used in this Agreement means any person, partnership,
corporation, group or other entity.

f. No Mitigation. In receiving any payments pursuant to this Section 4, Employee
shall not be obligated to seek other employment or take any other action by way of mitigation of
the amounts payable to Employee hereunder and such amounts shall not be reduced or terminated
whether or not Employee obtains other employment.

g. Parachute Payments.

(1) Notwithstanding anything in this Agreement to the contrary, in the
event it shall be determined that any payment, award, benefit or distribution (or any acceleration
of any payment, award, benefit or distribution) by Employer (or any of its affiliated entities) or
any entity which effectuates a Change of Control (or any of its affiliated entities) to or for the
benefit of Employee (whether pursuant to the terms of this Agreement or otherwise) (the Payments)
would be subject to the excise tax (the Excise Tax) under Section 4999 of the Internal Revenue Code
of 1986, as amended (the Code), then the amounts payable to Employee under this Agreement shall be
reduced (reducing first the payments under Section 3(b), unless an alternative method of reduction
is elected by Employee) to the maximum
amount as will result in no portion of the Payments being subject to such Excise Tax (the Safe
Harbor Cap). For purposes of reducing the Payments of the Safe Harbor Cap, only amounts payable
under this Agreement (and no other Payments) shall be reduced, unless consented to by Employee.

 

4

 

(2) All determinations required to be made under this Subsection 4(g) shall be made by the
public accounting firm that is generally retained by Employer (the Accounting Firm). In the event
that the Accounting Firm is serving as accountant or auditor for any individual, entity or group
effecting a Change of Control (or if the Accounting Firm fails to make the Determination), Employee
may appoint another nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder). If payments are reduced to the Safe Harbor Cap, the Accounting Firm shall provide a
reasonable opinion to Employee that he or she is not required to report any Excise Tax on his
federal income tax return. All fees, costs and expenses (including, but not limited to the costs of
retaining experts) of the Accounting Firm shall be borne by Employer, and the determination by the
Accounting Firm shall be binding upon Employer and Employee (except as provided in Subsection
(3) below).

(3) If it is established pursuant to a final determination of a court or an Internal Revenue
Service (the IRS) proceeding which has been finally and conclusively resolved, that Payments have
been made to, or provided for the benefit of, Employee by Employer, which are in excess of the
limitations provided in this Section 4 (hereinafter referred to as an Excess Payment), such Excess
Payment shall be deemed for all purposes to be a loan to Employee made on the date Employee
received the Excess Payment and Employee shall repay the Excess Payment to Employer on demand,
together with interest on the Excess Payment at the applicable federal rate (as defined in Section
1274(d) of the Code) from the date of Employee’s receipt of such Excess Payment until the date of
such repayment. As a result of the uncertainty in the application of Section 4999 of the Code at
the time of the determination, it is possible that Payments which will not have been made by
Employer shall have been made (an Underpayment), consistent with the calculations required to be
made under this Subsection 4(g). In the event that it is determined (i) by the Accounting Firm,
Employer (which shall include the position taken by Employer, or together with its consolidated
group, on its federal income tax return) or the IRS, or (ii) pursuant to a determination by a
court, that an Underpayment has occurred, Employer shall pay an amount equal to such Underpayment
to Employee within ten (10) days of such determination together with interest on such amount at the
applicable federal rate from the date such amount would have been paid to Employee until the date
of payment.

h. Key Employee. To the extent that Employee is a “key employee” (as defined under
Section 416(i) of the Internal Revenue Code, disregarding Section 416(i)(5) of the Internal Revenue
Code) of the Company, no payment of Termination Compensation may be made under this Section 4 prior
to the earlier of (i) the expiration of the six (6) month period measured from the date of
Employee’s separation from service, or (ii) the date of the Employee’s death; provided, however,
that the six (6) month delay required under this Section 4(i) shall not apply to the portion of any
payment resulting from the Employee’s “involuntary separation from service” (as defined in Treas.
Reg. 1.409A 1(n) and including a “separation from
service for good reason” as defined in Treas.
Reg. 1.409A i(n)(2) that (a) is payable no later than the last
day of the second year following the year in which the separation of service occurs, and
(b) does not exceed two times the lesser of (i) the Employee’s annualized compensation for the year
prior to the year in which the separation from services occurs, or (ii) the dollar limit described
in Section 401 (a)(17) of the Code. To the extent Termination Compensation payable in monthly
installments under this Section 4 is required to be deferred under the preceding sentence, the
first six months of monthly installments shall be payable in month seven following Employee’s
separation from service and the remaining monthly payments shall be made when otherwise scheduled.

 

5

 

i. Termination of Employment. Any reference in this Agreement to a termination of
employment, severance from employment or separation from employment shall be deemed to mean a
“Termination of Employment.” A “Termination of Employment” means the termination of the Employee’s
employment with the Company and its Affiliates for reasons other than death or disability. Whether
a Termination of Employment takes place is determined based on the facts and circumstances
surrounding the termination of the Employee’s employment. A Termination of Employment will be
considered to have occurred if it is reasonably anticipated that:

(i) the Employee will not perform any services for the Company or its
Affiliates after Termination of Employment, or

(ii) the Employee will continue to provide services for the Company or
its Affiliates at an annual rate that is less than fifty percent (50%) of the bona
fide services rendered during the immediately preceding twelve (12) months of
employment.

5. Other Employment. Employee shall devote all of his or her business time, attention,
knowledge and skills solely to the business and interest of Employer and its Affiliates, and
Employer and its Affiliates shall be entitled to all of the benefits, profits and other emoluments
arising from or incident to all work, services and advice of Employee, and Employee shall not,
during the Term hereof, become interested directly or indirectly, in any manner, as partner,
officer, director, stockholder, advisor, employee or in any other capacity in any other business
similar to Employer’s business; provided, however, that nothing herein contained shall be deemed to
prevent or limit the right of Employee to invest in a business similar to Employer’s business if
such investment is limited to less than 5% of the capital stock or other securities of any
corporation or similar organization whose stock or securities are publicly owned or are regularly
traded on any public exchange or less than 1% of the capital stock of any other entity.

6. Nondisparagement. Employee agrees that during the Term of this Agreement and for five
(5) years thereafter not to make any statements that disparage Employer, its respective affiliates,
employees, officers, directors, products or services. Notwithstanding the foregoing, statements
made in the course of sworn testimony in administrative, judicial or arbitral proceedings
(including, without limitation, depositions in connection with such proceedings) shall not be
subject to this Section 6. For the purposes of this Agreement the term “disparagement”,
“disparaging” or “disparage” shall mean a comment, remark, statement or implication, direct or
indirect, made orally, in writing or by any other medium that has the effect
of: (i) casting doubt on the quality of goods or services of a person or entity; (ii) influencing,
or tending to influence, another not to conduct business or associate with a person or entity;
(iii) derogating, belittling, discrediting, casting in a bad light or defaming a person or entity;
or (iv) taking away, casting doubt on, or reducing, or detracting from, the general reputation,
veracity, competency, character or worth of a person or entity or the quality of the products or
services of a person or entity.

 

6

 

7. Arbitration. Except as otherwise provided in this Section 7, all disputes arising
out of or relating to this Agreement, the interpretation or application of this Agreement, or
Employee’s employment with Employer (hereinafter “Covered Disputes”), shall be resolved solely and
exclusively by binding arbitration, applying the law of West Virginia.

Unless otherwise agreed in writing by the parties:

	 	(i)	 	the arbitration will be conducted before a single arbitrator of
the American Arbitration Association (“AAA”), in accordance with the rules of
the AAA then in effect regarding arbitration of employment disputes, which
arbitrator shall be independent of and from all of the parties, and the
arbitrator, any immediate family member living in the arbitrator’s household or
any entity controlled by the arbitrator or any immediate family member living
in the arbitrator’s household shall not be a customer, supplier, contractor or
shareholder of Employer or any affiliate thereof; and

	 	(ii)	 	the arbitration will be conducted in Morgantown, West Virginia.

For purposes of the foregoing, “control” shall mean the direct or indirect ownership of a
majority of an entity’s capital stock, ownership units or other ownership interests, or the direct
or indirect ownership of an interest in a partnership as a general partner. The award rendered by
the arbitrator shall be binding on the parties, and judgment on such award may be entered by any
court of competent jurisdiction.

a. Injunctions to Enforce Arbitration and to Restrain Violations Pending
Arbitration. Notwithstanding the foregoing, either party may file a lawsuit to compel
arbitration of disputes between the parties and to enjoin violations of this Agreement
pending arbitration. Such lawsuit may be brought only in the Circuit Court of Monongalia
County, West Virginia, or the United States District Court for the Northern District of West
Virginia, and Employee and Employer hereby waive any right that they might have to challenge
the selection of those forums, including but not limited to challenges to personal
jurisdiction, venue, or the convenience of the forum. Specifically, by executing this
Agreement, Employee and Employer agree, consent, and stipulate that, in any action to compel
arbitration of a Covered Dispute or to enjoin violations of this Agreement pending
arbitration: (i) the aforesaid courts have personal jurisdiction over Employee and
Employer, (ii) venue is proper in those courts, (iii) those courts provide a convenient
forum for that action; and (iv) neither the Employer nor the Employee shall be required to
provide a bond or surety pursuant to West Virginia Code Section 53-5-9, and in the event
such bond or such surety is required that the amount of such bond or such surety be as
little as possible.

 

7

 

To the maximum extent permitted by the law, the parties stipulate and agree that this
provision supersedes any analysis of choice of laws. To the extent that a choice-of-laws analysis
is required, the parties stipulate and agree that West Virginia and Federal law shall govern such
analysis.

b. Arbitration Costs. Employer shall pay all costs and fees charged by AAA for the
arbitration, including the arbitrator’s fees and expenses (“Arbitration Costs”) provided, however,
the arbitrator shall apportion the award of Arbitration Costs between the parties based upon their
relative degree of success.

8. Joinder by Centra Financial and CFC. Centra Financial and CFC join into this
Agreement to evidence their consent to, and their agreement to be bound by, the terms hereof. CFC
further agrees to employ Employee as its Executive Vice President and Chief Operating Officer of
Employer and President — Centra Financial Corporation-Martinsburg, Inc. during all times that
Employee is Executive Vice President of Employer, with compensation to Employee to be made by
Employer until such time as Employer, Employee, CFC, and Centra Financial agree to the contrary.

9. Miscellaneous.

a. This Agreement shall be governed by and construed in accordance with the laws
of the State of West Virginia without regard to conflicts of law principles thereof.

b. This Agreement constitutes the entire Agreement between Employee and Employer, with respect
to the subject matter hereof, and supersedes all prior agreements with respect thereto.

c. This Agreement may be executed in one or more counterparts, all of which, taken together,
shall constitute one and the same instrument.

d. Any notice or other communication required or permitted under this Agreement shall be
effective only if it is in writing and delivered in person or by reliable overnight courier service
or deposited in the mails, postage prepaid, return receipt requested, addressed as follows:

To Employer:

President

Centra Bank, Inc.

990 Elmer Prince Drive

P. O. Box 656

Morgantown, WV 26507-0656

 

8

 

with a copy to:

President

Centra Financial Holdings, Inc.

Centra Financial Corporation-Morgantown, Inc.

990 Elmer Prince Drive

P.O. Box 656

Morgantown, WV 26507-0656

Corporate Secretary

Centra Financial Corporation-Martinsburg, Inc.

P.O. Box 1109

Martinsburg, WV 25402

To Employee:

Henry M. Kayes, Jr.

122 N. Rosemont Avenue

Martinsburg, WV 25401

with a copy (which shall not constitute notice) to:

Henry M. Kayes

Jenkins Fenstermaker, PLLC

Suite 100, Coal Exchange Building

Fourth Avenue and Eleventh Street

PO Box 2688

Huntington, WV 25726-2688

Notices given in person or by overnight courier service shall be deemed given when delivered
to the address required by this Section 8(d), and notices given by mail shall be deemed given three
days after deposit in the mails. Any party hereto may designate by written notice to the other
party in accordance herewith any other address to which notices addressed to him shall be sent.

e. The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof. It is understood and agreed that no failure or delay by Employer or Employee in
exercising any right, power or privilege under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.

f. The Employer shall not merge or consolidate into or with another bank or sell substantially
all its assets to another bank, firm or person until such bank, firm or person expressly agrees, in
writing, to assume and discharge the duties and obligations of the Bank under this Agreement. This
Agreement shall be binding upon the parties hereto, their successors, beneficiaries, heirs and
personal representatives.

 

9

 

g. It is agreed by and between the parties hereto that, during the lifetime of the Employee,
this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual
written consent of the Employee and the Employer.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.

	 	 	 	 	 
	 

	 	CENTRA BANK, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ Douglas J. Leech
 

Douglas J. Leech
	 	 
	 

	 	President and CEO	 	 
	 
	 	 	 	 
	 

	 	CENTRA FINANCIAL HOLDINGS, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ Douglas J. Leech
 

Douglas J. Leech
	 	 
	 

	 	President and CEO	 	 
	 
	 	 	 	 
	 

	 	CENTRA FINANCIAL	 	 
	 

	 	CORPORATION-MARTINSBURG, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ Douglas J. Leech
 

Douglas J. Leech
	 	 
	 

	 	Vice President	 	 
	 
	 	 	 	 
	 

	 	EMPLOYEE:	 	 
	 
	 	 	 	 
	 

	 	/s/ Henry M. Kayes, Jr.
 

Henry M. Kayes, Jr.
	 	 

 

10

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