EMPLOYMENT AND CHANGE-OF-CONTROL AGREEMENT
Exhibit 10.51
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 Xxxxx X. Xxxxx, Xx. (“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.
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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.
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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.
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(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.
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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.
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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.
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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.
000 Xxxxx Xxxxxx Xxxxx
P. O. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Centra Bank, Inc.
000 Xxxxx Xxxxxx Xxxxx
P. O. Xxx 000
Xxxxxxxxxx, XX 00000-0000
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with a copy to:
President
Centra Financial Holdings, Inc.
Centra Financial Corporation-Morgantown, Inc.
000 Xxxxx Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Centra Financial Holdings, Inc.
Centra Financial Corporation-Morgantown, Inc.
000 Xxxxx Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Corporate Secretary
Centra Financial Corporation-Martinsburg, Inc.
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000
Centra Financial Corporation-Martinsburg, Inc.
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000
To Employee:
Xxxxx X. Xxxxx, Xx.
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxx
Xxxxxxx Xxxxxxxxxxxx, PLLC
Xxxxx 000, Xxxx Xxxxxxxx Xxxxxxxx
Xxxxxx Xxxxxx and Eleventh Street
XX Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Xxxxxxx Xxxxxxxxxxxx, PLLC
Xxxxx 000, Xxxx Xxxxxxxx Xxxxxxxx
Xxxxxx Xxxxxx and Eleventh Street
XX Xxx 0000
Xxxxxxxxxx, XX 00000-0000
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.
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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/ Xxxxxxx X. Xxxxx
|
||||
| President and CEO | ||||
| CENTRA FINANCIAL HOLDINGS, INC. | ||||
| /s/ Xxxxxxx X. Xxxxx
|
||||
| President and CEO | ||||
| CENTRA FINANCIAL | ||||
| CORPORATION-MARTINSBURG, INC. | ||||
| /s/ Xxxxxxx X. Xxxxx
|
||||
| Vice President | ||||
| EMPLOYEE: | ||||
| /s/ Xxxxx X. Xxxxx, Xx.
|
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