Exhibit 10.2
The Marathon Bank
4095 Valley Pike
Winchester, Virginia 22602
May 21, 2007
Mr. James C. Youngblood
181 Liza Kates Lane
Winchester, VA 22603
Dear Jim:
This letter sets forth the substance of the
separation agreement (the “Agreement”) which The
Marathon Bank (the “Company”) is offering to you to aid
in your employment transition.
1.
Contingent on Transaction. If the anticipated merger between The Marathon Bank and United
Bank (the “Merger”) does not close by December 31,
2007, this Agreement shall have no effect, and shall not be binding
on the Company or on you. If the Merger does not close by December
31, 2007, the Company agrees to reinstate you to your current
position with the Company under the terms of the Employment
Agreement as defined below.
2.
Separation. We have
agreed that, if you timely enter into this Agreement, allow it to
become effective, and comply with its terms, you will continue as a
regular full time employee of the Company through the closing date
of the Merger and your employment termination date will be the day
following the closing date of the Merger (the “Separation
Date”). From May 21, 2007 through the Separation Date, you
will not perform any work for the Company and will not use the
Company’s offices – and you will not be terminated for
failing to work through the Separation Date. If the Merger
successfully closes as anticipated, the termination of your
employment shall be deemed to have occurred after a change of
control for purposes of the Employment Agreement, the SERP
Agreement, the BOLI plan, and your stock option agreements (as
those terms are defined below).
3.
Accrued Salary and Vacation.
Until the Separation Date, you shall continue to
receive your current compensation and benefits pursuant to your
Employment Agreement dated November 23, 2004, attached hereto as
Exhibit A (“Employment Agreement”). On the next regular
payroll date following the Separation Date,
the Company will pay you all accrued salary and all accrued and
unused vacation earned through the Separation Date, subject to
standard payroll deductions and withholdings.
4.
Severance Benefits. If
you execute and do not revoke this Agreement and if the Merger
successfully closes as anticipated, the Company will provide the
severance benefits
Mr. James C. Youngblood
May 21, 2007
Page 2 of 8
described below (the “Severance
Benefits”), provided that you are not in material breach of
this Agreement or any other written agreement you may have executed
with the Company:
(a)
The Company will pay you, as severance, a lump sum
amount of $25,000, subject to standard payroll deductions and
withholdings. This amount will be paid within twenty (20) business
days of the later of: (i) the Effective Date as defined below,
provided the Company has received the executed Agreement from you
on or before that date; or (ii) the closing date of the Merger,
provided the Company has received the executed Agreement from you
on or before that date.
(b)
The Company will pay you, as severance, the cash
amount in Section 10(a)(i) or Section
10(a)(ii) of the Employment Agreement, whichever is greater. A copy
of your Employment Agreement is attached hereto as Exhibit A. This
amount will be subject to standard payroll deductions and
withholdings and will be paid in a lump sum within twenty (20)
business days of the later of: (i) the Effective Date as defined
below, provided the Company has received the executed Agreement
from you on or before that date; or (ii) the closing date of the
Merger, provided the Company has received the executed Agreement
from you on or before that date.
(a)
Health Insurance. If
you are currently participating in the Company’s group health
insurance plans, to the extent provided by the federal COBRA law
or, if applicable, state insurance laws, and by the Company’s
current group health insurance policies, you will be eligible to
continue your group health insurance benefits at your own expense
after the Separation Date. Later, you may be able to convert to an
individual policy through the provider of the Company’s
health insurance, if you wish.
(b)
SERP. You are currently
participating in the Company’s supplemental executive
retirement plan (“SERP”) pursuant to The Marathon Bank
Supplemental Executive Retirement Agreement dated January 1, 2004,
as amended (“SERP Agreement”). All rights and
obligations with respect to the SERP will be as set forth in your
SERP Agreement and related documents.
(c)
BOLI Plan .
You are currently participating in the Bank Owned
Life Insurance Plan (“BOLI plan”). All rights and
obligations with respect to the BOLI plan will be as set forth in
your Life Insurance Endorsement Method Split Dollar Plan Agreement
and related documents.
(d)
Other Benefits. If you
are current participant in other benefit programs (including but
not limited to the 401(k) plan), you will continue to do so through
the Separation Date. You will receive information by mail
concerning applicable rollover procedures should you be a
participant in certain benefit programs.
6.
Stock Options. You were
granted the following two options pursuant to the Company’s
2002 Long-Term Incentive Plan (the “Plan”) and related
Stock Option Grant
Mr. James C. Youngblood
May 21, 2007
Page 3 of 8
Agreements: (i) stock option granted on June 11,
2002, to purchase 6,500 shares of the Company’s common stock
at the purchase price of $10.53 per share; and (ii) stock option
granted on October 11, 2005, to purchase 10,000 shares of the
Company’s common stock at the purchase price of $20.25 per
share. Such options are fully vested. Your rights to exercise your
options as to any vested shares will be as set forth in the Plan
and your stock option agreement(s) and grant
notice(s).
7.
Other Compensation or Benefits.
You acknowledge that, except as expressly provided
in this Agreement or the other agreements referenced herein, you
will not receive any additional compensation, severance or benefits
after the Separation Date.
8.
Expense Reimbursements. If you have been issued any Company credit or calling cards,
the Company will cancel these card(s) effective May 21, 2007. You
agree that, within ten (10) days following May 21, 2007, you will
submit your final documented expense reimbursement statement
reflecting all business expenses you incurred through the
Separation Date, if any, for which you seek reimbursement. The
Company will reimburse you for reasonable business expenses
pursuant to its regular business practice.
9.
Return of Company Property.
By May 21, 2007, you agree to return to the Company
all Company documents (and all copies thereof) and other Company
property that you have had in your possession at any time,
including, but not limited to, Company files, notes, drawings,
records, business plans and forecasts, financial information,
specifications, computer-recorded information, tangible property
(including, but not limited to, computers), credit cards, entry
cards, identification badges and keys; and, any materials of any
kind that contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof). This
notwithstanding, the Company agrees that you may retain use of the
Company Owned Vehicle until the Separation Date. Please coordinate
return of Company property with me. Receipt of the Severance Benefits described in paragraph 4 of
this Agreement is expressly conditioned upon return of all Company
Property.
10.
Covenant Not to Compete and Related
Covenants. For four (4) months after the
Separation Date, you hereby acknowledge and agree to refrain from
certain solicitation and competitive activities and to comply with
your obligations under Section 19(a)-(j) of your Employment
Agreement.
