Exhibit 10.1 

 

SECOND AMENDMENT TO AGREEMENT UNDER THE FIRST UNITED CORPORATION CHANGE IN
CONTROL SEVERANCE PLAN

 

This Second Amendment to Agreement Under the First United Corporation Change in
Control Severance Plan (this “Second Amendment”) is entered into this 5th day of
January, 2015 by and between First United Corporation, a Maryland corporation
(“the Company”), and William B. Grant, an executive officer of the Company (the
“Eligible Employee”).

 

RECITALS

 

WHEREAS, the Company adopted the First United Corporation Change in Control
Severance Plan effective as of February 14, 2007, as amended and supplemented
from time to time (the “Plan”), a copy of which was provided to the Eligible
Employee; and

 

WHEREAS, the Company and the Eligible Employee have entered into that certain
Agreement Under the First United Corporation Change in Control Severance Plan,
dated as of February 14, 2007, to set forth the benefits to which the Eligible
Employee is entitled under the Plan, which was subsequently amended by the
parties pursuant to that certain First Amendment to Agreement Under the First
United Corporation Change in Control Severance Plan (as amended, the
“Agreement”) to ensure that the Agreement is in compliance with the requirements
of Section 409A of the Internal Revenue Code; and

 

WHEREAS, the Eligible Employee may become entitled to certain Change in Control
Severance Benefits under Section 3 of the Agreement if he incurs a Severance
during the Change in Control Protection Period; and

 

WHEREAS, Section 4 of the Agreement provides for the payment of the Gross-Up
Payment if it is determined that the Eligible Employee owes an Excise Tax
related to his receipt of the Change in Control Severance Benefits; and

 

WHEREAS, the Eligible Employee and the Company desire to further amend the
Agreement to eliminate such Gross-Up Payment; and

 

WHEREAS, except as expressly provided in these Recitals and below, the
capitalized terms in this Second Amendment shall have the meanings given those
terms in the Plan and the Agreement;

 

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to
further amend the Agreement as follows:

 

1.          The Agreement is hereby amended by deleting the first sentence of
Subsection 3(a) and substituting the following in lieu thereof:

 

(a)          Generally. Subject to subsections 3(h) and 3(i) below and Section
4, the Eligible Employee shall be entitled to the Change in Control Severance
Benefits provided in this Section 3 if he or she incurs a Severance during the
Change in Control Protection Period.

 

 

 

 

2.          The Agreement is hereby further amended by deleting Subsection 3(c)
in its entirety and substituting the following in lieu thereof:

 

(c)          Payment of Severance.  Subject to subsections 3(h) and 3(i) below
and Section 4, if the Eligible Employee incurs a Severance during a Change in
Control Protection Period, the Company shall pay to him a lump sum cash payment
on the 60th day after the Severance Date, equal to two times the Eligible
Employee’s Final Pay.

 

3.          The Agreement is hereby further amended by deleting the phrase “any
other limitations imposed by law” in the first clause of Subsection 3(e) and
substituting the phrase “Section 4” in lieu thereof.

 

4.          The Agreement is hereby further amended by deleting Subsection 3(f)
in its entirety and substituting the following in lieu thereof:

 

(f)          Benefit Continuation. Subject to subsections 3(h) and 3(i) below
and Section 4, if the Eligible Employee incurs a Severance during the Change in
Control Protection Period, commencing on the date immediately following such
Eligible Employee’s Severance Date and continuing for 24 months (or such lesser
time as required to avoid the imposition of additional taxes under Section 409A
of the Code) (the “Welfare Benefit Continuation Period”), the Company shall
cover the Eligible Employee under the same type (e.g., individual or family
coverage) of Employer-sponsored group health plan and dental plan in which he or
she was covered as of his or her Severance Date. The Eligible Employee shall
receive such continued coverage under the same terms and conditions (e.g., any
requirement that employees pay all or any portion of the cost of such coverage)
that would apply if the Eligible Employee had continued to be an employee of the
Employer during the Welfare Benefit Continuation Period.

 

5.          The Agreement is hereby further amended by deleting Subsection 3(g)
in its entirety and substituting the following in lieu thereof:

 

(g)          Outplacement Services.  Subject to subsection 3(i) below and
Section 4, if the Eligible Employee incurs a Severance during the Change in
Control Protection Period, the Company shall provide him with reasonable
outplacement services for up to 12 months following the Severance Date.

 

6.          The Agreement is hereby further amended by deleting Section 4 in its
entirety and substituting the following in lieu thereof:

 

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4.            Reduction of Change in Control Severance Benefits.

 

(a)          Reduction. If it is determined that the aggregate present value of
(1) such portion of the Eligible Employee’s Change in Control Severance Benefits
that are considered Contingent Payments, and (2) all other Contingent Payments
payable to the Eligible Employee exceeds 2.99 times the Eligible Employee’s Base
Amount such that the excise tax under Section 4999 of the Code would otherwise
be triggered, then the Change in Control Severance Benefits provided in Section
3(c) shall be reduced to the extent necessary so that the aggregate present
value of all Contingent Payments payable following such reduction does not
exceed 2.99 times the Eligible Employee’s Base Amount.

 

(b)          Determination. The determination that the aggregate present value
of the Eligible Employee’s Contingent Payments exceed 2.99 times his or her Base
Amount, and the calculation of the amount of any reduction, shall be made, at
the Company’s discretion, by the Company’s outside auditing firm or by a
nationally-recognized accounting or benefits consulting firm designated by the
Company prior to a Change in Control. The firm’s expenses shall be paid by the
Company.

 

(c)          Payment of Remaining Benefits. If the determination is made that an
Eligible Employee’s Change in Control Severance Benefits must be reduced in
accordance with Section 4(b), then the amount of such Benefits that are actually
paid to the Eligible Employee pursuant to Section 3(c) will be the amount
determined under Section 4(a) (the “Remaining Benefits”) and such Remaining
Benefits will be paid at the same time and in the same form otherwise specified
in Section 3(c).

 

(d)          Additional Definitions. The following capitalized terms that are
used in this Section 4 shall have the meanings provided below.

 

(i)          “Base Amount” means the Eligible Employee’s “annualized includible
compensation for the base period,” within the meaning of Sections 280G(d)(1) and
(d)(2) of the Code and the Treasury Regulations thereunder.

 

(ii)         “Contingent Payments” means payments in the “nature of
compensation” to (or for the benefit) of an Eligible Employee if such payment is
“contingent on a change in the ownership or effective control of the corporation
or in the ownership of a substantial portion of the assets of the corporation,”
as such terms are defined in Section 280G of the Code and the Treasury
Regulations thereunder.

 

7.          The Agreement is hereby further amended by deleting Section 5 in its
entirety and substituting the following in lieu thereof:

 

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5.          Taxes; Withholding. The Eligible Employee shall be responsible for
the payment of all applicable local, state and federal taxes associated with the
Eligible Employee’s participation in the Plan and the receipt of Change in
Control Severance Benefits hereunder, and the Company shall have the right to
deduct from any distributions hereunder any such taxes or other amounts required
by law to be withheld therefrom.

 

8.          Except as expressly amended hereby, the Agreement remains unchanged
and in full force and effect.

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Second Amendment
to be executed as of the day first above written.

 

ATTEST:   FIRST UNITED CORPORATION           By: /s/ Carissa L. Rodeheaver    
Name: Carissa L. Rodeheaver     Title: President and Chief Financial Officer    
    WITNESS:   ELIGIBLE EMPLOYEE           /s/ William B. Grant     William B.
Grant

 

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