Exhibit
      10.1

     

    

    


    Long-Term
      Incentive Program (LTIP)

    Program
      Description and Terms

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SUMMARY

    


    Introduction

    


    The
      Compensation Committee of the Board of Directors of First United Corporation
      (the “Corporation”) has adopted this Long-Term Incentive Program (the “LTIP”) as
      a sub-plan of the Corporation’s Omnibus Equity Compensation Plan that was
      adopted at the 2007 annual meeting of shareholders. The purpose of the LTIP
      is
      to reward participants for increasing shareholder value of the Corporation,
      align interests with shareholders, and serve as a retention tool for key
      executives. The following summary is qualified in its entirety by the more
      detailed “Terms and Conditions” contained elsewhere herein.

    


    As
      used
      in this document, the term “Corporation” refers to First United Corporation and,
      as the context requires, its subsidiaries.

    


    Objectives
      for the LTIP

    


    The
      LTIP
      is part of a total compensation package that includes base salary, annual
      incentives, long-term incentives and benefits. Below are specific objectives
      for
      the LTIP:

     

    
      	·	
              Motivate
                and reward senior management for increasing the long-term shareholder
                value of the Corporation.

            


    

     

    
      	·	
              Create
                a strong focus on pay-for-performance by providing a significant
                portion
                of total compensation at risk. 

            


    

     

    
      	·	
              Position
                First United’s total compensation to be competitive with market for
                meeting defined performance goals. 

            


    

     

    
      	·	
              Enable
                the Corporation to attract and retain talent needed to drive its
                success.

            


    

    


    Eligibility/Participation

    


    The
      CEO
      of First United Corporation and certain other executive officers of the
      Corporation are eligible to participate in the LTIP. The Compensation Committee
      of the Board of Directors of First United Corporation designates those executive
      officers who are eligible to participate in the LTIP and who should receive
      awards under the LTIP. The Compensation Committee may solicit eligibility and
      participation recommendations from the CEO.

    


    In
      order
      to receive an award under the LTIP, participants must be an active employee
      of
      the Corporation and in good standing at the time of grant. Employees hired
      after
      a grant date will not be eligible to participate in that grant.
      

    


    Grant
      of Awards

    


    The
      Compensation Committee believes that awards that vest based on the Corporation’s
      performance align executive officers with shareholder interests. Accordingly,
      under the LTIP, a participant will receive an award of shares of
      performance-vesting stock (“Performance Shares”). The value of the award is a
      specified percentage of the participant’s salary as of the date of grant, which
      will be stated on an Appendix
      A
      to this
      Program Description and Terms. Each participant’s award opportunity will be
      determined based on competitive market practice for his/her role. These
      opportunities will be determined so as to reflect a target total compensation
      package that is competitive and provides a significant percentage of pay based
      on performance (annual incentive + long-term incentive). 

     

    
      
         

      

      
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    To
      determine the number of Performance Shares granted by an award, the value of
      the
      grant will be divided by the fair market value of a share of common stock of
      the
      Corporation on the trading date preceding the grant date, all as required by
      the
      Omnibus Equity Compensation Plan. All awards will be evidenced by an individual
      award agreement with the participant that details the number of Performance
      Shares granted, the vesting conditions, and other terms consistent with the
      LTIP
      and the Omnibus Equity Compensation Plan. 

    


    Performance
      Goals; Performance Period; Vesting of Awards

    


    For
      each
      grant, the Compensation Committee will establish a performance goal(s) for
      a
      three-year performance period (the “Performance Period”) beginning on January 1
      of the year in which a grant is made and the minimum threshold(s) that must
      be
      met for Performance Shares to vest, stated as a percentage of the performance
      goal(s). The performance goal(s) and threshold(s) for a Performance Period
      will
      be stated in an Appendix
      A
      to this
      Program Description and Terms. 

    


    The
      vesting is “all or nothing”, in that Performance Shares will vest only if the
      Corporation achieves the threshold goals and then only if the participant is
      employed by the Corporation on the vesting date. There is no partial vesting,
      except in the case of termination due to a participant’s death, disability or
      retirement, and all Performance Shares will lapse unless the specified
      threshold(s) is met and the participant is employed on the vesting date.
      Achievement of the threshold(s) for a grant will be determined by the
      Compensation Committee after the Corporation files its Annual Report on Form
      10-K containing audited financial statements for the last year of the
      Performance Period related to the grant. If the Corporation is not required
      to
      file a Form 10-K, then the determination will occur no later than March 31
      of
      the year following the end of the Performance Period. Promptly thereafter,
      the
      Compensation Committee shall notify each participant in writing as to whether
      the threshold goal(s) for the Performance Period was satisfied. In all cases,
      the vesting date for an award is March 31 of the year following the end of
      the
      Performance Period for that award. 

    


    OTHER
      TERMS AND CONDITIONS

    


    Long-term
      Incentive Program Subject to Plan 

    


    Notwithstanding
      anything in this LTIP to the contrary, the terms of this LTIP are subject to
      the
      terms of the Omnibus Equity Compensation Plan, a copy of which must be provided
      to each participant at the time of grant. 

    


    Effective
      Date

    


    The
      LTIP
      is effective as of June 18, 2008. If award grants are made in 2008, the first
      Performance Period will begin on January 1, 2008 and end on December 31, 2010.
      The LTIP, its performance goals and its other components may be reviewed and
      revised annually by the Compensation Committee to ensure proper alignment with
      the Corporation’s objectives. The Compensation Committee retains the right as
      described below to amend, modify or terminate the LTIP at any time during the
      specified period. 

     

    
      
         

      

      
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    Program
      Authorization and Oversight

    


    The
      Compensation Committee has the sole
      authority to establish rules for and otherwise interpret the LTIP, to designate
      those employees who are eligible for participation, to grant awards under the
      LTIP, and to otherwise administer the LTIP as described in the Omnibus Equity
      Compensation Plan. Any determination by the Compensation Committee will be
      final
      and binding.

     

    Amendment
      and Termination

    


    The
      Compensation Committee has developed the LTIP on the basis of existing business,
      market and economic conditions; current philosophy and staff assignments. If
      substantial changes occur that affect these factors, the Compensation Committee
      may add to, amend, modify or discontinue any of the terms or conditions of
      the
      Program at any time. No such addition, amendment, modification or discontinuance
      shall adversely impact any participant who has been granted an award without
      that participant’s consent.

     

    Termination
      of Employment; Disability, Retirement and Death; Leaves of
      Absence

    


    If
      the
      employment of a participant is terminated prior to the vesting date of an
      outstanding award other than because of death, disability, or retirement, all
      unvested awards will lapse and be forfeited.

    


    If
      a
      participant becomes disabled and is disabled long enough to be placed on
      long-term disability, his/her outstanding unvested awards may be appropriately
      prorated so that no award will be earned during the period of long-term
      disability. If a participant’s employment is terminated due to disability, the
      Corporation will
      pay
      an amount of cash to the participant based on the pro rata portion of the award
      that would have been earned by the participant had the participant remained
      employed through the vesting date and had the threshold goals been met. Such
      payment will be made as soon as practicable after termination.

    


    In
      the
      event of retirement or death, the Corporation will pay an amount of cash to
      the
      participant or his or her estate (as the case may be) based on the pro rata
      portion of the award that would have been earned by the participant had the
      participant remained employed through the vesting date and had the threshold
      goals been met. Such payment will be made as soon as practicable after death
      or
      retirement.

    


    The
      method of determining the pro rata portion that shall be deemed vested in the
      event of termination due to disability, retirement or death shall be specified
      in each award agreement.

    


    In
      the
      event of an approved leave of absence, a participant’s award may be
      appropriately adjusted to reflect the period of active status. 

     

    
      
         

      

      
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    Change
      in Control of First United Corporation

    


    Subject
      to any conditions or restrictions imposed on a participant pursuant to any
      agreement that he or she has entered into pursuant to the First United
      Corporation Change in Control Severance Plan, if there is a change in control
      (as defined in the Omnibus Equity Compensation Plan) and a participant incurs
      a
      severance (as defined in the award agreement granting the award) during the
      period commencing on the date that is 90 days before the date on which the
      change in control occurs and ending on the first anniversary of the date on
      which the change in control occurs, then the restrictions and conditions on
      all
      outstanding Performance Shares granted to the participant under the Plan that
      have not already vested or expired or been forfeited pursuant to their terms
      shall immediately lapse upon the date of severance; provided, however, that,
      where the severance precedes the change in control and the terms of the award
      would otherwise call for the forfeiture of such award upon the termination
      of
      the participant’s employment with the Corporation, the award shall not be deemed
      to be forfeited on account of the participant’s severance and shall remain
      outstanding (subject to the other terms of the award, including its original
      term) as if the change in control preceded the severance.

    


    Ethics

    


    Any
      unvested award will terminate and lapse in the event the Board of Directors
      determines that a participant (i) knowingly participated in the altering,
      inflating, and/or inappropriate manipulation of performance or financial results
      of the Corporation for any fiscal year or (ii) willfully engaged in any activity
      injurious to the Corporation. In addition, in the event of item (i), the
      participant shall forfeit and return to the Corporation all Performance Shares
      under an award to the extent the award vested based on the altered, inflated,
      or
      manipulated financial results.

    


    Clawback

    


    Subject
      to the forfeiture provisions in the “Ethics” section above, if an award has
      vested and the Corporation is thereafter required to restate its financial
      statements in respect of any period covered by the Performance Period for that
      award due to the material noncompliance with any applicable financial reporting
      requirements, including securities laws, the award shall be adjusted to give
      retroactive effect to the restatement. In such case, a participant who received
      a distribution under such an award shall forfeit and return to the Corporation
      that portion of the award that the restatement shows should not have been
      earned;
      provided, however,
      that,
      notwithstanding the foregoing, no participant or former participant shall be
      required to return any portion of any award to the extent it was paid more
      than
      three years prior to the date the Corporation determines that a restatement
      is
      required.

    


    Miscellaneous

    


    Upon
      the
      vesting of an award or the payment of cash upon termination of employment,
      the
      Corporation shall be entitled to withhold Performance Shares or cash from the
      award in an amount necessary to satisfy all federal, state and local taxes
      required to be withheld or otherwise deducted and paid with respect to such
      award.

    


    Neither
      the LTIP nor any award agreement granted hereunder will be deemed to give any
      participant the right to remain an employee of the Corporation, nor will the
      LTIP or an award agreement interfere with the right of the Corporation to
      discharge any participant at any time. In the absence of an authorized, written
      employment contract, the relationship between employees and the Corporation
      is
      one of at-will employment. The LTIP does not alter the
      relationship.

     

    
      
         

      

      
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    The
      Program and the transactions and payouts hereunder shall, in all respect, be
      governed by, and construed and enforced in accordance with the laws of the
      State
      of Maryland and the Omnibus Equity Compensation Plan.

    


    Each
      provision of this LTIP is severable. If any provision is held to be invalid,
      illegal, or unenforceable, the validity, legality and enforceability of the
      remaining provisions shall not, in any way, be affected or impaired
      thereby.

     

    
      
         

      

      
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    APPENDIX
      A

    


    2008
      Award Opportunities

    


    The
      table
      below provides the 2008 LTIP award opportunities as a percentage of
      salary:

    


    
      	
              Tier

            	 	
              Annual Target Award Opportunity

              (% of Base Salary)

            	 
	
              CEO

            	 	 	
              40

            	
              %

            
	
              I

            	 	 	
              30

            	
              %

            
	
              II

            	 	 	
              20

            	
              %

            


    

    


    Tier
      I
      includes the following executive officers:  Robert
      W. Kurtz & Carissa L. Rodeheaver.

    


    Tier
      II
      includes the following executive officers: Eugene
      D. Helbig, Jeannette Rudy Fitzwater, Frederick A. Thayer, Robin E. Murray and
      Steven M. Lantz.

    


    2008
      Performance Goals

    


    The
      performance goal for the 2008 awards is diluted earnings per share (“EPS”) for
      the year ended December 31, 2010 of $2.72, and the performance threshold for
      vesting purposes is 90% of that goal. Accordingly, if First United Corporation’s
      EPS for the year ended December 31, 2010 is at least $2.448, then awards will
      vest in 2011, provided the participant is still employed on the vesting date.
      

    


    Example


     

    The
      2008
      LTIP three-year performance EPS goal is $2.72. In order for participants to
      receive vested shares of common stock of First United Corporation, the EPS
      for
      the year ended December 31, 2010 must be at least 90% of that goal, or $2.448.
      For illustration purposes, assume a fictional executive whose base salary is
      $125,000 and a award opportunity of 20% of base salary ($25,000). The grant
      is
      made on March 14, 2008. The fair market value of common stock of First United
      Corporation on March 13, 2008 was $19.535 per share. Accordingly, the number
      of
      Performance Shares subject to the award is 1,279. The table shows how the award
      and vesting might occur, along with how the grant will relate to future
      grants.

    


    
      	
              March 2008

            	 	
              March 2009

            	 	
              March 2010

            	 	
              March 2011

            	 	
              March 2012

            	 	
              March 2013

            
	
              · 
New
                grant

              · 
Communicate
                3 year performance goal of EPS
                $2.72 (need 90% or $2.448 to vest) 

              · 
Communicate
                potential (1,279 shares)
                

            	 	 	 	 	 	
              ·
 Determine
                if EPS achieve at least 90% of target
                (i.e. $2.448)

              ·
 If
                yes, all shares vest immediately
                

            	 	 	 	 
	 	 	
              · 
New
                grant

              · 
Communicate
                3 year performance goal
                

              · 
Communicate
                potential shares

            	 	 	 	 	 	
              ·
 Determine
                if EPS achieve at least 90% of target
                

              · 
If
                yes, all shares vest immediately
                

            	 	 
	 	
                

            	 	
                

            	
              ·
 New
                grant

              ·
 Communicate
                3 year performance goal
                

              ·
 Communicate
                potential shares

            	
                

            	 	
                

            	 	
                

            	
              ·
 Determine
                if EPS achieve at least 90% of target
                

              ·
 If
                yes, all shares vest immediately
                

            


    

     

    
      
         

      

      
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