Unassociated Document


    Exhibit
      10.2

     

    FIRST
      UNITED CORPORATION

    RESTRICTED
      STOCK AGREEMENT

    


    THIS
      RESTRICTED STOCK AGREEMENT (this “Agreement”), made as of June 18, 2008 by and
      between First United Corporation, a Maryland corporation (the together with
      all
      of its Affiliates, the “Corporation”), and William B. Grant (the “Employee”) is
      made pursuant and subject to the provisions of the Corporation’s Omnibus Equity
      Compensation Plan, as amended from time to time (the “Omnibus Plan”), and the
      2008 Long-Term Incentive Program (the “Program”) adopted by the Committee
      thereunder (the Omnibus Plan and the Program are collectively referred to herein
      as the “Plan”). All capitalized terms used but not defined herein shall have the
      meanings given such terms in the Plan.

    


    NOW,
      THEREFORE, in consideration of the mutual covenants hereinafter set forth and
      for other good and valuable consideration, the parties hereto have agreed and
      do
      hereby agree as follows:

    


    1. Grant
      of Award.
      On June
      18, 2008 (the “Grant Date”), pursuant to Section 11 of the Omnibus Plan, the
      Corporation granted (the “Award”) to the Employee 5,415 shares of restricted
      Common Stock (the “Restricted Stock”). 

    


    2. Performance
      Period; Vesting Goals.
      The
      performance period for this Award shall commence on January 1, 2008 and
      terminate on December 31, 2010 (the “Performance Period”). The Committee has
      established performance criteria for the Performance Period relating to the
      Corporation’s diluted earnings per share (“EPS”) for the year ended December 31,
      2010 that apply to the vesting of the shares of Restricted Stock granted hereby.
      The EPS goal is $2.72 (the “EPS Goal”). The threshold EPS is 90% of EPS Goal, or
      $2.448 (the “EPS Threshold”). 

    


    3. Vesting.
      The
      shares of Restricted Stock granted hereby shall vest if the audited financial
      statements for the year ended December 31, 2010 confirm that the EPS for the
      year ended December 31, 2010 equals or exceeds the EPS Threshold. For purposes
      of, and subject to, the foregoing, the date on which the shares of Restricted
      Stock shall vest and on which the Employee shall be entitled to receive shares
      of freely transferable Common Stock equal to the number of vested shares of
      Restricted Stock shall be the later of (i) March 31, 2011 or (ii) the date
      the
      Corporation’s audited financial statements for the year ended December 31, 2010
      have been finalized and provided to the Compensation Committee for verification
      of vesting (the “Vesting Date”), provided
      that, as
      of the Vesting Date, the Employee’s employment with the Corporation has not
      terminated. Except as set forth in Section
      11
      and
Section
      12
      hereof,
      there shall be no proportionate or partial vesting of this Award during the
      Performance Period or between the end of the Performance Period and the Vesting
      Date. Except as set forth in Section
      11
      and
Section
      12
      hereof,
      no vesting shall occur after the Employee’s employment terminates for any
      reason.

    


    4. Effect
      of Failure of to Meet EPS Threshold.
      Subject
      to Section
      11
      and
Section
      12
      hereof,
      if the EPS for the year ended December 31, 2010 does not equal or exceed the
      EPS
      Threshold, as determined pursuant to Section 2 hereof, then all shares of
      Restricted Stock granted hereby shall lapse and be forfeited and
      canceled.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5. Rights
      as a Stockholder.
      Unless
      and until the shares of Restricted Stock granted hereby become vested, the
      Employee shall have none of the rights of a stockholder with respect to those
      shares, including, without limitation, the right to vote shares or the right
      to
      receive dividends thereon. 

    


    6. Custody
      of Certificates.
      Custody
      of all stock certificates evidencing the shares of Restricted Stock shall be
      retained by the Corporation for so long as such shares are not vested. The
      Corporation shall place a legend on each certificate evidencing a share of
      Restricted Stock restricting the transfer of such share. As soon as practicable
      after shares of Restricted Stock become vested, the Corporation shall remove
      the
      restrictive legend and deliver to the Employee one ore more stock certificates
      evidencing that number of freely transferable shares of Common Stock equal
      to
      the number of vested shares of Restricted Stock.

    


    7. Stock
      Power.
      Upon
      signing this Agreement, the Employee shall deliver to the Corporation a stock
      power, endorsed in blank, with respect to the shares of Restricted Stock granted
      pursuant to this Agreement. The Corporation shall use the stock power to cancel
      any shares of Restricted Stock that do not become vested. The Company shall
      return the stock power to the Employee with respect to any shares of Restricted
      Stock that become vested. 

    


    8. Restrictions
      on Transfer.
      Shares
      of Restricted Stock may not be transferred or otherwise disposed of by the
      Employee, including by way of sale, assignment, transfer, pledge, hypothecation
      or otherwise, except as permitted by the Committee, or by will or the laws
      of
      descent and distribution, and are subject to a substantial risk of
      forfeiture.

    


    9. Approvals.
      The
      delivery of any shares of Common Stock hereunder is subject to approval of
      any
      government agency which may, in the opinion of counsel, be required in
      connection with the authorization, issuance or sale of Common Stock. No shares
      of Common Stock shall be issued upon the lapse of restrictions relating to
      the
      shares of Restricted Stock prior to compliance with such requirements and with
      the Corporation’s listing agreement with The NASDAQ Stock Market (or other
      national exchange upon which the Corporation’s shares of Common Stock may then
      be listed).

    


    10. Invalid
      Transfers.
      No
      purported sale, assignment, mortgage, hypothecation, transfer, pledge,
      encumbrance, gift, transfer in trust (voting or other) or other disposition
      of,
      or creation of a security interest in or lien on, any of the shares of
      Restricted Stock by any holder thereof in violation of the provisions of this
      Agreement shall be valid, and the Company will not transfer any of said shares
      of Restricted Stock on its books nor will any of said shares of Restricted
      Stock
      be entitled to vote, nor will any dividends be paid thereon, unless and until
      there has been full compliance with said provisions to the satisfaction of
      the
      Corporation. The foregoing restrictions are in addition to and not in lieu
      of
      any other remedies, legal or equitable, available to enforce said
      provisions.

    


    
      
        
        

      

      
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    11. Change
      in Control.
      

    


    (a) Vesting
      of Performance Shares.
      Subject
      to any conditions or restrictions imposed on the Employee pursuant to a change
      in control agreement into which the Employee has entered pursuant to the First
      United Corporation Change in Control Severance Plan (the “Severance Plan”), if
      there is a Change in Control prior to the Vesting Date and the Employee incurs
      a
      Severance 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 all shares of Restricted
      Stock granted hereby shall vest on the Severance Date, regardless of whether
      the
      performance criterion set forth in Section
      2
      hereof
      has been attained, to the extent they have not otherwise vested and have not
      expired or been forfeited pursuant to the other provisions of this Agreement;
      provided,
      however,
      that,
      where the Severance precedes the Change in Control and the terms of this
      Agreement would otherwise call for the forfeiture of the Award upon the
      termination of the Employee’s employment with the Corporation, the Award shall
      not be deemed to be forfeited on account of the Employee’s Severance and shall
      remain outstanding (subject to the other terms of this Agreement) as if the
      Change in Control preceded the Severance. Upon such vesting, the Employee shall
      be entitled to receive shares of freely transferable Common Stock equal to
      the
      number of shares of Restricted Stock granted hereby. 

    


    (b) Definitions.
      For
      purposes of this Section:

    


    (i) “Change
      in “Control” has the meaning given such term in the Omnibus Plan;

    


    (ii) “Severance”
      means (1) the involuntary termination of the Employee’s employment by the
      Corporation, other than for Cause, death or Disability or (2) a termination
      of
      the Employee’s employment by the Employee for Good Reason, provided,
      however,
      that in
      each case the termination constitutes a “separation from service” within the
      meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code and Treasury
      Regulations thereunder;

    


    (iii) “Cause”
      means one of the following reasons for which the Employee’s employment with the
      Corporation is terminated: (1) willful or grossly negligent misconduct that
      is
      materially injurious to the Corporation; (2) embezzlement or misappropriation
      of
      funds or property of the Corporation; (3) conviction of a felony or the entrance
      of a plea of guilty or nolo contendere to a felony; (4) conviction of any crime
      involving fraud, dishonesty, moral turpitude or breach of trust or the entrance
      of a plea of guilty or nolo contendere to such a crime; (5) failure or refusal
      by the Employee to devote full business time and attention to the performance
      of
      his or her duties and responsibilities if such breach has not been cured within
      15 days after notice is given to the Employee; or (6) issuance of a final
      non-appealable order or other direction by a Federal or state regulatory agency
      prohibiting the Employee’s employment in the business of banking;

    


    (iv) “Disability”
      has the meaning given such term in Section
      12(e)
      of this
      Agreement;

     

    
      
        
        

      

      
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    (v) “Good
      Reason” means, without the specific written consent of the Eligible
      Employee, any of the following:

    


    (1) A
      material and adverse change in the Employee’s status or position(s) as an
      officer or management employee of the Corporation as in effect immediately
      prior
      to the Change in Control, including, without limitation, any adverse change
      in
      his or her status or position as an employee of the Employer as a result of
      a
      material diminution in his or her duties or responsibilities (other than, if
      applicable, any such change directly attributable to the fact that the
      Corporation is no longer publicly owned) or the assignment to him or her of
      any
      duties or responsibilities which are materially inconsistent with such status
      or
      position(s) (other than any isolated and inadvertent failure by the Corporation
      that is cured promptly upon his or her giving notice), or any removal of the
      Employee from or any failure to reappoint or reelect him or her to such
      position(s) (except in connection with the Employee’s Severance other than for
      Good Reason). Without limiting the foregoing, “Good Reason” shall include the
      Employee’s not being employed, after a Change in Control, as the Chief Executive
      Officer of a corporation the capital stock of which is listed or traded on
      a
      national securities exchange;

    


    (2) A
      10% or
      greater reduction in the Employee’s base salary and targeted bonus from the base
      salary and targeted bonus that was in effective immediately prior to the
      occurrence of a Change of Control, but disregarding any reduction in bonus
      which
      occurs in accordance with the terms of any written bonus program as it reads
      immediately prior to the occurrence of a Change of Control;

    


    (3) The
      failure by the Corporation or any successor to continue in effect any employee
      benefit plan (excluding any equity compensation plan) in which the Employee
      is
      participating at the time of the Change in Control (or plans providing the
      Employee with at least substantially similar benefits in the aggregate) other
      than as a result of the normal expiration of any such plan in accordance with
      its terms as in effect at the time of the Change in Control; or the taking
      of
      any action, or the failure to act, by the Corporation or any successor which
      would adversely affect the Employee’s continued participation in any of such
      plans on at least as favorable a basis to him or her as is the case on the
      date
      of the Change in Control or which would materially reduce his or her benefits
      under any of such plans;

    


    (4) The
      Corporation’s requiring the Employee to be based at an office that is both more
      than 50 miles from where his or her office is located immediately prior to
      the
      Change in Control and further from his or her then current residence, except
      for
      required travel on the Corporation’s business to an extent substantially
      consistent with the business travel obligations which the Employee undertook
      on
      behalf of the Corporation prior to the Change in Control; or

    


    
      
        
        

      

      
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    (5) If
      the
      Employee has entered into a change in control agreement pursuant to the
      Severance Plan, the failure by the Corporation to obtain assumption of the
      Severance Plan by a successor; and

    


    (c) “Severance
      Date” means the date on which the Employee incurs a Severance.

    


    12. Effect
      of Termination of Employment, Disability and Leaves of Absence.
      

    


    (a) Partial
      Vesting Upon Death, Disability and Retirement.
      If the
      employment of the Employee is terminated prior to the Vesting Date by reason
      of
      his/her death, Disability or Retirement, then this Award shall vest and be
      payable in cash to the Employee or his or her estate (as the case may be)
      pursuant to the following formula: (A x B x C) / D; where “A” is the number of
      Shares of Restricted Stock granted hereby multiplied by either 50% if
      termination occurs during the first year of the Performance Period, 65% if
      termination occurs during the second year of the Performance Period, or 80%
      if
      termination occurs during the third year of the Performance Period; “B” is the
      number of whole months during the Performance Period that the Employee was
      employed; “C” is Fair Market Value of a share of Common Stock as of the date of
      termination; and “D” is the number of whole months in the Performance Period.
      The Award shall otherwise lapse and be forfeited and canceled.

    


    Example
      1:
      Employee receives a grant of 300 shares of Restricted Stock on April 1, 2008
      and
      dies on July 1, 2008. The Fair Market Value of a share of Common Stock as of
      July 1, 2008 is $19.00. Employee’s estate will be entitled to cash in the amount
      of ((300 shares x 50%) x 6 months x $19.00) / 36 months = $475.00.

    


    Example
      2:
      Employee receives a grant of 300 shares of Restricted Stock on April 1, 2008
      and
      retires on July 1, 2009. The Fair Market Value of a share of Common Stock as
      of
      July 1, 2009 is $20.00. Employee will be entitled to cash in the amount of
      ((300
      shares x 65%) x 18 months x $20.00) / 36 months = $1,950.00.

    


    Example
      3:
      Employee receives a grant of 300 shares of Restricted Stock on April 1, 2008
      and
      terminates employment due to a Disability on December 15, 2010. The Fair Market
      Value of a share of Common Stock as of December 15, 2010 is $21.00. Employee
      will be entitled to cash in the amount of ((300 shares x 80%) x 35 months x
      $21.00) / 36 months = $4,900.00.

    


    (b) Other
      Termination of Employment.
      Subject
      to Section
      11
      hereof,
      if the employment of the Employee is terminated prior to the Vesting Date for
      any reason other than by reason of death, Disability, or Retirement, then this
      Award shall lapse and be forfeited and canceled.

     

    
      
        
        

      

      
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    (c) Disability
      and Return to Service.
      If the
      Employee suffers a Disability, his or her employment is not terminated because
      of such Disability, and he or she thereafter returns to active employment,
      then
      the Award shall be reduced to reflect that period during the Performance Period
      that the Employee was not in active service with the Corporation. If the Award
      is so reduced, the Corporation shall promptly provide the Employee with a
      schedule of the reduction.

    


    (d) Leave
      of Absence.
      If the
      Employee takes an approved leave of absence, then the Award shall be reduced
      to
      reflect that period during the Performance Period that the Employee was not
      in
      active service with the Corporation. If the Award is so reduced, the Corporation
      shall promptly provide the Employee with a schedule of the
      reduction.

     

    (e) Definitions.
      For
      purposes of this Section:

    


    (i) “Disability”
      shall
      have the meaning given that term under the First United Bank & Trust Long
      Term Disability Plan, as in effect at the time a determination of Disability
      is
      to be made;

    


    (ii) “Retirement”
      means the termination of the Employee’s employment with the Corporation for any
      reason other than death, Disability or Cause after the Employee has both (i)
      completed 10 Years of Service with the Corporation and (ii) attained 60 years
      of
      age; and

    


    (iii) “Year
      of
      Service” means each 12 consecutive month period of full time employment with the
      Corporation.

    


    13. Forfeiture
      in Certain Events.
      This
      Award will terminate and lapse in the event the Board of Directors of the
      Corporation determines that the Employee (a) knowingly participated in the
      altering, inflating, and/or inappropriate manipulation of performance or
      financial results of the Corporation for any fiscal year or (b) willfully
      engaged in any activity injurious to the Corporation. In addition, in the event
      of item (a), the Employee shall forfeit and return to the Corporation all shares
      of freely transferable Common Stock received hereunder to the extent the Award
      vested based on the altered, inflated, or manipulated financial
      results.

    


    14. Clawback.
      If this
      Award vests and the Corporation is thereafter required to restate its financial
      statements in respect of any period covered by the Performance Period due to
      the
      material noncompliance by the Corporation with any applicable financial
      reporting requirements, including securities laws, then, regardless of fault
      on
      the part of the Employee, the Award shall be adjusted to give retroactive effect
      to the restatement. If, in such case, shares of freely transferable Common
      Stock
      have been paid hereunder, then the Employee shall forfeit and return to the
      Corporation that number of shares of to the extent the restatement shows that
      such shares should not have been earned; provided,
      however, that,
      notwithstanding the foregoing, and except in the case of the Employee’s
      alteration, inflation, and/or inappropriate manipulation of performance or
      financial results of the Corporation, the Employee shall not be required to
      return any portion of the Award to the extent it was paid more than three years
      prior to the date the Corporation determines that a restatement is required.
      This Section is in addition to, and not in lieu of, the rights and obligations
      of the parties provided in Section
      13.

    


    
      
        
        

      

      
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    15. Taxes.
      

    


    (a) At
      the
      time any shares of Restricted Stock become vested hereunder or any cash becomes
      payable under Section
      12,
      the
      Corporation shall have the right to retain and withhold from such vested shares
      or cash that portion representing the amount of federal, state and local taxes
      required by any governmental agency to be withheld or otherwise deducted and
      paid with respect to such vested shares or cash. The number of shares withheld
      will be calculated based on the Fair Market Value of a share of Common Stock
      as
      of the Vesting Date. Any shares so withheld shall be canceled by the
      Corporation.

    


    (b) The
      Employee shall be precluded from making any election pursuant to Section 83(b)
      of the Internal Revenue Code with respect to the shares of Restricted Stock
      granted hereby. 

    


    (c) The
      Employee understands that he or she (and not the Corporation) shall be
      responsible for any tax liability that may arise as a result of the transactions
      contemplated by this Agreement. 

    


    (d) This
      Agreement shall be interpreted and applied so that the Employee’s Restricted
      Stock will not be subject to Internal Revenue Code Section 409A. If
      notwithstanding the preceding sentence the Employee’s Restricted Stock becomes
      subject to Section 409A, then the specified time of payment of the Restricted
      Stock for purposes of Section 409A shall be the calendar year in which the
      short-term deferral period expires with respect to the Restricted Stock (but
      payment may be made by such later time as may be permitted by Section 409A
      under
      the circumstances). 

    


    16. Amendment
      and Termination.
       This
      Agreement may not be terminated prior to the end of its term without the written
      consent of the Employee. This Agreement may be amended by the Committee at
      any
      time; provided,
      however,
      that
      this Agreement may not be amended without the written consent of the Employee
      if
      such amendment would in any manner adversely affect the interests of the
      Employee. 

    


    17. Compliance
      with Law.
      Notwithstanding Section 14 hereof or any other provision of this Agreement
      to
      the contrary, the Committee may amend, modify or terminate this Agreement or
      the
      Plan, without the consent of the Employee, as the Committee deems necessary
      or
      appropriate to ensure compliance with any law, rule, regulation or other
      regulatory pronouncement applicable to the Plan or this Agreement, including,
      without limitation, Section 409A of the Code and any Treasury Regulations or
      other guidance thereunder. 

    


    18. Governing
      Law.
      This
      Agreement shall be construed and enforced according to the laws of the State
      of
      Maryland to the extent not preempted by federal law, without regard to any
      conflict of laws principles that would apply the law of another
      jurisdiction.

    


    
      
        
        

      

      
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    19. Severability.
      If any
      provision of this Agreement shall be held invalid or unenforceable, such
      invalidity or unenforceability shall not affect any other provisions hereof,
      and
      this Agreement shall be construed and enforced as if such provisions had not
      been included.

    


    20. Successors.
      This
      Agreement shall
      be
      binding upon each of the parties and shall also be binding upon their respective
      successors or assigns. 

    


    21. Application
      of the Plan; Entire Agreement.
      The
      Employee acknowledges, by executing this Agreement, that (a) this Agreement
      is
      subject in all respects to the provisions of the Plan, as amended from time
      to
      time, the terms of which are incorporated herein by reference and made a part
      hereof, (b) that a copy of the Plan and all amendments thereto through the
      date
      hereof were provided to the Employee on the date hereof, and (c) he or she
      understands and accepts of all of the terms and conditions of the Plan.
This
      Agreement sets forth the entire agreement of the parties with respect to the
      subject matter hereof. Any and all prior agreements or understandings with
      respect to such matters are hereby superseded.

    


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

    


    
      	
              ATTEST:

            	 	
              FIRST
                UNITED CORPORATION

            
	 	 	 
	/s/                                                                    	 	
              By: /s/                                                                        

            
	 	 	
              Name:

            
	 	 	
              Title:

            
	 	 	 
	
              WITNESS:

            	 	
              EMPLOYEE

            
	 	 	 
	/s/                                                                    	 	/s/                                                                              
	 	 	
              Name:
                William B. Grant

            


    

     

    
      
        
        

      

      
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