Exhibit 10.2


 


Execution Version


 


COOPERATION AND SETTLEMENT AGREEMENT


 


This
Cooperation and Settlement Agreement (this “Agreement”), effective as of April 16, 2021 (the “Effective
Date”), is entered into by and among First United Corporation, a Maryland corporation (“First United”), and
the Persons identified under that certain Schedule 13D, dated September 5, 2019, as amended (the “Driver Schedule 13D”),
as Reporting Persons (as defined therein) (each, a “Driver Party” and collectively, the “Driver Parties”).
First United and the Driver Parties are collectively referred to as the “Parties,” and each of First United and the
collective Driver Parties, a “Party.” Unless otherwise defined, capitalized terms shall have the meanings given to
them in Section 17 herein.


 


WHEREAS,
as of the Effective Date, the Driver Parties directly or indirectly beneficially own an aggregate of 360,737 shares of common
stock, par value $0.01 per share, of First United (the “Common Stock” and such shares of the Common Stock directly
or indirectly beneficially owned by the Driver Parties, the “Purchased Shares”);


 


WHEREAS,
a dispute exists between Driver Opportunity Partners I LP (“Driver Partners”), Driver Management Company LLC (“Driver
Management”), and First United about the application of Section 3-314 of the Financial Institutions Article of the
Annotated Code of Maryland (the “Maryland Stock Acquisition Statute”) (such dispute, the “3-314 Dispute”);


 


WHEREAS,
on May 20, 2020, First United instituted a declaratory relief action in the Circuit Court for Garrett County, Maryland, in which
Driver Partners, Driver Management, Mr. Cooper, and the three individuals that Driver Partners attempted to nominate as director candidates
for election at the 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”) were named as defendants (the “Declaratory
Relief Action”), seeking a declaration of the parties’ respective rights and responsibilities with respect to the Purchased
Shares under the Maryland Stock Acquisition Statute and pursuant to the Bylaws (as defined below);


 


WHEREAS,
on September 4, 2020, Driver Partners filed a lawsuit against First United, all of its then-incumbent directors, and former directors Robert
Kurtz and Elaine McDonald (the individuals being collectively referred to as the “Director Defendants”) in the United
States District Court for the District of Maryland (the “District Court”) and styled Driver Opportunity Partners
I LP v. First United Corp., et al., No. 1:20-cv-2575 RDB (the “Driver Litigation”);


 


WHEREAS,
the defendants in the Declaratory Relief Action filed motions to dismiss the lawsuit, and First United, on September 8, 2020, filed (i)
papers opposing the defendants’ motions to dismiss and (ii) an amended complaint in the Declaratory Relief Action;


 


WHEREAS,
the remaining defendants in the Declaratory Relief Action removed the Declaratory Relief Action to the District Court on September 8,
2020, such that the Declaratory Relief Action is currently pending in that court, with the matter styled First United Corp. v. Driver
Opportunity Partners I LP, et al., No. 1:20-cv-2592-RDB;


 






     


     


    

 


WHEREAS,
the remaining defendants in the Declaratory Relief Action filed a motion to dismiss the amended complaint and have denied and continue
to deny that First United is entitled to any relief in the Declaration Relief Action;


 


WHEREAS,
First United and the Director Defendants filed motions to dismiss the Driver Litigation;


 


WHEREAS,
following a hearing before the District Court on January 4, 2021, the District Court issued orders that (i) certified a question to the
Maryland Court of Appeals concerning the existence of a private right of action under the Maryland Stock Acquisition Statute, and (ii)
dismissed six of the nine causes of action asserted by Driver Partners in the Driver Litigation;


 


WHEREAS,
the certified question is the subject of a proceeding before the Maryland Court of Appeals styled First United Corporation v. Driver
Opportunity Partners I L.P., et al., Misc. No. 13, Sept. Term 2020, which proceeding is currently pending and, for purposes of this
Agreement, shall be deemed to be included within the definition of “Declaratory Relief Action”;


 


WHEREAS,
Driver Partners has filed motions for reconsideration of portions of the District Court’s dismissal order and for leave to amend
its complaint in the Driver Litigation, which motions are currently pending;


 


WHEREAS,
on January 8, 2021, Driver Partners submitted to First United a notice (the “Stockholder Nomination”) regarding its
intent to nominate Mr. Cooper to First United’s Board of Directors (the “Board”) at the 2021 Annual Meeting of
Stockholders (the “2021 Annual Meeting”) and to submit seven (7) proposals for consideration by First United’s
stockholders at the 2021 Annual Meeting (the “Driver Proposals”);


 


WHEREAS,
on March 26, 2021, Driver Partners filed a second lawsuit in the District Court, captioned Driver Opportunity Partners I,
LP. v. First United Corp., et al., No. 1:21-cv-0788 RDB (the “Driver Proxy Litigation”) and alleging that
defendants made materially false or misleading statements in preliminary proxy statements filed March 1, 2021 and March 26, 2021 in anticipation
of First United’s 2021 Annual Meeting, in alleged violation of Section 14(a) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) and Rule 14a-9 promulgated by the Securities and Exchange Commission (“SEC”)
under the Exchange Act;


 


WHEREAS,
First United and the individual defendants in the Driver Litigation and Driver Proxy Litigation have denied and continue to
deny all of Driver Partners’ allegations of wrongdoing and of any entitlement to relief in these legal proceedings;


 


WHEREAS,
First United has repurchased the Purchased Shares pursuant to that certain executed Stock Purchase Agreement, dated as of April 16, 2021
by and between First United and Driver Partners; and


 


WHEREAS,
First United and the Driver Parties now wish to settle the claims related to the Declaratory Relief Action, the Driver Litigation, and
the Driver Proxy Litigation (collectively, the “Litigation”) and their dispute concerning governance of First United,
including without limitation with regard to the 3-314 Dispute, the 2020 Annual Meeting and the 2021 Annual Meeting, on the terms set forth
in this Agreement.


 


NOW,
THEREFORE, in consideration of the promises, representations and mutual covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:


 






    2


     


    

 


1.                 
Governance Matters. First United shall not change
any of the Board’s proposals to be considered by stockholders at the 2021 Annual Meeting, or change its recommendations with respect
to such proposals, and set forth in First United’s amended preliminary proxy statement filed with the SEC on March 26, 2021 (the
 “Preliminary Proxy Statement”). For the avoidance of doubt, nothing in this Section 1 shall obligate
First United to nominate or in any way put forth any specific Person or Persons for election to the Board.


 


2.                  Withdrawal
of Proxy Contest and Related Matters.
As of the Effective Date, the Driver Parties hereby irrevocably agree to take all necessary actions to immediately:


 


(a)              
withdraw or rescind, as applicable, the Stockholder Nomination (with this Agreement deemed to evidence such withdrawal or recission)
and any and all related materials and notices submitted to First United in connection therewith or related thereto and any solicitation
materials concerning the foregoing or otherwise related to the 2021 Annual Meeting and filed by or on behalf of the Driver Parties with
the SEC or furnished to stockholders of First United, and to not take any further action in connection with the solicitation of proxies
in connection with the Stockholder Nomination and/or the Driver Proposals (other than in connection with such withdrawal or Section
10 hereof);


 


(b)              
withdraw any demand or request for a copy of First United’s list of stockholders or its other books and records pursuant
to Rule 14a-7 under the Exchange Act or under any statutory or regulatory provisions of Maryland providing for stockholder access to books
and records (including lists of stockholders) of First United (with this Agreement deemed to evidence such withdrawal);


 


(c)              
cease any and all solicitation and other activities in connection with the 2021 Annual Meeting (it being understood and agreed
that the Driver Parties are required to vote their shares of Common Stock beneficially owned as of the record date with respect to the
2021 Annual Meeting, subject to the provisions of this Agreement);


 


(d)              
withdraw any formal investigation demands and any claims submitted to any Governmental Authority concerning First United or otherwise
related to the 3-314 Dispute, the 2020 Annual Meeting or 2021 Annual Meeting and filed by or on behalf of the Driver Parties; and


 


(e)              
modify, disable and not permit to be re-enabled the website “www.renovatemybank.com” and any other websites the Driver
Parties directly or indirectly maintain with respect to their solicitation efforts and/or campaigns with respect to First United, the
3-314 Dispute, the 2020 Annual Meeting, and/or the 2021 Annual Meeting.


 


3.                 
Mutual Non-Disparagement.


 


(a)              
Each Driver Party agrees that, from the Effective Date until the Termination Date (the “Standstill Period”),
neither it nor any of its Representatives (as defined below) shall, and it shall cause each of its Representatives to not to, directly
or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize, or otherwise communicate in any way (or cause,
further, assist, solicit, encourage, support, or participate in any of the foregoing), any remark, comment, message, information, declaration,
communication, or other statement of any kind (including through the use of any social or professional networking websites and/or blogs),
whether verbal, in writing, electronically transferred, or otherwise, that might reasonably be construed to be derogatory or critical
of, or negative toward, or constitute an ad hominem attack on, or otherwise disparage, defame, damage, criticize, condemn, or impugn the
reputation or good name of First United or any of its Representatives, or any of their respective businesses, products, services, actions,
writings, policies, practices, procedures, or advertisements.


 






    3


     


    

 


(b)              
First United hereby agrees that, during the Standstill Period, neither it nor any of its Representatives shall, and it shall cause
each of its Representatives to not, directly or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize,
or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support, or participate in any of the foregoing),
any remark, comment, message, information, declaration, communication, or other statement of any kind (including through the use of any
social or professional networking websites and/or blogs), whether verbal, in writing, electronically transferred, or otherwise, that might
reasonably be construed to be derogatory or critical of, or negative toward, or constitute an ad hominem attack on, or otherwise disparage,
defame, damage, criticize, condemn, or impugn the reputation or good name of any Driver Party or any of their respective Representatives,
or any of their respective businesses, products, services, actions, writings, policies, practices, procedures, or advertisements.


 


(c)              
Notwithstanding the foregoing, nothing in this Section 3 or elsewhere in this Agreement shall prohibit any Party from
making any statement or disclosure required under the federal securities laws or other applicable laws (including to comply with any subpoena
or other legal process from any Governmental Authority with competent jurisdiction over the relevant Party hereto) or stock exchange regulations;
provided, however, that, unless prohibited under applicable law, such Party must provide written notice to the other Parties
at least four (4) business days prior to making any such statement or disclosure required under the federal securities laws or other applicable
laws or stock exchange regulations that would otherwise be prohibited by the provisions of this Section 3, and reasonably
consider any comments of such other Party.


 


(d)              
The limitations set forth in Sections 3(a) and 3(b) shall not prevent any Party from responding to any public
statement made by the other Party of the nature described in Sections 3(a) and 3(b), if such statement by the other
Party was made in breach of this Agreement, and any such response shall not be deemed to be a breach of this Agreement by the responding
Party.


 


(e)              
For the avoidance of doubt, the limitations set forth in Sections 3(a) and 3(b) apply to all communications,
including, but not limited to, any filings that must be made by either Party in connection with Section 10 of this Agreement.


 






    4


     


    

 


4.                 
Voluntary Dismissal of the Litigation. In consideration
of the terms set forth in this Agreement, including but not limited to the releases set forth in Section 6: 


 


(a)              
First United shall voluntarily dismiss the Declaratory Relief Action in its entirety with prejudice.


 


(b)              
Driver Partners shall voluntarily dismiss the Driver Litigation and the Driver Proxy Litigation in their entireties and with prejudice
as to all defendants.


 


(c)              
The Parties will file their respective dismissal requests (the “Dismissals”) with the relevant courts within
two (2) business days of April 16, 2021.


 


(d)              
The Dismissals will provide that each Party shall bear its own costs, and will include no admission of any factual or legal matter
concerning any issue in the Litigation or in the Driver Parties’ involvement with First United, or of any liability one to the other.
Without limiting the generality of this non-admission, nothing in this Agreement shall constitute an admission or concession by any Party
concerning the scope or reach (or lack thereof) of the Maryland Stock Acquisition Statute.


 


5.                 
No Further Litigation.


 


(a)              
The Driver Parties covenant and agree that, during the Standstill Period, they shall not, and shall not permit any of their Representatives
to, alone or in concert with others, knowingly encourage or pursue, or knowingly assist any other Person to threaten, initiate or pursue,
any lawsuit, claim, or proceeding (including commencing, encouraging, or supporting any derivative action in the name of First United
or any class action against First United or any of its officers or directors, in each case with the intent of circumventing any terms
of this Agreement) before any Governmental Authority (collectively, “Legal Proceedings”) against First United or any
of its Representatives, except for any Legal Proceeding initiated solely to remedy a breach of or to enforce this Agreement; provided,
however, that the foregoing shall not prevent the Driver Parties or any of their Representatives from responding to oral questions,
interrogatories, requests for information or documents, subpoenas, civil investigative demands, or similar processes (a “Legal
Requirement”) in connection with any Legal Proceeding if such Legal Proceeding has not been initiated by, or on behalf of, the
Driver Parties or any of their Representatives; provided, further, that in the event that the Driver Parties or any of their
Representatives receives such Legal Requirement, the Driver Parties shall, unless prohibited by applicable law, give prompt written notice
of such Legal Requirement to First United. In any such Legal Proceeding permitted under this Section 5(a) by the Driver Parties
against First United or any of its Representatives, the prevailing party shall be entitled to an award of all reasonable costs and attorney’s
fees.


 


(b)              
First United covenants and agrees that, during the Standstill Period, it shall not, and shall not permit any of its Representatives
to, alone or in concert with others, knowingly encourage or pursue, or knowingly assist any other Person to threaten, initiate or pursue,
any Legal Proceedings on claims arising out of any facts known to First United as of the Effective Date against any of the Driver Parties
or any of their respective Representatives, except for any Legal Proceeding initiated solely to remedy a breach of or to enforce this
Agreement; provided, however, that the foregoing shall not prevent First United or any of its Representatives from responding
to a Legal Requirement in connection with any Legal Proceeding if such Legal Proceeding has not been initiated by, or on behalf of, First
United or any of its Representatives; provided, further, that in the event First United or any of its Representatives receives
such Legal Requirement, First United shall, unless prohibited by applicable law, give prompt written notice of such Legal Requirement
to the Driver Parties, as applicable. In any such Legal Proceeding permitted under this Section 5(b) by the Driver Parties against
First United or any of its Representatives, the prevailing party shall be entitled to an award of all reasonable costs and attorney’s
fees.


 






    5


     


    

 


6.                 
Releases.


 


(a)              
As of the Effective Date, First United permanently, fully and completely releases, acquits, and discharges the Driver Parties,
jointly or severally, of and from any and all claims, demands, damages, causes of action, debts, liabilities, controversies, judgments,
and suits of every kind and nature whatsoever, foreseen, unforeseen, known or unknown, that First United has had, now has, or may have
against any of the Driver Parties collectively, jointly or severally, at any time prior to and including the Effective Date, including
(but not limited to) any and all claims arising out of or in any way whatsoever related to (i) the facts and allegations asserted in the
Litigation, or (ii) the Driver Parties’ involvement with First United.


 


(b)              
As of the Effective Date, the Driver Parties, and each of them, permanently, fully and completely release, acquit and discharge
First United, and First United's subsidiaries, joint ventures and partnerships, successors, assigns, officers, directors, partners, members,
managers, principals, predecessor or successor entities, agents, employees, stockholders, auditors, advisors, consultants, attorneys,
insurers, heirs, executors, administrators, successors and assigns of any such Person (in each case, and in their capacities as such)
(collectively, the “Company’s Affiliates”), jointly or severally, of and from any and all claims, demands, damages,
causes of action, debts, liabilities, controversies, judgments, and suits of every kind and nature whatsoever, foreseen, unforeseen, known
or unknown, that the Driver Parties or any of them have had, now have, or may have against any of First United and/or the Company’s
Affiliates, collectively, jointly or severally, at any time prior to and including the Effective Date, including (but not limited to)
any and all claims arising out of or in any way whatsoever related to (i) the facts and allegations asserted in the Litigation, or (ii)
the Driver Parties’ involvement with First United.


 


(c)                     
The Parties each acknowledge that as of the time of the Effective Date, the Parties may have claims against one another that a
Party does not know or suspect to exist in his, her, or its favor, including claims that, had they been known, might have affected the
decision to enter into this Agreement, or to provide the releases set forth in this Section 6. In connection with such any such
claims, the Parties agree that they intend to waive, relinquish, and release any and all provisions, rights, and benefits any state or
territory of the United States or other jurisdiction that purports to limit the application of a release to unknown claims, or to facts
unknown at the time the release was entered into. In connection with this waiver, the Parties acknowledge that they, or any of them,
may (including after the Effective Date) discover facts in addition to or different from those known or believed by them to be true with
respect to the subject matter of the releases set forth in this Section 6, but it is the intention of the Parties to complete,
fully, finally, and forever compromise, settle, release, discharge, and extinguish any and all claims that they may have one against
another, known or unknown, suspected or unsuspected, contingent or absolute, accrued or unaccrued, apparent or unapparent, that now exist
or previously existed, without regard to the subsequent discovery of additional or different facts. The Parties acknowledge that the
foregoing waiver is a key, bargained-for element to this Agreement and the releases that are part of it.


 


(d)              
The releases provided for in this Section 6 are intended to be broad, and this breadth is a bargained-for feature of this
Agreement. Despite this, the releases provided for in this Section 6 are not intended to, and do not, extend to any Party’s
obligations under this Agreement.


 






    6


     


    

 


7.                 
Standstill. 


 


(a)              
During the Standstill Period, each Driver Party shall not, and shall cause their respective Representatives to not, directly or
indirectly:


 


(i)             
make any announcement or proposal with respect to, or offer, seek, propose, or indicate an interest in, (A) any form of business
combination or acquisition or other transaction relating to some or all of the Common Stock, or some or all of the material assets of
First United or any of its subsidiaries, (B) any form of restructuring, recapitalization, or similar transaction with respect to First
United or any of its subsidiaries or (C) any form of tender or exchange offer for shares of Voting Securities, whether or not such transaction
involves a Change of Control (as defined below) of First United;


 


(ii)           
engage in, or assist in the engagement in, any solicitation of proxies or written consents to vote any Voting Securities, or conduct,
or assist in the conducting of, any type of binding or nonbinding referendum with respect to any Voting Securities, or assist or participate
in any other way, directly or indirectly, in any solicitation of proxies (or written consents) with respect to, or from the holders of,
any Voting Securities, or otherwise become a “participant” in a “solicitation,” as such terms are defined in Instruction
3 of Item 4 of Schedule 14A and Rule 14a-1 of Regulation 14A, respectively, under the Exchange Act, to vote any securities of First United
(including by initiating, encouraging or participating in any “withhold” or similar campaign);


 


(iii)           
purchase or otherwise acquire, or offer, seek, propose or agree to acquire, ownership (including beneficial ownership) of any securities
of First United, any direct or indirect rights or options to acquire any such securities, any derivative securities or contracts or instruments
in any way related to the price of shares of Common Stock, or any assets or liabilities of First United;


 


 (iv)          
advise, encourage, or influence any Person with respect to the disposition of any securities of First United;


 






    7


     


    

 


(v)           
take any action in furtherance of or make any proposal or request that such Driver Party knows, or should reasonably expect to
know, constitutes or would result in: (A) advising, controlling, changing, or influencing any director or employee of First United, including,
but not limited to, any plans or proposals to change the number or terms of First United directors or to fill any vacancies on the Board,
except as set forth in this Agreement, (B) any material change in the capitalization, stock repurchase programs, or practices or dividend
policy of First United, (C) any other material change in First United’s management, business, or corporate structure, (D) seeking
to have First United waive or make amendments or modifications to the Bylaws or the Articles of Incorporation (each as defined below),
or other actions that may impede or facilitate the acquisition of control of First United by any Person, (E) causing a class of securities
of First United to be delisted from, or to cease to be authorized to be quoted on, any securities exchange, or (F) causing a class of
securities of First United to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act and the
rules promulgated thereunder;


 


(vi)           
communicate with stockholders of First United or others pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act;


 


(vii)           act, including by making public announcements or speaking to reporters or members of the media (whether “on the record”
or on “background” or “off the record”), to seek to influence First United’s stockholders, management, or
the Board with respect to First United’s policies, operations, balance sheet, capital allocation, marketing approach, business configuration,
Extraordinary Transactions, or strategy or to obtain representation on the Board or seek the removal of any director in any manner, except
as expressly permitted by this Agreement;


 


(viii)         call or attempt to call, or request the call of, alone or in concert with others, any meeting of stockholders, whether or not such
a meeting is permitted by the Bylaws, including a “town hall meeting”;


 


(ix)           attempt
to, or knowingly encourage or advise any Person, to submit nominations in furtherance of a “contested solicitation” for the
election or removal of directors with respect to First United or seek, encourage or take any other action with respect to the election
or removal of any directors;


 


(x)            
form, join, maintain or in any other way participate in any “group” (within the meaning of Section 13(d)(3) of the
Exchange Act) with respect to any Voting Security;


 


(xi)            demand a copy of First United’s list of stockholders or its other books and records or make any request pursuant to Rule
14a-7 under the Exchange Act or under any statutory or regulatory provisions of Maryland providing for stockholder access to books and
records (including lists of stockholders) of First United;


 


(xii)          
make any request or submit any proposal to amend or waive the terms of this Section 7 other than through non-public
communications with First United that would not be reasonably likely to trigger public disclosure obligations for any Party;


 






    8


     


    

 


(xiii)         
engage any private investigations firm or other Person to investigate any of First United’s directors or officers;


 


(xiv)          disclose in a manner that could reasonably be expected to become public any intent, purpose, plan or proposal with respect to any
director or the First United’s management, policies, strategy, operations, financial results or affairs, any of its securities or
assets or this Agreement that is inconsistent with the provisions of this Agreement; or


 


(xv)           enter
into any discussions, negotiations, agreements, or understandings with any Person with respect to any action the Driver Parties are prohibited
from taking pursuant to this Section 7, or advise, assist, knowingly encourage, or seek to persuade any Person to take any
action or make any statement with respect to any such action, or otherwise take or cause any action or make any statement inconsistent
with any of the foregoing.


 


Notwithstanding
anything to the contrary contained in this Section 7, the Driver Parties shall not be prohibited or restricted
during the time that Driver Partners continues to be a First United stockholder from: (A) communicating privately with the Board or any
officer or director of First United in the manner set forth for communicating with the First United in the Company Policies (as defined
below), regarding any matter, so long as such communications are not intended to, and would not reasonably be expected to, require any
public disclosure of such communications by any of the Driver Parties or their respective Affiliates, First United or its Affiliates or
any Third Party (as defined below), subject in any case to any confidentiality obligations to First United of any such director or officer
and applicable law, rules or regulations; (B) taking any action necessary to comply with any law, rule, or regulation or any action required
by any Governmental Authority that has, or may have, jurisdiction over any Driver Party, provided that a breach by such Parties
of this Agreement is not the cause of the applicable requirement; or (C) privately communicating to any of their potential investors or
investors factual information regarding First United, provided such communications are subject to reasonable confidentiality obligations
and are not otherwise reasonably expected to be publicly disclosed.


 


(b)              
During the Standstill Period, each Driver Party shall refrain from taking any actions which could have the effect of encouraging,
assisting, or influencing other stockholders of First United or any other Persons to engage in actions which, if taken by such Party,
would violate this Agreement.


 


(c)              
During the Standstill Period, each of the Driver Parties agrees not to, and to cause their respective Representatives to not, comment
publicly about any director or First United’s management, policies, strategy, operations, financial results, or affairs or any transactions
involving First United or any of its subsidiaries, except as expressly permitted by this Agreement.


 






    9


     


    

 


8.                 
Representations and Warranties of First United. First
United represents and warrants to the Driver Parties that (a) First United was duly formed and is validly existing and in good standing
under the laws of the State of Maryland, and First United has the corporate power and authority to execute this Agreement and to bind
it thereto, (b) this Agreement has been duly and validly authorized, executed and delivered by First United, constitutes a valid and
binding obligation and agreement of First United, and is enforceable against First United in accordance with its terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally
affecting the rights and remedies of creditors and subject to general equity principles, and (c) the execution, delivery and performance
of this Agreement by First United does not and will not result in any breach or violation of or constitute a default (or an event which
with notice or lapse of time or both could become a default) under or pursuant to, or result in the loss of a material benefit under,
or give any right of termination, amendment, acceleration or cancellation of, any organizational document, or any material agreement,
contract, commitment, understanding or arrangement to which First United is a party or by which it is bound.


 


9.                 
Representations and Warranties of the Driver Parties. Each Driver Party jointly and severally represents and warrants to
First United and its Representatives that (a) if such Driver Party is an entity, it was duly formed and is validly existing and in good
standing under the laws of the jurisdiction of its formation, this Agreement has been duly and validly authorized, executed and delivered
by such Driver Party, and constitutes a valid and binding obligation and agreement of such Driver Party, enforceable against such Driver
Party in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws generally affecting the rights and remedies of creditors and subject to general equity
principles, (b) the signatory for each Driver Party has the power and authority to execute this Agreement and any other documents or
agreements entered into in connection with this Agreement on behalf of itself and the applicable Driver Party associated with that signatory’s
name, and to bind such Driver Party to the terms hereof and thereof, and (c) the execution, delivery and performance of this Agreement
by the Driver Party does not and will not result in any breach or violation of or constitute a default (or an event which with notice
or lapse of time or both could become a default) under or pursuant to, or result in the loss of a material benefit under, or give any
right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding
or arrangement to which such member is a party or by which it is bound. 


 


10.             
SEC Filings. 


 


(a)              
First United shall file with the SEC a Current Report on Form 8-K to report its entry into this Agreement and appending this Agreement
as an exhibit thereto (the “Form 8-K”). The disclosures contained in the Form 8-K relating to this Agreement shall
be consistent with the terms of this Agreement.


 






    10


     


    

 


(b)             
No later than two (2) business days following the Effective Date, the Reporting Persons on the Driver Schedule 13D shall file with
the SEC an amendment to the Driver Schedule 13D in compliance with Section 13 of the Exchange Act to report their entry into this Agreement
and appending this Agreement as an exhibit thereto or incorporating this Agreement by reference to First United's Current Report on Form
8-K referred to in Section 10(a) hereof (the “Driver Schedule 13D Amendment”). The disclosures in the Driver
Schedule 13D Amendment relating to this Agreement shall be consistent with the terms of this Agreement.


 


(c)              
Except as otherwise provided in this Section 10, the Driver Parties shall not make any public statements related to this
Agreement.


 


11.             
Term; Termination. The
term of this Agreement shall commence on the Effective Date and shall continue until the tenth (10th) anniversary of the Effective
Date (the “Termination Date”); provided, however, that (a) the Driver Parties may earlier terminate this Agreement
if First United commits a material breach of its obligations under this Agreement that (if capable of being cured) is not cured within
fifteen (15) days after receipt by First United from the Driver Parties specifying the material breach, or, if impossible to cure within
fifteen (15) days, that First United has not taken any substantive action to cure within such fifteen (15) day period; and (b) First
United may earlier terminate this Agreement if any of the Driver Parties commits a material breach of this Agreement that (if capable
of being cured) is not cured within fifteen (15) days after receipt by such Driver Party from First United specifying the material breach,
or, if impossible to cure within fifteen (15) days, that such Party has not taken any substantive action to cure within such fifteen
(15) day period. Termination of this Agreement shall not relieve any Party from its responsibilities in respect of any breach of this
Agreement occurring prior to such termination. 


 


12.             
Settlement Payment and Expenses; No Admission. Each
Party shall be responsible for its own fees and expenses in connection with the negotiation and execution of this Agreement and the transactions
contemplated hereby, except that First United shall, within two (2) business days following the filing by the Driver Parties of the dismissals
contemplated by Section 5 and the SEC filings contemplated by Section 10, pay to the Driver Parties, in settlement of the Driver
Litigation and the Driver Proxy Litigation, and in exchange for the releases from the Driver Parties set forth in Section 6(b),
the sum of $3,300,000. Nothing in this Agreement, including without limitation this Section 12, shall constitute an admission
of any wrongdoing or liability by either Party one to the other in connection with the Litigation or the Driver Parties’ involvement
with First United.


 


13.              No
Other Discussions or Arrangements. The
Driver Parties represent and warrant that, as of the Effective Date, except as specifically disclosed on the Driver Schedule 13D, or
as disclosed to First United in writing prior to the Effective Date, (a) none of the Driver Parties owns, of record or beneficially,
any Voting Securities or any securities convertible into, or exchangeable or exercisable for, any Voting Securities and (b) none of
the Driver Parties have entered into, directly or indirectly, any agreements or understandings with any Person (other than their own
respective Representatives) with respect to any potential transaction involving First United or the voting or disposition of any
securities of First United.


 






    11


     


    

 


14.             
Governing Law; Jurisdiction. This
Agreement shall be governed by and construed in accordance with the internal laws of the State of Maryland without giving effect to any
choice or conflict of law provision or rule that would cause the application of laws of any jurisdiction other than those of the State
of Maryland. Each Party agrees that it shall bring any suit, action, or other proceeding in respect of any claim arising out of or related
to this Agreement (each, an “Action”) exclusively in (a) the Circuit Court for Garrett County, Maryland, (b) in the
event (but only in the event) that such court does not have subject matter jurisdiction over such Action, the District Court, or (c)
in the event (but only in the event) such courts identified in clauses (a) and (b) do not have subject matter jurisdiction over such
Action, any other Maryland state court (collectively, the “Chosen Courts”), and, solely in connection with an Action,
(i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) irrevocably submits to the exclusive venue of any such
Action in the Chosen Courts and waives any objection to laying venue in any such Action in the Chosen Courts, (iii) waives any objection
that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party hereto and (iv) agrees that service of process
upon such Party in any such Action shall be effective if notice is given in accordance with Section 18 of this Agreement.
Each Party agrees that a final judgment in any Action brought in the Chosen Courts shall be conclusive and binding upon each of the Parties
and may be enforced in any other U.S. courts that has or may exercise jurisdiction over such Party by suit upon such judgment.


 


15.             
Waiver of Jury Trial. EACH
PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH
PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.


 


16.             
Specific Performance. Each
of the Parties acknowledges and agrees that irreparable harm to the other Parties would occur in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or are otherwise breached and that such injury would not be adequately
compensable by the remedies available at law (including the payment of money damages). It is accordingly agreed that each of the Parties
(the “Moving Party”) shall be entitled to specific enforcement of, and injunctive or other equitable relief as a remedy
for any such breach or to prevent any violation or threatened violation of, the terms hereof, and the other Parties will not take action,
directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available
at law or in equity. The Parties further agree to waive any requirement for the security or posting of any bond in connection with any
such relief. The remedies available pursuant to this Section 16 shall not be deemed to be the exclusive remedies
for a breach of this Agreement but shall be in addition to all other remedies available at law or equity.


 






    12


     


    

 



 


17.             
Certain Definitions. As used in this Agreement:



 


(a)              
“Affiliate” shall mean any “Affiliate” as defined in Rule 12b-2 promulgated by the SEC under
the Exchange Act, including, for the avoidance of doubt, Persons who become Affiliates subsequent to the Effective Date;


 


(b)              
“Articles of Incorporation” shall mean the Amended and Restated Articles of Incorporation of First United, as
may be further amended from time to time;


 


(c)              
“Associate” shall mean any “Associate” as defined in Rule 12b-2 promulgated by the SEC under
the Exchange Act, including, for the avoidance of doubt, Persons who become Associates subsequent to the Effective Date;


 


(d)             
“beneficial owner”, “beneficial ownership” and “beneficially own” shall
have the same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act;


 


(e)             
“business day” shall mean any day other than a Saturday, Sunday or day on which the commercial banks in the
State of New York are authorized or obligated to be closed by applicable law;


 


(f)              
“Bylaws” shall mean First United’s Amended and Restated Bylaws, as amended and as may be further amended
from time to time;


 


(g)              
a “Change of Control” transaction shall be deemed to have taken place if (i) any Person is or becomes a beneficial
owner, directly or indirectly, of securities of First United representing more than twenty-five percent (25%) of the equity interests
and voting power of First United’s then-outstanding equity securities or (ii) First United enters into a stock-for-stock transaction
whereby immediately after the consummation of the transaction First United’s stockholders retain less than fifty percent (50%) of
the equity interests and voting power of the surviving entity’s then-outstanding equity securities;


 


(h)             
“Company Policies” mean the policies, processes, procedures, codes, rules, standards and guidelines applicable
to members of the Board, including, but not limited to, First United’s Code of Business Conduct and Ethics, Corporate Governance
Guidelines, Insider Trading Policy, Luxury Expenditure Policy and any other policies on stock ownership, public disclosures and confidentiality.


 


(i)            
   “Extraordinary Transaction” shall mean any equity tender offer, equity exchange offer, merger, acquisition,
business combination, or other transaction with a Third Party that, in each case, would result in a Change of Control of First United,
liquidation, dissolution or other extraordinary transaction involving a majority of its equity securities or a majority of its assets,
and, for the avoidance of doubt, including any such transaction with a Third Party that is submitted for a vote of First United’s
stockholders;


 






    13


     


    

 


(j)              
“Governmental Authority” shall mean any federal, state, local, municipal, or foreign government and any political
subdivision thereof, any authority, bureau, commission, department, board, official, or other instrumentality of such government or political
subdivision, any self-regulatory organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent
that the rules, regulations or orders of such organization or authority have the force of law), and any court of competent jurisdiction,
including, without limitation, the SEC, the Maryland Commissioner of Financial Regulation, the Office of the Maryland Attorney General,
the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the respective staffs thereof.


 


(k)               
“other Parties” shall mean, with respect to First United, any of the Driver Parties; and with respect to any
of the Driver Parties, First United;


 


(l)             
“Person” or “Persons” shall mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, any other entity of
any kind, structure or nature, and any Governmental Authority.


 


(m)          
“Representative” shall mean a Person’s Affiliates and Associates and its and their respective directors,
officers, employees, personnel, partners, members, managers, consultants, auditors, legal or other advisors, agents and other representatives
(in each case in their capacities as such);


 


(n)               
a “Third Party” shall mean any Person who is not (i) a Party, (ii) a member of the Board, (iii) an officer of
First United, or (iv) an Affiliate of any Party; and


 


(o)             
“Voting Securities” means the Common Stock and any other securities of First United entitled to vote in the
election of directors.


 


18.             
Notices. All notices, requests, consents, claims,
demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by
hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier
(receipt requested), (c) on the date sent by email (with confirmation of transmission) if sent during normal business hours, and on the
next business day if sent after normal business hours; or (d) on the third day after the date mailed, by certified or registered
mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the addresses set forth
in this Section 18 (or to such other address that may be designated by a Party from time to time in accordance
with this Section 18).


 


If to First United, to its address at:


 


First
United Corporation

19 South Second Street

Oakland, MD 21550

Attention: Carissa Rodeheaver

Email:       crodeheaver@mybank.com


 






    14


     


    

 


With copies (which shall not constitute notice) to:


 


Gordon Feinblatt LLC

1001 Fleet Street, Suite 700


Baltimore, MD 21202

Attention:    Andrew Bulgin


George Ritchie

Email:          abulgin@gfrlaw.com


gritchie@gfrlaw.com


 


Vinson & Elkins L.L.P.

1114 Avenue of the Americas, 32nd Floor

New York, NY 10036

Attention:      Lawrence S. Elbaum

                        C. Patrick Gadson

Email:            lelbaum@velaw.com

                       pgadson@velaw.com


 


If to a Driver Party, to the address at:


 


J.
Abbott R. Cooper

Driver Management Company LLC

250 Park Avenue, 7th Floor

New York, NY 10019

Attention:     J. Abbott R. Cooper

Email:           ac@drivermgmtco.com


 


With a copy (which shall not constitute notice) to:


 


Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue, NW

Washington, DC 20004

Attention: Jason R. Scherr

Email:       jr.scherr@morganlewis.com


 


19.             
Entire Agreement. This Agreement shall constitute
the sole and entire agreement of the Parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous
understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter. This Agreement
may be amended, modified, or supplemented only by an agreement in writing signed by each Party.


 


20.             
Interpretation. No rule of construction against
the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as each Party has had the opportunity
to have this Agreement reviewed by counsel. 


 


21.             
Severability. If any term or provision of this
Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect
any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.


 






    15


     


    

 


22.             
Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement.
A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission shall be deemed to have the
same legal effect as delivery of an original signed copy of this Agreement.


 


23.            
Assignment. No Party may assign any of its rights
or delegate any of its obligations hereunder without the prior written consent of the other Parties; provided, that each Party must assign
any of its rights and delegate any of its obligations hereunder to any Person that acquires substantially all of that Party’s assets,
whether by stock sale, merger, asset sale or otherwise. Any purported assignment or delegation in violation of this Section 23
shall be null and void. No assignment or delegation shall relieve the assigning or delegating Party of any of its obligations under this
Agreement. This Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns; and nothing in
the Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.


 


24.            
Waivers. No waiver by any Party of any of the
provisions of this Agreement shall be effective unless explicitly set forth in writing and signed by the Parties so waiving. No waiver
by any Party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such
written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise,
or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power, or privilege.


 


[Remainder of Page Intentionally Left Blank]


 






    16


     


    

 


IN
WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the Effective Date.


 


	 	FIRST UNITED:
	 
	 	FIRST UNITED CORPORATION
	 
	 	By:	 /s/ Carissa L. Rodeheaver
	 	Name:	Carissa L. Rodeheaver
	 	Title: 	Chairman of the Board, President and Chief Executive Officer



 


Signature Page to


Cooperation and Settlement
Agreement


 






    


     


    

 





	 	DRIVER PARTIES:
	 
	 	DRIVER OPPORTUNITY PARTNERS I
LP 
	 
	 	By:	/s/ J. Abbott R.
    Cooper
	 	Name:	J. Abbott R. Cooper
	 	Title:	Managing Member
	 	 
	 	 
	 	DRIVER MANAGEMENT COMPANY LLC 
	 	 
	 	By:	/s/ J. Abbott R. Cooper
	 	Name:	J. Abbott R. Cooper
	 	Title:	Managing Member
	 	 
	 	 
	 	J. ABBOTT R. COOPER 
	 
	 	By:	/s/ J. Abbott R. Cooper



 


Signature Page to


Cooperation and Settlement Agreement