Document:

Unassociated Document

     

    Exhibit
      10.4

     

    

    

    Executive
      Pay for Performance Plan

    Plan
      Summary and Terms

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Introduction
      and Objective

    

    The
      annual incentive compensation plan, known as the Executive Pay-for-Performance
      Plan (the “Plan”), of First United Corporation (the “Corporation”) is designed
      to recognize and reward employees of the Corporation and its affiliates for
      their collective contributions to the success of the Corporation. The Plan
      focuses on the financial measures that are critical to the Corporation’s growth
      and profitability. This document summarizes the elements and features of the
      Plan. 

    In
      short,
      the objectives of the Incentive Plan are to: 

    

    
      	 	
              ·

            	
              Align
                pay with performance;

            

    

    

    
      	 	
              ·

            	
              Encourage
                teamwork and collaboration across all areas of the Corporation and
                its
                affiliates;

            

    

    

    
      	 	
              ·

            	
              Motivate
                and reward the achievement of specific, measurable performance
                objectives;

            

    

    

    
      	 	
              ·

            	
              Position
                total cash compensation to be competitive with market (50th
                percentile) when performance meets
                expectations;

            

    

    

    
      	 	
              ·

            	
              Motivate
                and reward employees for achieving/exceeding performance goals;
                and

            

    

    

    
      	 	
              ·

            	
              Enable
                the Bank to attract and retain the talent needed to drive success.
                

            

    

    

    Eligibility

    

    The
      Corporation’s CEO and certain other executive officers selected by the
      Compensation Committee are eligible to participate in the Plan. An employee
      who
      becomes a participant after the beginning of the Plan year, whether because
      he
      or she is a new hire or because he or she is appointed as an executive officer
      during a Plan year, is eligible for a prorated award for that Plan year based
      on
      the period of the Plan year during which he or she was a participant, provided
      that an executive must be employed by October 1 of a Plan year to be eligible
      for an award for that Plan year. 

    

    Participants
      must maintain a performance level of “Satisfactory”, as determined by the
      Corporation’s performance review program.

    

    Participants
      must be an active employee of the Corporation or one of its affiliates as of
      the
      award payout date to receive an award (other than exceptions for death,
      disability and retirement contained herein).

    

    Effective
      Date

    

    The
      Plan
      is effective June 18, 2008. The Plan will be reviewed annually by the
      Compensation Committee of the Corporation’s Board of Directors and by Executive
      Management to ensure proper alignment with the Corporation’s business objectives
      and to revise, if necessary, the performance goals. The Corporation retains
      the
      rights as described below to amend, modify or discontinue the Plan at any time
      during the specified period. The Plan will remain in effect until terminated
      by
      the Board of Directors. 

    

    Program
      Administration

    

    The
      Plan
      was adopted by the Board of Directors at the recommendation of its Compensation
      Committee. The Compensation Committee has the sole authority to interpret the
      Plan and to make or nullify any rules and procedures, as necessary, for proper
      administration. Any determination by the Compensation Committee will be final
      and binding on all participants. 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    Performance
      Period

    

    The
      performance period and Plan operate on a calendar year basis (January 1 -
      December 31st).
      The
      first Plan year is January 1, 2008 to December 31, 2008. 

    

    Incentive
      Payout Opportunity

    

    Each
      participant will have a target incentive opportunity based on competitive market
      practice for his/her role. A participant’s award will be based upon a percentage
      of the participant’s base salary as of December 31 for the Plan year and will be
      calculated based on actual performance relative to the target levels. Threshold
      performance will pay out at 50% of the target award; target performance will
      pay
      out the expected target award, and stretch performance will pay out at 125%
      of
      target award. Payouts for performance below the threshold will be zero.
Actual
      payouts for each performance goal will be pro-rated between threshold and target
      levels and target and stretch levels to reward incremental improvement.
The
      range
      of awards can go from 0% of target (not achieving minimal performance) to 125%
      of target for exceptional performance. For goals that do not meet threshold
      performance, there will be no award for that component. The target incentives
      for a given Plan year will be disclosed in an Appendix
      A
      to this
      Plan.

    

    Incentive
      Plan Measures

    

    The
      Plan
      rewards the Corporation’s attainment of critical consolidated performance goals.
      The performance goals for a given Plan year will be disclosed in an Appendix
      A
      to this
      Plan.

    

    Plan
      Trigger

    

    In
      order
      for the Plan to “activate” in a Plan year, the Corporation must attain the
      threshold levels stated in an Appendix
      A
      to this
      Plan for that Plan year. If the threshold levels established for that year
      are
      not met, then the Plan will not pay out any awards for that Plan year,
      regardless of performance on other goals. 

    

    Example

    

    Below
      is
      an illustration for a fictional executive with a base salary of $125,000 and
      an
      incentive target of 20% of base salary ($25,000), where the performance measures
      are return on equity (ROE), earnings per share (EPS), efficiency ratio,
      operating income as a percentage of net revenue, and growth of Community
      Oriented Business Owners (COBO) loan and deposit relationships. Weight and
      actual performance are fictional for illustration. 

    
       

      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Participant
                  Goals

              	 	
                Performance
                  and Payout

              	 
	
                Performance

                Measure

              	 	
                Performance
                  Goal

                threshold/target/stretch

              	 	
                Weight

              	 	
                $

              	 	
                Actual

                Performance

              	 	
                Payout

                Allocation

                (0% - 125%)

              	 	
                Payout ($)

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                ROE

              	 	 	
                12.10%
                  /13.44%/
                  14.78%

              	
                 

              	 	
                30

              	
                %

              	
                $

              	
                7,500

              	 	 	
                Threshold

              	 	 	
                50

              	
                %

              	
                $

              	
                3,750

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                EPS

              	 	
                 

              	
                $2.21
                  /$2.35/
                  $2.59

              	 	 	
                30

              	
                %

              	
                $

              	
                7,500

              	 	 	
                Target

              	 	 	
                100

              	
                %

              	
                $

              	
                7,500

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Efficiency
                  Ratio

              	 	 	
                67.98%
                  /61.80%/
                  56.62%

              	
                 

              	 	
                15

              	
                %

              	
                $

              	
                3,750

              	 	 	
                Threshold

              	 	 	
                50

              	
                %

              	
                $

              	
                1,875

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Operating
                  Income

                as
                  % of Net Revenue

              	 	 	
                26.1%
                  / 29% / 31.9%

              	
                 

              	 	
                15

              	
                %

              	
                $

              	
                3,750

              	 	 	
                Stretch

              	 	 	
                125

              	
                %

              	
                $

              	
                4,688

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Growth
                  of COBO Loan and Deposit Relationships

              	 	 	
                4.5%
                  / 5% / 5.5%

              	
                 

              	 	
                10

              	
                %

              	
                $

              	
                2,500

              	 	 	
                Below
                  Threshold

              	 	 	
                0

              	
                %  

              	
                $

              	
                0

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                TOTAL

              	 	
                100

              	
                %  

              	
                $

              	
                25,000

              	 	
                71.3%
                  payout     

              	
                $

              	
                17,813

              	 

      

    

    

    Award
      Payouts

    

    Awards
      for a Plan year will be paid as a cash bonus before the end of the first quarter
      following the Plan year. Awards will be calculated based on actual performance
      relative to the target levels. Awards will be taxable income to participants
      in
      the year in which the award is actually paid and will be subject to withholding
      for required income and other applicable taxes. 

    

    Any
      rights accruing to a participant or his/her beneficiary under the Plan shall
      be
      solely those of an unsecured general creditor of the Corporation. Nothing
      contained in the Plan, and no action taken pursuant to the provisions hereof,
      will create or be construed to create a trust of any kind, or a pledge, or
      a
      fiduciary relationship between the Corporation and its affiliates, on the one
      hand, and a participant or any other person, on the other hand. Nothing herein
      will be construed to require the Corporation to maintain any fund or to
      segregate any amount for a participant’s benefit.

    

    Program
      Changes or Discontinuance

    

    The
      Corporation has developed the Plan based on existing business, market and
      economic conditions. If substantial changes occur that affect these conditions,
      the Corporation may add to, amend, modify or discontinue any of the terms or
      conditions of the Plan at any time.

    

    The
      Compensation Committee may also, at its sole discretion, waive, change or amend
      the Plan, as it deems appropriate.

    

    No
      amendment, modification, discontinuance or waiver may adversely affect a
      participant’s eligibility to receive an award if he or she has been notified of
      such eligiblity. 

    

    Notwithstanding
      any other provision of this Plan to the contrary, however, the Corporation
      may
      amend, modify or terminate this Plan, without the consent of the participants,
      as the Corporation deems necessary or appropriate to ensure compliance with
      any
      law, rule, regulation or other regulatory pronouncement applicable to the Plan,
      including, without limitation, Section 409A of the Internal Revenue Code and
      any
      related regulations or other guidance promulgated with respect to Section 409A
      of the Code.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Promotions
      and Transfers

    

    If
      a
      participant changes his/her role or is promoted during the Plan year, he/she
      will be eligible for the new role’s target award on a prorata basis
      (i.e.
      the
      award will be determined based on the number of months employed in each
      position.)

    

    Termination
      of Employment

    

    Except
      in
      the case of a termination due to a participant’s death, disability or retirement
      as discussed below, no incentive award will be granted to any participant whose
      employment with the Corporation or one of its affiliates is terminated for
      any
      reason. Moreover, to encourage employees to remain in the employment of the
      Corporation, a participant must be an active employee of the Corporation or
      one
      of its affiliates on the date the incentive is paid to receive an award.

    

    Death,
      Disability or Retirement

    

    If
      a
      participant is disabled by an accident or illness and is disabled long enough
      to
      be placed on long-term
      disability under the Corporation’s long-term disability policy, his/her award
      for the Plan year shall be prorated so that no award will be earned during
      the
      period of long-term disability.

    

    In
      the
      event a participant’s employment is terminated due to death or disability (as
      defined in the Corporation’s long-term disability policy), the Corporation will
      pay to the participant’s estate or to the participant (as the case may be) the
      pro rata portion of the award that had been earned by the participant through
      the date of termination.

    

    Participant’s
      who retire during the Plan year will receive a pro-rata portion of the award
      based on the retirement date. For purposes of the Plan, the term “retire” means
      a participant’s voluntary termination of his or her employment (other than by
      reason of death or disability) after (i) reaching 60 years of age and (ii)
      completing 10 years of service with the Corporation.

    

    Clawback

    

    In
      the
      event the Corporation is required to prepare an accounting restatement due
      to
      the material noncompliance of the Corporation with any financial reporting
      requirement under applicable securities laws or applicable accounting
      principles, then each participant who received an award under the Plan shall
      return to the Corporation his or her award to the extent the accounting
      restatement shows that a smaller award should have been paid; 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.
      To the
      extent a participant has deferred into a deferred compensation plan of the
      Corporation an amount that an accounting restatement shows should not have
      been
      awarded, such participant’s account under the deferred compensation plan shall
      be adjusted to reflect such improperly-awarded amount (and earnings and losses
      thereon). 

    

    Ethics
      and Interpretation

    

    If
      there
      is any ambiguity as to the meaning of any terms or provisions of this Plan
      or
      any questions as to the correct interpretation of any information contained
      herein, the Corporation’s interpretation expressed by the Compensation Committee
      will be final and binding. It is the intent of the Corporation that this Plan
      and each award hereunder comply with the applicable provisions of Section 409A
      of the Internal Revenue Code, and the Plan shall be so interpreted and
      administered accordingly, including with respect to any restrictions or other
      limitations imposed by Section 409A of the Internal Revenue Code on the amount
      and timing of distributions payable under an award. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    The
      altering, inflating, and/or inappropriate manipulation of performance/financial
      results or any other infraction of recognized ethical business standards by
      a
      participant will subject that participant to disciplinary action up to and
      including termination of employment. In addition, that participant’s eligibility
      for an award under the Plan shall be revoked.

    

    If
      it is
      determined (by the independent members of the Board of Directors) that a
      participant has willfully engaged or is willfully engaging in any activity
      that
      was or is injurious to the Corporation or its affiliates, then the participant
      shall forfeit eligibility for an award for the Plan year in which such
      determination is made. If it is determined that such activity occurred during
      a
      Plan year for which the participant received an award under the Plan, then,
      subject to any provision of the Corporation’s deferred compensation plan that
      does not permit the forfeiture of amounts deferred into such plan, the
      participant shall return the award to the Corporation. 

    

    Miscellaneous

    

    The
      Plan
      will not be deemed to give any participant the right to be retained in the
      employ of the Corporation or any of its affiliates, nor will the Plan interfere
      with the right of the Corporation or an affiliate to discharge any participant
      at any time.

    

    In
      the
      absence of an authorized, written employment contract, the relationship between
      a participant and the Corporation and its affiliates is one of at-will
      employment. The Plan does not alter the relationship.

    

    This
      Plan
      and the transactions and payments hereunder shall, in all respects, be governed
      by, and construed and enforced in accordance with the laws of the State of
      Maryland. 

    

    Each
      provision in this Plan is severable, and 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.

    

    Participant
      Acknowledgement

    

    As
      a
      condition to participation in the Plan and the receipt of any award, each
      participant shall sign and deliver to the Corporation an acknowledgement in
      which he or she agrees to the terms and conditions of the Plan. 

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Appendix
      A

    

    Executive
      Pay-for-Performance Plan

    2008
      Plan Year Targets and Goals

    

    Incentive
      Targets

    

    The
      incentive targets for the 2008 Plan year are set forth in the following table:
      

    

      
        	
                2008
                  Short-Term Incentive Opportunities

                (%
                  of Base Salary)

              	 
	
                Tier

              	 	
                Below
                  

                Threshold

              	 	
                Threshold

                (50% of Target)

              	 	
                Target

                (100%)

              	 	
                Stretch

                (125% of Target)

              	 
	
                CEO

              	 	 	
                0

              	
                %

              	 	
                20

              	
                %

              	 	
                40

              	
                %

              	 	
                50

              	
                %

              
	
                Tier
                  I

              	 	 	
                0

              	
                %

              	 	
                15

              	
                %

              	 	
                30

              	
                %

              	 	
                37.5

              	
                %

              
	
                Tier
                  II

              	 	 	
                0

              	
                %

              	 	
                10

              	
                %

              	 	
                20

              	
                %

              	 	
                25

              	
                %

              

      

    

    

    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.

    

    Performance
      Goals

    

    For
      Plan
      year 2008, the performance goals are return on equity (ROE), earnings per share
      (EPS), efficiency ratio, operating income as a percentage of net revenue, and
      growth of Community Oriented Business Owners (COBO) loan and deposit
      relationships. The following table shows the performance goals at threshold,
      budget and stretch for Plan year 2008: 

     

    

      
        	 	 	 	 	
                2008
                  Performance Metrics

              	 
	
                Performance
                  Measures

              	 	
                Wt.

              	 	
                Threshold

                (90% of target
                  performance)

              	 	
                Target

                (100%)

              	 	
                Stretch

                (110% of target
                  performance)

              	 
	
                ROE

              	 	 	
                30

              	
                %

              	 	
                12.10

              	
                %

              	 	
                13.44

              	
                %

              	 	
                14.78

              	
                %

              
	
                EPS

              	 	 	
                30

              	
                %

              	
                $

              	
                2.21

              	 	
                $

              	
                2.35

              	 	
                $

              	
                2.59

              	 
	
                Efficiency
                  Ratio

              	 	 	
                15

              	
                %

              	 	
                67.98

              	
                %

              	 	
                61.80

              	
                %

              	 	
                56.62

              	
                %

              
	
                Operating
                  Income

                as
                  % of Net Revenue

              	 	 	
                15

              	
                %

              	 	
                26.1

              	
                %

              	 	
                29

              	
                %

              	 	
                31.9

              	
                %

              
	
                Growth
                  of COBO Loan and Deposit Relationships

              	 	 	
                10

              	
                %

              	 	
                4.5

              	
                %

              	 	
                5

              	
                %

              	 	
                5.5

              	
                %

              

      

    

    

    Minimum
      Thresholds

    

    For
      Plan
      year 2008, the Corporation must attain the threshold level for at least one
      of
      ROE or EPS, as stated above, or the Plan will not pay out any awards, regardless
      of the performance of other goals. 

    

    Acknowledgement

    

    By
      signing below, the undersigned participant ackowledges the terms of the
      Executive Pay-for-Performance Plan and his or her award
      opportunity.

    

      
        	
                Date:

              	 	
                ,
                  2008

              	
                Name:Exhibit
      10.5

    
 

    FIRST
      UNITED CORPORATION 

    CHANGE
      IN CONTROL SEVERANCE PLAN

     

    As
      amended and restated on June 18, 2008

     

    First
      United Corporation, a Maryland corporation (the “Company”). hereby adopts this
      First United Corporation Change in Control Severance Plan (the “Plan”) for the
      benefit of certain employees of the Company and its subsidiaries.  The
      Plan, as set forth herein, is intended to help retain certain executive
      officers, maintain a stable work environment and provide economic security
      to
      eligible employees in the event of certain terminations of employment.  The
      Plan is intended to be an unfunded plan maintained primarily for the purpose
      of
      providing deferred compensation for a select group of management or highly
      compensated employees and therefore exempt from Parts 2, 3 and 4 of Title I
      of
      ERISA.

     

    ARTICLE
      I. 

    DEFINITIONS

     

    As
      hereinafter used:

    

    Section
      1.1 “Affiliate”
means
      any “parent corporation” and any “subsidiary corporation” of the Company, as
      such terms are defined in Section 424 of the Code.

     

    Section
      1.2 “Agreement” 
      means the written agreement between the Company and an Eligible Employee
      pursuant to which the Company agrees to provide Change in Control Severance
      Benefits to the Eligible Employee in accordance with the Plan.  Each
      Agreement may contain such information, terms and conditions as the Plan
      Administrator in its discretion may specify, including without limitation,
      the
      following:

     

    (a) the
      effective date and duration of the Agreement;

     

    (b) the
      Change in Control Severance Benefits to which the Eligible Employee is entitled
      under the Plan and the time and manner in which such Change in Control Severance
      Benefits are to be paid; and

     

    (c) any
      other
      provisions which supplement the terms and conditions contained in the
      Plan.

     

    Section
      1.3 “Board”
means
      the Board of Directors of the Company.

     

    Section
      1.4 “Change
      in Control”
means
      the first of the following events to occur after the Effective
      Date:

     

    (a) Any
      “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
      Exchange Act of 1934, as amended) becomes, within the 12-month period ending
      on
      the date of such person’s most recent acquisition, a “beneficial owner” (as
      defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
      securities of the Company representing more than 35% of the voting power of
      the
      then outstanding securities of the Company; provided that a Change in Control
      shall not be deemed to occur as a result of a transaction in which the Company
      becomes a subsidiary of another corporation and in which the shareholders of
      the
      Company, immediately prior to the transaction, will beneficially own,
      immediately after the transaction, shares entitling such shareholders to more
      than 50% of all votes to which all shareholders of the parent corporation would
      be entitled in the election of directors (without consideration of the rights
      of
      any class of stock to elect directors by a separate class vote); and provided
      further that ownership or control of the Company’s voting securities,
      individually or collectively, by any Affiliate that is a bank or any benefit
      plan sponsored by the Company or any Affiliate shall not constitute a Change
      in
      Control.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) The
      consummation of (1) a merger, consolidation, or similar extraordinary event
      involving the Company and another entity where the shareholders of the Company,
      immediately prior to the merger, consolidation or similar extraordinary event,
      will not beneficially own, immediately after the merger, consolidation or
      similar extraordinary event, shares entitling such shareholders to more than
      50%
      of all votes to which all shareholders of the surviving corporation would be
      entitled in the election of directors (without consideration of the rights
      of
      any class of stock to elect directors by a separate class vote), or (2) a sale
      or other disposition of all or substantially all of the assets of the Company;
      or

     

    (c) During
      any 12-month period, individuals who at the beginning of such period constituted
      the Board cease for any reason to constitute a majority thereof, unless the
      election, or the nomination for election by the Company’s shareholders, of at
      least a majority of the directors who were not directors at the beginning of
      such period, was approved by a vote of at least two-thirds of the directors
      then
      in office at the time of such election or nomination who either (1) were
      directors at the beginning of such period or (2) whose appointment, election
      or
      nomination for election was previously so approved.

     

    Section
      1.5 “Change
      in Control Severance Benefits”
      means,
      with respect to each Eligible Employee, the benefits payable pursuant to the
      Eligible Employee’s Agreement.

     

    Section
      1.6 “Code”
means
      the Internal Revenue Code of 1986, as amended.

     

    Section
      1.7 “Company”
means
      First United Corporation, a Maryland corporation, and any successor
      thereto.

     

    Section
      1.8 “Effective
      Date”
means,
      with respect to each Agreement, the effective date of such
      Agreement.

     

    Section
      1.9 “Eligible
      Employee”
means
      an Executive who is designated by the Plan Administrator as eligible to
      participate in the Plan.

     

    Section
      1.10 “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended.

     

    Section
      1.11 “Executive”
means
      a
      management or highly compensated employee of the Company or a subsidiary
      thereof.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Section
      1.12 “Plan”
means
      the First United Corporation Change in Control Severance Plan, as set forth
      herein, as it may be amended from time to time.

     

    Section
      1.13 “Plan
      Administrator”
means
      the Compensation Committee of the Board, as appointed from time to time by
      the
      Board, or such other person or persons appointed from time to time by the
      Compensation Committee of the Board to administer the Plan.

     

    Section
      1.14 “Severance”
shall
      have the meaning given that term in the Agreement.

     

    ARTICLE
      II. 

    ELIGIBILITY
      AND PARTICIPATION

     

    Section
      2.1 The
      Plan
      Administrator, in its sole discretion, shall from time to time designate those
      Executive(s) who shall be eligible to participate in the Plan.

     

    Section
      2.2 Each
      Executive who is designated as eligible to participate in the Plan shall
      participate in the Plan by entering into an Agreement and completing such other
      forms and furnishing such other information as the Plan Administrator may
      request. An Eligible Employer’s participation in the Plan shall commence as of
      the date specified in the Agreement.

     

    ARTICLE
      III. 

    CHANGE
      IN CONTROL SEVERANCE BENEFITS

     

    Section
      3.1 Each
      Eligible Employee, subject to the terms and conditions of his or her Agreement,
      shall become entitled to receive Change in Control Severance Benefits as set
      forth in his or her Agreement.

     

    ARTICLE
      IV. 

    PLAN
      ADMINISTRATION

     

    Section
      4.1 The
      Plan
      Administrator shall administer the Plan and may interpret the Plan, prescribe,
      amend and rescind rules and regulations under the Plan and make all other
      determinations necessary or advisable for the administration of the Plan,
      subject to all of the provisions of the Plan.

     

    Section
      4.2 The
      Plan
      Administrator may delegate any of its duties hereunder to such person or persons
      from time to time as it may designate.

     

    Section
      4.3 The
      Plan
      Administrator is empowered, on behalf of the Plan, to engage accountants, legal
      counsel and such other personnel as it deems necessary or advisable to assist
      it
      in the performance of its duties under the Plan.  The functions of any such
      persons engaged by the Plan Administrator shall be limited to the specified
      services and duties for which they are engaged, and such persons shall have
      no
      other duties, obligations or responsibilities under the Plan. All reasonable
      expenses thereof shall be borne by the Company.

     

    Section
      4.4 The
      Plan
      Administrator shall not be liable for any actions by it hereunder unless due
      to
      its own gross negligence or willful misconduct, and it shall be indemnified
      and
      saved harmless by the Company from and against all personal liability to which
      it may be subject by reason of any act done or omitted to be done in its
      official capacity as Plan Administrator in good faith in the administration
      of
      the Plan, including all expenses reasonably incurred in its defense in the
      event
      the Company fails to provide such defense upon the request of the Plan
      Administrator. Except as provided in the foregoing sentence and except in
      connection with any breach of duty to Eligible Employees, the Plan Administrator
      shall be relieved of all responsibility in connection with its duties hereunder
      to the fullest extent permitted by law.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Section
      4.5 Following
      the occurrence of a Change in Control, the Company or any successor may not
      remove from office the individual or individuals who served as Plan
      Administrator immediately prior to the Change in Control; provided, however,
      if
      any such individual ceases to be affiliated with the Company, the Company may
      appoint another individual or individuals as Plan Administrator so long as
      the
      successor Plan Administrator consists solely of an individual or individuals
      who
      either (a) were officers of the Company immediately prior to the Change in
      Control or (b) were directors of the Company immediately prior to the Change
      in
      Control and are not affiliated with the acquiring entity in the Change in
      Control.

     

    ARTICLE
      V. 

    PLAN
      AMENDMENT OR TERMINATION

     

    Section
      5.1 The
      Plan
      may not be terminated with respect to an Eligible Employee prior to the end
      of
      the term of such Eligible Employee’s Agreement without the written consent of
      the Eligible Employee. The Plan may be amended by the Board at any time;
      provided, however, that the Plan may not be amended without the written consent
      of an Eligible Employee if such amendment would in any manner adversely affect
      the interests of such Eligible Employee.  Without limiting the scope of the
      foregoing sentence, any action taken by the Company or the Plan Administrator
      to
      cause an Eligible Employee to no longer be designated as an Eligible Employee
      or
      any action taken by the Company or the Plan Administrator to decrease the
      benefits for which an Eligible Employee is eligible, and any amendment to
      Section 4.5 or this Section 5.1 following the occurrence of a Change in Control,
      shall be treated as an amendment to the Plan which adversely affects the
      interests of any Eligible Employee.

     

    Section
      5.2 Notwithstanding
      Section 5.1 or any other provision of this Plan or any Agreement to the
      contrary, the Company may amend, modify or terminate this Plan and/or any
      Agreement, without the consent of the Eligible Employee, as the Company deems
      necessary or appropriate to ensure compliance with any law, rule, regulation
      or
      other regulatory pronouncement applicable to the Plan, including, without
      limitation, Section 409A of the Code and any Treasury Regulations or other
      guidance thereunder.

     

    ARTICLE
      VI. 

    CLAIMS
      PROCEDURES

     

    Section
      6.1 Applications
      for Benefits and Inquiries. 
      Any application for benefits, inquiries about the Plan or inquiries about
      present or future rights under the Plan must be submitted to the Plan
      Administrator in writing.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Section
      6.2 Denial
      of Claims. 
      In the event that any application for benefits is denied in whole or in part,
      the Plan Administrator must notify the applicant, in writing, of the denial
      of
      the application, and of the applicant’s right to review the denial.  The
      written notice of denial will be set forth in a manner designed to be understood
      by the applicant, and will include specific reasons for the denial, specific
      references to the Plan provisions upon which the denial is based, a description
      of any additional material or information necessary for the applicant to perfect
      the claim and an explanation of why such material or information is necessary,
      and an explanation of the Plan’s review procedure, including the applicant’s
      right to bring a civil action under Section 502(a) of ERISA following an adverse
      decision on review.

     

    This
      written notice will be given to the employee within 90 days after the Plan
      Administrator receives the application, unless special circumstances require
      an
      extension of time, in which case, the Plan Administrator has up to an additional
      90 days.  If an extension of time is required, written notice of the
      extension will be furnished to the applicant before the end of the initial
      90-day period. This notice of extension will describe the special circumstances
      necessitating the additional time and the date by which the Plan Administrator
      expects to render a decision on the application.

     

    Section
      6.3 Request
      for a Review. 
      Any person (or that person’s authorized representative) for whom an application
      for benefits is denied, in whole or in part, may appeal the denial by submitting
      a written request for a review to the Plan Administrator within 60 days after
      the application is denied.  The Plan Administrator will give the applicant
      (or his or her representative) an opportunity to review pertinent documents
      in
      preparing a request for a review and submit written comments, documents, records
      and other information relating to the claim.

     

    Section
      6.4 Decision
      on Review. 
      The Plan Administrator will provide written notice of its decision on review
      within 60 days after receipt of the request, unless special circumstances
      require an extension of time (not to exceed an additional 60 days).  If an
      extension for review is required, written notice of the extension will be
      furnished to the applicant within the initial 60-day period. This notice of
      extension will describe the special circumstances necessitating the additional
      time and the date by which the Plan Administrator expects to render a decision
      on review. In the event that the Plan Administrator confirms the denial of
      the
      application for benefits in whole or in part, the notice will outline, in a
      manner calculated to be understood by the applicant, the specific reasons for
      the decision, the specific Plan provisions upon which the decision is based,
      a
      statement that the applicant is entitled to receive, upon request and free
      of
      charge, reasonable access to, and copies of, all documents, records and other
      information relevant to the applicant’s claim for benefits, and a statement of
      the applicant’s right to bring an action under Section 502(a) of ERISA. 

     

    Section
      6.5 Rules
      and Procedures. 
      The Plan Administrator may establish rules and procedures, consistent with
      the
      Plan and with ERISA, as necessary and appropriate in carrying out its
      responsibilities in reviewing benefit claims.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      VII. 

    MISCELLANEOUS

     

    Section
      7.1 Except
      as
      otherwise provided herein or by law, no right or interest of any Eligible
      Employee under the Plan or any Agreement shall be assignable or transferable,
      in
      whole or in part, either directly or by operation of law or otherwise, including
      without limitation by execution, levy, garnishment, attachment, pledge or in
      any
      manner; no attempted assignment or transfer thereof shall be effective; and
      no
      right or interest of any Eligible Employee under the Plan shall be liable for,
      or subject to, any obligation or liability of such Eligible
      Employee.

     

    Notwithstanding
      the preceding paragraph, when a payment is due under this Plan or any Agreement
      to an Eligible Employee who is unable to care for his or her affairs, payment
      may be made directly to his or her legal guardian or personal
      representative.

     

    Section
      7.2 Neither
      the establishment of the Plan, nor any modification thereof, nor the execution
      of any Agreement, nor the creation of any fund, trust or account, nor the
      payment of any benefits shall be construed as giving any Eligible Employee,
      or
      any other person, the right to be retained in the service of the Company or
      any
      subsidiary thereof, and all Eligible Employees shall remain subject to discharge
      to the same extent as if the Plan had never been adopted.

     

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

     

    Section
      7.4 This
      Plan
      shall inure to the benefit of and be binding upon the heirs, executors,
      administrators, successors and assigns of the parties, including each Eligible
      Employee, present and future, and any successor to the Company.  If an
      Eligible Employee incurs a Severance during the Change in Control Protection
      Period but dies before his or her Change in Control Severance Benefits have
      been
      fully paid, any unpaid amounts shall be paid to the executor, personal
      representative or administrators of the Eligible Employee’s estate in a lump sum
      payment no later than the 15th
      day of
      the third calendar month following the Eligible Employee’s death. 

     

    Section
      7.5 The
      headings and captions herein are provided for reference and convenience only,
      shall not be considered part of the Plan, and shall not be employed in the
      construction of the Plan. Capitalized terms shall have the meanings given
      herein.  Singular nouns shall be read as plural and masculine pronouns
      shall be read as feminine, and vice versa, as appropriate.

     

    Section
      7.6 It
      is the
      express intention of the Company that this Plan and all Agreements shall be
      unfunded for tax purposes and for purposes of Title I of ERISA. Eligible
      Employees shall have no right, title or interest whatsoever in or to any assets
      or amounts which are used to pay benefits under the Plan. Each Eligible Employee
      shall be required to look to the provisions of this Plan and to the Company
      itself for enforcement of any and all benefits due under this Plan, and, to
      the
      extent any such person acquires a right to receive payment under this Plan,
      such
      right shall be no greater than the right of any unsecured general creditor
      of
      the Company. Nothing contained in the Plan, and no action taken pursuant to
      its
      provisions, shall create or be construed to create a trust of any kind or a
      fiduciary relationship between the Company and any Eligible Employee or any
      other person. Without limiting the foregoing, should any investment be acquired
      in connection with the liabilities assumed under this Plan or any Agreement,
      no
      Eligible Employee shall have any right with respect to, or claim against, such
      assets nor shall any such purchase be construed to create a trust of any kind
      or
      a fiduciary relationship between the Company and any Eligible Employee or any
      other person. Any such assets shall be and remain a part of the general,
      unpledged, unrestricted assets of the Company, subject to the claims of its
      general creditors. The Company shall be designated the owner and beneficiary
      of
      any investment acquired in connection with its obligation under this
      Plan.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Section
      7.7 Any
      notice or other communication required or permitted pursuant to the terms hereof
      shall have been duly given when delivered or mailed by United States Mail,
      first
      class, postage prepaid, addressed to the intended recipient at his, her or
      its
      last known address.

     

    Section
      7.8 This
      Plan
      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.

     

    Section
      7.9 All
      benefits hereunder shall be reduced by applicable withholding and shall be
      subject to applicable tax reporting, as determined by the Plan
      Administrator.

     

    Section
      7.10 Except
      as
      otherwise provided hereunder, all expenses incurred in the administration
      of the Plan, whether incurred by the Company or the Plan
      Administrator, shall be paid by the Company.

     

    
      
        
        

      

      
        7

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