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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.
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 sha
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