8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 5, 2015

First United Corporation

(Exact name of registrant as specified in its charter)

Maryland	0-14237	52-1380770
(State or other jurisdiction of	(Commission file number)	(IRS Employer
incorporation or organization)		Identification No.)

19 South Second Street, Oakland, Maryland 21550

(Address of principal executive offices) (Zip Code)

(301) 334-9471

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) Compensatory Arrangements.

Amendment of Change in Control Severance Plan Agreement with William B. Grant

On January 5, 2015, First United Corporation (the “Company”) and William B. Grant, its Chairman and Chief Executive Officer, entered into a Second Amendment to Agreement Under the First United Corporation Change in Control Severance Plan (the “Second Amendment”) to align Mr. Grant’s rights and benefits under the Change in Control Severance Plan, as amended to date (the “Severance Plan”), with those of the other officers with whom the Company has entered into Agreements Under the First United Corporation Severance Plan, as amended to date (each, a “Severance Agreement”). Prior to the Second Amendment, Mr. Grant’s Severance Agreement, as amended by a First Amendment (the “First Amendment”), required the Company to make a tax gross-up payment to him in the event that an excise tax would be imposed on Mr. Grant under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), because the amount of the benefits payable to him under his Severance Agreement, plus all other benefits the payment of which is deemed to be contingent on a change in the ownership or effective control of the Company (as determined under Section 280G of the Code), would exceed 2.99 times his “annualized includable compensation for the base period” (i.e., the average annual compensation that was includable in his gross income for the last five taxable years ending before the date on which the change in ownership or effective control occurred). The Severance Agreements with the Company’s other officers contemplate a reduction in the benefits payable to them in the event that such an excise tax is imposed, to the extent necessary to avoid its imposition. The Second Amendment eliminates the Company’s obligation to make a tax gross-up payment to Mr. Grant and, in addition, requires a reduction in the benefits payable to Mr. Grant under his Severance Agreement to the extent necessary to avoid the imposition of such excise tax.

A copy of the Second Amendment is filed as Exhibit 10.1 to this report. Mr. Grant’s Severance Agreement was filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on February 21, 2007, and the First Amendment was filed as Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Compensatory Arrangements with Keith R. Sanders

Deferred Compensation Plan

The Company maintains the First United Corporation Executive and Director Deferred Compensation Plan, as amended and restated (the “Deferred Compensation Plan”), for all non-employee directors and certain executive officers of the Company and its bank subsidiary, First United Bank & Trust (the “Bank”), who are selected by the Compensation Committee of the Company’s Board of Directors. Separately, the Bank maintains the First United Bank & Trust Supplemental Executive Retirement Plan, as amended and restated (the “SERP”), for select members of management and highly compensated employees of the Bank. Keith R. Sanders, who serves as the Bank’s Senior Vice President and Senior Trust Officer and was identified as a “named executive officer” of the Company when the Company was last required to make such determination for purposes of the disclosure required by Item 402 of Regulation S-K, is eligible to participate in the Deferred Compensation Plan but does not participate in the SERP.

On January 9, 2015, the Company and Mr. Sanders entered into a participation agreement under the Deferred Compensation Plan styled as a SERP Alternative Participation Agreement (the “Participation Agreement”). Pursuant to the Participation Agreement, the Company agreed, for each Plan Year (as defined in the Deferred Compensation Plan) in which it determines that it has been Profitable (as defined in the Participation Agreement), to make a discretionary contribution (referred to in the Deferred Compensation Plan as an “Employer Contribution Credit”) for the benefit of Mr. Sanders in an amount equal to 15% of Mr. Sander’s base salary for such Plan Year, with the first Plan Year being the year ending December 31, 2015. Mr. Sanders could potentially receive an Employer Contribution Credit of $27,000 for the current Plan Year.

If made, the Employer Contribution Credits will be maintained in an Employer Contribution Credit Account (as defined in the Deferred Compensation Plan) in Mr. Sander’s name. The Deferred Compensation Plan and the Participation Agreement provide that all compensation deferred at the election of Mr. Sanders and all Employer Contribution Credits made on his behalf will be deemed to be invested in certain investment options established from time to time by the Investment Committee of the Bank’s Trust Department, as administrator of the Deferred Compensation Plan. Mr. Sanders will become 100% vested in the amount maintained in his Employer Contribution Account upon the earliest to occur of the following events: (i) his Normal Retirement (as defined in the Participation Agreement); (ii) his Separation from Service (as defined in the Participation Agreement) following a Change of Control (as defined in the Deferred Compensation Plan) and subsequent Triggering Event (as defined in the Participation Agreement); (iii) his Separation from Service due to a Disability (as defined in the Participation Agreement); (iv) with respect to a particular award of Employer Contribution Credits, his completion of two consecutive Years of Service (as defined in the Participation Agreement) immediately following the Plan Year for which such award was made; or (v) his death. Notwithstanding the foregoing, however, Mr. Sanders will lose his entitlement to the amount maintained in his Employer Contribution Account in the event his employment is terminated for Cause (as defined in the Participation Agreement).

The Participation Agreement conditions the Company’s obligation to make distributions from Mr. Sander’s Employer Contribution Account on Mr. Sander’s (i) refraining from engaging in Competitive Employment (as defined in the Participation Agreement) for three years following his Separation from Service, (ii) refraining from injurious disclosure of confidential information concerning the Company, and (iii) remaining available, at the Company’s reasonable request, to provide at least six hours of transition services per month for 12 months following his Separation from Service (except in the case of death or Disability), except that only item (ii) will apply in the event of a Separation from Service following a Change of Control and subsequent Triggering Event. In the event that Mr. Sanders violates any of those conditions, he will forfeit all then-unpaid amounts in his Employer Contribution Account and be obligated to reimburse the Company for all amounts theretofore paid to him, plus interest thereon at the rate of 10% per year.

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A copy of the Participation Agreement is filed as Exhibit 10.2 to this report. A copy of the Deferred Compensation Plan was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 24, 2008, and the material terms of the Deferred Compensation Plan, including those governing distributions of the amount in an Employer Contribution Account, were summarized on page 22 of the Company’s definitive proxy statement for the 2014 annual meeting of shareholders, filed with the SEC on March 28, 2014, under the heading “Deferred Compensation Plan”, which summary is incorporated herein by reference.

Change in Control Severance Plan Agreement

On January 9, 2015, the Company and Mr. Sanders entered into a Severance Agreement in substantially the form of the Severance Agreements into which the Company has entered with executive officers other than Mr. Grant. The material terms of the Severance Plan and these Severance Agreements were summarized (i) under the heading “Adoption of the Change in Control Severance Plan” in Item 5.02(e) of the Company’s Current Report on Form 8-K, filed with the SEC on February 21, 2007, (ii) under the heading “Amendments to the Change in Control Severance Plan” in Item 5.02(e) of the Company’s Current Report on Form 8-K, filed with the SEC on June 23, 2008, and (iii) in Item 5.02 of the Company’s Current Report on Form 8-K, filed with the SEC on December 28, 2012, which summaries are incorporated herein by reference.

A copy of Mr. Sanders’ Severance Agreement is filed as Exhibit 10.3 to this report.

Restricted Stock Award Agreement

On January 9, 2015, the Company granted 4,845 restricted shares of the Company’s common stock to Mr. Sanders under the First United Corporation Omnibus Equity Compensation Plan (the “Omnibus Plan”). The grant is evidenced by a Restricted Stock Agreement between the Company and Mr. Sanders, which provides that, subject to earlier vesting in the event of a Change in Control (as defined in the Omnibus Plan), the restricted shares will vest on the second anniversary of the grant date (the “Vesting Date”). In the event that Mr. Sander’s employment with the Bank terminates prior to the Vesting Date for any reason, however, the award will be canceled and the restricted shares will lapse and be forfeited. During the period that the restricted shares remain unvested, Mr. Sanders will have none of the rights of a shareholder of the Company on account of the restricted shares, including, without limitation, the rights to vote such shares or receive dividends thereon.

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A copy of Mr. Sander’s Restricted Stock Agreement is filed as Exhibit 10.4 to this report. A copy of the Omnibus Plan was filed as Appendix B to the Company’s definitive proxy statement for the 2007 annual meeting of stockholders, filed with the SEC on March 23, 2007.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The exhibits filed or furnished with this report are listed in the Exhibit Index which immediately follows the signatures hereto, which Exhibit Index is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FIRST UNITED CORPORATION
Dated:  January 9, 2015	By:	/s/ Carissa L. Rodeheaver
		Carissa L. Rodeheaver
		President and Chief Financial
		Officer

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Second Amendment to Agreement Under the First United Corporation Change in Control Severance Plan, dated January 5, 2015, between First United Corporation and William B. Grant (filed herewith)
10.2	SERP Alternative Participation Agreement under the First United Corporation Executive and Director Deferred Compensation Plan, dated January 9, 2015, between First United Corporation and Keith R. Sanders (filed herewith)
10.3	Agreement Under the First United Corporation Change in Control Severance Plan, dated January 9, 2015, between First United Corporation and Keith R. Sanders (filed herewith)
10.4	Restricted Stock Agreement, dated January 9, 2015, between First United Corporation and Keith R. Sanders (filed herewith)

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EX-10.1

Exhibit 10.1 

SECOND AMENDMENT TO AGREEMENT UNDER THE FIRST UNITED CORPORATION CHANGE IN CONTROL SEVERANCE PLAN

This Second Amendment to Agreement Under the First United Corporation Change in Control Severance Plan (this “Second Amendment”) is entered into this 5^th day of January, 2015 by and between First United Corporation, a Maryland corporation (“the Company”), and William B. Grant, an executive officer of the Company (the “Eligible Employee”).

RECITALS

WHEREAS, the Company adopted the First United Corporation Change in Control Severance Plan effective as of February 14, 2007, as amended and supplemented from time to time (the “Plan”), a copy of which was provided to the Eligible Employee; and

WHEREAS, the Company and the Eligible Employee have entered into that certain Agreement Under the First United Corporation Change in Control Severance Plan, dated as of February 14, 2007, to set forth the benefits to which the Eligible Employee is entitled under the Plan, which was subsequently amended by the parties pursuant to that certain First Amendment to Agreement Under the First United Corporation Change in Control Severance Plan (as amended, the “Agreement”) to ensure that the Agreement is in compliance with the requirements of Section 409A of the Internal Revenue Code; and

WHEREAS, the Eligible Employee may become entitled to certain Change in Control Severance Benefits under Section 3 of the Agreement if he incurs a Severance during the Change in Control Protection Period; and

WHEREAS, Section 4 of the Agreement provides for the payment of the Gross-Up Payment if it is determined that the Eligible Employee owes an Excise Tax related to his receipt of the Change in Control Severance Benefits; and

WHEREAS, the Eligible Employee and the Company desire to further amend the Agreement to eliminate such Gross-Up Payment; and

WHEREAS, except as expressly provided in these Recitals and below, the capitalized terms in this Second Amendment shall have the meanings given those terms in the Plan and the Agreement;

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to further amend the Agreement as follows:

1.          The Agreement is hereby amended by deleting the first sentence of Subsection 3(a) and substituting the following in lieu thereof:

(a)          Generally. Subject to subsections 3(h) and 3(i) below and Section 4, the Eligible Employee shall be entitled to the Change in Control Severance Benefits provided in this Section 3 if he or she incurs a Severance during the Change in Control Protection Period.

2.          The Agreement is hereby further amended by deleting Subsection 3(c) in its entirety and substituting the following in lieu thereof:

(c)          Payment of Severance.  Subject to subsections 3(h) and 3(i) below and Section 4, if the Eligible Employee incurs a Severance during a Change in Control Protection Period, the Company shall pay to him a lump sum cash payment on the 60th day after the Severance Date, equal to two times the Eligible Employee’s Final Pay.

3.          The Agreement is hereby further amended by deleting the phrase “any other limitations imposed by law” in the first clause of Subsection 3(e) and substituting the phrase “Section 4” in lieu thereof.

4.          The Agreement is hereby further amended by deleting Subsection 3(f) in its entirety and substituting the following in lieu thereof:

(f)          Benefit Continuation. Subject to subsections 3(h) and 3(i) below and Section 4, if the Eligible Employee incurs a Severance during the Change in Control Protection Period, commencing on the date immediately following such Eligible Employee’s Severance Date and continuing for 24 months (or such lesser time as required to avoid the imposition of additional taxes under Section 409A of the Code) (the “Welfare Benefit Continuation Period”), the Company shall cover the Eligible Employee under the same type (e.g., individual or family coverage) of Employer-sponsored group health plan and dental plan in which he or she was covered as of his or her Severance Date. The Eligible Employee shall receive such continued coverage under the same terms and conditions (e.g., any requirement that employees pay all or any portion of the cost of such coverage) that would apply if the Eligible Employee had continued to be an employee of the Employer during the Welfare Benefit Continuation Period.

5.          The Agreement is hereby further amended by deleting Subsection 3(g) in its entirety and substituting the following in lieu thereof:

(g)          Outplacement Services.  Subject to subsection 3(i) below and Section 4, if the Eligible Employee incurs a Severance during the Change in Control Protection Period, the Company shall provide him with reasonable outplacement services for up to 12 months following the Severance Date.

6.          The Agreement is hereby further amended by deleting Section 4 in its entirety and substituting the following in lieu thereof:

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4.            Reduction of Change in Control Severance Benefits.

(a)          Reduction. If it is determined that the aggregate present value of (1) such portion of the Eligible Employee’s Change in Control Severance Benefits that are considered Contingent Payments, and (2) all other Contingent Payments payable to the Eligible Employee exceeds 2.99 times the Eligible Employee’s Base Amount such that the excise tax under Section 4999 of the Code would otherwise be triggered, then the Change in Control Severance Benefits provided in Section 3(c) shall be reduced to the extent necessary so that the aggregate present value of all Contingent Payments payable following such reduction does not exceed 2.99 times the Eligible Employee’s Base Amount.

(b)          Determination. The determination that the aggregate present value of the Eligible Employee’s Contingent Payments exceed 2.99 times his or her Base Amount, and the calculation of the amount of any reduction, shall be made, at the Company’s discretion, by the Company’s outside auditing firm or by a nationally-recognized accounting or benefits consulting firm designated by the Company prior to a Change in Control. The firm’s expenses shall be paid by the Company.

(c)          Payment of Remaining Benefits. If the determination is made that an Eligible Employee’s Change in Control Severance Benefits must be reduced in accordance with Section 4(b), then the amount of such Benefits that are actually paid to the Eligible Employee pursuant to Section 3(c) will be the amount determined under Section 4(a) (the “Remaining Benefits”) and such Remaining Benefits will be paid at the same time and in the same form otherwise specified in Section 3(c).

(d)          Additional Definitions. The following capitalized terms that are used in this Section 4 shall have the meanings provided below.

(i)          “Base Amount” means the Eligible Employee’s “annualized includible compensation for the base period,” within the meaning of Sections 280G(d)(1) and (d)(2) of the Code and the Treasury Regulations thereunder.

(ii)         “Contingent Payments” means payments in the “nature of compensation” to (or for the benefit) of an Eligible Employee if such payment is “contingent on a change in the ownership or effective control of the corporation or in the ownership of a substantial portion of the assets of the corporation,” as such terms are defined in Section 280G of the Code and the Treasury Regulations thereunder.

7.          The Agreement is hereby further amended by deleting Section 5 in its entirety and substituting the following in lieu thereof:

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5.          Taxes; Withholding. The Eligible Employee shall be responsible for the payment of all applicable local, state and federal taxes associated with the Eligible Employee’s participation in the Plan and the receipt of Change in Control Severance Benefits hereunder, and the Company shall have the right to deduct from any distributions hereunder any such taxes or other amounts required by law to be withheld therefrom.

8.          Except as expressly amended hereby, the Agreement remains unchanged and in full force and effect.

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

ATTEST:	FIRST UNITED CORPORATION
	By:	/s/ Carissa L. Rodeheaver
	Name:	Carissa L. Rodeheaver
	Title:	President and Chief Financial Officer
WITNESS:	ELIGIBLE EMPLOYEE
	/s/ William B. Grant
	William B. Grant

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EX-10.2

Exhibit 10.2

FIRST UNITED CORPORATION EXECUTIVE AND DIRECTOR DEFERRED COMPENSATION PLAN

SERP ALTERNATIVE PARTICIPATION AGREEMENT

THIS SERP ALTERNATIVE PARTICIPATION AGREEMENT (this “SERP Alternative Participation Agreement”) is entered into this 9^th day of January, 2015 (the “Execution Date”) by and between First United Corporation (“Employer”) and Keith R. Sanders, an executive officer of the Employer (the “Participant”).

RECITALS:

WHEREAS, the Employer has adopted the First United Corporation Executive and Director Deferred Compensation Plan, amended and restated effective as of November 19, 2008 (the “Plan”); and

WHEREAS, the Employer in its sole and absolute discretion annually selects the individual(s), if any, who will be eligible to actively participate in the Plan for the following year; and

WHEREAS, the Employer in its sole and absolute discretion annually determines whether to award Employer Contribution Credits to Plan participants, and if so, the amount of any such Credits to award to any particular Participant; and

WHEREAS, the Participant does not participate in the First United Bank & Trust Supplemental Executive Retirement Plan (the “SERP”); and

WHEREAS, the Employer wishes to provide certain additional benefits in the form of Employer Contribution Credits to the Participant to reflect that fact that the Participant does not participate in the SERP; and

WHEREAS, the Employer and the Participant desire to enter into this SERP Alternative Participation Agreement to provide the Participant with the opportunity to earn additional compensation in the form of Employer Contribution Credits awarded pursuant to the terms of the Plan; and

NOW, THEREFORE, in consideration of the foregoing, the agreements and covenants set forth herein, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree to this SERP Alternative Participation Agreement, effective as of the Execution Date, as follows:

1.           Definitions. Except as defined in the Recitals and below, capitalized terms in this SERP Alternative Participation Agreement shall have the meanings given those terms in the Plan.

(a) “Award” means any decision of the Employer to award Employer Contribution Credits to the Participant's Employer Contribution Credit Account for a particular Plan Year.

(b) “Cause” has the meaning given that term in Section 8(a) hereof.

(c) “Competitive Employment” means the Participant engages, directly or indirectly, as an owner, partner, member, director, officer, employee or agent of any sole proprietorship or entity, in the business of providing goods or services that are substantially similar to those provided by the Employer in any county in which the Employer has a branch.

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

(e) “Employer” means First United Corporation and its successors and assigns unless otherwise herein provided, or any other corporation or business organization which, with the consent of First United Corporation, or its successors or assigns, assumes the Employer’s obligations hereunder, or any other corporation or business organization which agrees, with the consent of First United Corporation, to become a party to the Plan.

(f) “Key Employee” means, for the 12-month period beginning on a particular April 1, a Participant described in Section 416(i) of the Code (disregarding Section 416(i)(5) of the Code and using the definition of compensation under T. Reg. §1.415(c)-2(d)(4)) at any time during the 12-month period ending on the preceding December 31.

(g) “Normal Retirement” means Participant’s Separation from Service with the Employer for any reason other than Cause after such Participant has both (i) attained his or her Normal Retirement Age and (ii) commenced receipt of benefits under the First United Bank & Trust Pension Plan or any successor plan thereto.

(h) “Normal Retirement Age” means sixty-five (65) years of age.

(i) “Profitable” means the Employer has positive pre-tax net income. All calculations related to the determination of whether the Employer was Profitable for a particular period shall be determined as of the Relevant Valuation Date.

(j) “Relevant Valuation Date” means the last day of the fiscal year immediately preceding the year during which an Award is made.

(k) “Separation from Service” means a termination of the Participant’s employment with the Employer in accordance with Section 409A(a)(2)(A)(i) of the Code and any related regulations or other guidance promulgated with respect to Section 409A of the Code (and any successor section or regulations).

(l) “Triggering Event” means the occurrence of any one of the following events subsequent to a Change of Control:

(i) Participant's receipt of a letter of intent to dismiss without Cause, as such term is defined in Section 8(a) hereof ; or

(ii) termination of the Plan; or

(iii) relocation of Participant's employment to a location more than 50 miles from the Participant’s place of employment at the time of the Change of Control; or

(iv) a 10% or greater reduction in Participant’s total compensation for the year in which the Triggering Event occurs from the prior year’s total compensation, but disregarding any reduction in bonus or incentive compensation payments which occurs in accordance with the terms of any written bonus or incentive compensation program as it reads before the occurrence of a Change of Control; or

(v) a change to Participant’s position that results in Participant not being deemed an executive officer of Employer.

(m) “Year of Service” means each twelve (12) consecutive month period of full time employment with the Employer. No credit will be received for a partial Year of Service.

2.           Effective Date of Participation. The effective date of the Participant’s participation in the Plan shall be January 9, 2015.

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3.           Contributions and Credits to Participant’s Account. The Participant’s Account shall be credited with any Participation Compensation Deferrals made pursuant to Section 3(b) of this Agreement. With respect to any year during which it has been determined that the Employer has been Profitable, the Employer may award to such Participant the Employer Contribution Credits provided in Section 3(a) of this Agreement. The Participant’s Account also may be credited with any deemed income, gains, and losses awarded pursuant to Section 4 of this Agreement.

(a) Employer Contribution Credits.

(i) Pursuant to the Plan (including Section 3.1 thereof), the amount of any Employer's Contribution Credits awarded to the Participant for a particular Plan Year will be equal to 15% of the Participant’s base salary for such Plan Year. The Participant will receive notice of the amount of Employer Contribution Credits for such Plan Year. Notwithstanding anything to the contrary in this Participation Agreement, the Employer retains sole and absolute discretion to determine both the fact of and the amount of Employer Contribution Credits for any Plan Year; provided, however, that the Employer intends to exercise such discretion in a manner that is not inconsistent with Section 3(a)(ii) of this Agreement.

(ii) Except with respect to any year during which the Employer determines there is good cause, the Employer generally intends not to make adjustments to the amount of Employer Contribution Credits for a Plan Year as provided in Section 3(a)(i) if during such Plan Year the Employer has been Profitable.

(b)         Participant Compensation Deferrals. The Participant may elect on an Election Form provided by the Employer to defer Compensation which would otherwise be payable to the Participant in the manner provided in Section 3.2 of the Plan. The provisions of the Plan, and in particular Sections 3.2, 4.1, 4.5, and 7.1 of it, shall apply to such Compensation Deferrals.

4.           Allocation and Investment of Participant’s Account. The Plan is an unfunded deferred compensation arrangement for the select group of management or highly compensated employees. All rights with respect to any assets that are related to the Plan, including any investment thereof, are exercised by the Employer and/or the Trustee selected by the Employer. Pursuant to the terms of the Plan, the Participant understands that (s)he may communicate the preference as to how any Plan assets that are related to the Participant’s Plan account should be deemed to be invested among the categories of deemed investments that are available under the Plan. The provisions of Article IV of the Plan shall apply to the credits in Participant’s Account without any distinction as to the source of such credit(s). Accordingly, any election or deemed election with respect to the investment of Employer Contribution Credits shall also apply to the Participant Compensation Deferrals, if any, and any election or deemed election regarding the investment of Participant Compensation Deferrals shall also apply to any Employer Contribution Credits.

5.           Vesting.

(a)           Employer Contribution Credits. Subject to Section 8 hereof, a Participant shall become 100% vested in his or her Employer Contribution Credits for a Plan Year upon the following events:

(i)           upon the Participant’s Normal Retirement;

(ii)          upon the Participant’s Separation from Service following a Change of Control and subsequent Triggering Event;

(iii)        upon a Separation from Service due to a Disability;

(iv)       upon completion of two (2) consecutive Years of Service immediately following the Plan Year for which the Award was made; or

(v)        upon the Participant’s death.

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There shall be no partial vesting of Employer Contribution Credits.

(b)         Participant Compensation Deferrals. The Participant shall at all times be 100% vested in amounts credited to his or her Participant Compensation Deferral Account.

6.           Distribution of Benefits. The provisions of Article VI of the Plan shall apply to the benefits associated with the Participant’s Account without any distinction as to the source of such benefit(s). Accordingly, any election or deemed election with respect to the distribution of benefits related to Employer Contribution Credits shall also apply to any Participant Compensation Deferrals and any election or deemed election regarding the distribution of benefits related to Participant Compensation Deferrals shall also apply to Employer Contribution Credits. Notwithstanding anything to the contrary in the Plan or this Agreement, if the Participant does not have any benefits related to Participant Compensation Deferrals, then for purposes of Section 6.2 of the Plan, such Participant shall be deemed to have failed to designate properly the manner of payment of the Participant’s benefit under the Plan, and, accordingly, the payment of such Participant’s benefits shall be in a lump sum.

7.           Beneficiaries. The provisions of Article VII of the Plan shall apply to the benefits associated with the Participant’s Account without any distinction as to the source of such benefit(s). Accordingly, any designation or deemed designation of a Beneficiary for receipt of benefits related to Employer Contribution Credits shall also apply to any benefits related to Participant Compensation Deferrals and any designation or deemed designation of a Beneficiary for receipt of benefits related to Participant Compensation Deferrals shall also apply to any benefits related to Employer Contribution Credits.

8.           Forfeiture of Benefits Related to Employer Contribution Credits.

(a) No Benefits Payable Upon Termination for Cause. Notwithstanding anything contained herein to the contrary, no benefits related to Employer Contribution Credits shall be payable to the Participant if his or her employment with the Employer is terminated for Cause, regardless of whether the Participant would otherwise be vested in his or her Employer Contribution Credits. For purposes hereof, a Participant whose employment is terminated for any of the following reasons shall be regarded as having been terminated for “Cause”:

(i) willful or grossly negligent misconduct that is materially injurious to the Employer;

(ii) embezzlement or misappropriation of funds or property of the Employer;

(iii) conviction of a felony or the entrance of a plea of guilty or nolo contendere to a felony;

(iv) conviction of any crime involving fraud, dishonesty, moral turpitude or breach of trust or the entrance of a plea of guilty or nolo contendere to such a crime;

(v) failure or refusal by the Participant to devote full business time and attention to the performance of his or her duties and responsibilities if such breach has not been cured within fifteen (15) days after notice is given to the Participant; or

(vi) issuance of a final non-appealable order or other direction by a Federal or state regulatory agency prohibiting the Participant’s employment in the business of banking.

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(b) Competitive Employment. Notwithstanding anything contained herein to the contrary, and regardless of whether the Participant would otherwise be vested in his or her Employer Contribution Credits, the Employer’s obligation to make payments on account of such Employer Contribution Credits to the Participant or a Beneficiary under this SERP Alternative Participation Agreement will be conditioned upon (i) the Participant refraining from Competitive Employment for a period of three (3) years following his or her Separation from Service with the Employer, (ii) the Participant refraining from injurious disclosure of confidential information concerning the Employer, and (iii) the Participant remaining available, at the Employer’s reasonable request, to provide at least six (6) hours’ of transition services per month for twelve (12) months following his or her Separation from Service (except in the case of a Separation from Service due to death or Disability); provided, however, that only condition (ii) of this paragraph shall apply if the Participant has a Separation from Service following a Change of Control and subsequent Triggering Event. If the Participant violates any of the foregoing conditions, then the Participant will forfeit all then-unpaid amounts related to Employer Contribution Credits under this SERP Alternative Participation Agreement and be obligated to reimburse the Employer for all amounts paid hereunder, plus interest thereon at the rate of 10% per year. If the Employer engages an attorney that is not its employee to collect any amounts owed by the Participant pursuant to this paragraph, then the Participant will be obligated to reimburse the Employer for any associated attorney’s fees and other costs of collection.

9.           Taxes; Withholding. The Participant shall be responsible for the payment of all applicable local, state and federal taxes associated with the Participant’s participation in the Plan and the receipt of benefits hereunder, and the Employer shall have the right to deduct from any distributions hereunder any such taxes or other amounts required by law to be withheld therefrom.

10. General Provisions

(a) No Assignment. All benefits under this SERP Alternative Participation Agreement shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any such action shall be void for all purposes of this SERP Alternative Participation Agreement. Benefits under the Plan shall not in any manner be subject to the debts, contracts, liabilities, engagements, or torts of any person, nor shall they be subject to attachments or other legal process for or against any person, except to such extent as may be required by law. This paragraph (a) does not prohibit the transfer or assignment to the Participant’s spouse, former spouse or child of the right to receive all or a portion of the benefits payable to the Participant under this SERP Alternative Participation Agreement, if such transfer or assignment is made pursuant to a domestic relations order issued by a court that is legally binding on the Participant. Payment of benefits pursuant to such an order may not be made before the earlier of (i) when such benefits are actually paid to the Participant or (ii) a date specified in the order that is not before the earliest date that benefits could actually begin being paid to the Participant if he or she terminated employment. Any provision of an order for payment of benefits upon the election of the spouse, former spouse or child cannot be given effect. Any payment of benefits pursuant to a domestic relations order will be subject to tax withholding as provided by law. If a domestic relations order is served on the Employer, it will be processed in accordance with the Employer’s rules for processing qualified domestic relations orders established pursuant to Section 414(p) of the Code.

(b) No Employment Rights. Participation in the Plan, and the execution of this SERP Alternative Participation Agreement, shall not be construed to confer upon the Participant the legal right to be retained in the employ of the Employer, or give the Participant or any Beneficiary, or any other person, any right to any payment whatsoever, except to the extent of the benefits provided for hereunder. The Participant shall remain subject to discharge to the same extent as if this Plan had never been adopted.

(c) Incompetence. If the Administrator determines that any person to whom a benefit is payable under this SERP Alternative Participation Agreement is incompetent by reason of physical or mental disability, the Administrator shall have the power to cause the payments becoming due to such person to be made to another individual for the Participant’s benefit without responsibility of the Administrator or the Employer to see to the application of such payments. Any payment made pursuant to such power shall, as to such payment, operate as a complete discharge of the Employer, the Administrator, and their representatives.

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(d) Identity. If, at any time, any doubt exists as to the identity of any person entitled to any payment hereunder or the amount or time of such payment, the Administrator shall be entitled to hold such sum until such identity or amount or time is determined or until an order of a court of competent jurisdiction is obtained. The Administrator shall also be entitled to pay such sum into court in accordance with the appropriate rules of law. Any expenses incurred by the Employer or Administrator incident to such proceeding or litigation shall be charged against the benefits of the Participant.

(e) Amendment and Termination. Except as prohibited by applicable law, the Employer may unilaterally modify, amend or terminate this SERP Alternative Participation Agreement; provided, however, that no modification, amendment or termination shall reduce any vested benefit to which the Participant has already become entitled at the time of the modification, amendment or termination, including, without limitation, benefits to which a Participant became entitled due to a Change of Control, unless the Participant consents in writing to such modification, amendment or termination. Any modification, amendment or termination shall be evidenced by a written instrument executed by the Employer and delivered to the Participant.

(f) Compliance with Law. Notwithstanding any other provision of this SERP Alternative Participation Agreement to the contrary, the Employer may amend, modify or terminate this SERP Alternative Participation Agreement, without the consent of the Participant, as the Employer 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 related regulations or other guidance promulgated with respect to Section 409A of the Code.

(f) Governing Law. To the extent not preempted by federal law, this SERP Alternative Participation Agreement shall be governed by, construed and administered under, the laws of the State of Maryland, exclusive of the conflict of laws principles of that State.

(g) Severability. Should any provision of this SERP Alternative Participation Agreement be deemed or held to be unlawful or invalid for any reason, such fact shall not adversely affect the other provisions hereof unless such invalidity shall render impossible or impractical the functioning of this SERP Alternative Participation Agreement and, in such case, the Employer shall immediately adopt a new provision to take the place of the one held illegal or invalid.

(h) Headings. The headings contained in this SERP Alternative Participation Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge, or describe the scope or intent of this Plan nor in any way shall they affect this SERP Alternative Participation Agreement or the construction of any provision thereof.

(i) Terms. Singular nouns shall be read as plural and masculine pronouns shall be read as feminine, and vice versa, as appropriate.

(j) Successors. This SERP Alternative Participation Agreement shall be binding upon each of the parties and shall also be binding upon their respective successors or assigns.

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

[SIGNATURES APPEAR ON NEXT PAGE]

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[SIGNATURE PAGE]

IN WITNESS WHEREOF, each of the parties has caused this SERP Alternative Participation Agreement to be executed as of the Execution Date.

ATTEST:	FIRST UNITED CORPORATION:
	By:	/s/ William B. Grant
	Name:	William B. Grant
	Title:	Chairman/Chief Executive Officer
WITNESS:	PARTICIPANT:
	/s/ Keith R. Sanders
	Name: Keith R. Sanders

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EXHIBIT A

First United Corporation Executive and Director Deferred Compensation Plan, as amended and restated effective as of November 19, 2008

EX-10.3

Exhibit 10.3

AGREEMENT UNDER THE

FIRST UNITED CORPORATION

CHANGE IN CONTROL SEVERANCE PLAN

THIS AGREEMENT (the “Agreement”) is entered into this 9^th day of January, 2015 (the “Effective Date”) by and between First United Corporation, a Maryland corporation (“the Company”), and Keith R. Sanders, an executive officer of the Company (the “Eligible Employee”).

RECITALS:

WHEREAS, the Company adopted the First United Corporation Change in Control Severance Plan effective as of February 14, 2007, as amended and supplemented from time to time, a copy of which is attached hereto as Exhibit A (the “Plan”); and

WHEREAS,  the Eligible Employee has been designated as a participant in the Plan, effective as of the Effective Date; and

WHEREAS, the Company and the Eligible Employee desire to enter into this Agreement to set forth the benefits to which the Eligible Employee is entitled under the Plan; and

NOW, THEREFORE, in consideration of the foregoing, the agreements and covenants set forth herein, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree to enter into this Agreement, as follows:

1.           Definitions. Except as defined in the Recitals and below, capitalized terms in this Agreement shall have the meanings given those terms in the Plan.

(a) “Base Amount” means the Eligible Employee’s “annualized includible compensation for the base period,” within the meaning of Sections 280G(d)(1) and (d)(2) of the Code and the Treasury Regulations thereunder.

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

(c) “Change in Control Severance Benefits” means the benefits payable pursuant to Section 3 of this Agreement.

(d) “Change in Control Protection Period” means the period commencing on the later of (1) the date that is 90 days before the date a Change in Control occurs, or (2) the Effective Date, and ending on the first anniversary of the date the Change in Control occurs.

(e) “Contingent Payments” means payments in the “nature of compensation” to (or for the benefit) of an Eligible Employee if such payment is “contingent on a change in the ownership or effective control of the corporation or in the ownership of a substantial portion of the assets of the corporation,” as such terms are defined in Section 280G of the Code and the Treasury Regulations thereunder.

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

(g) “Effective Date” has the meaning given such term in the Preamble to this Agreement.

(h) “Employer” means the Company or an Affiliate.

(i) “Final Pay” means the sum of (1) the Eligible Employee’s annual salary for the year in which employment terminates, regardless of whether all such salary has been paid at the time of termination of employment and (2) the greater of (A) the Eligible Employee’s targeted cash bonus for the year in which employment terminates or (B) the actual cash bonus earned by the Eligible Employee for the year immediately prior to the year in which employment terminates.

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

(1)       A material and adverse change in the Eligible Employee’s status or position(s) as an officer or management employee of the Employer as in effect immediately prior to the Change in Control, including, without limitation, any adverse change in his or her status or position as an employee of the Employer as a result of a material diminution in his or her duties or responsibilities (other than, if applicable, any such change directly attributable to the fact that the Employer is no longer publicly owned) or the assignment to him or her of any duties or responsibilities which are materially inconsistent with such status or position(s) (other than any isolated and inadvertent failure by the Employer that is cured promptly upon his or her giving notice), or any removal of the Eligible Employee from or any failure to reappoint or reelect him or her to such position(s) (except in connection with the Eligible Employee’s Severance other than for Good Reason).

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

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

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

(5)       The failure by the Company to obtain assumption of the Plan by a successor.

(k) “Incentive Plan” means the First United Corporation 2006 Stock and Incentive Compensation Plan (or a successor plan).

(l) “Key Employee” means, for the 12-month period beginning on a particular April 1, an Eligible Employee described in Section 416(i) of the Code (applied in accordance with the Section 416 regulations and disregarding Section 416(i)(5) of the Code) at any time during the 12-month period ending on the preceding December 31.

(m) “Severance” means (1) the involuntary termination of the Eligible Employee’s employment by the Employer, other than for Cause, death or Disability or (2) a termination of the Eligible Employee’s employment by the Eligible Employee for Good Reason, in each case, during the Change in Control Protection Period; provided, however, that in each case the termination constitutes a “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code and Treasury Regulations thereunder.

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

2.            Term of Agreement. The term of this Agreement shall commence on the Effective Date and shall terminate on the third (3^rd) anniversary of the Effective Date; provided, however, that (a) the Agreement shall automatically extend for additional one-year terms unless the Company provides written notice to the Eligible Employee not less than 6 months before the end of the then-current term; and (b) the Agreement shall automatically extend until the end of the Change in Control Protection Period if a Change in Control occurs during the term of the Agreement.

3.            Change in Control Severance Benefits.

(a) Generally.  Subject to subsections (h) and (i) below and Section 4, the Eligible Employee shall be entitled to the Change in Control Severance Benefits provided in this Section 3 if he or she incurs a Severance during the Change in Control Protection Period. Except for any benefits to which the Eligible Employee may be entitled to receive pursuant to the First United Bank & Trust Supplemental Executive Retirement Plan (as amended or supplemented from time to time), the Change in Control Severance Benefits provided in this Section 3 shall be the sole severance payments and benefits to which the Eligible Employee shall be entitled during the Change in Control Protection Period.

(b) Payment of Accrued Obligations.  If the Eligible Employee incurs a Severance during the Change in Control Protection Period, the Company shall pay to him or her a lump sum payment in cash, no later than 10 days after the Severance Date, equal to the sum of (1) the Eligible Employee’s accrued annual base salary and any accrued vacation pay through the Severance Date, and (2) the Eligible Employee’s annual bonus earned for the fiscal year immediately preceding the fiscal year in which the Severance Date occurs if such bonus has not been paid as of the Severance Date.

(c) Payment of Severance. Subject to subsections (h) and (i) below and Section 4, if the Eligible Employee incurs a Severance during a Change in Control Protection Period, the Company shall pay to him or her a lump sum cash payment on the 60th day after the Severance Date, equal to two (2) times the Eligible Employee’s Final Pay.

(d) [Intentionally Omitted].

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(e) Immediate Vesting of Equity-Based Compensation Awards upon a Change in Control.  Subject to subsections (h) and (i) below and Section 4, if the Eligible Employee incurs a Severance during the Change in Control Protection Period, (1) the unexercised portions of all Options and SARs (as defined in the Incentive Plan) granted to the Eligible Employee under the Incentive Plan that have not expired or been forfeited pursuant to their terms shall automatically accelerate and become fully exercisable, (2) the restrictions and conditions on all outstanding Stock Awards (as defined in the Incentive Plan) granted to the Eligible Employee that have not expired or been forfeited pursuant to their terms shall immediately lapse, (3) all outstanding Performance Units (as defined in the Incentive Plan) granted to the Eligible Employee that have not expired or been forfeited pursuant to their terms shall become payable in an amount determined by the Committee, based on the Eligible Employee’s target payment for the relevant performance period and the portion of the relevant performance period that precedes the Change in Control, (4) all outstanding Stock Units (as defined in the Incentive Plan) granted to the Eligible Employee that have not expired or been forfeited pursuant to their terms shall become payable in an amount not less than their target amounts, as determined by the Committee, and (5) all unpaid Dividend Equivalents (as defined in the Incentive Plan) and other Stock-Based Awards (as defined in the Incentive Plan) granted to the Eligible Employee that have not expired or been forfeited pursuant to their terms shall become fully payable in amounts determined by the Committee; provided, however, that, where a Severance precedes the Change in Control and the terms of any award granted to the Eligible Employee under the Incentive Plan would otherwise call for the forfeiture of such award upon the termination of the Eligible Employee’s employment with the Company, such award shall not be deemed to be forfeited on account of the Eligible Employee’s Severance and shall remain outstanding (subject to the other terms of the award, including its original term) as if the Change in Control preceded the Severance.

(f) Benefit Continuation.  Subject to subsections (h) and (i) below and Section 4, if the Eligible Employee incurs a Severance during the Change in Control Protection Period, commencing on the date immediately following such Eligible Employee’s Severance Date and continuing for 24 months (or such lesser time as required to avoid the imposition of additional taxes under Section 409A of the Code) (the “Welfare Benefit Continuation Period”), the Company shall cover the Eligible Employee under the same type (e.g., individual or family coverage) of Employer-sponsored group health plan and dental plan in which he or she was covered as of his or her Severance Date. The Eligible Employee shall receive such continued coverage under the same terms and conditions (e.g., any requirement that employees pay all or any portion of the cost of such coverage) that would apply if the Eligible Employee had continued to be an employee of the Employer.

For each month during the Welfare Benefit Continuation Period in which the Eligible Employee’s continued coverage under an insured plan is not possible, the Company shall, in lieu of providing the coverage described in the preceding paragraph, make a monthly cash payment to the Eligible Employee equal to the monthly premium the Employer would be charged for coverage of a similarly-situated employee.  The Company shall not be obligated to “gross up” or otherwise compensate the Eligible Employee for any taxes due on amounts paid pursuant to the preceding sentence.

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Notwithstanding any other provision of this subsection (f), the Company’s obligation to provide continued coverage (or, in lieu thereof, make a cash payment) pursuant to this subsection (f) shall expire on the date the Eligible Employee becomes covered under one or more plans sponsored by a new employer (other than a successor to the Company) that, at the sole discretion of the Plan Administrator, are determined to provide coverage at least equivalent in the aggregate to the benefits continued under this subsection (f). The coverage period for purposes of the group health continuation requirements of Section 4980B of the Code shall commence at the expiration of the Welfare Benefit Continuation Period.

(g) Outplacement Services.  Subject to subsection (i) below and Section 4, if the Eligible Employee incurs a Severance during the Change in Control Protection Period, the Company shall provide him or her with reasonable outplacement services for up to 12 months following the Severance Date.

(h) Release. The Company will provide the Eligible Employee with a written release and agreement within five (5) days of his Severance during a Change in Control Protection Period. The Eligible Employee shall not be eligible to receive any Change in Control Severance Benefits provided in this Section 3 (other than payments under Section 3(b)) and such Change in Control Severance Benefits shall be forfeited unless he or she has executed and submitted the written release and agreement provided by the Company and the applicable period during which the Eligible Employee may revoke such release and agreement has expired on or before the 60th day after the date provided in subsection 3(c).

(i) Restriction on Timing of Distribution for Key Employees. Notwithstanding any provision of this Agreement to the contrary and to the extent required by Section 409A of the Code and the Treasury Regulations thereunder, if the Eligible Employee is a Key Employee and any class of securities of the Company (or of any person with whom the Company would be considered a single employer under Section 414(b) and (c) of the Code) is publicly traded as of the Eligible Employee’s Severance Date, no distribution may be made to the Eligible Employee on account of such Severance before the date that is six (6) months after the Severance Date (or, if earlier, the date of the Key Employee’s death).

4.           Reduction of Change in Control Severance Benefits.

(a) Reduction. If it is determined that the aggregate present value of (1) such portion of the Eligible Employee’s Change in Control Severance Benefits that are considered Contingent Payments, and (2) all other Contingent Payments payable to the Eligible Employee exceeds 2.99 times the Eligible Employee’s Base Amount such that the excise tax under Section 4999 of the Code would otherwise be triggered, then the Change in Control Severance Benefits provided in Section 3(c) shall be reduced to the extent necessary so that the aggregate present value of all Contingent Payments payable following such reduction does not exceed 2.99 times the Eligible Employee’s Base Amount.

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(b) Determination. The determination that the aggregate present value of the Eligible Employee’s Contingent Payments exceed 2.99 times his or her Base Amount, and the calculation of the amount of any reduction, shall be made, at the Company’s discretion, by the Company’s outside auditing firm or by a nationally-recognized accounting or benefits consulting firm designated by the Company prior to a Change in Control. The firm’s expenses shall be paid by the Company.

(c) Payment of Remaining Benefits. If the determination is made that an Eligible Employee’s Change in Control Severance Benefits must be reduced in accordance with Section 4(b), then the amount of such Benefits that are actually paid to the Eligible Employee pursuant to Section 3(c) will be the amount determined under Section 4(a) (the “Remaining Benefits”) and such Remaining Benefits will be paid at the same time and in the same form otherwise specified in Section 3(c).

5.           Taxes; Withholding. The Eligible Employee shall be responsible for the payment of all applicable local, state and federal taxes associated with the Eligible Employee’s participation in the Plan and the receipt of Change in Control Severance Benefits hereunder, and the Company shall have the right to deduct from any distributions hereunder any such taxes or other amounts required by law to be withheld therefrom.

6.           General Provisions

(a) Amendment and Termination. This Agreement may not be terminated prior to the end of its term without the written consent of the Eligible Employee.  This Agreement may be amended by the Board at any time; provided, however, that this Agreement may not be amended without the written consent of the Eligible Employee if such amendment would in any manner adversely affect the interests of the Eligible Employee.  Any action taken by the Company or the Plan Administrator to cause the 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 the Eligible Employee is eligible shall be treated as an amendment to the Agreement which adversely affects the interests of the Eligible Employee.

(b) Compliance with Law. Notwithstanding subsection (a) above or any other provision of this Agreement to the contrary, the Company may amend, modify or terminate this 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 or this Agreement, including, without limitation, Section 409A of the Code and any Treasury Regulations or other guidance thereunder.

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

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

(e) Headings and Terms. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. 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.

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

(g) Application of the Plan; Entire Agreement. The Eligible Employee acknowledges, by executing this Agreement, that (1) this Agreement is subject in all respects to the provisions of the Plan, as amended from time to time, the terms of which are incorporated herein by reference and made a part hereof, (2) that a copy of the Plan and all amendments thereto through the date hereof were provided to the Eligible Employee on the date hereof, and (3) he or she understands and accepts of all of the terms and conditions of the Plan. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof. Any and all prior agreements or understandings with respect to such matters are hereby superseded.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed as of the Effective Date.

ATTEST:	FIRST UNITED CORPORATION
	By:	/s/ William B. Grant
	Name:	William B. Grant
	Title:	Chairman/Chief Executive Officer
WITNESS:	ELIGIBLE EMPLOYEE
	/s/ Keith R. Sanders
	Name:  Keith R. Sanders

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EX-10.4

Exhibit 10.4

FIRST UNITED CORPORATION

RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (this “Agreement”), made as of January 9, 2015 (the “Grant Date”) by and between First United Corporation, a Maryland corporation (the “Company”), and Keith R. Sanders (the “Employee”), is entered into pursuant to Section 11 of the Company’s Omnibus Equity Compensation Plan, as amended from time to time (the “Plan”). All capitalized terms used but not defined herein shall have the meanings given such terms in the Plan.

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

1.            Grant of Restricted Shares. Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants (the “Grant”) to the Employee 4,845 shares of restricted Stock (the “Restricted Shares”).

2.            Vesting.

(a)          General. Subject to paragraph (b) of this Section and the terms and conditions set forth in the Plan, including, without limitation, Section 18 thereof, the Restricted Shares shall become fully vested on the second anniversary of the Grant Date (the “Vesting Date”).

(b)          Lapse Upon Termination of Employment. Notwithstanding paragraph (a) of this Section, the Restricted Shares shall immediately lapse and be forfeited, and the Grant shall be canceled, if the Employee’s employment with the Company and/or its Affiliates is terminated for any reason prior to the Vesting Date.

3.            Custody of Stock Certificates; Rights as a Stockholder. The Restricted Shares will be deemed to be issued and outstanding shares of Stock as of the Grant Date, but custody of all stock certificates evidencing the Restricted Shares (the “Restricted Certificates”) shall be retained by the Company for so long as the Restricted Shares remain unvested. Further, unless and until the Restricted Shares become vested, the Employee shall have none of the rights of a shareholder of the Company with respect to such Restricted Shares, including, without limitation, the right to vote such Restricted Shares or the right to receive dividends thereon.

4.            Stock Power. Upon signing this Agreement, the Employee shall deliver to the Company a stock power, endorsed in blank, with respect to the Restricted Shares in the form attached hereto as Exhibit A (the “Stock Power”). The Company shall use the Stock Power to cancel the Restricted Shares if they do not become vested.

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

6.            Restricted Legend; Company Actions Upon Vesting. The Company shall place a legend on the Restricted Certificates evidencing the restrictions on transfer imposed by this Agreement. As soon as practicable after the Restricted Shares become vested, the Company shall (a) remove such legend and, subject to Section 16(b) of the Plan, deliver to the Employee one or more stock certificates evidencing that number of freely transferable shares of Stock (the “Grant Shares”) equal to the number of Restricted Shares, and (b) return the Stock Power to the Employee.

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

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

9.            Taxes.

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

(b)          Required Withholding. The Grant shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Company may (i) require that the Employee pay to the Company the amount of any federal, state or local taxes that the Company is required to withhold with respect to the Grant, or (ii) deduct from other wages paid by the Company or its Affiliates the amount of any withholding taxes due with respect to the Grant.

(c)          Section 83(b) Election. In the event that the Employee makes an election under Section 83(b) of the Code with respect to the Restricted Shares, the Employee shall, in addition to satisfying the requirements of paragraph (b) of this Section, notify the Company thereof within 10 days of such election and provide to the Company such evidence thereof as the Company deems satisfactory.

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(d)          Compliance with Section 409A of the Code. This Agreement shall be interpreted and applied so that the Grant will not be subject to Section 409A of the Code and any Treasury Regulations or other guidance thereunder (collectively, “Section 409A”). If, notwithstanding the preceding sentence, the Grant becomes subject to Section 409A, then the specified time of payment of the Grant Shares for purposes of Section 409A shall be the calendar year in which the short-term deferral period expires with respect to the Grant (but payment may be made by such later time as may be permitted by Section 409A under the circumstances).

(e)          Tax Advice. The Employee represents and warrants that he or she has sought his or her own tax advice regarding the Grant, including, without limitation, advice as to whether or not to make an election under Section 83(b) of the Code.

10.          Amendment. This Agreement may be amended by the Committee at any time in any manner not prohibited by law; provided, however, that no such amendment shall, without the written consent of the Employee, adversely affect the interests of the Employee under the Grant.

11.          Compliance with Law. Notwithstanding any provision of this Agreement to the contrary, including, without limitation, Section 9 hereof, the Committee may amend, modify or terminate this Agreement, without the consent of the Employee, as the Committee deems necessary or appropriate to ensure compliance with any law, rule, regulation or other regulatory pronouncement applicable to the Plan or this Agreement, including, without limitation, Section 409A.

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

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

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

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

[Signatures Appear on Next Page]

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[Signature Page]

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

ATTEST:	FIRST UNITED CORPORATION
	By:	/s/ Carissa L. Rodeheaver
	Name:	Carissa L. Rodeheaver
	Title:	President and CFO
WITNESS:	EMPLOYEE
	/s/ Keith R. Sanders
	Name:  Keith R. Sanders

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EXHIBIT A

STOCK POWER AND ASSIGNMENT

The undersigned employee (the “Employee”) hereby transfers 4,845 restricted shares of common stock, par value $.01 per share, of First United Corporation (the “Company”), standing in the name of the Employee on the books of the Company, to the Company until such time as such shares become vested pursuant to that certain Restricted Stock Agreement, dated as of January 9, 2015, by and between the Company and the Employee. Once such shares become vested, this Stock Power and Assignment shall terminate and be returned to the Employee.

Dated: January 7, 2015

WITNESS:

By:	/s/ Keith R. Sanders	(SEAL)
Name:	Keith R. Sanders