Exhibit 10.2
FIRST UNITED BANK AND TRUST
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (the "Participation Agreement") is entered
into this ___ day of _________, 2002 by and between FIRST UNITED BANK AND TRUST
(the "Employer"), and , an employee of the Employer (the "Participant").
RECITALS:
WHEREAS, the Employer has adopted the Plan effective as of November 1,
2001, and the Administrator has determined, and the Participant has agreed, that
the Participant shall be eligible to participate in the Plan on the terms and
conditions set forth in this Participation Agreement.
NOW, THEREFORE, in consideration of the foregoing and the agreements
and covenants set forth herein, the parties agree as follows:
1. Definitions. Except as otherwise provided, or unless the context
otherwise requires, the terms used in this Participation Agreement shall have
the same meanings as in the Plan.
2. Plan. Plan means First United Bank and Trust Supplemental Executive
Retirement Plan, as amended, as the same may be altered or supplemented in any
validly executed Participation Agreement.
3. Incorporation of Plan. The Plan, a copy of which is attached as Exhibit
A, is hereby incorporated into this Participation Agreement as if fully set
forth herein, and the parties hereby agree to be bound by all of the terms and
provisions contained in the Plan, except as such terms and conditions may be
altered, amended or supplemented in this agreement. The Participant hereby
acknowledges receipt of a copy of the Plan and, subject to the foregoing,
confirms his or her understanding and acceptance of all of the terms and
conditions contained therein.
4. Effective Date of Participation. The effective date of the
Participant's participation in the Plan shall be November 1, 2001 (the
"Participation Date").
5. Normal Retirement Age. The Participant's Normal Retirement Age for
purposes of this Plan shall be the attainment of sixty (60) years of age and the
completion of ten (10) Years of Service.
6. Normal Retirement. Normal Retirement means termination of a
Participant's employment with the Employer for any reason other than for Cause
after such Participant has attained his Normal Retirement Age.
7. Prohibition Against Funding. Should any investment be acquired in
connection with the liabilities assumed under this Plan and Participation
Agreement, it is expressly understood and agreed that the Participants and
Beneficiaries shall not 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 Employer and the Participants, their
Beneficiaries, or any other person. Any such assets shall be and remain a part
of the general, unpledged, unrestricted assets of the Employer, subject to the
claims of its general creditors. It is the express intention of the parties
hereto that this arrangement shall be unfunded for tax purposes and for purposes
of Title I of ERISA. Each Participant and Beneficiary shall be required to look
to the provisions of this Plan and to the Employer 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 Employer. The
Employer shall be designated the owner and beneficiary of any investment
acquired in connection with its obligation under this Plan.
8. Provisions Related to SERP Benefit.
(a) Normal Retirement SERP Benefit. Upon Participant's Normal
Retirement, Participant shall be entitled to the Normal
------------------------------ Retirement SERP Benefit. The
Normal Retirement SERP Benefit shall be two and one-half
percent (2.5%) of Final Pay for each Year of Service up to a
maximum of twenty-four (24) Years of
Service, plus one percent (1%) of Final Pay for each Year of
Service above twenty-four (24) and up to a maximum of
twenty-nine (29) Years of Service. For purposes of this Plan,
a Participant's Final Pay shall mean the average of the three
(3) highest annual pay periods over the five (5) years
preceding the Participant's Normal Retirement. This
calculation shall take into effect those Employer provided
amounts of remuneration considered Participant's W-2 pay for
services provided while employed by the Employer. Participant
shall be responsible for the payment of all applicable local,
state and federal taxes associated with Participant's
participation in this Plan.
(b) Change of Control SERP Benefit. In the event there is a Change
of Control, as defined in the Plan, and termination of
Participant pursuant to a subsequent Triggering Event,
Participant shall be deemed to have terminated employment as a
consequence of Normal Retirement and will be fully vested in
his benefit under the Plan (including the pre-retirement death
benefit). Upon such an event, if this Participation Agreement
was executed before March 15, 2002, the Participant's SERP
Benefit will be the greater of (1) 60% of Final Pay or (2) the
Benefit already earned under Section 8(a). If this
Participation Agreement was executed on or after March 15,
2002, the Participant's SERP Benefit will be the Benefit
already earned under Section 8(a). In no event will the SERP
Benefit payable on account of a Change of Control exceed the
maximum amount that can be paid without triggering a loss of
Employer deduction under Code Section 280G or imposition of an
excise tax under Code Section 4999. All rights and liabilities
associated with Participant's Normal Retirement SERP Benefit
shall not be adversely affected, limited or reduced in any way
due to a Change of Control and Triggering Event.
(c) Offset Provision. There will be a dollar-for-dollar offset of
the SERP Benefit that the Participant may be entitled to under
this Plan and pursuant to this Participation Agreement. The
SERP Benefit shall be offset, dollar-for-dollar, by an amount
equal to fifty-percent (50%) of the Participant's Social
Security and one hundred-percent (100%) of the First United
Bank and Trust Pension Plan benefits received. For purposes of
this Plan and offset calculation, Participant shall be deemed
to have begun receiving Social Security benefits at the
earliest time allowed by law. In no event shall, military
service certified to Participant as credited service under the
First United Bank and Trust Pension Plan, cause an increase to
any offset amount under this Participation Agreement and Plan.
(d) Vesting. A Participant shall become 100% vested in his Normal
Retirement SERP Benefit upon the Participant's attainment of
Normal Retirement Age, as set forth in this Participation
Agreement, as set forth in Section 8(b) (Change of Control) or
Section 8(k) (Disability), upon completion of ten (10) Years
of Service or upon death. There shall be no partial vesting of
Participant's Normal Retirement SERP Benefit.
(e) Triggering Event. For purposes of this Plan, a Triggering
Event shall be the occurrence of any one of the following
subsequent to a Change of Control, as defined in the Plan:
1) Participant's receipt of a letter of intent to dismiss
without Cause; or
2) termination of Participant's employment without Cause;
or
3) termination of Plan; or
4) relocation of Participant's employment to a location
more than fifty miles from the Participant's place of
employment at the time of the Change of Control; or
5) at least a 10% reduction in total pay (meaning regular
pay plus any bonus or incentive 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 Change of
Control occurs; or
6) a reduction of position to one of a non executive
nature.
(f) Form of Normal Retirement SERP Benefit Payment. Participant
may elect any one (1) of the following actuarially equivalent
distribution methods:
1) lump sum payment made as soon as administratively
possible after the Participant's Normal Retirement; or
2) lifetime annuity; or
3) lifetime annuity with ten (10) years certain; or
4) 50% joint and survivor annuity; or
5) 75% joint and survivor annuity; or
6) 100% joint and survivor annuity.
In the event the Participant fails to elect any of the above
forms of SERP Benefit distribution methods prior to
termination of employment, such Participant shall be deemed to
have chosen a lifetime annuity and benefits shall begin as
soon as administratively possible following Normal Retirement.
All distributions under this Section 8(f), except for a lump
sum distribution, shall be made on a monthly basis. The
monthly amount shall be derived from the Normal Retirement
SERP Benefit divided by twelve (12) months. In the event a
Participant elects any one of the joint and survivor annuity
methods of payment, as addressed herein, Participant
acknowledges and accepts the reduction of their monthly
distribution to actuarially accommodate such distribution
election.
If the Participant elects a form of benefit other than a
lifetime annuity, the actuarial equivalent will be determined
using the same actuarial equivalent assumptions contained in
the Employer's pension plan referenced in Section 8(c).
(g) Post Retirement Survivor Benefit. A Participant's Normal
Retirement SERP Benefit under this Plan shall only continue in
the event of Participant's death if Participant had elected
one of the following forms of SERP Benefit distributions
methods:
1) 50% joint and survivor annuity; or
2) 75% joint and survivor annuity; or
3) 100% joint and survivor annuity; or
4) ten (10) year certain with payments continuing to the
participant's beneficiary until one hundred twenty
(120) monthly payments in total have been made.
(h) Pre-Retirement Death Benefit. Upon a Participant's death
before Normal Retirement, the Participant's Beneficiary will
be entitled to receive the Participant's SERP Benefit payable
as a lump sum. For this purpose, the SERP Benefit equals the
Participant's Normal Retirement SERP Benefit earned to date of
death under Section 8(a), reduced by the offset in Section
8(c) and any death benefit payable to the beneficiary(ies)
designated by the Participant for purposes of any Employer
owned life insurance covering the life of the Participant
(disregarding any group term life insurance). Benefits will be
paid as soon as practicable after the Participant's death. In
no circumstances will the sum of (1) the Pre-Retirement Death
Benefit payable under this Section 8(h) plus (2) the death
benefit payable to the beneficiary(ies) designated by the
Participant for purposes of any Employer owned life insurance
covering the life of the Participant (disregarding any group
term life insurance) exceed (3) the Participant's Normal
Retirement SERP Benefit earned to date of death under Section
8(a).
(i) Years of Service. A Participant shall receive credit for one
(1) Year of Service for each twelve (12) consecutive months of
full time employment with Employer. There will be NO partial
credit given for a Year of Service for less than twelve (12)
consecutive months of employment with Employer.
(j) Final Pay. For purposes of this Plan, a Participant's Final
Pay shall mean the average of the three (3) highest annual pay
periods over the five (5) years preceding the Participant's
effective date of retirement.
This calculation shall take into effect those amounts of
remuneration considered Participant's W-2 pay for services
while employed by the Employer.
(k) Disability Termination. In the event Participant is terminated
from employment with the Employer due to the Participant's
Disability, Participant shall be 100% vested in his SERP
Benefit already earned at the date of termination of
employment and shall be deemed to have terminated employment
by Normal Retirement. Disability shall have the same meaning
as found under the First United Bank and Trust's current Long
Term Disability Plan as in effect at the time of the
termination of employment. All benefits derived from, and
pursuant to, a Participant's Normal Retirement through this
Plan and Participation Agreement, shall not be adversely
affected by the Participant's Disability termination, and
shall be distributed accordingly. Furthermore, in addition to
the benefit offset as provided for in 8(c) above, an amount
equal to any Employer provided disability insurance payment
will offset, dollar-for-dollar, the amount of Participant's
Normal Retirement SERP Benefit received pursuant to a
Disability termination. For purposes of this Section,
disability insurance is considered Employer provided even if
the Participant is taxed on premium payments made by the
Employer.
(l) Forfeiture. Notwithstanding the above, the Employer's
obligation to pay the Participant or Beneficiary, as
applicable, any payments under the Plan will be conditioned
upon (i) the Participant refraining from Competitive
Employment, (ii) the Participant refraining from injurious
disclosure of confidential information concerning the
Employer, and (iii) the Participant remaining available for
consultation services with the Employer. Competitive
Employment means the Participant engaging in any business (i)
which provides goods or services substantially similar to
those provided by the Employer and (ii) which is located in a
county in which the Employer has a branch.
If the Participant engages in Competitive Employment, makes a
prohibited disclosure, or refuses to provide consultation
services as are reasonably required by the Employer, the
Participant will forfeit all then-unpaid amounts under the
Plan and must reimburse the Employer, plus interest at the
rate of 10% per year, any amounts previously paid under the
Plan. The Participant must reimburse the Employer for any
attorney's fees it incurs to enforce this repayment provision.
9. Beneficiary.
(a) Pre-Retirement Death Benefits. A Participant may designate his
Beneficiary for the Pre-Retirement Death Benefit in Section 8(h) in
accordance with rules established by the Administrator. A Participant
may change any prior Beneficiary designation, without notice to or
consent of any previously designated Beneficiary, in accordance with
rules established by the Administrator. In the absence of a Beneficiary
designation or if the Beneficiary predeceases the Participant, the
Beneficiary will be the death beneficiary designated by the Participant
for purposes of the life insurance policy owned by the Employer on the
life of the Participant (if any). If there is still no Beneficiary,
then the Beneficiary will be the Participant's estate. If more than one
person is the Beneficiary, each Beneficiary will receive equal
divisible amounts of any death benefit payable, unless otherwise
indicated on the applicable form.
(b) Post Retirement Death Benefits. A Participant who elects a
joint and survivor annuity or a lifetime annuity with ten (10) years
certain shall designate, in accordance with rules established by the
Administrator, a Beneficiary who will receive benefits, if any, upon
his death.
10. Lost Beneficiary.
(a) All Participants and Beneficiaries shall have the obligation
to keep the Administrator informed of their current address
until such time as all benefits due have been paid.
(b) If a Participant or Beneficiary cannot be located by the
Administrator exercising diligence, then, in its sole
discretion, the Administrator may presume that the Participant
or Beneficiary is deceased for purposes of the Participation
Agreement and all unpaid amounts (net of due diligence
expenses) owed to the Participant or Beneficiary shall be paid
accordingly, or, if a Beneficiary cannot be so located, then
such amounts may be forfeited. Any such presumption of death
shall be final, conclusive, and binding on all parties.
11. General Provisions
(a) The Administrator:
1) is expressly empowered to interpret the Participation
Agreement and the Plan and to determine all questions
arising in the administration, interpretation, and
application of the Participation Agreement and the
Plan; to employ actuaries, accountants, counsel, and
other persons it deems necessary in connection with
the administration of the Participation Agreement; to
request any information from the Employer it deems
necessary to determine whether the Employer would be
considered insolvent or subject to a proceeding in
bankruptcy; and to take all other necessary and proper
actions to fulfill its duties as Administrator;
2) shall not be liable for any actions by it hereunder
unless due to its own gross negligence or willful
misconduct; and
3) shall be indemnified and saved harmless by the
Employer 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
Administrator in good faith in the administration of
the Participation Agreement, including all expenses
reasonably incurred in its defense in the event the
Employer fails to provide such defense upon the
request of the Administrator. The Administrator is
relieved of all responsibility in connection with its
duties hereunder to the fullest extent permitted by
law, except any breach of duty to the Participants or
Beneficiaries.
(b) No Assignment. No benefit under the Participation Agreement
shall 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 the
Participation Agreement. No benefit shall in any manner be
subject to the debts, contracts, liabilities, engagements, or
torts of any person, nor shall it be subject to attachments or
other legal process for or against any person, except to such
extent as may be required by law.
(c) No Employment Rights. Participation in this Plan, and
execution of this Participation Agreement, shall not be
construed to confer upon any Participant the legal right to be
retained in the employ of the Employer, or give a Participant
or Beneficiary, or any other person, any right to any payment
whatsoever, except to the extent of the benefits provided for
hereunder. Each Participant shall remain subject to discharge
to the same extent as if this Plan had never been adopted.
(d) Incompetence. If the Administrator determines that any person
to whom a benefit is payable under this Plan and 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, the Trustee, and
their representatives.
(e) 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 SERP Benefit of the
affected Participant.
(f) No Liability. No liability shall attach to or be incurred by
any employee of the Employer or Administrator individually
under or by reason of the terms, conditions, and provisions
contained in this Plan and Participation Agreement, or for the
acts or decisions taken or made hereunder or in connection
therewith; and, as a condition precedent to the establishment
of this Plan or the receipt of benefits hereunder, or both,
such liability, if any, is expressly waived and released by
each Participant
and by any and all persons claiming under or through any
Participant or any other person. Such waiver and release shall
be conclusively evidenced by any act or participation in or
the acceptance of benefits or the making of any election under
this Plan, and execution of this Participation Agreement.
(g) Expenses. Except as otherwise provided in the Plan, all
expenses incurred in the administration of the Plan, whether
incurred by the Employer or the Plan, shall be paid by the
Employer.
(h) Termination. Except as otherwise provided in this section, the
Employer shall have the sole authority to terminate this Plan,
thus voiding any obligations or liabilities under this
Participation Agreement. Notwithstanding the preceding, no
Amendment may eliminate a Participant's accrued vested
interest in this Plan which was already earned by the date of
the amendment, including benefits already earned due to a
Change of Control.
(i) Employer Determinations. Any determinations, actions, or
decisions of the Employer (including but not limited to, Plan
termination) shall be made by the Board in accordance with its
established procedures or by such other individuals, groups,
or organizations that have been properly delegated by the
Board to make such determination or decision.
(j) Construction. All questions of interpretation, construction or
application arising under or concerning the terms of this Plan
and Participation Agreement, shall be decided by the
Administrator, in its sole and final discretion, whose
decision shall be final, binding and conclusive upon all
persons.
(k) Governing Law. To the extent not preempted by federal law,
this Plan shall be governed by, construed and administered
under the laws of the State of Maryland.
(l) Severability. Should any provision of the Participation
Agreement or any regulations adopted hereunder be deemed or
held to be unlawful or invalid for any reason, such fact shall
not adversely affect the other provisions or regulations
unless such invalidity shall render impossible or impractical
the functioning of the Participation Agreement and, in such
case, the appropriate parties shall immediately adopt a new
provision or regulation to take the place of the one held
illegal or invalid.
(m) Headings. The headings contained in the 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 Participation Agreement or the construction of any
provision thereof.
(n) Terms. Capitalized terms shall have meanings as defined
herein. Singular nouns shall be read as plural, masculine
pronouns shall be read as feminine, and vice versa, as
appropriate.
(o) Successors. This Participation Agreement shall be binding upon
each of the parties and shall also be binding upon their
respective successors or assigns.
(p) Amendments. This Agreement may not be modified or amended
except by a duly executed instrument in writing signed by the
Employer and approved the Board. No amendment may eliminate a
Participant's accrued vested interest in this Plan which was
already earned by the date of the amendment, including
benefits already earned due to a Change of Control.
(q) Entire Agreement. This 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.
IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be executed as of the day first above written.
PARTICIPANT: FIRST UNITED BANK AND TRUST:
______________________________ By: _______________________________
Title: _____________________________
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Printed Name of Participant
ATTESTED: ATTESTED:
By: ____________________________ By: ________________________________
Title: ___________________________ Title: _____________________________