SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the
Commission Only (as permitted by
|X| Definitive Proxy Statement Rule 14a-6(e)(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
First United Corporation
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
|_| Fee paid previously with preliminary materials: N/A
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
<PAGE>
(3) Filing Party:
(4) Date Filed:
<PAGE>
FIRST UNITED CORPORATION
Oakland, Maryland
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 27, 1998
To Shareholders of First United Corporation:
Notice is hereby given that the Annual Meeting of the Shareholders of First
United Corporation (the "Company") will be held in the McHenry House, the Wisp
Ski Area, in McHenry, Maryland 21541. The meeting is scheduled for:
TUESDAY, APRIL 28, 1998, at 3:00 p.m.
The purposes of the meeting are:
1. To elect eighteen (18) Directors to serve for the ensuing year and until
the election and qualification of their successors, or, upon approval of
proposal 2, for the staggered terms specified in the enclosed proxy
statement and on the proxy.
2. To consider and approve Articles of Amendment and Restatement which would
effect changes to the present Articles of Incorporation by:
(a) increasing the authorized shares of Common Stock from 12,000,000 to
25,000,000;
(b) staggering the terms of Directors and providing that they be removed
only for cause as provided by Maryland law, subject to regular Board
elections;
(c) establishing parameters that the Board of Directors shall consider in
evaluating offers to acquire the Company;
(d) limiting liability of Directors and officers to the extent consistent
with Maryland law; and
(e) providing for other technical and clarifying amendments.
3. To ratify the appointment of the accounting firm of Ernst & Young LLP to
act as the independent certified public accountants of the Company.
4. To transact such other business as may be properly brought before the
meeting or any adjournment thereof.
IT IS HOPED THAT YOU WILL PLAN TO ATTEND, BUT WHETHER OR NOT YOU
CONTEMPLATE ATTENDING THE MEETING, YOU ARE REQUESTED TO EXECUTE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY. IF YOU SHOULD ATTEND THE MEETING, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON, SHOULD YOU SO DESIRE. ALL SHAREHOLDERS
OF RECORD AT THE CLOSE OF BUSINESS ON FEBRUARY 27, 1998, ARE ENTITLED TO VOTE AT
THIS MEETING.
Anyone acting as proxy agent for a shareholder must present a proxy
properly executed by the shareholder authorizing the agent in form and substance
satisfactory to the judges of election, and otherwise in accordance with the
Company's By-Laws.
<PAGE>
By order of the Board of Directors
ROBERT W. KURTZ, Secretary
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
FIRST UNITED CORPORATION
19 South Second Street
P.O. Box 9
Oakland, Maryland 21550-0009
March 27, 1998
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
The enclosed proxy is solicited by the Board of Directors of First
United Corporation (the "Company") in connection with the Annual Meeting of
Shareholders to be held on April 28, 1998, and any adjournment or postponements
thereof. The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited by officers,
Directors and regular employees of the Company personally or by telephone,
telegraph or facsimile. No additional remuneration will be paid to officers,
Directors or regular employees who solicit proxies. The Company may reimburse
brokers, banks, custodians, nominees and other fiduciaries for their reasonable
out-of-pocket expenses in forwarding proxy materials to their principals. The
Company has also engaged ChaseMellon Shareholder Services ("ChaseMellon") to
assist in the solicitation of proxies, at an estimated cost of $2,000 plus
reasonable expenses.
Please complete, sign the enclosed proxy and return it to our transfer
agent, ChaseMellon, promptly. Should you attend the meeting and desire to vote
in person, you may withdraw your proxy by written request delivered to the
Secretary of the Company, prior to its exercise by the named proxies. Also, your
proxy may be revoked before it is exercised, whether or not you attend the
meeting, by notifying Robert W. Kurtz, Secretary, First United Corporation, P.O.
Box 9, Oakland, Maryland 21550-0009, in writing prior to the Annual Meeting of
Shareholders. Your proxy may also be revoked by using a subsequently signed
proxy. Your proxy will be voted in accordance with the instructions on the proxy
card; if no instructions are given, your proxy will be voted FOR the Director
nominees listed below, FOR the proposed Articles of Amendment and Restatement
which effect several changes to the present Articles of Incorporation, FOR the
ratification of the appointment of independent certified public accountants, and
in the discretion of the persons named in the proxy with respect to any other
matter properly brought before the meeting. The proxy materials are first being
mailed to shareholders on or about March 27, 1998.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1999 Annual
Meeting of Shareholders must be received by the Company not later than November
28, 1998, in order to be eligible for inclusion in the Company's 1999 Proxy
Statement.
OUTSTANDING VOTING SECURITIES; VOTING RIGHTS
<PAGE>
Only shareholders of record of the Company's common stock, par value
$.01 per share ("Common Stock") at the close of business on February 27, 1998,
(the "Record Date") will be entitled to receive notice of and vote at the Annual
Meeting of Shareholders. As of the Record Date, there were 6,250,961 shares of
Common Stock outstanding and entitled to be voted at the Annual Meeting of
Shareholders, except that an aggregate of 674,869 shares, or 10.8%, held by the
Trust Department of First United National Bank & Trust (the "Bank"), as sole
trustee for the benefit of various beneficiaries, may not be voted in the
election of Directors. Each share of Common Stock is entitled to one vote.
Directors are elected by a plurality of the votes cast by the holders of shares
of Common Stock present in person or represented by proxy at the meeting, in
which there is a quorum present. Ratification of Ernst & Young LLP as
independent auditors also requires a majority of the votes cast. Consequently,
withholding of votes, abstentions and broker non-votes will not affect the
outcome of either vote. Because the affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting will be necessary for approval of the Articles of Amendment and
Restatement, the withholding of votes, abstentions and broker non-votes will be
the equivalents of votes against the proposed Articles of Amendment and
Restatement.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of the Record Date by Directors and executive officers and
by each person that, to the Company's knowledge, beneficially owns more than 5%
of the Company's outstanding Common Stock. Except as otherwise indicated and
except for shares held by members of an individual's family or in trust, all
shares are held with sole dispositive and voting power. The address of each
person listed below is the address of the Company.
Common Stock Percent of
Beneficially Outstanding
DIRECTORS & EXECUTIVE OFFICERS: Owned Common Stock
David J. Beachy .......................... 7,572 .12%
Donald M. Browning........................ 17,821 .29%
Rex W. Burton ............................ 9,119 .14%
Paul Cox, Jr.............................. 1,337 .02%
Richard D. Dailey, Jr. ................... 2,661 .04%
William B. Grant ......................... 6,009 .10%
Maynard G. Grossnickle.................... 9,957 .16%
Raymond F. Hinkle ........................ 5,684 .09%
Robert W. Kurtz .......................... 7,030 .11%
Andrew E. Mance .......................... 46,500 .74%
Elaine L. McDonald........................ 2,078 .03%
Donald E. Moran........................... 103,829 1.66%
Karen F. Myers ........................... 8,456 .14%
I. Robert Rudy............................ 28,373 .45%
James F. Scarpelli, Sr. .................. 87,637 (1) 1.40%
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<PAGE>
Richard G. Stanton....................... 11,800 .19%
Robert G. Stuck.......................... 2,285 .04%
Frederick A. Thayer, III................. 48,143 .77%
Directors & Executive Officers as a Group (24 persons)424,801 6.80%
OTHER BENEFICIAL OWNERS:
Firstoak & Company................................. 605,203 (2) 9.68%
(1) Includes 1053 shares held in the James and Margaret Scarpelli
Foundation Trust which Mr.Scarpelli has a 1/4 interest.
(2) Shares held in the name of Firstoak & Company, a nominee, are
administered by the Trust Department of the Bank in a fiduciary
capacity. Firstoak & Company disclaims beneficial ownership of such
shares.
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
Eighteen (18) Directors will be elected at the Annual Meeting. If the
proposed Articles of Amendment and Restatement are adopted by the shareholders,
as described below under the caption "ADOPTION OF ARTICLES OF AMENDMENT AND
RESTATEMENT," the Board of Directors will consist of three classes holding the
terms of office indicated below. If such amendments are not adopted, all
eighteen (18) nominees will be nominated to serve one-year terms, until the 1999
Annual Meeting of Shareholders and until his or her successor is elected and
qualified:
<TABLE>
<CAPTION>
CLASS I (Term Expires 1999) CLASS II (Term Expires 2000) CLASS III (Term Expires 2001)
<S> <C> <C> <C>
David J. Beachy Maynard G. Grossnickle Karen F. Myers
Donald M. Browning Raymond F. Hinkle I. Robert Rudy
Rex W. Burton Robert W. Kurtz James F. Scarpelli, Sr.
Paul Cox, Jr. Andrew E. Mance Richard G. Stanton
Richard D. Dailey, Jr. Elaine L. McDonald Robert G. Stuck
William B. Grant Donald E. Moran Frederick A. Thayer, III
</TABLE>
For each of the 18 nominees for director listed below there is a brief
summary of his or her present principal occupation, other business experience
during the last five years, age (as of the Record Date), and the year such
individual first became a Director. Unless authority to vote is withheld, the
enclosed proxy will be voted in favor of the nominees listed below. The Board of
Directors has no reason to believe that any nominee herein will be unable to
serve, but if any of them become unable to serve, the proxies may be voted with
discretionary authority for the election of other persons to serve as directors.
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<PAGE>
<TABLE>
<CAPTION>
NAME Age Occupation During Past Five Years Director Since
<S> <C> <C> <C>
David J. Beachy 57 Vice President, 1985
Fred E. Beachy Lumber Co., Inc.,
Building Supplies
Donald M. Browning 73 Corporate Secretary, 1985
Browning's, Inc.,
Retail Groceries
Rex W. Burton 63 Owner & President, 1992
Burtons, Inc., Dry Goods
Paul Cox, Jr. 58 Owner, Professional Tax Service 1993
Tax Consulting Firm
Richard D. Dailey, Jr. 41 President, Cumberland Electric Company 1995
William B. Grant 44 Chairman of the Board and 1995
Chief Executive Officer ("CEO")
First United Corporation and
First United National Bank & Trust
Maynard G. Grossnickle 66 Farmer, Retired 1996
Raymond F. Hinkle 61 Tax Consultant 1996
Robert W. Kurtz 51 President, Chief Financial Officer, 1990
Secretary and Treasurer
First United Corporation;
President and Chief Financial Officer
First United National Bank & Trust
Andrew E. Mance 83 Physician 1985
Elaine L. McDonald 49 Vice President, 1995
Alpine Village / Silver Tree Inn
Donald E. Moran 67 Secretary/Treasurer, Moran Coal Company 1988
Karen F. Myers 46 President, Mountaineer Log & Siding Co., 1992
Inc.; Associate Broker, A&A Realty/Long &
Foster
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<PAGE>
I. Robert Rudy 45 President, Rudy's Inc., 1992
Retail Apparel and Sporting Goods
James F. Scarpelli, Sr. 84 Owner, Scarpelli Funeral Home 1985
Richard G. Stanton 58 Banker, Retired 1985
Robert G. Stuck 51 Vice President, Oakview Motors, Inc. 1995
Frederick A. Thayer, III 64 Judge, Retired 1996
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR SUCH
NOMINEES.
Attendance at Board Meetings
During 1997 the Board of Directors of the Company held eight meetings.
All incumbent Directors who are nominees for reelection attended at least 75% of
the Board Meetings and meetings of each committee of the Board on which such
Director served, with the exception of Donald E. Moran, who attended 63% of the
Board Meetings and 73% of meetings of the committees on which he served, and
Donald M. Browning, Rex W. Burton, Richard D. Dailey, Jr., Richard G. Stanton
and Frederick A. Thayer, III, who attended 67%, 64%, 25%, 67% and 71% of
meetings of the committees on which they served, respectively. In addition,
Directors of the Company's subsidiaries have met in accordance with guidelines
established by the Board of Directors.
Committees of the Board of Directors
In addition to meeting as a group, certain members of the Board also
devote their time to certain standing committees. Members of the Board of
Directors of the Company are also members of the Board of Directors of the lead
subsidiary, the Bank. These committees act on behalf of the Company. Among those
committees are the Audit, Asset and Liability Management, Executive, Strategic
Planning, and Corporate Development Committees. The Chairman of the Board and
CEO of the Company, William B.
Grant, is a member of all committees, except the Audit Committee.
Audit Committee - The Audit Committee, which consists of Raymond F.
Hinkle, Andrew E. Mance, Elaine L. McDonald, James F. Scarpelli, Sr. and Kathryn
M. Burkey, an ex-officio member from the Advisory Board, reviews significant
audit and accounting principles, policies and practices, meets with the
Company's auditor to review the Company's internal auditing function, and meets
with the Company's independent auditors to review the results of the annual
audit. This committee met four times in 1997.
Asset and Liability Management Committee - The Asset and Liability
Management Committee, which consists of David J. Beachy, Rex W. Burton, Paul
Cox, Jr., Richard D. Dailey, Jr., William B. Grant, Robert W. Kurtz, Karen F.
Myers, Richard G. Stanton and Robert G. Stuck, reviews and recommends changes to
the Company's Asset and Liability, Investment, Liquidity, and Capital Plans.
- 5 -
<PAGE>
This committee met three times in 1997.
Executive Committee - The Executive Committee, which consists of Donald
M. Browning, Rex W. Burton, Paul Cox, Jr., William B. Grant, Maynard G.
Grossnickle, Robert W. Kurtz, Donald E. Moran, Karen F. Myers, Richard G.
Stanton and Frederick A. Thayer, III, is responsible for reviewing and
recommending changes to the Company's Insurance Program, overseeing compliance
with the Company's By-Laws and Articles of Incorporation, supervising the
Company's CEO, recommending to the Board a compensation policy for the CEO and
other executive officers of the Company and its subsidiaries, recommending
changes to the CEO's compensation package based on performance reviews,
monitoring the performance of the Company and its subsidiaries, recommending
changes to the Company's and subsidiaries' personnel policies, and serving as a
director nomination committee. The Executive Committee functions with the
authority of the full Board between meetings of the Board. This committee met
three times in 1997.
Strategic Planning Committee - The Strategic Planning Committee which
consists of Rex W. Burton, William B. Grant, Raymond F. Hinkle, Elaine L.
McDonald, Donald E. Moran, I. Robert Rudy, Richard G. Stanton, Frederick A.
Thayer, III, and three Advisory Board members, George C. Harne, William M.
Kenny, and Gary R. Ruddell, focuses on long-term planning to insure that
management's decisions take into account the future operating environment, the
development of corporate statements of policy, review of overall management
internal control procedures, and review of management's internal and external
information and communications systems. This committee met six times in 1997.
Corporate Development Committee - The Corporate Development Committee,
which consists of David J. Beachy, Richard D. Dailey, Jr., William B. Grant,
Robert W. Kurtz, Andrew E. Mance, Donald E. Moran and Frederick A. Thayer, III,
is charged with addressing issues pertaining to the Company's structure, its
Articles of Incorporation and Bylaws, and oversight of the Company's Investor
Relations Program.
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors' Fees
Directors' fees are paid only to Directors who are not executive
officers of the Company. A Director of the Company receives up to $350 for a
Board meeting and up to $175 for each committee meeting of the Board of which
the Director is a member, depending on the length of the meeting. Directors of
subsidiaries of the Company are compensated for their attendance of meetings of
the subsidiaries' Boards of Directors.
Summary Compensation Table
The following table sets forth the total remuneration for services in
all capacities paid during each of the last three fiscal years to the chief
executive officer and each other executive officer of the Company whose annual
compensation exceeded $100,000 during the fiscal year ended December 31, 1997.
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<PAGE>
<TABLE>
<CAPTION>
Name and Annual Compensation All other
Principal Position Year Salary Bonus (1) Compensation(2)(3)(4)
- ------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
William B. Grant 1997 $125,000 $21,370 $14,832
Chairman of the Board and CEO 1996 114,763 27,516 10,714
1995 107,196 0 10,478
Robert W. Kurtz 1997 $117,000 $25,605 $10,129
President, Chief Financial Officer, 1996 111,276 29,767 7,050
and Secretary/Treasurer 1995 107,196 0 7,296
</TABLE>
(1) No pay for performance was paid for 1995. The pay for performance for 1996
and 1997 was distributed in 1997 and 1998, respectively.
(2) Includes (i) basic and matching contributions made by the Company for Mr.
Grant under the Company's Profit Sharing Plan of $5,015, $10,151, and
$9,935 for fiscal years 1997, 1996, and 1995, respectively, and (ii)
contributions made by the Company under the Employee Stock Ownership Plan
of $9,817, $563, and $543 for fiscal years 1997, 1996, and 1995,
respectively.
(3) Includes (i) basic and matching contributions made by the Company for Mr.
Kurtz under the Company's Profit Sharing Plan of $767, $6,504, and $6,742,
for fiscal years 1997, 1996, and 1995, respectively, and (ii) contributions
made by the Company under the Employee Stock Ownership Plan of $9,392,
$546, and $554 for fiscal years 1997, 1996, and 1995, respectively.
(4) Messrs. Grant and Kurtz have in excess of seven years of credited service
under the respective plans, and are therefore 100% vested.
Executive Committee Interlocks and Insider Participation
The Executive Committee consists of Donald M. Browning, Rex W. Burton,
Paul Cox, Jr., William B. Grant, Maynard G. Grossnickle, Robert W. Kurtz, Donald
E. Moran, Karen F. Myers, Richard G. Stanton and Frederick A. Thayer, III. Mr.
Grant is Chairman of the Board and CEO of the Company and Mr. Kurtz is
President, CFO and Secretary/Treasurer of the Company. Mr. Stanton is the former
Chairman of the Board, President and CEO of the Company.
Executive Committee Report on Compensation
The basic philosophy of the Company's compensation program is to offer
competitive compensation for all executive employees which takes into account
both individual contributions and corporate performance. Compensation levels for
executives were recommended by the Executive Committee and approved by the
non-employee Directors of the Board.
Executive compensation of the Chairman of the Board/CEO and of the
President/CFO, as well as the other executives, consists of two principal
elements: (i) base salary; and (ii) incentives that are variable, fluctuate
annually, and are linked to the Company's performance, and therefore at risk.
Base salaries are set at levels intended to foster a career development among
executives, consistent with the long-term nature of the Company's business
objectives. In setting base salary levels, consideration is given to
establishing salary levels that approximate the amounts paid for similar
executive positions at other comparable community banking organizations. Salary
adjustments and "at risk" amounts are determined in accordance with the Annual
Incentive Program established for executive officers and other members of senior
management. The incentive program, which was developed in consultation with the
Company's independent accountants, utilizes a targeted goal-oriented approach
whereby each year the committee establishes performance goals based on the
recommendation of the Chairman and CEO. The performance goals include strategic
financial measures such as earnings per share, return on equity, and
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<PAGE>
efficiency ratio. Each of these elements is weighted approximately the same. The
measures are established annually at the start of each fiscal year and are tied
directly to the Company's business strategy, projected budgeted results and
competitive peer group performance.
The targeted goals are set at levels which only reward continued
exceptional Company performance. The incentive awards are expressed as a percent
of base pay and measured on a range around the targeted goals with a fixed
maximum incentive award. The plan provides a payout equal to 10% of salary for
attaining the minimum goals, a payout of 25% of salary for attaining the
targeted goals, and up to 40% of salary for reaching or exceeding maximum goal
levels. Payout percentages are interpolated for results between various
categories. Performance below certain stated minimum threshold levels will
result in no incentive payout to the executives.
The 1997 goals, as approved by the Board, are shown below, and compared
to the actual results for 1997:
Minimum Target Maximum Actual
------- ------ ------- ------
Return on Equity 10.00% 12.18% 15.00% 11.67%
Earnings Per Share $ .90 $1.10 $1.30 $1.05
Efficiency Ratio 62.50% 60.69% 56.00% 62.98%
As the results indicate, Company performance fell short of targeted performance,
but exceeded minimum performance as to "return on equity" and "earnings per
share," and did not obtain the minimum as to "efficiency ratio". These results
are a direct result of the one-time costs associated with process improvements
undertaken in 1997. With earnings restated without inclusion of these one-time
process improvement costs, performance would have been as follows: Return on
Equity - 12.72%, Earnings Per Share - $1.14, and Efficiency Ratio - 60.22%.
These results clearly show performance which is consistent with Company goals.
The Executive Committee decided, with the Board's concurrence, not to restate
performance, and the at-risk portion of the salary which is based on performance
was based on actual Company results.
Mr. Grant's 1997 base salary increase of $10,237, or 8.9% over 1996,
was due to his promotion to Chairman and CEO in 1996. The 1997 base salary
increase of $5,724, or 5.1% over 1996, for Mr. Kurtz was due to his promotion to
President and Chief Operating Officer in 1996. With respect to Mr. Grant, his
incentive compensation was based on meeting certain financial goals as outlined
in the preceding table. His incentive compensation was less than the prior year,
because all of those financial goals described above were not fully realized.
The incentive compensation for Mr. Kurtz was based on a combination of financial
goals of the Company and certain subjective goals on his personal performance.
His incentive compensation was less than last year because not all of the
Company's financial goals were realized.
EXECUTIVE COMMITTEE
BY: Donald M. Browning Donald E. Moran
Rex W. Burton Karen F. Myers
Paul Cox, Jr. Richard G. Stanton
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<PAGE>
Maynard G. Grossnickle Frederick A. Thayer, III
PENSION AND PROFIT SHARING PLANS
The following table shows the maximum annual retirement benefits
payable under the Company Defined Benefit Pension Plan for various levels of
compensation during the year of service:
APPROXIMATE ANNUAL BENEFIT UPON RETIREMENT AT
AGE 65 BASED ON YEARS OF CREDITED SERVICE
FINAL AVERAGE
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
30,000 6,000 8,000 10,000 12,000 14,000
70,000 15,000 20,000 25,000 30,000 35,000
110,000 24,000 32,000 40,000 48,000 56,000
150,000 33,000 44,000 55,000 66,000 77,000
190,000 33,250 47,000 58,750 70,500 82,250
For purposes of this table, final average compensation shown is twelve times the
average of the highest salary during sixty consecutive months in the last one
hundred twenty months preceding normal retirement. Also, for purposes of the
table, benefits are payable for life with a minimum guarantee of ten years.
Benefits are computed on an actuarial basis. To convert the benefits at normal
retirement to a lifetime only benefit, the amounts would be increased by a
factor of 1.0677% during 1997. Social Security benefits are not shown on the
table and would not reduce retirement benefits under the plan.
Projected Benefits for Highly Compensated Employees:
CURRENT COMPENSATION CREDITED SERVICE AT ESTIMATED ANNUAL
COVERED BY THE PLAN NORMAL RETIREMENT BENEFITS AT RETIREMENT
William B. Grant $154,037 40 Years $86,821
Robert W. Kurtz $147,368 38 Years $80,039
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<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph showing 5-year cumulative total return of
the Common Stock as compared with all publicly traded banks in the $500 million
to $1 billion Asset-Size Index, and the NASDAQ total index.
PERFORMANCE GRAPH INSERTED HERE
Total Return Performance
<TABLE>
<CAPTION>
Period Ending
Index 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First United Corporation 100.00 209.15 195.67 159.21 156.30 218.17
NASDAQ - Total US 100.00 114.80 112.21 158.70 195.19 239.53
SNL $500M-$1B Bank Index 100.00 125.46 133.93 177.82 222.29 361.35
</TABLE>
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Some of the Directors and officers of the Company and their associates
were customers of and had banking transactions with banking subsidiaries of the
Company in the ordinary course of business during 1997. All loans and loan
commitments included in such transactions were made on the same
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<PAGE>
terms, including collateral, as those prevailing at the same time for comparable
transactions with others, and in the opinion of the management of the Company,
do not involve more than a normal risk of collectability or present other
unfavorable features.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and
the rules promulgated thereunder, the Company's executive officers and Directors
are required to file with the Securities and Exchange Commission reports of
their ownership of Common Stock. Based solely on a review of copies of such
reports furnished to the Company, or written representations that no reports
were required, the Company believes that during the fiscal year ended December
31, 1997, its executive officers and Directors complied with the Section 16(a)
requirements.
ADOPTION OF ARTICLES OF AMENDMENT AND RESTATEMENT (PROPOSAL NO. 2)
The Board of Directors proposes that the present Articles of
Incorporation of the Company be amended and restated by the adoption of Articles
of Amendment and Restatement ("Restated Articles"). The Restated Articles
effects four substantive and material changes by: (a) increasing the authorized
shares of Common Stock from 12,000,000 to 25,000,000; (b) staggering the terms
of Directors and providing that they be removed only for cause as provided by
Maryland law, subject to regular Board elections; (c) establishing parameters
that the Board of Directors shall consider in evaluating offers to acquire the
Company; and (d) limiting liability of Directors and officers consistent with
Maryland law. The Restated Articles effects other minor revisions which the
Board of Directors does not consider to be material but will be approved by
shareholder vote. While the following discussion summarizes certain provisions
of the Company's proposed Restated Articles, this summary does not purport to be
a complete description of, and is qualified in its entirety by reference to, the
proposed Restated Articles which accompanies this Proxy Statement. Although the
Board of Directors believes that this proposal is beneficial to shareholders,
shareholders should consider possible disadvantages, discussed under the
heading, "Disadvantages of Anti- Takeover Provisions in Restated Articles,"
below.
The Board of Directors believes that approval of the Restated Articles
will have the effect of encouraging a potential acquiror to negotiate directly
with the Board of Directors of the Company and discourage hostile takeover
attempts. Certain federal banking laws, which regulate bank holding companies
and restrict changes in bank control, and Maryland corporate laws, which
restrict certain business combinations and share acquisitions, also discourage
hostile takeovers. The Board of Directors believes that this combination of
state and federal law and the Restated Articles would likely require a potential
acquiror to consult with the Board of Directors.
Approval of the proposals will have the effect of approving the
Restated Articles. The Restated
- 11 -
<PAGE>
Articles, if approved and adopted, will become effective upon filing the
Restated Articles with the Maryland State Department of Assessments and
Taxation, which would be accomplished as soon as practicable. If one or more of
the proposals are not approved, the Board of Directors will review the results
of the shareholder vote and determine whether to make effective only the
proposal or proposals that were approved by filing alternative Restated Articles
or by filing Articles of Amendment.
A. Increase in Authorized Common Stock and Other Stock Issues
The Company's Articles of Incorporation currently provide for an
authorized capitalization consisting of 12,000,000 shares of common stock, par
value $.01 per share, and 2,000,000 shares of preferred stock, without par
value, of which 6,250,961 shares of Common Stock are issued and outstanding,
with an additional 196,155 shares of Common Stock reserved for issuance under
the Company's Dividend Reinvestment and Stock Purchase Plan. The Restated
Articles increases the number of shares of Common Stock to 25,000,000 shares.
The Board considers the proposed increase to be in the best long-term
and short-term interests of the Company and its shareholders. The proposed
increase ensures that a sufficient number of shares of Common Stock will be
available for possible future transactions, including, among others,
acquisitions, stock splits, and other general corporate purposes. All attributes
of additional Common Stock to be authorized would be the same as those of the
existing shares of Common Stock. If additional shares are issued, the percentage
ownership interests of existing shareholders may be reduced. It is possible that
shares of Common Stock may be issued at a time and under circumstances that may
increase or decrease earnings per share and increase or decrease the book value
per share of shares presently held. Moreover, such additional share issuance
could be construed as having an anti-takeover effect because the percentage
ownership of a potential acquiror would be reduced upon the issuances of
additional shares. The Company, however, does not have any immediate plans,
arrangements, agreements, commitments or understandings with respect to the
issuance of any of the additional shares of Common Stock which would be
authorized by the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RESTATED ARTICLES BY APPROVAL OF THIS PROPOSAL.
B. Staggered Terms of Directors and For Cause Removal
The Restated Articles provides that the Board of Directors of the
Company will be divided into three classes, with directors in each class elected
for three-year staggered terms. Therefore, a majority of the Company's Board of
Directors may be replaced after two annual elections. Directors who were
appointed by the Board to fill a Board vacancy will serve for the unexpired
portion of the term of the Director whose place was made vacant, until the
election of his successor or until he is removed prior thereto by an affirmative
vote of the holders of a majority of the stock. The current Articles of
Incorporation provide for one-year terms for all Directors.
- 12 -
<PAGE>
Although the Board of Directors has in the past retained a high
percentage of its Directors, the Board and management believe that it is
desirable to ensure continuity and stability of the Company's leadership and
policies, thereby enabling it to carry out its long-range plans for its benefit
and that of its shareholders, and that a staggered Board of Directors will
assist in achieving such continuity and stability. Such a staggered Board of
Directors would moderate the pace of any change in control of the Company since
a person or entity acquiring a majority stock interest in the Company would have
to wait for at least two consecutive annual meetings, covering a period of two
years, to elect a majority of the Company's Board of Directors. The
implementation of a staggered Board may discourage a hostile acquisition, and
thus, require an acquiror to approach the Board with any potential tender offer.
The inability to change the composition of the Board of Directors immediately
even if such change and composition were determined by the shareholders to be
beneficial to them may tend to discourage a tender offer or hostile takeover bid
for the Company's stock, and enable the Board of Directors to negotiate the
terms of any offer to achieve maximum value for the Company.
Maryland law provides that directors on a staggered board of directors
may be removed only for cause, unless the Articles of Incorporation states
otherwise. To conform with Maryland law regarding staggered boards of directors,
the Restated Articles provides that a Director or the entire Board of Directors
may be removed only for cause and only by the affirmative vote of a majority of
the entire Board of Directors of the Company or by the affirmative vote of a
least a majority of the shares eligible to vote generally in the election of
directors. Removal for cause is defined as a final unappealable conviction of a
felony, unsound mind, adjudication of bankruptcy, or action that causes material
injury to the Company. While shareholders may choose not to re-elect a director
at the end of his or her term, shareholders may only attempt to remove a
director for cause after service of specific charges, adequate notice and full
opportunity to refute the charges. The current Articles of Incorporation provide
that directors may be removed by a majority vote of shareholders, with or
without cause. This change, may, under certain circumstances, impede the removal
of a director or directors of the Company, thus precluding a person or entity
from immediately acquiring control of the Company's Board through the removal of
existing directors and the election of his or its nominees to fill the
newly-created vacancies.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RESTATED ARTICLES BY APPROVAL OF THIS PROPOSAL.
C. Board Evaluation of Parameters for Changes of Control
The Restated Articles provides that the Board of Directors will
consider all factors they deem relevant in evaluating any proposed offer for the
Company or any of its shares, any proposed merger or consolidation of the
Company or subsidiary of the Company with or into another entity, any proposal
to purchase or otherwise acquire all or substantially all of the assets of the
Company or any subsidiary of the Company, and any other business combination.
The Directors are required to evaluate whether the proposal is in the best
interests of the Company and its subsidiaries by considering the best interests
of the shareholders and other factors the Directors determine to be relevant.
The Directors must evaluate the
- 13 -
<PAGE>
consideration being offered to the shareholders in relation to the then current
market value of the Company and its subsidiaries, the then current market value
of the stock of the Company or any subsidiary in a freely negotiated
transaction, and the Directors' judgment as to the future value of the stock of
the Company as an independent entity.
The Board believes that consideration of the parameters is appropriate
and consistent with the standard of conduct for directors established by
Maryland corporate law. If approached by a potential acquiror, the Board can
exercise its business judgment objectively based on a list of factors. One
Director believes that more factors should be listed. The proposal is not
intended to lessen shareholder rights or to subjugate shareholder interest to
the interests of others but is proposed to establish guidelines for the Board to
preserve shareholder value and interests in general by requiring a potential
acquiror to approach the Board with any potential offer.
D. Limitation of Liability of Directors and Officers
The Restated Articles limits liability of the Company's Directors and
officers in connection with their service in those capacities to nonmonetary
damages to the extent provided under Maryland corporate law. Maryland law
permits a Maryland corporation to limit the personal monetary liability of its
directors for their conduct as directors under certain circumstances. Maryland
law presently permits a corporation to eliminate or limit the scope of personal
liability of directors and officers to the Company or its shareholders for
monetary damages other than (i) to the extent that it is proved that the
director or officer actually received an improper benefit or profit in money,
property or services actually received, or (ii) to the extent that a judgment or
other final adjudication adverse to such Director or officer is entered in a
proceeding based on a finding that such Director's or officer's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding.
Currently, the Articles of Incorporation does not limit the liability
of the Company's Directors and officers to nonmonetary damages. The proposed
change will enhance the Company's ability to attract and retain qualified
personnel to serve as its directors and officers and provides greater
predictability in the Company's legal affairs. The Board believes that this
provision of the Restated Articles is necessary to attract and retain qualified
Directors, and to keep the Directors focused on utilizing their best business
judgment. The change does not eliminate the directors' or officers' duty of care
to the Company and its shareholders, and does not eliminate other remedies
available with regard to negligence by directors, such as injunction or
rescission, based upon breach of a director's duty of care. The effect of the
change may be to limit or eliminate an effective remedy which might otherwise be
available to the shareholder. To the best of the Board of Directors knowledge,
there is currently no pending or threatened litigation involving Directors of
the Company that might be affected by this limited liability provision.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RESTATED ARTICLES BY APPROVAL OF THIS PROPOSAL.
E. Approval of Other Provisions in Restated Articles
- 14 -
<PAGE>
The Board of Directors believes that the changes to the present
Articles of Incorporation would be made most efficiently and effectively by
completely restating the present Articles of Incorporation to read as provided
in the Restated Articles attached as Appendix A. The substantive and material
changes made by the Restated Articles are described in Proposals 2(a) through
2(d). To ensure that the requisite shareholder approval is obtained for all
changes made in the Restated Articles and not just those reflected in Proposals
2(a) through 2(d), the shareholders are requested to approve in Proposal 2(e)
the balance of the revisions made in the Restated Articles, which do not
materially change the substance of the present Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RESTATED ARTICLES BY APPROVAL OF THIS PROPOSAL.
Disadvantages of Anti-Takeover Provisions
Although the Company's Board of Directors believes that the proposed
changes to the present Articles of Incorporation are beneficial to shareholders,
the provisions may have the effect of rendering the Company less attractive to
potential hostile acquirors thereby discouraging future takeover attempts from
which shareholders may, or may not, obtain a premium for their shares over
current market prices. The provisions also render the removal of the incumbent
Board of Directors more difficult. Thus, these proposals may tend to make
accomplishment of certain transactions involving a potential hostile change of
control of the Company more difficult. The Board of Directors believes, however,
that the potential benefits outweigh these possible disadvantages.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS (PROPOSAL NO. 3)
Subject to ratification by shareholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors to audit the consolidated
financial statements of the Company and its subsidiaries. Ernst & Young LLP has
advised the Company that no one within the firm nor any of its members or
associates has any direct financial interest in or has any connection with the
Company or its subsidiaries other than as independent auditors. No
representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR SUCH
RATIFICATION.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
aware of any matters, other than those stated above, that may properly be
brought before the meeting. If other matters should properly
- 15 -
<PAGE>
come before the meeting or any adjournment thereof, persons named in the
enclosed form of proxy or their substitutes will vote with respect to any such
matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF
DIRECTORS
ROBERT W. KURTZ
Secretary
- 16 -
<PAGE>
APPENDIX A
FIRST UNITED CORPORATION
ARTICLES OF AMENDMENT AND RESTATEMENT
First United Corporation, a Maryland corporation (hereinafter called the
"Corporation"), having its principal office in Garrett County, Maryland, hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
SECTION I. The Corporation desires to completely amend and restate its
Charter by striking all paragraphs of the Articles of Incorporation and
amendments thereto, and inserting in lieu thereof the following:
FIRST: The name of the corporation (hereinafter called the
"Corporation") is: FIRST UNITED CORPORATION
SECOND: The purposes for which the Corporation is formed are as
follows:
(a) To exercise all powers of a bank holding company.
(b) To engage in any lawful act or activities permitted by
a corporation organized under the laws of the State of Maryland.
The foregoing enumeration of the purposes, objects and business of the
Corporation is made in furtherance, and not in limitation, of the powers
conferred upon the Corporation by law, and is not intended, by the mention of
any particular purpose, object or business, in any manner to limit or restrict
the generality of any other purpose, object or business mentioned, or to limit
or restrict any of the powers of the Corporation, and the said Corporation shall
enjoy and exercise all of the powers and rights now or hereafter conferred by
statute upon corporations. Nothing herein contained shall be deemed to authorize
or permit the Corporation to carry on any business or exercise any power or do
any act which a corporation formed under the laws of the State of Maryland may
not at the time lawfully carry on or do.
THIRD: The post office address of the principal office of the
Corporation in this State is 19 South Second Street, Oakland, Maryland
21550-0009. The name and post office address of the resident agent of the
Corporation in this State are William B. Grant, 19 South Second Street, Oakland,
Maryland 21550-0009. Said resident agent is an individual and a citizen of this
State who resides in this State.
FOURTH: The total number of shares of stock which the Corporation
has authority to issue is Twenty-Seven Million (27,000,000) shares, consisting
of Twenty-Five Million (25,000,000) shares of common stock, $.01 par value per
share, and Two Million (2,000,000) shares of preferred stock, without par value.
The aggregate value of all authorized shares having a par value is Two Hundred
Fifty Thousand Dollars ($250,000).
A description of each class of stock of the Corporation, including any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption, is as follows:
(a) Common Stock. Subject to the rights of holders of any
series of preferred stock established pursuant to paragraph (b) of this Article
FOURTH, each share of common stock shall entitle the holder to one vote per
share on all matters upon which stockholders are entitled to vote, to receive
dividends and other
<PAGE>
distributions as authorized by the Board of Directors in accordance with the
Maryland General Corporation Law ("MGCL"), and to all rights of a stockholder
pursuant to the MGCL. The common stock shall have no preference, preemptive,
conversion or exchange rights.
Dividends may be declared on the common stock at such time
and in such amounts as the Board of Directors may deem advisable; however, any
such dividends shall be subject to the rights of any preferred stock
outstanding, and any share of common stock shall entitle the holder thereof to
one (1) vote in any proceedings in which action shall be taken by stockholders
of the Corporation.
(b) Series Preferred Stock. Shares of Preferred Stock may
be issued in one or more series, from time to time, with each such series to
consist of such number of shares and to have such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, as shall be stated in the resolution or
resolutions providing for the issuance of such series adopted by the Board of
Directors of the Corporation, and the Board of Directors is hereby expressly
vested with authority, to the full extent now or hereafter provided by law, to
adopt any such resolution or resolutions.
The authority of the Board of Directors with respect to
each series of Preferred Stock shall include, but not be limited to,
determination of the following: (i) the number of shares constituting that
series and the distinctive designation thereof; (ii) the dividend rate on the
shares of that series, whether dividends shall be cumulative, and, if so, from
which dates, and the relative rights of priority, if any, of payment of
dividends on shares of that series; (iii) whether that series shall have voting
rights, in addition to the voting rights provided by law, and, if so, the terms
of such voting rights; (iv) whether that series shall have conversion
privileges, and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the Board of
Directors shall determine; (v) whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or date upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates; (vi) whether that series shall
have a sinking fund for the redemption or purchase of shares of that series,
and, if so, the terms and amount of such sinking fund; (vii) the rights of the
shares of that series in the event of voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, and the relative rights of
priority, if any, of payment of shares of that series; and (viii) any other
relative rights, preferences and limitations of that series.
The Board of Directors shall have the power from time to
time to (i) classify or reclassify, in one or more series, any unissued shares
of series preferred stock, and (ii) reclassify any unissued shares of any series
of series preferred stock, in either case by setting or changing the number of
shares constituting such series and the designation, preferences conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of such shares and, in
such event, the Corporation shall file for record with the State Department of
Assessments and Taxation of Maryland articles supplementary in substance and
form as prescribed by Maryland law.
FIFTH: The number of Directors of the Corporation shall be not
less than three (3) nor more than twenty-five (25). The number of Directors may
be increased or decreased in accordance with the Bylaws of the Corporation. The
Directors shall be divided into three classes with respect to the time for which
they shall hold office. Directors of Class I shall hold office for one year or
until the first annual meeting of stockholders following their election;
Directors of Class II shall hold office for two years or until the second annual
meeting of stockholders following their election; and Directors of Class III
shall hold office for three years or until the third annual meeting of
stockholders following their election; and in each case until their successors
are elected and qualify. At each future annual meeting of stockholders, the
successors to the Class of Directors whose term shall expire at that time
<PAGE>
shall be elected to hold office for a term of three years, so that the term of
office of one Class of Directors shall expire in each year.
SIXTH: The following provisions are hereby adopted for the
purposes of describing the rights and powers of the Corporation and of the
Directors and stockholders:
(a) The Board of Directors of the Corporation is hereby
empowered to authorize the issuance from time to time of shares of stock of any
class, whether now or hereafter authorized, and securities convertible into
shares of its stock of any class whether now or hereafter authorized, for such
consideration as the Board of Directors may deem advisable, subject to such
limitations and restrictions, if any, as may be set forth in the Bylaws of the
Corporation.
(b) The Board of Directors of the Corporation may from
time to time classify or reclassify any unissued shares of stock of any class or
series by setting, fixing, eliminating or altering in any one or more respects
the preferences, rights, voting powers, restrictions and qualifications of,
dividends on, and redemption, conversion, exchange and other rights of, such
shares.
(c) The Corporation reserves the right, upon authorization
by the Board of Directors and requisite approval by the affirmative vote of
holders of two-thirds of the outstanding stock, to amend its Charter so that
such amendment may alter the contract rights, as expressly set forth in the
Charter, of any such class of outstanding stock.
The enumeration and definition of a particular power of
the Board of Directors included in the foregoing is for descriptive purposes
only and shall in no way limit or restrict the terms of any other clause of this
or any other Article of these Articles of Incorporation, or in any manner
exclude or limit any powers conferred upon the Board of Directors under the MGCL
now or hereafter in force.
SEVENTH: The Directors of the Corporation shall consider all
factors they deem relevant in evaluating any proposed offer for the Corporation
or any of its stock, any proposed merger or consolidation of the Corporation or
subsidiary of the Corporation with or into another entity, any proposal to
purchase or otherwise acquire all or substantially all the assets of the
Corporation or any subsidiary of the Corporation, and any other business
combination (as such term is defined in the MGCL). The Directors shall evaluate
whether the proposal is in the best interests of the Corporation and its
subsidiaries by considering the best interests of the stockholders and other
factors the Directors determine to be relevant. The Directors shall evaluate the
consideration being offered to the stockholders in relation to the then current
market value of the Corporation and its subsidiaries, the then current market
value of the stock of the Corporation or any subsidiary in a freely negotiated
transaction, and the Directors' judgment as to the future value of the stock of
the Corporation as an independent entity.
EIGHTH: A Director of the corporation may be removed during his or
her term of office only for cause, which is defined as a final unappealable
conviction of a felony, unsound mind, adjudication of bankruptcy, or action that
causes material injury to the Corporation. Action to remove a Director may be
taken only upon by the affirmative vote of a majority of the entire Board of
Directors of the Corporation or by the affirmative vote of a majority of the
outstanding voting stock of the Corporation. Stockholders shall not have the
right to remove Directors without such cause. Stockholders may only attempt to
remove a Director for cause after service of specific charges, adequate notice
and full opportunity to refute the charges.
NINTH: No Director or officer of the Corporation shall be liable
to the Corporation or to its stockholders for money damages except (i) to the
extent that it is proved that such Director or officer actually received an
improper benefit or profit in money, property or services, for the amount of the
benefit or profit in
<PAGE>
money, property or services actually received, or (ii) to the extent that a
judgment or other final adjudication adverse to such Director or officer is
entered in a proceeding based on a finding in the proceeding that such
Director's or officer's action, or failure to act, was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated in the
proceeding. No amendment of these Articles of Incorporation or repeal of any of
its provisions shall limit or eliminate the benefits provided to directors and
officers under this provision with respect to any act or omission which occurred
prior to such amendment.
SECTION II. The provisions set forth in these Articles of Amendment and
Restatement are all of the provisions of the Charter of the Corporation in
effect upon acceptance of these Articles of Amendment and Restatement (the
"Articles") for record by the State Department of Assessments and Taxation of
Maryland, and upon such acceptance these Articles shall constitute the entire
Charter of the Corporation and supersede all prior Charter papers.
SECTION III. The foregoing complete Amendment and Restatement of the
Charter of the Corporation includes amendments to the Charter duly advised by
the Board of Directors and approved by the stockholders of the Corporation in
the manner required for a Charter amendment under the Charter and By-laws of the
Corporation and the laws of the State of Maryland.
SECTION IV. (a) The Board of Directors of the Corporation at a meeting
held on December 17, 1997, adopted a resolution in which was set forth the
foregoing complete Amendment and Restatement of the Articles of Incorporation,
declaring that said Amendment and Restatement were advisable, and directing that
they be submitted to the stockholders of the Corporation for their
consideration.
(b) The stockholders of the Corporation approved the
complete Amendment and Restatement of the Articles of the Corporation as
hereinabove set forth at a meeting of the stockholders held on April 28, 1998.
SECTION V. (a) The total number of shares of all classes of stock of
the Corporation heretofore authorized, and the number and par value of the
shares of each class are as follows: The total number of shares of stock which
the Corporation has authority to issue is fourteen million (14,000,000) shares,
consisting of twelve million (12,000,000) shares of common stock, $.01 par value
per share, and two million (2,000,000) shares of preferred stock, without par
value. The aggregate value of all authorized shares having a par value is one
hundred twenty thousand dollars ($120,000).
(b) The total number of shares of all classes of stock of
the Corporation, as increased, and the number and par value of the shares of
each class are as follows:
<PAGE>
The total number of shares of stock which the Corporation has
authority to issue is Twenty-Seven Million (27,000,000)
shares, consisting of Twenty-Five Million (25,000,000) shares
of common stock, $.01 par value per share, and Two Million
(2,000,000) shares of preferred stock, without par value. The
aggregate value of all authorized shares having a par value is
Two Hundred Fifty Thousand Dollars ($250,000).
(c) The preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of each class of authorized capital stock, as
increased, are as set forth in Section 1, Article FOURTH of these Articles of
Amendment and Restatement.
<PAGE>
IN WITNESS WHEREOF, First United Corporation has caused these Articles
of Amendment and Restatement to be signed and acknowledged in its name and on
its behalf by its Chairman of the Board and witnessed and attested by its
Secretary on this ___ day of April, 1998, and they acknowledged the same to be
the act of said Corporation, and that to the best of their knowledge,
information and belief, all matters and facts stated herein are true in all
material respects and that this statement is made under the penalties of
perjury.
ATTEST: FIRST UNITED CORPORATION
______________________________ By:_________________________(SEAL)
Robert W. Kurtz William B. Grant
Secretary Chairman of the Board
<PAGE>
PROXY
FIRST UNITED CORPORATION
P.O. Box 9
Oakland, MD 21550-0009
The undersigned hereby appoints Mr. Billy L. Eckstine and Dr. William G. Savage,
and each of them, as Proxies, with the powers the undersigned would possess if
personally present, and with full power of substitution, and hereby authorizes
them to represent and to vote as designated on the reverse side, all the shares
of Common Stock of First United Corporation held of record by the undersigned on
February 27, 1998, at the Annual Meeting of Shareholders to be held on April 28,
1998, or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. HOWEVER, IN THE ABSENCE OF DIRECTION TO
THE CONTRARY, THE ATTORNEYS NAMED HEREIN INTEND TO VOTE THIS PROXY "FOR"
PROPOSALS 1, 2 AND 3 HEREON, AND FOR MATTERS WHICH MAY BE PRESENTED AT THE
MEETING IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
(Please sign on reverse side and return immediately)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------
FOLD AND DETACH HERE
FIRST UNITED CORPORATION CAPABLE AND EAGER TO MEET THE FINANCIAL NEEDS OF ITS
SHAREHOLDERS
Dividend Reinvestment
A convenient way to make your shares in First United GROW!! Our plan also allows
you to purchase additional shares.
Trust Services
First United offers a complete array of trust services designed to meet the
individual needs of our clients. These services include personal trusts, estate
planning, employee benefit plans, estate administration and fully managed IRA's.
Certificate of Deposit
A complete selection of fully-insured deposit products are available at First
United. Investors can select from a range of maturities. Our skilled Customer
Service Officers are capable of designing investment programs to plan for
college, retirement, and other goals.
Brokerage Services
Full service brokerage is available through PRIMEVEST Financial Services located
at First United. PRIMEVEST offers a broad spectrum of investment products and
services, such as retirement planning, financial planning, portfolio management
and much more. Our PRIMEVEST Investment Executives devote a high level of
attention to your investment needs.
PRIMEVEST Financial Services, Inc. is an independent, registered broker/dealer.
Member of NASD/SIPC. Securities provided by PRIMEVEST: *Not FDIC Insured *No
Financial Institution Guarantee *May lose value.
President's Club
The President's Club is a truly unique club which brings together the special
customers of First United for informative seminars, delightful trips and special
promotions.
THIS LIST IS ONLY A SAMPLE OF THE SERVICES WHICH YOU, OUR OWNERS, CAN TAKE
ADVANTAGE OF, FOR MORE DETAILS ON THESE EXCITING SERVICES. CALL MY BANK'S
CUSTOMER SERVICE CENTER, TOLL FREE AT (888) 692-2654.
<PAGE>
1. Proposal to elect 18 Directors. If the proposed Articles of Amendment and
Restatement specified in Proposal 2 are adopted by the shareholders, the Board
of Directors will consist of three classes as listed. If such Articles of
Amendment and Restatement are not adopted, all eighteen of the director nominees
will be nominated to serve until the 1999 Annual Meeting of Shareholders.
For WITHHOLD
all nominees AUTHORITY
listed (except as to vote for all
marked to the contrary) nominees listed
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list below.)
<TABLE>
<CAPTION>
CLASS I (Term Expires 1999) CLASS II (Term Expires 2000) CLASS III (Term Expires 2001)
<S> <C> <C>
David J. Beachy Maynard G. Grossnickle Karen F. Myers
Donald M. Browning Raymond F. Hinkle I. Robert Rudy
Rex W. Burton Robert W. Kurtz James F. Scarpelli, Sr.
Paul Cox Jr., Andrew E. Mance Richard G. Stanton,
Richard D. Dailey, Jr. Elaine L. McDonald Robert G. Stuck
William B. Grant Donald E. Moran Frederick A. Thayer, III
2. Proposal to approve the Articles of Amendment and Restatement:
(a) Increase the authorized shares of Common Stock from 12,000,000 to 25,000,000
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(b) Stagger the terms of Directors and provide that they be removed only for cause, subject to regular Board
elections
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(c) Establish parameters for consideration by the Directors in evaluating acquisition offers
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(d) Limitation of Director and Officer liability consistent with Maryland law
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(e) All other technical and clarifying amendments.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
<PAGE>
3. Proposal to ratify the Appointment of Ernst & Young LLP as the
independent auditors of First United Corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournments thereof.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF NOTICE OF THE AFORESAID
ANNUAL MEETING OF SHAREHOLDERS.
Signature(s) Signature(s) Date NOTE: Please sign exactly as name appears hereon.
Joint holders should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please indicate the capacity in which you
are signing. If a corporation or other entity, please sign in full corporate or
entity name by authorized person.
o FOLD AND DETACH HERE o
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C72012l.634 T:2
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