Exhibit
10.UU


 


MERCANTILE
BANKSHARES CORPORATION


 


2004
RESTRICTED STOCK PROGRAM


 


Article 1:  Introduction


 


On March 3 2004, the
Compensation Committee (the “Committee”) of
the Board of Directors of Mercantile Bankshares Corporation (“MBC”), pursuant to Section 3.2 of the Mercantile Bankshares
Corporation 1999 Omnibus Stock Plan (the “Stock Plan”),
approved and adopted this Mercantile Bankshares Corporation 2004 Restricted
Stock Program (“Incentive Program”). Awards of
Restricted Stock hereunder are conditioned upon and subject to the prior (a)
approval by MBC stockholders of the Stock Plan, as amended, and (b)
certification in writing by the Committee that the performance goals and other
requirements set forth herein have been met. 
The awards of Restricted Stock hereunder are intended to qualify as
qualified performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (“Code”) and
the Treasury Regulations thereunder.  The
Incentive Program shall be interpreted and administered in compliance with such
provisions.  Capitalized terms under this
Incentive Program shall have the same meaning as under the Stock Plan unless
defined differently herein.


 


Article 2.  Administration.


 


The Incentive Program
shall be administered by the Committee as provided in Article 3 of the Stock
Plan.  The Committee consists solely of
two (2) or more “outside directors” within the meaning of Code Section 162(m)
and “nonemployee directors” as defined for purposes of Rule 16b-3 of the
Securities Exchange Act of 1934 (the “Exchange Act”).


 


Article 3.  Participants


 


Participants under the
Incentive Program shall mean those executives of MBC or its Affiliates listed
on Appendix A hereto.  Participation in
the Incentive Plan neither guarantees nor precludes participation in other
incentive and/or equity compensation plans of MBC or its Affiliates for 2004 or
other years.


 


Article 4.  Performance Period.


 


(a)                                  Definition:  The
period over which the performance goals set forth below must be met is the period
from January 1, 2004 to December 31, 2005 (the “Performance
Period”).


 





















 


(b)                                 Sale of MBC.  Notwithstanding
the above, the Performance Period shall end on the date of a “Sale” of MBC, if
earlier than December 31, 2005, which shall mean:


 


(i)                                     The
acquisition by any person, entity or “group”, within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act (excluding for this purpose, MBC or
its Affiliates, and excluding any acquisition of securities by any employee
benefit plan of MBC or its Affiliates), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent
(50%) or more of either the then outstanding shares of common stock of MBC or
the combined voting power of MBC’s then outstanding voting securities entitled
to vote generally in the election of directors (such common stock or then
outstanding voting securities being referred to herein as “Voting
Securities”), calculated on the date of the transaction causing the
foregoing fifty percent (50%) test to be met, without regard to any limitation
upon the voting rights of any acquiring person under Maryland statutes and
without regard to the potential exercisability of rights, not exercised on such
date, pursuant to any Stockholder Protection Rights Agreement of MBC then in
effect; or


 


(ii)                                  Approval
by the stockholders of MBC of (A) a reorganization, merger, consolidation or
statutory share exchange, in each case, with respect to which persons who are
the holders of the outstanding Voting Securities of MBC immediately prior to
such reorganization, merger, consolidation or statutory share exchange do not,
immediately thereafter, own more than fifty percent (50%) of the combined
voting power entitled to vote generally in the election of directors of the entity
resulting from such reorganization, merger, consolidation or statutory share
exchange, or (B) a liquidation or dissolution of MBC or the sale of all or
substantially all of the assets of MBC to an entity other than an Affiliate.


 


Article 5.  Incentive Awards.


 


(a)                                  Amount.  The award
payable to each Participant hereunder, subject to the conditions herein, shall
be shares of Restricted Stock in an amount whose Value (as defined below), as
of the last day of the Performance Period, equals one hundred percent (100%) of
the Participant’s annual base salary (not total base salary during the
Performance Period) as of the date of adoption and approval of this Incentive
Program by the Committee.  “Value” of the Restricted Stock shall mean the Fair Market
Value as defined in the Stock Plan or, in the case of a Sale of MBC, the
average weighted closing price of the shares for the thirty- (30) day trading
period immediately preceding the closing date of the transaction.


 


(b)                                 Issuance of Shares. 
Such shares of Restricted Stock shall be awarded and issued within
ninety (90) days of the end of the Performance Period, provided the Stock Plan,
as amended, is approved by MBC stockholders and the Committee certifies in
writing after the end of the Performance Period and prior to such award and
issuance of


 


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the Restricted Stock that
the performance goals and other requirements herein have been met.  No fractional shares shall be issued under
this Incentive Program.


 


(c)                                  Adjustments.  The
Committee may not increase the amount of any award hereunder that would be
issued and payable upon attainment of the performance goals herein but may
within its discretion reduce or eliminate any such award.


 


Article 6.  Performance and Employment Requirements


 


The following must be
certified in writing as met by the Committee as of the end of the Performance
Period before the award and issuance of Restricted Stock hereunder to a
Participant:


 


(a)                                  Performance Goal: 
Total Stockholder Return during the Performance Period, as measured by
the dividends payable on MBC common stock during the Performance Period
together with the increase from the Beginning Stock Price to the Ending Stock
Price, must reflect a compound annual growth rate of at least twelve percent
(12%).  For this purpose the following
definitions apply:


 


(i)                                     “Total Stockholder Return” means dividends paid on MBC Common
Stock based on each record date during the Performance Period plus appreciation
of MBC common stock as measured by the excess, if any, of the Ending Stock
Price over the Beginning Stock Price.  In
the event of stock splits or other recapitalizations involving MBC (excepting
stock repurchases or issuances of new stock for acquisitions), the Committee
shall make such adjustment as it deems appropriate to maintain comparability
between the Beginning Stock Price and Ending Stock Price.


 


(ii)                                  “Beginning Stock Price” means the average weighted closing
price of MBC common stock for the 30-day trading period beginning on January 1,
2004.


 


(iii)                               “Ending Stock Price” means:


 


(A) if
the Performance Period ends on December 31, 2005, other than as a result of the
Sale of MBC, the average weighted closing price of MBC common stock for the
thirty (30)-day trading period ending on such date; or


 


(B) if
the Performance Period ends on the date of the Sale of MBC, the average
weighted closing price of MBC common stock for the thirty (30)-day trading
period immediately preceding the Closing date of the transaction.


 


(b)                                 Continued Employment: 
The Participant must remain in the continued employment of MBC or its
Affiliates from the beginning of the Performance Period through the last day of
the Performance Period. Notwithstanding the foregoing, if a Participant does
not remain in continued employment during the Performance period


 


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solely because of death
or total disability (as defined in MBC’s long-term disability plan), the
Participant (or his estate, in the event of his death) shall nevertheless be
entitled to receive an award hereunder at the end of the Performance period on
the same basis as if he had remained in continued employment during the
Performance Period, so long as the performance goal described in Article 6 has
been attained.


 


Article
7.  Holding Period.


 


Restricted Stock issued
under this Incentive Program may not be sold or otherwise disposed of by the
Participant for one year from the issuance of the shares. During the
restriction period, cash dividends will not be paid to the Participant, but
will be accumulated as credits, to be converted to and paid as additional
shares at the end of the restriction period. The Committee may impose such
conditions as it determines in order to enforce such restriction including
without limitation providing for the holding of the shares of Restricted Stock
in escrow or providing for an appropriate legend on such share certificates.


 


Article 8.  Tax Withholding


 


MBC or any Affiliate
shall have the right to deduct from any compensation or any other payment of
any kind (including withholding the issuance of shares of MBC common stock) due
the Participant the amount of any federal, state or local taxes required by law
to be withheld as a result of the award, issuance or vesting of the Restricted Stock
hereunder.  In lieu of such deduction,
MBC may require the Participant to make a cash payment to MBC or an Affiliate
equal to the amount required to be withheld. 
If the Participant does not make such payment when requested, MBC may
refuse to issue any MBC common stock certificate hereunder until arrangements
satisfactory to the Committee for such payment have been made.


 


Article 9.  Miscellaneous


 


(a)                                  Employment.  Nothing
in the Incentive Program shall confer upon any Participant the right to remain in
the employ of MBC or its Affiliates or shall interfere or restrict in any way
the rights of the Participant’s employer to discharge or change the terms of
employment of any Participant at any time for any reason whatsoever, with or
without cause.


 


(b)                                 Other Plans.  The
adoption of the Incentive Program shall not affect any other equity or other
compensation or incentive plan in effect for MBC or any Affiliate, and the
Incentive Program shall not preclude the Committee or MBC’s Board of Directors
from establishing any other forms of incentive compensation.


 


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APPENDIX
A


 


LIST OF
PARTICIPANTS UNDER


THE MERCANTILE
BANKSHARES CORPORATION

2004 RESTRICTED STOCK PROGRAM.


 


1.                                       Edward
J. Kelly, III


2.                                       Alexander
Mason


3.                                       Michael
Reid


4.                                       Peter
Floeckher


5.                                       John
Unger


6.                                       Terry
Troupe


7.                                       Michael
Paese


 


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