Document:

Exhibit 10.2

 

ESCROW AGREEMENT

 

This Escrow Agreement, dated as of this 10th day of May, 2005 (this “Agreement”),
by and among (i) ABIOMED, Inc., a Delaware corporation (“ABIOMED”), (ii) the
persons named in Exhibit A attached hereto (collectively, the “Stockholders”),
who are all of the Stockholders of Impella CardioSystems AG, a German company (“Impella”),
(iii) Accelerated Technologies, Inc., in its capacity as agent for the Stockholders
(the “Stockholders’ Representative”) and (iv) American Stock Transfer &
Trust Company, a New York corporation, as escrow agent (the “Escrow Agent”).

 

WHEREAS, pursuant to a Share Purchase Agreement by and among ABIOMED,  Impella, the Stockholders and the Stockholders’
Representative dated as of April 26, 2005 (the “Purchase Agreement”), the
parties thereto have agreed, subject to the terms and conditions set forth
therein, that, among other things, ABIOMED will acquire Impella in exchange for
shares of ABIOMED Common Stock (as such term is defined in the Purchase
Agreement);

 

WHEREAS, pursuant and subject to the Purchase Agreement, the Stockholders
have agreed to indemnify ABIOMED for certain claims that ABIOMED may incur;

 

WHEREAS the
Stockholders have appointed the Stockholders’ Representative and the
Stockholders’ Representative has accepted the appointment to act on behalf of
such parties for purposes of this Agreement and as set forth in the Purchase
Agreement; and

 

WHEREAS, pursuant to the Purchase Agreement,  ABIOMED is transferring to the Escrow Agent as
security for potential claims for indemnification by ABIOMED pursuant to the terms
of the Purchase Agreement, an aggregate of 210,000 shares of ABIOMED Common
Stock (which amount represents a portion of the total number of shares of ABIOMED
Common Stock to be paid to the Stockholders at the Closing pursuant to the
terms of the Purchase Agreement (rounded up to the nearest whole number of
shares of ABIOMED Common Stock for each Stockholder)), to be held by the Escrow
Agent upon the terms and conditions set forth herein.  (For purposes of this Agreement, the term “Escrow
Fund” shall refer to the shares of ABIOMED Common Stock held by the Escrow
Agent from time to time pursuant to this Agreement);

 

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:

 

1.  Establishment of Escrow.

 

(a)  ABIOMED and the Stockholders hereby appoint the Escrow
Agent to serve as agent for the purpose of holding and distributing the Escrow
Fund upon the terms and conditions

 

 

herein set forth, and the Escrow Agent accepts such appointment subject
to the terms and conditions hereof.  In
accordance with Section 2.4(b) of the Purchase Agreement, at the Closing
(as defined in the Purchase Agreement), ABIOMED shall deposit with the Escrow
Agent 210,000 shares of ABIOMED Common Stock (collectively, the “Deposit”),
which shares represent a part of the shares of ABIOMED Common Stock issuable
pursuant to the Purchase Agreement.  The
Deposit shall consist of one certificate registered in the name of the Escrow
Agent.  The shares of ABIOMED Common
Stock contained in the Deposit shall be credited to a book entry account for
each such Stockholder maintained by the Escrow Agent (an “Account”), with each
Stockholder being credited with the number of shares of ABIOMED Common Stock
set forth opposite such Stockholder’s name on Exhibit A hereto.

 

(b)  If at any time during the term of this Agreement, a
stock dividend, reclassification, readjustment or other change is declared or
made in the capital structure of ABIOMED, certificates evidencing all new,
substituted or additional shares, or other securities, issued by reason of any
such change shall be deposited with the Escrow Agent and shall for all purposes
constitute part of the Escrow Fund hereunder and be deemed shares of ABIOMED
Common Stock as such term is used herein.

 

2.  Disbursement
of the Escrow Fund. 
Except as otherwise provided in this Section 2, the Escrow Fund
shall remain in existence from the Closing until the eighteen (18) month
anniversary of the date of this Agreement (the “Termination Date”).  The Escrow Agent shall continue to hold the
Escrow Fund in its possession until authorized hereunder to make distributions
from the Escrow Fund.  The Escrow Agent
shall distribute the Escrow Fund as follows:

 

(a)  If, at any time on or prior to the Termination Date,
ABIOMED wishes to make a claim (each, an Indemnification Claim) against the
Escrow Fund for which it reasonably believes it is entitled to recovery under Article IX
of the Purchase Agreement, ABIOMED shall execute and deliver to the Escrow
Agent (with a copy being sent simultaneously to the Stockholders’
Representative pursuant to Article IX of the Purchase Agreement) a written
notice asserting a claim for indemnification against the Stockholders in
accordance with Article IX of the Purchase Agreement (a “Claim Notice”;
and the right of indemnity asserted in a Claim Notice being hereinafter
referred to as a “Claim”) stating: (i) the dollar amount of the Claim and the
number of shares of ABIOMED Common Stock held in the Escrow Fund to be applied
to satisfy such Claim, determined after giving effect to the provisions of Article IX
of the Purchase Agreement (including the method of calculating the value of a
share of ABIOMED Common Stock) (the “Claimed Amount”), (ii) the Claim meets the
applicable threshold requirement of Section 9.5 of the Purchase Agreement
(the “Threshold Requirement”) and (iii) the nature and description of such
Claim in reasonable detail (to the extent known); provided, however, the
following shall apply:

 

(i)             In
order to be effective hereunder, a Claim Notice delivered to the Escrow Agent
pursuant to this Section 2(a) must (A) set forth the nature and
description of such Claim (to the extent known), the Claimed Amount (and the
application of the Threshold Requirement to the

 

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determination thereof), and the basis for ABIOMED’s request for
indemnification and (B) be received by the Escrow Agent and the Stockholders’
Representative on or prior to the close of business on the Termination Date;

 

(ii)          If,
following Escrow Agent’s receipt of any Claim Notice by ABIOMED pursuant to
this Section 2(a), the Escrow Agent either (A) receives written notification
from the Stockholders’ Representative that the Claim and the Claimed Amount is
not disputed or (B) does not receive a notice from the Stockholders’
Representative within twenty (20) days of receipt of the Claim Notice
indicating that a dispute exists with respect to the Claim, then the Escrow
Agent shall, within five (5) days after the earlier of the receipt of the
notice referred to in clause (A) of this paragraph or following the expiration
of the twenty (20) day period referred to in clause (B) of this paragraph,
deliver to ABIOMED from the Escrow Fund, through instruments of transfer
reasonably satisfactory to ABIOMED, certificates representing a number of
shares of ABIOMED Common Stock equal to the Claimed Amount but not in excess of
the Escrow Fund, or, if the Claimed Amount shall be greater than the remaining
portion of the Escrow Fund, the balance of the Escrow Fund; and

 

(iii)       If,
within twenty (20) days of the Escrow Agent’s receipt of a Claim Notice, the
Escrow Agent receives written notification from the Stockholders’
Representative that (A) such Claim is disputed or (B) that such Claim is only
partially disputed and that ABIOMED is only entitled to receive part, but not
all, of the Claimed Amount (the “Agreed Amount”), then the Escrow Agent shall
within five (5) days after the receipt of the notice referred to in clause (B)
of this paragraph, deliver to ABIOMED from the Escrow Fund through instruments
of transfer reasonably satisfactory to ABIOMED certificates representing a
number of shares of ABIOMED Common Stock equal to the Agreed Amount, but not in
excess of the Escrow Fund, or, if the Agreed Amount shall be greater than the
remaining portion of the Escrow Fund, the balance of the Escrow Fund.

 

(iv)      If,
within twenty (20) days of the Escrow Agent’s receipt of a Claim Notice, the
Escrow Agent receives written notification from the Stockholders’
Representative that it disputes all or any portion of a Claim, such dispute
shall be resolved pursuant to Section 3 hereof.  Within five (5) days after the Stockholders’
Representative and ABIOMED resolve a dispute with respect to the Claimed Amount
in the form of a memorandum pursuant to Section 3(a), a settlement
agreement pursuant to Section 3(b), or by obtaining a final order of
Arbitrators pursuant to Section 3(b), and such memorandum, settlement
agreement or order provides that ABIOMED is entitled to be indemnified for any
portion of the Claimed Amount, the Escrow Agent shall deliver to ABIOMED from
the Escrow Fund through instruments of transfer reasonably satisfactory to
ABIOMED certificates representing a number of shares of ABIOMED Common Stock
equal to the such portion of the Claimed Amount, but not in excess of the
Escrow Fund, or, if such portion of the Claimed Amount shall be greater than
the remaining portion of the Escrow Fund, the balance of the Escrow Fund.

 

(b)  Any distribution of shares of ABIOMED Common Stock to
satisfy an ABIOMED Claim pursuant to Section 2(a) hereof shall be deducted
from the respective Accounts of each

 

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Stockholder in proportion to each Stockholder’s pro rata portion set
forth on Exhibit A hereto (“Pro Rata Portion”), provided, however, that,
if the Account of a Stockholder does not contain shares of ABIOMED Common Stock
sufficient to pay such Stockholder’s Pro Rata Portion of such ABIOMED Claim (as
a result of a Claim based on a breach of a representation set forth in Section 4.1
of the Purchase Agreement) and other shares of ABIOMED Common Stock remain in
the Escrow Fund, then such other shares of ABIOMED Common Stock shall be deducted
from the respective Accounts of the other Stockholders to satisfy such ABIOMED
Claim in proportion to the amount that each such other Stockholder’s Pro Rata
Portion bears to the total Pro Rata Portions of all such other
Stockholders.  Notwithstanding the
foregoing, in the event of a Claim based on a breach of a representation set
forth in Section 4.1 of the Purchase Agreement by a particular
Stockholder, the Escrow Agent shall distribute to ABIOMED only those shares of
ABIOMED Common Stock held in the Escrow Fund and credited to the Account of the
Stockholder who is responsible for such Claim, as such Stockholder is
identified in the award, agreement or notice delivered to the Escrow Agent
pursuant to Section 2(a) hereof.

 

(c)  Promptly following the Termination Date, the Escrow
Agent shall, on receipt of written notice from ABIOMED or the Stockholders’
Representative, distribute to the Stockholders’ Representative on behalf of the
Stockholders the entire then remaining balance, if any, of the Escrow Fund,
that is in excess of the aggregate Claimed Amounts specified in all Claim
Notices which, on or prior to such date, have been delivered to the Escrow
Agent but which have not been paid to ABIOMED or otherwise discharged or
withheld pursuant to this Section 2. 
Any such distribution shall be deducted from each Stockholder’s Account
and distributed based on each Stockholder’s Pro Rata Portion.  To the extent that the final amount of a Claim
remains unknown on the Termination Date, a number of shares of ABIOMED Common
Stock reasonably estimated by ABIOMED and the Stockholders’ Representative as
providing adequate recourse for satisfaction of the final amount of the Claim,
plus an amount reasonably estimated by ABIOMED and the Stockholders’
Representative to provide reimbursement for costs and expenses incurred in
resolving such Claim, shall be reserved until the final resolution and
satisfaction of such Claim, and the Escrow Agent may rely upon a written
certification executed by both ABIOMED and the Stockholders’ Representative as
to such amounts.  Any portion of the
Escrow Fund which shall continue to be held by the Escrow Agent pursuant to the
preceding sentence shall be so held until such time as all disputed Claims
hereunder shall have been settled or resolved and notice of such settlement or
resolution setting forth the amounts to be paid to ABIOMED shall have been
delivered to the Escrow Agent in accordance with the terms hereof.  As outstanding Claims are resolved, reserves
in excess of the amounts withheld with respect to all Claims remaining
unresolved shall be released to the Stockholders’ Representative on behalf of
the Stockholders and shall be deducted from each Stockholder’s Account and
distributed based on each Stockholder’s Pro Rata Portion.

 

(d)  In order that the Escrow Agent may distribute the shares
of ABIOMED Common Stock from the Escrow Fund as provided in this Agreement,
ABIOMED agrees to cause its transfer agent to deliver to the Escrow Agent upon
surrender of a certificate then held by the Escrow Agent (i) a new certificate
or certificates representing the shares of ABIOMED Common

 

4

 

Stock to be distributed hereunder, issued in the name of the
distributee and (ii) if necessary, new certificates representing shares of
ABIOMED Common Stock issued in the name of the Escrow Agent to be retained by
the Escrow Agent as part of the Escrow Fund. 
The Stockholders shall execute and deliver such instruments of transfer,
stock powers and instructions to the Escrow Agent and ABIOMED as may be
reasonably requested to give effect to the provisions of this Agreement.  Each of the Stockholders hereby authorizes
the Stockholders’ Representative to execute and deliver any such instruments,
powers and instructions on its behalf and hereby constitutes and appoints the
Stockholders’ Representative its true and lawful agent and attorney-in-fact,
with full power of substitution to the Stockholders’ Representative and each
substitution so appointed, and full power and authority in its name, place and
stead, to make, execute and acknowledge all such documents.

 

3.  Resolution
of Conflicts.

 

(a)  In case the Stockholders’ Representative shall so object
in writing to the indemnification of ABIOMED, in respect of any Claim or Claims
made by ABIOMED in any Claim Notice, the Stockholders’ Representative and
ABIOMED shall attempt in good faith to agree upon their rights with respect to
each of such claims in accordance with Section 11.1 of the Purchase
Agreement.  If the Stockholders’
Representative and ABIOMED shall so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and shall be furnished
to the Escrow Agent.  The Escrow Agent
shall be entitled to rely on any such memorandum and to distribute shares of
ABIOMED Common Stock from the Escrow Fund in accordance with the terms of the
memorandum.

 

(b)  If an agreement cannot be reached after good faith
negotiation, the Escrow Agent shall deliver to ABIOMED that portion of the Claimed
Amount upon the Escrow Agent’s receipt of (i) a final order of Arbitrators in
accordance with Section 11.2 of the Purchase Agreement setting forth the
resolution of such dispute and the portion of the Claimed Amount in dispute, if
any, to which the Arbitrators have determined ABIOMED is entitled to be
indemnified, (ii) a joint written settlement agreement executed by the
Stockholders’ Representative and ABIOMED, which agreement provides that the
Stockholders’ Representative has agreed ABIOMED is entitled to be indemnified
for a portion of the Claimed Amount in dispute.

 

4.  Escrow
Agent’s Duties.

 

(a)  Except as expressly contemplated by this Agreement or by
joint written instructions from ABIOMED and the Stockholders’ Representative,
the Escrow Agent shall not transfer or otherwise dispose of in any manner all
or any portion of the Escrow Fund, except pursuant to an order of a court of
competent jurisdiction.

 

(b)  The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed to be genuine and to have been signed or presented by the proper
party or parties.  With respect to the
Stockholders’ Representative, the Escrow

 

5

 

Agent and ABIOMED shall be entitled to rely on any instrument executed
by the Stockholders’ Representative.  The
Escrow Agent shall not be liable for any act done or omitted hereunder as
Escrow Agent while acting in good faith and in the exercise of reasonable
judgment, and any act done or omitted pursuant to the advice of either in-house
or outside counsel to the Escrow Agent shall be conclusive evidence of such
good faith.

 

(c)  The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto (but not any
communications properly delivered pursuant to Sections 2 or 3 hereof) or by any
other person, excepting only a final order of arbitrators in accordance with Section 11.2
of the Purchase Agreement or orders or process of courts of law, and is hereby
expressly authorized to comply with and obey any such final order of arbitrators
or any orders, judgments or decrees of any court of law.  In case the Escrow Agent obeys or complies
with any such order, judgment or decree of any court of law, the Escrow Agent
shall not be liable to any of the parties hereto or to any other person by
reason of such compliance, notwithstanding any such order, judgment or decree
being subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.

 

(d)  The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.

 

(e)  If any party to this Agreement disagrees on anything
connected with the Escrow Fund, (1) the Escrow Agent will not have to settle
the matter, (2) the Escrow Agent may wait for a settlement by appropriate legal
proceedings or other means it may require, and in such event it will not be
liable for interest or damage, (3) if the Escrow Agent intervenes in or is made
a party to any legal proceedings, it will be entitled to such reasonable
compensation for services, costs and attorney’s fees pursuant to Section 5
hereof and (4) the Escrow Agent is entitled to hold assets deposited in the
Escrow Fund pending settlement of the disagreement by any of the above means.

 

5.  Indemnification and Fees of Escrow
Agent.

 

(a)  In consideration of its acceptance of the appointment as
Escrow Agent, the Stockholders’ Representative on behalf of the Stockholders
and ABIOMED, jointly and severally, shall indemnify and hold the Escrow Agent
harmless as to any liability incurred by it (other than for the ordinary
services contemplated by this Agreement) to any other person or entity by
reason of its having accepted the same or in carrying out any of the terms
hereof, and shall reimburse the Escrow Agent for all its out-of-pocket
expenses, including, among other things, reasonable counsel fees and court
costs, incurred by reason of its position hereunder or actions taken pursuant
hereto, except in the event of the negligence or misconduct of the Escrow Agent;
provided, however, that such liability or expenses shall be divided equally
between ABIOMED, on the one hand, and the Stockholders on the other.  The fees and charges set forth below for the
services of the Escrow Agent will be considered compensation for the Escrow
Agent’s ordinary services as contemplated by this Agreement.

 

6

 

(b) The Escrow Agent shall receive fees for its services hereunder in
accordance with the Fee Schedule attached hereto as Exhibit B.  All such fees shall be paid 50% by the
Stockholders and 50% by ABIOMED.

 

6.  Resignation, Removal, Successor. 

 

(a)  The Escrow Agent may resign as escrow agent under this
Agreement and thereby become discharged from the obligations hereby created, by
notice in writing given to ABIOMED and the Stockholders’ Representative not
less than thirty days before such resignation is to take effect.

 

(b)  The Escrow Agent may be removed at any time by an
instrument or concurrent instruments in writing delivered to the Escrow Agent
and signed by ABIOMED and the Stockholders’ Representative.

 

(c)  If at any time hereafter the Escrow Agent shall give
notice of its resignation pursuant to Section 6(a) hereof, shall be
removed pursuant to Section 6(b) hereof, or shall be dissolved or
otherwise become incapable of acting, or the position of the Escrow Agent shall
become vacant for any other reason, ABIOMED and the Stockholders’
Representative shall promptly appoint a successor Escrow Agent, which shall be
a bank or trust company having assets in excess of $500 million.  Upon such appointment such successor shall
execute, acknowledge and deliver to its predecessor, and also to ABIOMED and
the Stockholders’ Representative, an instrument in writing accepting such
appointment hereunder and agreeing to be bound by the terms and provisions of
this Agreement.  Thereupon such successor
Escrow Agent, without any further act, shall become fully vested with all the
rights, immunities, and powers, and shall be subject to all of the duties and
obligations of its predecessor and such predecessor Escrow Agent shall promptly
deliver the Escrow Fund to such successor.

 

(d)  In the event that a successor Escrow Agent has not been
appointed within thirty days of the date of any such resignation, removal,
dissolution, incapacity or vacancy, the Escrow Agent or its legal
representative shall deposit the Escrow Fund with the clerk of a court of
competent jurisdiction and shall interplead all of the parties hereto.  Upon so depositing the Escrow Fund and filing
its pleading, this Agreement shall terminate as to the Escrow Agent.

 

(e)  In the event the Escrow Agent is merged or consolidated
with any other entity, and as a result thereof the Escrow Agent ceases to exist
as a separate entity, then such surviving entity, without any further act,
shall become fully vested with all the rights, immunities, and powers, and shall
be subject to all of the duties and obligations, of the Escrow Agent.

 

7.  Valuation
of ABIOMED Common Stock for Indemnification Purposes.  Whenever the Escrow Agent delivers any shares
of ABIOMED Common Stock held in escrow to ABIOMED to satisfy all or a portion
of an Indemnification Claim, such shares of ABIOMED Common Stock shall be
valued in accordance with the provisions of Section 9.3(d) of the

 

7

 

Purchase Agreement.

 

8.  Conflict With Purchase Agreement.  In the case of a conflict between the
provisions of this Agreement and the Purchase Agreement, the provisions of the Purchase
Agreement shall govern.

 

9.  Voting and Dividends. 
Notwithstanding that a share of ABIOMED Common Stock is held in the Escrow
Fund, nothing contained in this Agreement shall in any way limit the rights of
the Stockholders to exercise the votes attaching to such shares of ABIOMED
Common Stock or to receive dividends thereon (other than dividends of shares of
ABIOMED Common Stock or other securities, which shall become part of the Escrow
Fund as provided in Section 1(b) hereof).

 

10.  Termination.  This Agreement shall terminate upon the
distribution by the Escrow Agent of all of the Escrow Fund in accordance with
the terms of this Agreement.

 

11.  Amendments and Supplements.  This Agreement may not be amended, modified
or supplemented by the parties hereto in any manner, except by an instrument in
writing signed by ABIOMED, the Stockholders’ Representative and the Escrow Agent.

 

12.  No Waiver.  The
terms and conditions of this Agreement may be waived only by a written
instrument signed by the party waiving compliance.  The failure of any party hereto to enforce at
any time any of the provisions of this Agreement shall in no way be construed
to be a waiver of any such provision, nor in any way to affect the validity of
this Agreement or any part hereof or the right of such party thereafter to
enforce each and every such provision. 
No waiver of any breach of or non-compliance with this Agreement shall
be held to be a waiver of any other or subsequent breach or
non-compliance.  The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity.

 

13.  Governing Law.  This
Agreement shall be governed by, and construed and enforced in accordance with,
the substantive laws of the State of Delaware, without regard to its principles
of conflicts of laws.

 

14.  Notice.  All notices
and other communications hereunder shall be in writing and shall be deemed
given if delivered by hand, sent by facsimile transmission with confirmation of
receipt, or sent via a reputable overnight courier service with confirmation of
receipt requested, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice), and shall be deemed
given on the date on which delivered by hand or otherwise on the date of
receipt as confirmed:

 

8

 

If to ABIOMED:

 

ABIOMED, Inc.

22 Cherry Hill Drive

Danvers, MA 01923

USA

Attention:   President

Facsimile:  (01)
978-777-8411

 

With a required copy to:

 

Foley Hoag LLP

155 Seaport Boulevard

Boston, Massachusetts 02210

USA

Attention:   Peter M. Rosenblum, Esq.

Facsimile:  (01) 617 832-7000

 

and

 

Freshfields Bruckhaus Deringer

Taunusanlage 11

60329 Frankfurt Am Main

Germany

Attention:   Dr. Karsten Müller-Eising

Facsimile:  (49) 69 23 26 64

 

To any Stockholder or the Stockholders’ Representative:

 

c/o Accelerated Technologies, Inc., as Stockholders’ Representative

401 Hackensack Avenue

Hackensack, NJ  07601

Attention:  Richard Geoffrion

Facsimile:  (201) 487-2005

 

With a required copy to:

 

Fulbright & Jaworski, L.L.P.

666 Fifth Avenue

New York, New York  10103

Attn:  Joseph F. Daniels, Esq.

Facsimile:  (212) 318-3400

 

To the Escrow Agent:

 

American Stock Transfer & Trust Company

6201 15th Avenue, 2nd Floor

 

9

 

Brooklyn, NY  11219

Attn:  Karen Trachtenberg

 

13.  Construction of
Agreement.  A reference to
a Section shall mean a Section in this Agreement unless otherwise
expressly stated.  The titles and
headings herein are for reference purposes only and shall not in any manner
limit the construction of this Agreement which shall be considered as a
whole.  The words “include,” “includes”
and “including” when used herein shall be deemed in each case to be followed by
the words “without limitation.”

 

14.  Entire Agreement,
Assignability, etc..  This
Agreement and the Purchase Agreement and the documents and other agreements
among the parties hereto and thereto as contemplated by or referred to herein
or therein constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to such
subject matter.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.  This
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder, except as otherwise expressly provided
herein and shall not be assignable by operation of law or otherwise.

 

15.  Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.

 

16.  Counterparts.  This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same
Agreement.

 

*   
*    *    *   
*

 

10

 

IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed as an agreement under seal as of the date first written above.

 

	
   

  	
  ABIOMED, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Javier Jimenez

  	
   

  
	
   

  	
  Name: Javier Jimenez

  
	
   

  	
  Title: VP Operations

  
	
   

  	
   

  
	
   

  	
  AMERICAN STOCK TRANSFER & TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  /s/ Herbert J. Lemmer

  	
   

  
	
   

  	
  Name: Herbert J. Lemmer

  
	
   

  	
  Title: Vice President

  

 

[Signature Page to Escrow Agreement]

 

 

	
   

  	
  STOCKHOLDERS’ REPRESENTATIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCELERATED TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
    /s/ John P. Brancaccio

  	
   

  
	
   

  	
  Name: John P. Brancaccio

  
	
   

  	
  Title: CFO

  

 

 

	
   

  	
  IMPELLA STOCKHOLDERS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  ACCELERATED
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ John P.
  Brancaccio

  	
   

  
	
   

  	
   

  	
   

  	
  Name: John P. Brancaccio

  
	
   

  	
   

  	
   

  	
  Title: CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MRNA FUND II L.P.

  
	
   

  	
   

  	
  By:  OBP Management IV L.P., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jeffrey T.
  Barnes

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Jeffrey T. Barnes

  
	
   

  	
   

  	
   

  	
  Title: General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OXFORD BIOSCIENCE PARTNERS IV L.P.

  
	
   

  	
   

  	
  By:  OBP Management IV L.P., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jeffrey T.
  Barnes

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Jeffrey T. Barnes

  
	
   

  	
   

  	
   

  	
  Title: General Partner

  

 

 

	
   

  	
  GIZA EXECUTIVE VENTURE FUND III L.P.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Avi Molcho

  	
   

  
	
   

  	
  Name: Avi Molcho

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Zvi Schecter

  	
   

  
	
   

  	
  Name: Zvi Schechter

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIZA ALPINVEST VENTURE FUND III L.P.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Avi Molcho

  	
   

  
	
   

  	
  Name: Avi Molcho

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Zvi Schecter

  	
   

  
	
   

  	
  Name: Zvi Schechter

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIZA GE VENTURE FUND III L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Avi Molcho

  	
   

  
	
   

  	
  Name: Avi Molcho

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Zvi Schecter

  	
   

  
	
   

  	
  Name: Zvi Schechter

  
	
   

  	
  Title: Managing Director

  

 

 

	
   

  	
  GIZA GMULOT VENTURE FUND III L.P.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Avi Molcho

  	
   

  
	
   

  	
  Name: Avi Molcho

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Zvi Schecter

  	
   

  
	
   

  	
  Name: Zvi Schechter

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GIZA VENTURE FUND III L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Avi Molcho

  	
   

  
	
   

  	
  Name: Avi Molcho

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Zvi Schecter

  	
   

  
	
   

  	
  Name: Zvi Schechter

  
	
   

  	
  Title: Managing Director

  

 

 

	
   

  	
  /s/ Donald
  S. Baim

  	
   

  
	
   

  	
  Dr. Donald
  S. Baim

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Daniel
  Burkhoff

  	
   

  
	
   

  	
  Dr. Daniel
  Burkhoff

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Peter J.
  Fitzgerald

  	
   

  
	
   

  	
  Dr. Peter J.
  Fitzgerald

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard
  Geoffrion

  	
   

  
	
   

  	
  Richard
  Geoffrion

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Martin
  B. Leon

  	
   

  
	
   

  	
  Dr. Martin
  B. Leon

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Mark
  Maguire

  	
   

  
	
   

  	
  Mark Maguire

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Arthur
  Pergament

  	
   

  
	
   

  	
  Arthur
  Pergament

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Paul
  Spence

  	
   

  
	
   

  	
  Dr. Paul
  Spence

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Paul S.
  Teirstein

  	
   

  
	
   

  	
  Dr. Paul S.
  Teirstein

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Eberhard Grube

  	
   

  
	
   

  	
  Dr. Eberhard
  Grube

  

 

 

	
   

  	
  ABN AMRO
  PARTICIPATIES B.V.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. A. van Osis

  	
   

  
	
   

  	
  Name: M. A. van Osis

  
	
   

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ LPA Bergstein

  	
   

  
	
   

  	
  Name: LPA Bergstein

  
	
   

  	
  Director

  

 

 

	
   

  	
  MEDICA II INVESTMENTS
  (INTERNATIONAL) L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Yuval Binur

  	
   

  
	
   

  	
  Name: Yuval Binur

  
	
   

  	
  Title: GP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICA II INVESTMENTS (P.F) (ISRAEL) L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Yuval Binur

  	
   

  
	
   

  	
  Name: Yuval Binur

  
	
   

  	
  Title: GP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICA II INVESTMENTS (ISRAEL) L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Yuval Binur

  	
   

  
	
   

  	
  Name: Yuval Binur

  
	
   

  	
  Title: GP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

	
   

  	
  /s/ Volker Trenz    /s/
  Rolf Käse

  
	
   

  	
  (Dr. Paolo Cremascoli

  represented by

  Volker Trenz and Dr. Rolf Käse

  on the basis of their power of attorney)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Volker Trenz    /s/
  Rolf Käse

  
	
   

  	
  (Guido Derjung

  represented by

  Volker Trenz and Dr. Rolf Käse

  on the basis of their power of attorney)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Rolf Käse

  
	
   

  	
  (Dr. Rolf Käse)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Volker Trenz    /s/
  Rolf Käse

  
	
   

  	
  (Dirk Michels

  represented by

  Volker Trenz and Dr. Rolf Käse

  on the basis of their power of attorney)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Volker Trenz    /s/
  Rolf Käse

  
	
   

  	
  (Christoph Nix

  represented by

  Volker Trenz and Dr. Rolf Käse

  on the basis of their power of attorney)

  

 

 

	
   

  	
  /s/ Volker Trenz    /s/
  Rolf Käse

  
	
   

  	
  (Prof. Dr. Günter Rau

  represented by

  Volker Trenz and Dr. Rolf Käse

  on the basis of their power
  of attorney)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Volker Trenz    /s/
  Rolf Käse

  
	
   

  	
  (Community of Heirs After

  Prof. Dr. Helmut Reul

  represented by

  Volker Trenz and Dr. Rolf Käse

  on the basis of their power
  of attorney)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Volker Trenz    /s/
  Rolf Käse

  
	
   

  	
  (Sebastian Schwandtner

  represented by

  Volker Trenz and Dr. Rolf Käse

  on the basis of their power
  of attorney)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Volker Trenz    /s/
  Rolf Käse

  
	
   

  	
  (Dr. Thorsten Sieß

  represented by

  Volker Trenz and Dr. Rolf Käse

  on the basis of their power
  of attorney)Exhibit 10.1

 

MERCANTILE
BANKSHARES CORPORATION

STOCK
RETAINER AND DEFERRED COMPENSATION PLAN

FOR NON-EMPLOYEE DIRECTORS

 

INTRODUCTION

 

The Mercantile Bankshares
Corporation Stock Retainer and Deferred Compensation Plan for Non-Employee
Directors (the “Plan”) was approved by the Board of Directors of Mercantile
Bankshares Corporation (the “Sponsor”) on March 8, 2005, and shall become
effective on the date of the 2005 annual meeting of the stockholders of the
Sponsor, subject to its approval by such stockholders at such annual
meeting.  It is intended that the Plan
meets the requirements of Section 409A of the Internal Revenue Code of
1986, as amended, (“Code”) and any regulations, rulings and notices published
thereunder and the Plan shall be administered and interpreted accordingly.

 

1.             Purpose

 

The purpose of the Plan
is to promote the interests of the Sponsor and its stockholders by increasing
the proprietary interests of non-employee directors of the Sponsor and
Affiliates (as defined below) in the growth and performance of the Sponsor by
awarding to non-employee directors of the Sponsor an annual stock retainer in
addition to their annual cash retainer and by enabling non-employee directors
to defer receipt of the annual stock retainer, annual cash retainer and other
cash compensation otherwise payable for services as a director by so electing
in accordance with the provisions of the Plan.

 

2.             Definitions

 

Under the Plan, except
where the context indicates otherwise, the following definitions apply:

 

(a)           “Account” shall
mean a bookkeeping reserve account established and maintained for each
Participant pursuant to Section 6(a) for purposes of determining the
amount payable to the Participant pursuant to Section 7.

 

(b)           “Affiliate”
shall mean any corporation in which the Sponsor owns directly or indirectly at
least eighty percent (80%) of the outstanding voting stock.

 

(c)           “Annual Cash Retainer”
shall mean the annual cash retainer as established from time to time by the
Corporation and payable to Directors for their services as members of the Board
and/or as chairpersons of committees of the Board of the Corporation for any
calendar year.  The Annual Cash Retainer
may be reduced in proportion to any period of time in a calendar year during
which a Director has not served as a member of the Board and/or chairperson of
a committee of the Board, as applicable, of the Corporation.

 

 

(d)           “Annual Stock Retainer”
shall mean an annual stock award of 500 shares of Common Stock that shall be
made as of June 1, 2005 and each January 1 thereafter while this Plan
is in effect to Directors of the Sponsor who are members of the Board of
Sponsor on such dates.  In lieu of such
stock award for the calendar year in which a Director is initially elected to
the Sponsor’s Board, the new Director will receive a one-time award of 500
shares of Common Stock on the thirty-first day after being elected to the Board
which for all purposes herein shall be treated the same as an Annual Stock
Retainer.

 

(e)           “Beneficiary”
shall mean the person(s) entitled, pursuant to Section 7(e) of the
Plan, to receive payments under the Plan at and after the death of the
Participant, including the person(s) designated by the Participant, the
Participant’s estate or the estate of a deceased Beneficiary, all as more
particularly described in Section 7(e).

 

(f)            “Board of Directors” or “Board”
shall mean the Board of Directors of the Sponsor or an Affiliate, as the case
may be.

 

(g)           “Code”  shall mean the Internal Revenue Code of 1986,
as amended.

 

(h)           “Corporation”
shall mean Mercantile Bankshares Corporation and any Affiliate and any
successor thereto by merger, consolidation or otherwise.

 

(i)            “Committee”
shall mean the committee appointed by the Board of Directors of the Sponsor
pursuant to Section 3 to administer the Plan, as the committee may be
constituted from time to time, or, in lieu thereof, the Board of Directors of
the Sponsor.

 

(j)            “Common Stock”
shall mean shares of the Sponsor’s authorized and issued common stock, par
value of Two Dollars ($2.00) per share.

 

(k)           “Deferral Agreement”
shall mean a written agreement, in the form established from time to time by
the Committee, executed by the Participant and delivered to the Committee, on
which the Participant specifies his or her elections pursuant to Sections 5 and
7.

 

(l)            “Deferred Compensation”
shall mean the portion of each Annual Cash Retainer, Annual Stock Retainer and
other cash compensation payment which would have been payable to the
Participant in his or her capacity as a Director while participating in the
Plan and which portion the Director has elected to defer under the terms of an
election pursuant to Sections 5 and 7.

 

(m)          “Director”
shall mean a member of the Board of Directors of the Sponsor or any Affiliate
who is not an officer of the Sponsor or any Affiliate.

 

(n)           “Elected Amount”  shall mean the portion
of the Undeferred Annual Cash Retainer that a Participant elects under Section 5(d) to
receive in the form of shares of Common Stock.

 

(o)           “Election Date”
shall mean, as to each calendar year, the date of the regularly scheduled December meeting
of the Sponsor’s Board; if no such meeting is held, the Election Date shall be December 10
of such calendar year.

 

2

 

(p)           “Fair Market Value”
of a share of Common Stock on a particular date under the Plan shall mean the
last reported sale price per share of Common Stock, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on a national securities exchange or included for quotation on the
Nasdaq Stock Market, or if the Common Stock is not so listed or admitted to
trading or included for quotation, the last quoted price, or if the Common
Stock is not so quoted, the average of the high bid and low asked prices,
regular way, in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System or, if such system
is no longer in use, the principal other automated quotations system that may
then be in use or, if the Common Stock is not quoted by any such organization,
the average of the closing bid and asked prices, regular way, as furnished by a
professional market maker making a market in the Common Stock as selected in
good faith by the Committee or by such other source or sources as shall be
selected in good faith by the Committee; provided, however, that the
determination of Fair Market Value shall be made by the Committee in good faith
in accordance with the Code.  If, as the
case may be, the particular date for which Fair Market Value need be
established under the Plan is not a trading day, the determination shall be
made as of the next preceding trading day. 
As used herein, the term “trading day” shall mean a day on which public
trading of securities occurs and is reported in the principal consolidated
reporting system referred to above, or if the Common Stock is not listed or
admitted to trading on a national securities exchange or included for quotation
on the Nasdaq Stock Market, any day other than a Saturday, a Sunday or a day on
which banking institutions in the State of New York are closed.

 

(q)           “Frozen Plan”
shall mean the Mercantile Bankshares Corporation and Participating Affiliates
Unfunded Deferred Compensation Plan.

 

(r)            “Participant”
shall mean a Director of a Corporation.

 

(s)           “Phantom Stock Credits”
shall mean those amounts credited to the Participant’s Account pursuant to Section 6(c),
where each such Phantom Stock Credit is equivalent to the Fair Market Value of
one share of Common Stock, but the crediting of which does not transfer any of
the attributes of ownership of a share of Common Stock to the Participant.

 

(t)            “Plan” shall
mean the Mercantile Bankshares Corporation Stock Retainer and Deferred
Compensation Plan For Non-Employee Directors, as described herein and as
amended from time to time.

 

(u)           “Sponsor” shall mean
Mercantile Bankshares Corporation, a Maryland corporation.

 

(v)           “Undeferred Annual Cash
Retainer”  shall mean all or
any portion of the Annual Cash Retainer which was eligible to be deferred, but
shall not have been deferred pursuant to a Deferral Agreement under the Plan or
the Frozen Plan.

 

(w)          “Valuation Date” shall
mean the last business day of March, June, September and December.

 

3

 

3.             Administration

 

The Plan shall be
administered by the Board of Directors of the Sponsor.  In the alternative, the Board of Directors of
the Sponsor may appoint a Committee that is composed solely of two or more
Non-Employee Directors, as that term is defined in Rule 16b-3(b)(3)(i) promulgated
under the Securities Exchange Act of 1934, as amended, to administer the Plan
on behalf of the Board of Directors of the Sponsor, subject to such terms and
conditions as the Board of Directors of the Sponsor may prescribe.  The Committee shall have the authority, in
its sole and absolute discretion, to interpret the Plan and adopt, amend, or
rescind such rules and procedures for carrying out the Plan, and to take
all other action necessary or advisable for the implementation and
administration of the Plan, as the Committee may deem appropriate.  Once appointed, the Committee shall continue
to serve until otherwise directed by the Board of Directors of the
Sponsor.  From time to time, the Board of
Directors of the Sponsor may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefore, fill vacancies, however caused, and
remove all members of the Committee and, thereafter, directly administer the
Plan.  In the event that the Board of
Directors of the Sponsor is the administrator of the Plan in lieu of a
Committee, the term “Committee” as used herein shall be deemed to mean the
Board of Directors of the Sponsor.

 

4.             Eligibility; Shares Subject to the Plan

 

(a)           Eligibility.

 

All Directors of a
Corporation are eligible to participate in the Plan.

 

(b)           Shares Subject to Plan.

 

Subject to adjustment as
provided in Section 6(e), an aggregate of four hundred forty-five thousand
(445,000) shares of Common Stock shall be available for issuance under the
Plan.

 

5.             Participant Elections

 

(a)           Deferral Elections.

 

(i)  Except as
otherwise provided below, any Director who first becomes eligible to
participate in the Plan in a calendar year may elect to defer all or any
portion of the Annual Cash Retainer, Annual Stock Retainer and other cash
compensation earned in his or her capacity as a Director during such calendar
year and after such election is made by filing a Deferral Agreement to that
effect with the Committee within thirty (30) days after first becoming eligible
to participate.  If a Deferral Agreement
is not received by the Committee within such thirty (30)-day period, the
Director may only elect to defer receipt under the Plan of the Annual Cash Retainer,
Annual Stock Retainer and other cash compensation as of January 1 of the
subsequent calendar year or January 1 of any later calendar year and shall
make such election by filing a Deferral Agreement to that effect with the
Committee by December 31 of the calendar year immediately preceding the
calendar year during which the election is to take effect.

 

4

 

(ii) Unless
otherwise withdrawn by the Participant as provided below, a Deferral Agreement
shall continue to apply to the Annual Cash Retainer, Annual Stock Retainer and
other cash compensation received in subsequent calendar years until the end of
the calendar year in which that person ceases to be an eligible Director.  A Participant who ceases to be an eligible
Director shall, nevertheless, remain an inactive Participant hereunder and
shall remain bound by all applicable provisions of the Plan until such time as
his or her Account shall be fully distributed.

 

(iii)  Amounts
deferred from the Annual Cash Retainer and other cash compensation by a
Participant pursuant to a deferral election applicable to calendar year 2005
under the Frozen Plan shall be transferred to and administered in accordance
with this Plan.  The method of payment
under this Plan for such transferred amounts shall be the method elected by
such Participant in a Deferral Agreement filed under this Plan on or before December 31,
2005 (or such later time as may be permitted under Section 409A of the
Code), specifying the form of payment; in the absence of such an election the
method provided in section 7(f) of this Plan shall govern.  With respect to Directors who were eligible
to participate under the Frozen Plan as of the effective date of this Plan, the
amount of the deferral election under the Frozen Plan for calendar year 2005
shall continue to govern with respect to the deferral of the Annual Cash
Retainer and other cash compensation for calendar year 2005 and no change to
such election for calendar year 2005 shall be permitted under this Plan or
otherwise.

 

(iv)          Deferral elections shall not be
permitted with respect to the Annual Stock Retainer payable in calendar year
2005.

 

(b)           Deferral Agreements.

 

(i)  Each Deferral
Agreement shall specify the percentage of the Annual Cash Retainer, Annual
Stock Retainer and other cash compensation payable to the Director, the receipt
of which the Director elects to defer pursuant to the Plan.

 

(ii)  All Deferral
Agreements shall be effective prospectively and only with respect to amounts
earned by the eligible Director subsequent to the date each such Deferral
Agreement is received by the Committee.

 

(iii)  A Deferral
Agreement shall remain in effect with respect to compensation earned by the
Director in subsequent calendar years until a revised Deferral Agreement is
filed with the Committee that modifies any elections in effect under the
current Deferral Agreement on file with the Committee.  Any such modifications to current elections
shall be effective as of January 1 of the calendar year immediately
following the calendar year in which the revised Deferral Agreement is received
by the Committee.  An election to defer
all or any part of a Director’s compensation shall be irrevocable with respect
to the calendar year to which such deferral election applies.

 

(c)           Termination or Withdrawal of
Participation. A Director’s termination of active participation or
termination of election to defer shall not cause acceleration or modification
of the periodic method of payment elected by the Director pursuant to Section 7
with respect to the balance of the Director’s Account accrued as of the
effective date of such

 

5

 

termination (or with
respect to any dividend equivalent Phantom Stock Credits credited to such
Account thereafter and before the entire balance of such Account has been
distributed).

 

(d)           Elections to Receive Stock.  Each person who is a Director of the Sponsor
on an Election Date in any calendar year shall have the right to elect, within
a ten-day period ending on the Election Date, to have all or a portion of such
Director’s Undeferred Annual Cash Retainer paid in the form of Common Stock in
lieu of cash, provided that the Elected Amount shall not be less than
$3,000.  The number of shares of such
Common Stock shall equal such Elected Amount divided by the Fair Market Value
of a share of Common Stock on the Election Date.  Such Elected Amount and the number of shares
of Common Stock so issuable shall be adjusted by a reduction if and to the
extent necessary to avoid issuance of any fractional shares.  The shares shall be deemed issued at the
close of business on the Election Date and certificates therefore shall be
delivered as soon as practicable thereafter. 
All such shares shall be 100% vested upon issuance.  Any election by a Director to receive Common
Stock under this Section 5(d) shall be made by the execution by the
Participant and delivery to the Committee of a form established by the
Committee from time to time for such purpose.

 

(e)           Payment of Annual Stock
Retainer.  Any shares of Common
Stock payable with respect to an Annual Stock Retainer which were not deferred
under a Deferral Agreement pursuant to the provisions above shall be issued to
the respective Director at the close of business on the date the Annual Stock
Retainer is payable and certificates therefore shall be delivered as soon as
practicable thereafter to such Director. 
All such shares shall be 100% vested upon issuance.

 

6.             Deferred Compensation Accounts

 

(a)           Accounts, In General.  After the effective date of any
deferral election properly filed with the Committee by a Director, the Sponsor
shall establish an Account on its books in the name of the Director, which
Account shall be credited or debited, as the case may be, with Deferred
Compensation and/or Phantom Stock Credits as described below, and payments
pursuant to Section 7.  Each such
Account shall consist of such subaccounts as are necessary or desirable to the
Committee for the convenient administration of the Plan.  The Account and any subaccounts established thereunder
shall be bookkeeping reserve accounts only and shall not require segregation of
any funds of the Sponsor or an Affiliate or provide any Participant with any
rights to any assets of the Sponsor or an Affiliate, except, to the extent
applicable, as a general creditor thereof. 
Neither a Participant nor a Participant’s Beneficiary shall have any
right to receive payment of any amount credited to the Participant’s Account
except as expressly provided in Section 7.

 

(b)           Vesting.  Each Participant shall be at all times fully
vested in and have a nonforfeitable right to the aggregate amount credited to
the Participant’s Account.

 

6

 

(c)           Deferred Compensation and
Phantom Stock Credits.

 

(i)  All Deferred
Compensation deferred by a Participant under the Plan shall be credited to the
Participant’s Account as of the applicable Valuation Date in the form of
Phantom Stock Credits.

 

(ii)  The number of
such Phantom Stock Credits to be credited to each Participant’s Account from
deferral of all or a portion of the Annual Stock Retainer shall be the number
of shares of Common Stock deferred and shall be credited as of the date the
Annual Stock Retainer would otherwise be paid. 
The number of such Phantom Stock Credits to be credited to each
Participant’s Account as of any Valuation Date from all other Deferred
Compensation shall be determined by dividing (A) the aggregate dollar
amount of such other Deferred Compensation that otherwise would have been
payable to the Participant during the calendar quarter ending on such Valuation
Date absent the Participant’s election to defer such amount pursuant to the
Plan, by (B) the Fair Market Value of one share of Common Stock on such
Valuation Date.  Phantom Stock Credits
shall be added to the Phantom Stock Credits previously credited to the
Participant’s Account and may be credited to such Account in whole or
fractional units as applicable.

 

(d)           Dividend Equivalents.  As of each Valuation Date, each Participant’s
Account that has a balance of Phantom Stock Credits shall be credited with
dividend equivalent Phantom Stock Credits determined by dividing (i) the
aggregate dividends that the Participant would have received during the
calendar quarter ending on such Valuation Date if the Participant were the
owner of record throughout such calendar quarter of a number of whole shares of
Common Stock equal to the number of whole Phantom Stock Credits credited to
such Participant’s Account as of such Valuation Date (but prior to the crediting
of any Deferred Compensation on such Valuation Date), by (ii) the Fair
Market Value of one share of Common Stock on such Valuation Date.  Dividend equivalent Phantom Stock Credits
shall be added to the Phantom Stock Credits previously credited to the Participant’s
Account and may be credited to such Account in whole or fractional units as
applicable.

 

(e)           Adjustments.  The Committee shall adjust the
Phantom Stock Credits credited to each Participant’s Account and the number of
shares of Common Stock authorized to be issued under the Plan, as appropriate,
to reflect any stock dividend, stock split, combination of shares, merger,
share exchange, consolidation or any other change in the corporate structure or
shares of the Sponsor.

 

7.             Distributions of Deferred Compensation Accounts

 

(a)           Phantom Stock Credits may be redeemed
only for whole shares of Common Stock in accordance with the provisions of the
Plan.  No fractional shares of Common
Stock shall be distributable under the Plan.

 

(b)           Each Participant shall elect, in his
or her first Deferral Agreement properly filed under the Plan, the method of
payment of distributions of the Participant’s Account.  The method of payment elected in a Deferral
Agreement shall remain in effect with respect to deferrals under the Plan in
subsequent calendar years until a revised Deferral Agreement is filed with the
Committee that modifies the method of payment election in effect under the
current Deferral Agreement on file with the Committee.  Any such

 

7

 

modifications to the
method of payment election shall be effective as to deferrals under the Plan on
or after January 1 of the calendar year immediately following the year in
which the revised Deferral Agreement is received by the Committee. An election
as to method of payment shall be irrevocable with respect to the deferrals in
the calendar year to which such method of payment election applies. A
Participant may elect to receive distributions in a number of substantially equal
annual or quarterly installments (which shall include dividend equivalent
Phantom Stock Credits) not to exceed ten (10) if the installment payments
are to be made annually, and not to exceed forty (40) if the installment
payments are to be made quarterly.  If a
Participant elects to receive distributions in annual installments, the first
installment payment shall be made during the first calendar quarter of the
calendar year immediately following the calendar year in which the Participant
ceases to be a Director, and shall be based on the value of the Participant’s
Account as of the Valuation Date occurring in the last calendar quarter of the
calendar year in which the Participant ceases to be a Director.  If a Participant elects to receive
distributions in quarterly installments, the first installment payment shall be
made during the first calendar quarter immediately following the calendar
quarter in which the Participant ceases to be a Director, and shall be based on
the value of the Participant’s Account as of the Valuation Date occurring in
the calendar quarter in which the Participant ceases to be a Director.  Amounts held for installment payments shall
continue to be credited with dividend equivalent Phantom Stock Credits.  Subsequent installments shall be made during
each succeeding calendar quarter, if installment payments are to be made
quarterly, or during the first calendar quarter of each succeeding calendar
year, if installment payments are to be made annually, until the entire balance
of such Participant’s Account due to that Participant has been paid.  All distributions shall be based on the value
of or the number of Phantom Stock Credits allocated to the Participant’s
Account as of the Valuation Date immediately preceding such distribution.

 

(c)           The Committee shall in all events
make a single lump sum payment, notwithstanding the periodic method elected by
the Participant, if the balance of the Participant’s Account at the time of
commencement of benefits is less than Fifty Thousand Dollars ($50,000).  The distribution shall be based on the value
of the Participant’s Account as of the Valuation Date immediately preceding
such distribution.

 

(d)           In the event a Participant ceases to
be a Director and becomes employed by any governmental agency that has
jurisdiction over the activities of the Sponsor or an Affiliate (all as
determined by the Committee), the entire unpaid balance of all of such
Participant’s Account shall be paid immediately, in a single lump sum payment,
without regard to the timing of distributions elected pursuant to Section 7(b),
subject to Section 409A of the Code. 
The distribution shall be based on the value of the Participant’s
Account as of the Valuation Date immediately preceding such distribution.

 

(e)           If a Participant dies before full
payment is made of such Participant’s Account, the unpaid balance of such
Account shall be paid to the surviving Beneficiary designated in writing by the
Participant, on a form established from time to time by the Committee for such
purpose and delivered to the Committee, in one lump sum payment.  The filing of a designation of Beneficiary
shall be deemed automatically to revoke any previously filed Beneficiary
designation.  If (i) no designation
shall be in effect, or (ii) no designated Beneficiary survives the
Participant, or (iii) the designated Beneficiary is the Participant’s
estate, then the unpaid balance at the Participant’s death shall be paid to the
estate of the Participant in one lump sum payment.  Payment to the Participant’s estate or

 

8

 

Beneficiary shall be made
during the calendar quarter immediately following the calendar quarter in which
the Participant dies.  All distributions
shall be based on the value of the Participant’s Account as of the Valuation
Date immediately preceding such distribution.

 

(f)            In the event a Participant failed to
timely elect the method of payment in a Deferral Agreement properly filed under
the Plan for the deferrals for a calendar year, the balance of the Participant’s
Account attributable to the deferrals for such calendar year shall be paid in a
single lump sum payment during the calendar quarter immediately following the
calendar quarter in which the Participant ceases to be a Director.  The distribution shall be based on the value
of that portion of the Participant’s Account as of the Valuation Date
immediately preceding such distribution.

 

8.             Assignment and Payments Upon Incapacity

 

(a)           No right of any Participant or
Beneficiary in the Plan to receipt of a Participant’s Account shall be
assignable or subject to anticipation, encumbrance, sale, pledge, alienation,
execution, levy, attachment, charge or any other form of transfer or
encumbrance of any nature whatsoever except that a Participant may name a
Beneficiary in respect of the rights of the Participant in the event of such
Participant’s death.  Upon the occurrence
of any event deemed by the Corporation to be in violation, attempted violation
or to evidence any danger of violation of the prohibition on transfers and
encumbrances described in this Section 8(a), all as determined by the
Committee, the Corporation may refuse to honor such transfer or encumbrance and
make payment, when due, to anyone else deemed by the Corporation to be a
natural object of the bounty of the Participant or Beneficiary to whom such
withheld payments would otherwise have been made.

 

(b)           If the Committee shall find that any
person to whom any payment is payable under the Plan is unable to care for his
or her affairs because of illness or accident, or is a minor, any payment due
(unless a prior claim therefore shall have been made by a duly appointed
guardian, committee, or other legal representative) may be paid to the spouse,
a child, a parent, or a brother or sister, or to any person deemed by the
Committee to have incurred expense for such person otherwise entitled to
payment, in such manner and proportions as the Committee may determine.  Any such payment shall be a complete discharge
of the liabilities of the Corporation to make such payment to the Participant.

 

9.             Amendment or Discontinuance of Plan

 

(a)           Except as provided in Section 9(d),
the Board of Directors of the Sponsor shall be vested with the sole power to
amend the Plan, subject to applicable law including without limitation Code Section 409A
and stock exchange requirements, at any time and in any manner (whether in
toto or with respect to an individual Participant) in such respects as
the Board of Directors of the Sponsor may deem advisable by an instrument in
writing, which amendment shall be binding on all parties, subject to the
principles contained in Section 9(c). 
If required by any applicable stock exchange or any statute, rule or
regulation including without limitation Section 16(b) of the
Securities Exchange Act of 1934, amendment by the Board shall be subject to
approval by the stockholders of the Sponsor. 
Notice of any such amendment shall be provided to all Participants and
to each Corporation promptly.

 

9

 

(b)           The
Board of Directors of the Sponsor may, by resolution, discontinue the
participation of any Affiliate in the Plan. 
Notice of such discontinuance shall be provided to the Committee and
each affected Participant promptly.

 

(c)           Notwithstanding
the foregoing, but subject to Section 9(d), no amendment or discontinuance of
the Plan shall affect Participant’s deferral elections for the calendar year of
such amendment or termination, Participants’ rights to receive distributions of
their Accounts and/or the timing of such distributions attributable to fees
deferred (including dividend equivalent Phantom Stock Credits) prior to the
effective date of such amendment or discontinuance, except to the extent
permitted by Code Section 409A.

 

(d)           The
Board of Directors of the Sponsor reserves the right to terminate its
sponsorship of the Plan, by resolution adopted by a majority of its entire
Board of Directors, provided that at least thirty (30) days advance written
notice is provided to each other Corporation. 
Any such termination shall not affect Participants’ deferral elections
for the calendar year of termination, rights to receive distributions of their
Accounts and/or the timing of such distributions attributable to fees and
Common Stock deferred (including dividend equivalent Phantom Stock Credits)
prior to the end of the calendar year in which occurs such termination, except
to the extent permitted by Code Section 409A. 
Notwithstanding the above or the other provisions of the Plan, the Board
of Directors of the Sponsor reserves the right to terminate the Plan and
provide for the cessation of all deferral elections and the distribution of all
Accounts hereunder within 12 months of a “Change in Control” as such term is
defined for purposes of Code Section 409A and any regulations, rulings or
notices thereunder including without limitation IRS Notice 2005-1.

 

10.          Plan Not Funded

 

(a)           The Accounts under Plan are not
funded.  Neither the Sponsor nor any
Affiliate shall be required to reserve, or otherwise set aside, physically or
legally, any funds for the payment of any obligations with respect to Accounts
established hereunder.  Benefits payable
hereunder shall be paid out of the general assets of the Sponsor or an Affiliate
and shall not be secured by any form of trust, escrow, evidence of indebtedness
or otherwise.  No person having rights
under the Plan shall be deemed to have any property interest, legal or
equitable, in any specific asset of the Sponsor or any Affiliate or any Common
Stock of the Sponsor, and, to the extent that any person acquires any right to
receive payments under the Plan, such right shall be no greater than, nor shall
it have preference or priority over, the rights of any unsecured general
creditor of the Sponsor or any Affiliate.

 

(b)           A Corporation shall have the right,
but shall not be required, to segregate funds in its financial records equal to
the aggregate Accounts of its Directors, and to invest such funds or to direct
the investment of such funds in order to produce an income return, but such
funds and the earnings thereon shall remain solely as an asset of the
Corporation.

 

10

 

11.          Copies of Plan Available

 

Copies of the Plan and
any and all amendments thereto shall be provided to all Participants and made
available to all members of the Board of Directors and Participants during
normal business hours at the office of the General Counsel of the Sponsor.

 

12.          Application of Plan

 

The Plan embodies the
terms and conditions of an unfunded deferred compensation plan of the Sponsor
and participating Affiliates, for the benefit of their respective Directors,
which shall be governed by this instrument and referred to as the “Plan.”

 

13.          Common Directors

 

In the event that a
Director serves on the Board of Directors of more than one Corporation, the
Director must execute a separate election form as to each Corporation for which
the Director desires to have Deferred Compensation.

 

14.          Binding on Successors

 

In the event that the
Corporation (or any entity resulting from any merger or consolidation referred
to in this Section 14 or which shall be a purchaser or transferee so
referred to) shall at any time be merged or consolidated into or with any other
entity or entities or in the event that substantially all of the assets of the
Corporation or any such entity shall be sold or otherwise transferred to
another entity, the provisions of the Plan shall be binding upon and shall
inure to the benefit of the continuing entity in (or the entity resulting from)
such merger or consolidation or the entity to which such assets shall be sold
or transferred.  Except as provided in
the preceding sentence, the Plan shall
not be assignable by a Corporation or by any entity referred to in this Section 14.  The obligations and rights of a Participant
under the Plan shall not be assignable, but, in the event of the Participant’s
death, such obligations and rights shall be binding upon and inure to the
benefit of such Participant’s heirs, executors or administrators.

 

15.          Continuation as Director

 

The Plan or the payment
of any benefits hereunder shall not be construed as giving to any Director any
right to be retained as a member of the Board of Directors of any Corporation.

 

16.          Participation by Members of Committee

 

No member of the
Committee shall be precluded from becoming a Participant in the Plan; however,
such member shall not be entitled to vote or act upon matters, or sign any
documents, relating specifically to such member’s own participation under the Plan,
except when such matters or documents relate to benefits and administrative
matters generally.  If this
disqualification results in the lack of a quorum, then the Sponsor’s Board of

 

11

 

Directors shall appoint a
sufficient number of temporary members of the Committee who shall serve for the
sole purpose of determining such a question.

 

17.          Hardship Withdrawals

 

For an “unforeseeable
emergency” beyond the Participant’s control, and which would cause the Participant
severe financial hardship if early withdrawal were not permitted, such
Participant may apply to the Committee for withdrawals from the Plan prior to
termination of the Participant’s service as a Director of the Corporation;
provided, however, that no early withdrawals shall be permitted with respect to
any Participant while such Participant is a Director of the Sponsor.  If such application for withdrawal is
approved by the Committee, the withdrawal will be effective at the later of the
dates specified in the Participant’s application or the date of approval by the
Committee.  The Committee shall direct
the Sponsor to pay such amount in shares of Common Stock attributable to the
balance in such Participant’s Account (determined as of the Valuation Date
immediately preceding such distribution) up to the amount necessary to meet the
financial emergency, plus amounts necessary to pay taxes reasonably anticipated
as a result of the distribution, after taking into account the extent to which
such hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participant’s assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship).  The term “unforeseeable
emergency” means a severe financial hardship to the Participant resulting from
an illness or accident of the Participant, the Participant’s spouse, or a
dependent (as defined in Code Section 152(a)) of the Participant, loss of
the Participant’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant, or such other circumstances as may be permitted under Section 409A
of the Code.

 

18.          Claims Procedure

 

Any claim for benefits or
payments under the Plan by Participants or Beneficiaries shall be made in
writing and delivered to the Committee at the principal office of the
Sponsor.  If the Participant or
Beneficiary believes he or she has been denied any benefits or payments under
the Plan, either in total or in an amount less than the full benefit or payment
the claimant would normally be entitled to receive, the Committee shall advise
the claimant in writing of the amount of the benefit, or payment; if any, and the
specific reasons for the denial.  The
Committee shall also furnish the claimant at that time with a written notice
containing:

 

(a)           A specific reference to pertinent
provisions of the Plan.

 

(b)           A description of any additional
material or information necessary for the claimant to perfect this claim, if
possible, and an explanation of why such material or information is needed.

 

(c)           An explanation of the following claim
review procedure.

 

Within sixty (60) days of
receipt of the information described above, the claimant shall, if further
review is desired, file a written request for reconsideration with the

 

12

 

Committee.  So long as the claimant’s request for review
is pending (including such sixty (60) day period), the claimant or his or her
duly authorized representative may review pertinent documents and may submit
issues and comments in writing to the Committee.

 

A final and binding
decision shall be made by the Committee within sixty (60) days of the filing by
the claimant of the request for reconsideration; provided, however, that if the
Committee, in its discretion, feels that a hearing with the claimant or his or
her representative present is necessary or desirable, this period shall be
extended an additional sixty (60) days.

 

The decision by the
Committee shall be conveyed to the claimant in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, with specific references to the pertinent
provisions of the Plan on which the decision is based.

 

The Committee shall use
ordinary care and diligence in the performance of its duties.  The Committee shall be entitled to rely
conclusively, and shall be fully protected in any action or omission taken by
it in good faith reliance, upon the advice or opinions of any persons, firms or
agents retained by it, including, but not limited to, accountants, actuaries,
counsel and other specialists.  Nothing
contained herein shall preclude any Corporation from indemnifying any member of
the Committee for all actions under the Plan, or from purchasing liability
insurance to protect such persons serving thereon with respect to their duties
pursuant to the Plan.

 

19.          Governing Law

 

Except to the extent
preempted by applicable Federal laws, the Plan shall be construed according to
the laws of the State of Maryland, other than its conflict of laws principles,
and so as to comply with any applicable securities exchange rules or
regulations.

 

13

 

IN
WITNESS WHEREOF, the duly authorized officers of Mercantile
Bankshares Corporation have signed and sealed this Plan on behalf of Mercantile
Bankshares Corporation as of the          
day of                         ,
2005.

 

 

	
  ATTEST:

  	
   

  	
  MERCANTILE BANKSHARES

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  

 

14

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