Exhibit 10.39
MERRILL LYNCH & CO., INC.
2007 DEFERRED COMPENSATION PLAN
FOR A SELECT GROUP OF ELIGIBLE EMPLOYEES
DATED AS OF MAY 24, 2006
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

 

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MERRILL LYNCH & CO., INC.
2007 DEFERRED COMPENSATION PLAN
FOR A SELECT GROUP OF ELIGIBLE EMPLOYEES
Table of Contents

                                  Page I.   GENERAL   1     1.1   Purpose and
Intent   1     1.2   Definitions   1 II.   ELIGIBILITY   5     2.1   Eligible
Employees   5
 
      (a)   General Rule   5
 
      (b)   Individuals First Employed During Election Year or Plan Year   5
 
      (c)   Disqualifying Factors   5 III.   DEFERRAL ELECTIONS; ACCOUNTS   5  
  3.1   Deferral Elections   5
 
      (a)   Timing and Manner of Making of Elections   5
 
      (b)   Irrevocability of Deferral Election   5
 
      (c)   Application of Election   6     3.2   Crediting to Accounts   6
 
      (a)   Initial Deferrals   6
 
      (b)   Private Fund Return Options   6     3.3   Minimum Requirements for
Deferral   6     3.4   Return Options; Adjustment of Accounts   6
 
      (a)   Selection of Mutual Fund Return Option and Income Builder Return
Option   6
 
      (b)   Selection of Private Fund Return Option   7
 
      (c)   Adjustments of Income Builder Return Option and Other Special Rules
  7
 
      (d)   Adjustment of Mutual Fund Return Balances   7
 
      (e)   Adjustment of Private Fund Return Options   8
 
      (f)   Annual Charge   8
 
      (g)   Rollover Option   9 IV.   STATUS OF DEFERRED AMOUNTS AND ACCOUNT   9
    4.1   No Trust or Fund Created; General Creditor Status   9     4.2  
Non-Assignability   9     4.3   Effect of Deferral on Benefits Under Pension and
Welfare Benefit Plans   9

 

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                                  Page V.   PAYMENT OF ACCOUNT   10     5.1  
Manner of Payment   10     5.2   Termination of Employment   10
 
      (a)   Death, Retirement, Rule of 60   10
 
      (b)   Other Termination of Employment; Treatment of Key Employees   10
 
      (c)   Leave of Absence, Transfer or Disability   11     5.3   Withholding
of Taxes   11     5.4   Beneficiary   11
 
      (a)   Designation of Beneficiary   11
 
      (b)   Change in Beneficiary   11
 
      (c)   Default Beneficiary   11
 
      (d)   If the Beneficiary Dies During Payment   11     5.5   Distributions
Upon Unforeseeable Emergency   11     5.6   Domestic Relations Orders   12    
5.7   No Actions Permitted that Would Cause Constructive Receipt or Violate
Section 409A of the Code   12 VI.   ADMINISTRATION OF THE PLAN   12     6.1  
Powers of the Administrator   12     6.2   Grantor Trust   13     6.3   Payments
on Behalf of an Incompetent   13     6.4   No Right of Set Off   13     6.5  
Corporate Books and Records Controlling   13 VII.   MISCELLANEOUS PROVISIONS  
13     7.1   Litigation   13     7.2   Headings Are Not Controlling   13     7.3
  Governing Law   13     7.4   Amendment and Termination   14

 

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MERRILL LYNCH & CO., INC.
2007 DEFERRED COMPENSATION PLAN
FOR A SELECT GROUP OF ELIGIBLE EMPLOYEES
ARTICLE I
GENERAL

1.1  
Purpose and Intent.

        The purpose of the Plan is to encourage the employees who are integral
to the success of the business of the Company to continue their employment by
providing them with flexibility in meeting their future income needs. This Plan
is unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
within the meaning of Title I of ERISA, and all decisions concerning who is to
be considered a member of that select group and how this Plan shall be
administered and interpreted shall be consistent with this intention.

1.2  
Definitions.

        For the purpose of the Plan, the following terms shall have the meanings
indicated.
        “Account” means the notional account established on the books and
records of ML & Co. for each Participant to record the Participant’s interest
under the Plan.
        “Account Balance” means, as of any date, the Deferred Amounts credited
to a Participant’s Account, adjusted in accordance with Section 3.4 to reflect
the performance of the Participant’s Selected Benchmark Return Options, the
Annual Charge, the Debit Balance, (if any) any adjustments in the event of a
Capital Call Default, and any payments made from the Account under Article V to
the Participant prior to that date.
        “Adjusted Compensation” means the financial advisor incentive
compensation, account executive incentive compensation or estate planning and
business insurance specialist incentive compensation, in each case exclusive of
base salary, earned by a Participant during the Fiscal Year ending in 2007, and
payable after January 1, 2007, as a result of the Participant’s production
credit level, or such other similar items of compensation as the Administrator
shall designate as “Adjusted Compensation” for purposes of this Plan.
        “Administrator” means the Head of Rewards and Recognition Planning for
ML & Co., or his or her functional successor, or any other person or committee
designated as Administrator of the Plan by the Administrator or the MDCC.
        “Affiliate” means any corporation, partnership, or other organization of
which ML & Co. owns or controls, directly or indirectly, not less than 50% of
the total combined voting power of all classes of stock or other equity
interests.
        “Annual Charge” means the charge to a Participant’s Account provided for
in Section 3.4(h).
        “Available Balance” means amounts in a Participant’s Account that are
indexed to liquid Benchmark Return Options after the Account’s Debit Balance has
been reduced to zero.

 

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        “Benchmark Return Options” means such investment vehicles as the
Administrator may from time to time designate for the purpose of indexing
Accounts hereunder. In the event a Benchmark Return Option ceases to exist or is
no longer to be a Benchmark Return Option, the Administrator may designate a
substitute Benchmark Return Option for such discontinued option.
        “Board of Directors” means the Board of Directors of ML & Co.
        “Capital Call” means the periodic demands for funds from a Participant’s
Account that will be equal to and occur simultaneously with capital calls made
by private equity funds chosen as a return option by the Participant.
        “Capital Call Default” means that there is an insufficient Liquid
Balance in the Participant’s Account to fund a Capital Call.
        “Capital Demand Default Adjustment” means the negative adjustment
described in Section 3.4 in the number of “units” attributed to a Private Equity
Fund Return Options that will be the result of a Capital Call Default.
        “Cash Compensation” means (1) (for VICP eligible employees) salary in
the reference year plus VICP earned in the reference year and paid in January or
February of the next calendar year or (2) (for Financial Advisors and other
employees receiving Adjusted Compensation) base salary plus Adjusted
Compensation paid in the reference year.
        “Code” means the U.S. Internal Revenue Code of 1986, as amended from
time to time.
        “Company” means ML & Co. and all of its Affiliates.
        “Compensation” means, as relevant, a Participant’s Adjusted
Compensation, Variable Incentive Compensation and/or Sign-On Bonus, or such
other items or items of compensation as the Administrator, in his or her sole
discretion, may specify in a particular instance.
        “Debit Balance” means, as of any date, the dollar amount, if any,
representing the accrued aggregate Annual Charge not deducted from the Liquid
Balance.
        “Deferral Percentage” means the percentage (which, unless the
Administrator, in his or her sole discretion, determines otherwise, shall be in
whole percentage increments and not more than 90%) specified by the Participant
to be the percentage of each payment of Compensation he or she wishes to defer
under the Plan.
        “Deferred Amounts” means, except as provided in Section 5.6, the amounts
of Compensation actually deferred by the Participant under this Plan.
        “Election Year” means the 2006 calendar year.
        “Eligible Compensation” means (1) for persons eligible for the Variable
Incentive Compensation Program or other similar programs: (A) a Participant’s
2005 base earnings plus (B) any cash bonus awarded in early 2006, and (2) for
persons ineligible for such bonus programs, a Participant’s 2005 Adjusted
Compensation.
        “Eligible Employee” means an employee eligible to defer amounts under
this Plan, as determined under Section 2.1 hereof.

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        “ERISA” means the U.S. Employee Retirement Income Security Act of 1974,
as amended from time to time.
        “Excess Deferred Amounts” means the amount, if any, of a Participant’s
Deferred Amounts in excess of the lesser of 10% of the Participant’s
Compensation or $150,000.
        “Fiscal Month” means the monthly period used by ML & Co. for financial
accounting purposes.
        “Fiscal Year” means the annual period used by ML & Co. for financial
accounting purposes.
        “Full-Time Domestic Employee” means a full-time employee of the Company
paid from the Company’s domestic based payroll (other than any U.S. citizen or
“green card” holder who is employed outside the United States).
        “Full-Time Expatriate Employee” means a U.S. citizen or “green card”
holder employed by the Company outside the United States and selected by the
Administrator as eligible to participate in the Plan (subject to the other
eligibility criteria).
        “Income Builder Return Option” means the option of receiving returns
hereunder equal to the yield of the Moody’s Long-Term Aa Corporate Bond Yield
Average (or its successor). Such yield shall be reset annually as of the last
business day of each calendar year, shall remain in effect until the last
business day of the following calendar year, and shall be credited annually. If
the Moody’s Long-Term Aa Corporate Bond Yield Average is no longer in existence,
a new crediting index rate for the Income Builder Return Option will be choosen
by the Administrator.
        “Liquid Balance” means, as of any date, the Deferred Amounts credited to
a Participant’s Account, not including amounts that represent future commitments
to Private Equity Funds adjusted (either up or down) to reflect: (1) the
performance of the Participant’s Mutual Fund Return Balances or the Income
Builder Return Option, as provided in Section 3.4(f); (2) reduction of any Debit
Balance; and (3) any payments to the Participant under Article V hereof.
        “Maximum Deferral” means the whole dollar amount specified by the
Participant to be the amount of Compensation he or she elects to be deferred
under the Plan.
        “MDCC” means the Management Development and Compensation Committee of
the Board of Directors.
        “ML & Co.” means Merrill Lynch & Co., Inc.
        “Moody’s Long-Term Aa Corporate Bond Yield Average” means the average
yield-to-maturity of a selection of long-term bonds rated “Excellent” (2nd
highest rating) by the Moody’s Investor Service.
        “Mutual Fund Return Options” means the mutual funds chosen as Benchmark
Return Options by the Administrator.
        “Net Asset Value” means, with respect to each Benchmark Return Option
that is a mutual fund or other commingled investment vehicle for which such
values are determined in the normal course of business, the net asset value, on
the date in question, of the vehicle for which such value is being determined.
        “Participant” means an Eligible Employee who has elected to defer
Compensation under the Plan.

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        “Plan” means this Merrill Lynch & Co., Inc. 2007 Deferred Compensation
Plan for a Select Group of Eligible Employees.
        “Plan Year” means the Fiscal Year ending in 2007.
        “Private Fund Return Option(s)” means one or more private funds that are
chosen by the Administrator to be offered — with such limitations as may be
required — to eligible Participants as Benchmark Return Options.
        “Private Fund Unit(s)” means the record-keeping units credited to the
Accounts of Participants who have chosen one or more Private Fund Return
Options.
        “Retirement” means a Participant’s (i) termination of employment with
the Company for reasons other than for cause on or after the Participant’s 65th
birthday, or (ii) termination of employment on or after the Participant’s 55th
birthday if the Participant has at least 10 years of service.
        “Remaining Deferred Amounts” means the product of a Participant’s
Deferred Amounts times a fraction equal to the number of remaining installment
payments divided by the total number of installment payments.
        “Remaining Excess Deferred Amounts” means the portion, if any, of a
Participant’s Remaining Deferred Amounts attributable to Excess Deferred
Amounts.
        “Rule of 60” means a Participant’s termination of employment with the
Company for reasons other than cause on or after (A) having completed at least
five (5) years of service and (B) reaching any age, that, when added to service
with the Company (in each case, expressed as completed years and completed
months), equals at least 60; provided that, a Participant shall not qualify for
the Rule of 60 if he or she engages in a business which the Administrator, in
his or her sole discretion, determines to be in competition with the business of
the Company.
        “Selected Benchmark Return Option” means a Benchmark Return Option
selected by the Participant in accordance with Section 3.4.
        “Sign-On Bonus” means a single-sum amount paid or payable to a new
Eligible Employee during the Plan Year upon commencement of employment, in
addition to base pay and other Compensation, to induce him or her to become an
employee of the Company, or any similar item of compensation as the
Administrator shall designate as “Sign-On Bonus” for purposes of this Plan.
        “Undistributed Deferred Amounts” means, as of any date on which the
Annual Charge is determined, a Participant’s Deferred Amounts (exclusive of any
appreciation or depreciation) minus, for each distribution to a Participant
prior to such date, an amount equal to the product of the Deferred Amounts and a
fraction the numerator of which is the amount of such distribution and the
denominator of which is the combined Net Asset Value (prior to distribution) of
the Participant’s Account as of the date of the relevant distribution.
        “Variable Incentive Compensation” means the variable incentive
compensation or office manager incentive compensation that is paid in cash to
certain employees of the Company generally in January or February of the Plan
Year with respect to the prior Fiscal Year, which for purposes of this Plan is
considered earned during the Plan Year regardless of when it is actually paid to
the Participant, or such other similar items of compensation as the
Administrator shall designate as “Variable Incentive Compensation” for purposes
of this Plan.

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        “401(k) Plan” means the Merrill Lynch & Co., Inc. 401(k) Savings &
Investment Plan.
ARTICLE II
ELIGIBILITY

2.1  
Eligible Employees.

        (a)     General Rule. An individual is an Eligible Employee if he or she
(i) is a Full-Time Domestic Employee or a Full-Time Expatriate Employee,
(ii) has at least $300,000 of Eligible Compensation for the year prior to the
Election Year, and (iii) has attained the title of Vice President or higher.
        (b)     Individuals First Employed During Election Year or Plan Year.
Subject to the approval of the Administrator in his or her sole discretion, an
individual who is first employed by the Company during the Election Year or the
Plan Year is an Eligible Employee if his or her Eligible Compensation, together,
if applicable, with the amount of any Variable Incentive Compensation that will
be payable to such individual in the next annual bonus cycle pursuant to a
written bonus guarantee, is greater than $300,000, and he or she is employed as
or is to be nominated for the title of Vice President or higher at the first
opportunity following his or her commencement of employment with the Company.
        (c)     Disqualifying Factors. An individual shall not be an Eligible
Employee if either (i) as of the deadline for submission of elections specified
in Section 3.1(a), the individual’s wages have been attached or are being
garnished or are otherwise restrained pursuant to legal process, or (ii) within
13 months prior to the deadline for submission of elections specified in
Section 3.1(a), the individual has made a hardship withdrawal of Elective 401(k)
Deferrals as defined under the 401(k) Plan.
ARTICLE III
DEFERRAL ELECTIONS; ACCOUNTS

3.1  
Deferral Elections.

        (a)     Timing and Manner of Making of Elections. An election to defer
Compensation for payment in accordance with Article V shall be made by
submitting to the Administrator such forms as the Administrator may prescribe in
whatever manner that the Administrator directs. Each election submitted must
specify a Maximum Deferral and a Deferral Percentage with respect to each
category of Compensation to be deferred. All elections by a Participant to defer
Compensation under the Plan must be received by the Administrator or such person
as he or she may designate for the purpose by no later than June 30 of the
Election Year or, in the event such date is not a business day, the immediately
preceding business day; provided, however, that (1) an Eligible Employee’s
election to defer a Sign-On Bonus must be part of such Eligible Employee’s terms
and conditions of employment agreed to prior to the Eligible Employee’s first
day of employment with the Company and (2) an Eligible Employee’s election to
defer pursuant to Section 2.1(b) must occur no later than 30 days after his or
her first day of employment with the Company.
        (b)     Irrevocability of Deferral Election. Except as provided in
Section 5.5, an election to defer the receipt of any Compensation made under
Section 3.1(a) is irrevocable once submitted to the Administrator or his or her
designee. The Administrator’s acceptance of an election to defer Compensation
shall not, however, affect the contingent nature of such Compensation under the
plan or program under which such Compensation is payable.

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        (c)     Application of Election. The Participant’s Deferral Percentage
will be applied to each payment of Compensation to which the Participant’s
deferral election applies, provided that the aggregate of the Participant’s
Deferred Amounts shall not exceed the Participant’s Maximum Deferral. If a
Participant has made deferral elections with respect to more than one category
of Compensation, this Section 3.1(c) shall be applied separately with respect to
each such category.

3.2  
Crediting to Accounts.

        (a)     Initial Deferrals. A Participant’s Deferred Amounts will be
credited to the Participant’s Account as soon as practicable (but in no event
later than the end of the following month) after the last day of the Fiscal
Month during which such Deferred Amounts would, but for deferral, have been paid
and will be accounted for in accordance with Section 3.4. No interest will
accrue, nor will any adjustment be made to an Account, for the period until the
Deferred Amounts are credited.
        (b)     Private Fund Return Options. Upon the closing of any Private
Return Option, a Participant’s Account will be credited with a number of units
determined by dividing by $1,000 the portion of the Account Balance that the
Participant has elected to allocate to the Private Return Option, as of the day
prior to the closing date.

3.3  
Minimum Requirements for Deferral.

        Notwithstanding any other provision of this Plan, no deferral will be
effected under this Plan with respect to a Participant if:

  (i)  
the Participant is not an Eligible Employee as of December 31, 2006, or
    (ii)  
the Participant’s election as applied to the Participant’s Variable Incentive
Compensation (determined by substituting the Election Year for the Plan Year) or
Adjusted Compensation (determined by substituting the Fiscal Year immediately
prior to the Fiscal Year ending in the Election Year for the Fiscal Year ending
in the Plan Year) would have resulted in an annual deferral of less than
$15,000:

provided, that any Participant who first becomes an employee of the Company
during the Plan Year shall not be required to satisfy conditions (i) and (ii).
Condition (ii) does not require a Participant’s elections to result in an actual
deferral of at least $15,000.

3.4  
Return Options; Adjustment of Accounts.

        (a)     Selection of Mutual Fund Return Options and Income Builder
Return Option. Coincident with the Participant’s election to defer Compensation,
the Participant must select the percentage of the Participant’s Account to be
adjusted to reflect the performance of Mutual Fund Return Options and the Income
Builder Return Option, for use when a Participant’s Account has a Liquid
Balance. All elections shall be in multiples of 1%. A Participant may, by
complying with such procedures as the Administrator may prescribe on a uniform
and nondiscriminatory basis, including procedures specifying the frequency with
respect to which such changes may be effected (but not more than 12 times in any
calendar year), change the Selected Benchmark Return Options to be applicable
with respect to his or her Account. Notwithstanding the foregoing, (i) a
Participant may not elect to index more than the lesser of 10% of the
Participant’s Compensation or $150,000 to the performance of the Income Builder
Return Option, (ii) no amounts initially indexed to the performance of the
Income Builder Return Option may subsequently be changed to another Selected
Benchmark Return Option, and (iii) no amounts initially indexed to the
performance of another Selected Benchmark Return Option may subsequently be
changed to the Income Builder Return Option.

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        (b)     Selection of Private Fund Return Options. In any year that a
Private Fund partnership is offered as a return option, an eligible Participant
may select the Private Fund Return Option, provided that the selection of such
return option is consistent with the Participant’s payment election under the
terms of the Plan and applicable law. Upon the closing of a selected Private
Fund Return Option, the selecting Participant will not be able to change his or
her selection of such return option. In addition, upon a Capital Call Default
with respect to certain Private Fund Return Options, the defaulting Participant
may be penalized by having his or her Account adjusted downward in accordance
with Section 3.4 (d).

  (c)  
Adjustment of Income Builder Return Option Balances and Other Special Rules.
    (i)  
Crediting.  The portion, if any, of a Participant’s Account Balance attributable
to the Income Builder Return Option shall be credited annually to reflect the
rate of return under such Return Option. Such amounts shall not be reduced by
the annual fee.
    (ii)  
Restatement.  Notwithstanding the foregoing, if a Participant terminates
employment with fewer than 5 years of Merrill Lynch service and 12 months of
participation in the Plan, the portion of the Participant’s Balances
attributable to the Income Builder Return Option shall be restated to reflect
crediting for all periods based on the performance of the Merrill Lynch Premier
Institutional Money Market Fund Return Option instead of the rate of return
under the Income Builder Return Option.
    (iii)  
Death Benefit.  In the event of a Participant’s death while still employed by
the Company, the portion of the Participant’s Account Balance attributable to
the Income Builder Return Option shall be credited with an additional investment
return calculated as if such portion of the Balances had been credited with the
then current rate of return under the Income Builder Return Option until the
later of the fifth anniversary of the Participant’s death or the date on which
the Participant would have attained age 60. In order for the Participant’s
Balances to be eligible for this additional investment return, the Participant
must provide consent to the Company (in accordance with rules and procedures
established by the Administrator) for the Company to purchase, and be the
beneficiary of, one or more insurance policies on the Participant’s life.

        (d)     Adjustment of Mutual Fund Return Balances. While the
Participant’s Balances do not represent the Participant’s ownership of, or any
ownership interest in, any particular assets, the Balances attributable to
Mutual Fund Return Options shall be adjusted to reflect credits or debits
relating to distributions from any Private Fund Return Options or chargeoffs
against the Debit Balance and to reflect the investment experience of the
Participant’s Mutual Fund Return Options in the same manner as if investments or
dispositions in accordance with the Participant’s elections had actually been
made through the ML Benefit Services Platform and ML II Core Recordkeeping
System, or any successor system used for keeping records of Participants’
Accounts (the “ML II System”). In adjusting Accounts, the Participant will give
instructions to the ML Benefit Services Platform which will be reflected as
credits or debits as of the weekly processing of such instructions through the
ML II System. This processing shall control the timing and pricing of the
notional investments in the Participant’s Mutual Fund Return Options in
accordance with the rules of operation of the ML II System and its requirements
for placing corresponding investment orders, as if orders to make corresponding
investments or dispositions were actually to be made on the transaction
processing date. In connection with the crediting of Deferred Amounts or
distributions to the Participant’s Account and distributions from or debits to
the Account, appropriate deferral allocation instructions shall be treated as
received from the Participant prior to the close of transactions through the ML
II System on the relevant transaction processing date. Each Mutual Fund Return
Option shall be valued using the Net Asset Value of the Mutual Fund Return
Option as of the relevant transaction processing date; provided, that, in
valuing a Mutual Fund Return Option for which a Net Asset Value

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is not computed, the value of the security involved for determining
Participants’ rights under the Plan shall be the price reported for actual
transactions in that security through the ML II System on the relevant
transaction processing date, without giving effect to any transaction charges or
costs associated with such transactions; provided, further, that, if there are
no such transactions effected through the ML II System on the relevant day, the
value of the security shall be:

  (i)  
if the security is listed for trading on one or more national securities
exchanges, the average of the high and low sale prices for that day on the
principal exchange for such security, or if such security is not traded on such
principal exchange on that day, the average of the high and low sales prices on
such exchange on the first day prior thereto on which such security was so
traded;
    (ii)  
if the security is not listed for trading on a national securities exchange but
is traded in the over-the-counter market, the average of the highest and lowest
bid prices for such security on the relevant day; or
    (iii)  
if neither clause (i) nor (ii) applies, the value determined by the
Administrator by whatever means he considers appropriate in his or her sole
discretion.

All debits and charges against a Participant’s Account shall be applied as a pro
rata reduction of the portion of the Account Balance indexed to each of the
Participant’s Mutual Fund Return Options and to the Income Builder Return
Option.

  (d)  
Adjustments of Private Fund Return Options.
    (i)  
Whenever a distribution is paid on an actual unit of a Private Fund Return
Option, an amount equal to such per unit distribution times the number of units
in the Participant’s Account will first be applied against any Debit Balance, as
provided in Section 3.4(e), and then, if any portion of such distribution
remains after the Debit Balance is reduced to zero, be credited to the
Participant’s Account to be indexed initially to ML Premier Institutional Fund
and then to the Mutual Fund Return Option(s) chosen by the Participant.
    (ii)  
In the event of a Capital Call Default, a Participant’s notional investment in
the relevant fund will be capped. If this occurs, the number of units
represented by the return option will be adjusted downward to reflect a smaller
investment.

        (f)     Annual Charge. As of the last day of each Fiscal Year or such
earlier day in December as the Administrator shall determine, an Annual Charge
of 2.0% of the Participant’s Excess Deferred Amounts (exclusive of any
appreciation or depreciation determined under Section 3.4 (f) or 3.4(g)) shall
be applied to reduce the Account Balance.

  (i)  
In the event that all or any portion of the Account Balance is indexed to a
Benchmark Return Option with less than daily liquidity, the Annual Charge, if
any, will accrue as a Debit Balance and be paid out of future amounts credited
to the Account Balance.
    (ii)  
In the event that the Participant elects to have the Account Balance paid in
installments, the Annual Charge, if any, will be charged on the Remaining Excess
Deferred Amounts after giving effect to the installment payments.
    (iii)  
In the event that the Account Balance is paid out completely during a Fiscal
Year prior to the date upon which the Annual Charge is assessed, a pro rata
Annual Charge will be deducted from amounts to be paid to the Participant to
cover that fraction of the

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Fiscal Year that Excess Deferred Amounts (or Remaining Excess Deferred Amounts
in the case of installment payments) were maintained hereunder. The Annual
Charge shall be applied as a pro rata reduction of the portion of the Account
Balance indexed to each of the Participant’s Selected Benchmark Return Options.
In applying the Annual Charge, the pricing principles set forth in
Section 3.4(f) will be followed.

        (g)     Rollover Option. In the discretion of the Administrator or a
designee, additional Benchmark Return Options, including illiquid Return
Options, may be offered to all Participants under the Plan or to a more limited
group of Participants. In such event, Participants will be allowed, in such
manner as the Administrator shall determine, to elect that all or a portion of
Account Balances be indexed to such Benchmark Return Options. With respect to
Benchmark Return Options that do not provide liquidity: (A) except as otherwise
provided under the Plan and applicable law, payments under Article V will be
made in accordance with a Participant’s election at the time of the
Participant’s original deferral; (B) Participants may be limited in their
ability to elect, change or continue their Benchmark Return Options in
accordance with such terms and conditions as the Administrator or a designee may
determine; and (C) the Annual Charge shall be accrued on Excess Deferred Amounts
and paid, when possible, upon liquidation of all or any portion of the Benchmark
Return Option, provided that no payment shall be made to a Participant under
Article V hereof until all accrued Annual Charges have been paid.
ARTICLE IV
STATUS OF DEFERRED AMOUNTS AND ACCOUNT

4.1  
No Trust or Fund Created; General Creditor Status.

        Nothing contained herein and no action taken pursuant hereto will be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between ML & Co. and any Participant, the Participant’s beneficiary
or estate, or any other person. Title to and beneficial ownership of any funds
represented by the Account Balance will at all times remain in ML & Co.; such
funds will continue for all purposes to be a part of the general funds of ML &
Co. and may be used for any corporate purpose. No person will, by virtue of the
provisions of this Plan, have any interest whatsoever in any specific assets of
the Company. TO THE EXTENT THAT ANY PERSON ACQUIRES A RIGHT TO RECEIVE PAYMENTS
FROM ML & CO. UNDER THIS PLAN, SUCH RIGHT WILL BE NO GREATER THAN THE RIGHT OF
ANY UNSECURED GENERAL CREDITOR OF ML & CO.

4.2  
Non-Assignability.

        The Participant’s right or the right of any other person to the Account
Balance or any other benefits hereunder cannot be assigned, alienated, sold,
garnished, transferred, pledged, or encumbered except by a written designation
of beneficiary under this Plan, by written will, or by the laws of descent and
distribution.

4.3  
Effect of Deferral on Benefits Under Pension and Welfare Benefit Plans.

        The effect of deferral on pension and welfare benefit plans in which the
Participant may participate will depend upon the provisions of each such plan,
as amended from time to time.

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ARTICLE V
PAYMENT OF ACCOUNT

5.1  
Manner of Payment.

        A Participant’s Account Balance will be paid by the Company, as elected
by the Participant at the time of his or her deferral election, either in a
single payment to be made, or in the number of annual installments (not to
exceed 15) chosen by the Participant to commence, (i) in the month following the
month of the Participant’s Retirement or death, (ii) in any month and year
selected by the Participant after the end of 2007, or (iii) in any month in the
calendar year following the Participant’s Retirement; provided that, if a
Participant’s election would result in payment (in the case of a single payment)
or commencement of payment (in the case of installment payments) after the
Participant’s 70th birthday, then, notwithstanding the Participant’s elections,
the Company will pay, or commence payment of, the Participant’s Account Balance
in the month following the Participant’s 70th birthday unless the Participant
continues to be an active full time employee at such time, in which case the
Company will pay, or commence payment of, the Participant’s Account Balance in
the month following the Participant’s cessation of active service (to the extent
payment has not already been made or commenced). The amount of each annual
installment, if applicable, shall be determined by multiplying the Account
Balance as of the last day of the month immediately preceding the month in which
the payment is to be made by a fraction, the numerator of which is one and the
denominator of which is the number of remaining installment payments (including
the installment payment to be made). Notwithstanding the foregoing, if a
Participant indexes any portion of his or her Account Balance to the Income
Builder Return Option, the Participant may make separate payment elections with
respect to the portion of his or her Account Balance indexed to the Income
Builder Return Option and the remainder of such Account Balance.

5.2  
Termination of Employment.

        (a)     Death, Retirement, Rule of 60. Subject to Section 5.2(b)(2),
upon a Participant’s death or Retirement (as defined in this Plan), or
termination when the Participant complies with the Rule of 60 (as defined in
this Plan) prior to payment, the Account Balance will be paid, in accordance
with the Participant’s elections and as provided in Section 5.1, to the
Participant or to the Participant’s beneficiary (in the event of death);
provided, however, that (1) in the event that the Participant enters into
competition with the business of Merrill Lynch, he or she will not be eligible
for Retirement or Rule of 60 treatment under this Section 5.2 (a), and (2) in
the event that a beneficiary of the Participant’s Account is the Participant’s
estate or is otherwise not a natural person, the applicable portion of the
Account Balance will promptly be paid in a single payment to such beneficiary
notwithstanding any election of installment payments.
(b)      Other Termination of Employment; Treatment of Key Employees
        (1)     Subject to Section 5.2(b)(2), if a Participant’s employment
terminates at any time for any other reason than those described in
Section 5.2(a), then, notwithstanding the Participant’s elections hereunder, any
Available Balance will be paid to the Participant in a single payment in the
month following the month of the Participant’s termination.
        (2)     If a Participant’s employment terminates at any time while the
Participant constitutes a specified employee within the meaning of section 409A
of the Code, then, notwithstanding the Participant’s elections hereunder, any
Available Balance will be paid to the Participant (or to the Participant’s
beneficiary, in the event of death) in a single payment in the month following
the earlier of (i) the six-month anniversary of the Participant’s termination or
(ii) the month of the Participant’s death.

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        (c)     Leave of Absence, Transfer or Disability. The Participant’s
employment will not be considered as terminated if the Participant (1) is on an
approved leave of absence; (2) transfers or is transferred but remains in the
employ of the Company or an unconsolidated affiliate; or (3) is eligible to
receive disability payments under the ML & Co. Basic Long-Term Disability Plan.

5.3  
Withholding of Taxes.

        ML & Co. will deduct or withhold from any payment to be made or deferred
hereunder any U.S. Federal, state or local or foreign income or employment taxes
required by law to be withheld or require the Participant or the Participant’s
beneficiary to pay any amount, or the balance of any amount, required to be
withheld.

5.4  
Beneficiary.

        (a)     Designation of Beneficiary. The Participant may designate, in a
writing delivered to the Administrator or his or her designee before the
Participant’s death, a beneficiary to receive payments in the event of the
Participant’s death. The Participant may also designate a contingent beneficiary
to receive payments in accordance with this Plan if the primary beneficiary does
not survive the Participant. The Participant may designate more than one person
as the Participant’s beneficiary or contingent beneficiary, in which case (i) no
contingent beneficiary would receive any payment unless all of the primary
beneficiaries predeceased the Participant, and (ii) the surviving beneficiaries
in any class shall share in any payments in proportion to the percentages of
interest assigned to them by the Participant.
        (b)     Change in Beneficiary. The Participant may change his or her
beneficiary or contingent beneficiary (without the consent of any prior
beneficiary) in a writing delivered to the Administrator or his or her designee
before the Participant’s death. Unless the Participant states otherwise in
writing, any change in beneficiary or contingent beneficiary will automatically
revoke prior such designations of the Participant’s beneficiary or of the
Participant’s contingent beneficiary, as the case may be, under this Plan only;
and any designations under other deferral agreements or plans of the Company
will remain unaffected.
        (c)     Default Beneficiary. In the event that a Participant does not
designate a beneficiary, or no designated beneficiary survives the Participant,
the Participant’s beneficiary shall be the Participant’s surviving spouse, if
the Participant is married at the time of his or her death and not subject to a
court-approved agreement or court decree of separation, or otherwise the person
or persons designated to receive benefits on account of the Participant’s death
under the ML & Co. Basic Group Life Insurance Plan (the “Life Insurance Plan”).
However, if an unmarried Participant does not have coverage in effect under the
Life Insurance Plan, or the Participant has assigned his or her death benefit
under the Life Insurance Plan, any amounts payable to the Participant’s
beneficiary under the Plan will be paid to the Participant’s estate.
        (d)     If the Beneficiary Dies During Payment. If a beneficiary who is
receiving or is entitled to receive payments hereunder dies after the
Participant dies, but before all the payments have been made, the portion of the
Account Balance to which that beneficiary was entitled will be paid as soon as
practicable in one lump sum to such beneficiary’s estate and not to any
contingent beneficiary the Participant may have designated.

5.5  
Distributions Upon Unforeseeable Emergency.

        ML & Co. has the sole discretion, but shall not be required, to pay to
the Participant, on such terms and conditions as the Administrator may
establish, such part or all of the Participant’s Account Balance as the
Administrator determines, based upon substantial evidence submitted by the

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Participant, is necessary to alleviate an unforeseeable emergency of the
Participant. An unforeseeable emergency is defined as a severe financial
hardship to the Participant (i) resulting from an illness or accident of the
Participant, the Participant’s spouse, or a dependent (as defined in section
152(a) of the Code, (ii) loss of the Participant’s property due to casualty, or
(iii) other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. The amount of the
distribution shall not exceed the amount needed to satisfy the emergency plus
taxes reasonably anticipated as a result of the distribution. A distribution
shall not be allowed to the extent that the hardship may be relieved through
reimbursement or compensation by insurance or otherwise, or by liquidation of
the Participant’s assets (to the extent such liquidation would not itself cause
a severe financial hardship). Such payment will be made only at the
Participant’s written request and with the express approval of the Administrator
and will be made on the date selected by the Administrator in his or her sole
discretion. The balance of the Account, if any, will continue to be governed by
the terms of this Plan.

5.6  
Domestic Relations Orders.

        Notwithstanding the Participant’s elections hereunder, ML & Co. will pay
to, or to the Participant for the benefit of, the Participant’s spouse or former
spouse the portion of the Participant’s Account Balance specified in a valid
court order entered in a domestic relations proceeding involving the
Participant’s divorce or legal separation. Such payment will be made in a lump
sum and net of any amounts the Company may be required to withhold under
applicable federal, state or local law. After such payment, references herein to
the Participant’s “Deferred Amounts” (except for purposes of determining the
Annual Charge applicable to any remaining Account Balance) shall mean the
Participant’s original Deferred Amounts times an amount equal to one minus a
fraction, the numerator of which is the gross amount (prior to withholding) paid
pursuant to the order, and the denominator of which is the Participant’s Account
Balance immediately prior to payment.

5.7  
No Actions Permitted that Would Cause Constructive Receipt or Violate
Section 409A of the Code.

        Notwithstanding any provision of the Plan to the contrary, no deferral
election, payment election, modification of any election under the Plan or other
action with respect to the Plan shall be permitted to the extent that such
election, modification or other action would violate any requirement of section
409A of the Code or would cause any Participant or Beneficiary to be in
constructive receipt of any amount hereunder.
ARTICLE VI
ADMINISTRATION OF THE PLAN

6.1  
Powers of the Administrator.

        The Administrator has full power and authority to interpret, construe
and administer this Plan so as to ensure that it provides deferred compensation
for the Participants as members of a select group of management or highly
compensated employees within the meaning of Title I of ERISA. The
Administrator’s interpretations and construction hereof, and actions hereunder,
including any determinations regarding the amount or recipient of any payments,
will be binding and conclusive on all persons for all purposes. The
Administrator will not be liable to any person for any action taken or omitted
in connection with the interpretation and administration of this Plan unless
attributable to his or her willful misconduct or lack of good faith. The
Administrator may designate persons to carry out the specified responsibilities
of the Administrator and shall not be liable for any act or omission of a person
as designated.

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6.2  
Grantor Trust.

        Creation of Trust. The Administrator shall be empowered (but shall not
be required) to create a grantor trust to hold assets representing the amounts
deferred under this Plan on such terms and conditions as the Administrator shall
approve. The trustee of the grantor trust shall be a party unaffiliated with the
Company.

6.3  
Payments on Behalf of an Incompetent.

        If the Administrator finds that any person who is entitled to any
payment hereunder is a minor or is unable to care for his or her affairs because
of disability or incompetency, payment of the Account Balance may be made to
anyone found by the Administrator to be the committee or other authorized
representative of such person, or to be otherwise entitled to such payment, in
the manner and under the conditions that the Administrator determines. Such
payment will be a complete discharge of the liabilities of ML & Co. hereunder
with respect to the amounts so paid.

6.4  
No Right of Set-Off.

        Unless specifically authorized by a Participant, the Company shall have
no right of set-off with respect to any Participant’s Account Balances or
Account under the Plan and unless so authorized, the Company shall not withhold
any sums owed to a Participant under the Plan.

6.5  
Corporate Books and Records Controlling.

        The books and records of the Company will be controlling in the event
that a question arises hereunder concerning the amount of Adjusted Compensation,
Incentive Compensation, Sign-On Bonus, Eligible Compensation, the Deferred
Amounts, the Account Balance, the designation of a beneficiary, or any other
matters.
ARTICLE VII
MISCELLANEOUS PROVISIONS

7.1  
Litigation.

        The Company shall have the right to contest, at its expense, any ruling
or decision, administrative or judicial, on an issue that is related to the Plan
and that the Administrator believes to be important to Participants, and to
conduct any such contest or any litigation arising therefrom to a final
decision.

7.2  
Headings Are Not Controlling.

        The headings contained in this Plan are for convenience only and will
not control or affect the meaning or construction of any of the terms or
provisions of this Plan.

7.3  
Governing Law.

        To the extent not preempted by applicable U.S. Federal law, this Plan
will be construed in accordance with and governed by the laws of the State of
New York as to all matters, including, but not limited to, matters of validity,
construction, and performance.

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7.4  
Amendment and Termination.

        ML & Co., through the Administrator, reserves the right to amend or
terminate this Plan at any time, except that no such amendment or termination
shall adversely affect the right of a Participant to his or her Account Balance
(as reduced by the Annual Charge or the Debit Balance, as set forth in
Section 3.4) as of the date of such amendment or termination.

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