Document:

EX-10.27

 

Exhibit 10.27

MERRILL LYNCH FINANCIAL ADVISOR

CAPITAL ACCUMULATION AWARD PLAN

As amended through October 22, 2007

 

 

MERRILL LYNCH FINANCIAL ADVISOR

CAPITAL ACCUMULATION AWARD PLAN

	 	 	 	 	 
	I. DEFINITION 
	 	 	1	 
	1. Definitions 
	 	 	1	 
	 
	 	 	 	 
	II. ELIGIBILITY 
	 	 	4	 
	2. Eligible Employees 
	 	 	4	 
	 
	 	 	 	 
	III. THE AWARDS; APPRECIATION 
	 	 	4	 
	3. The Awards 
	 	 	4	 
	(a) Criteria for Awards 
	 	 	4	 
	(b) Calculation of Amounts Payable for Awards Made Prior to January
2003
	 	 	4	 
	(c) Calculation of Amounts Payable for Awards Made in January 2003
and Thereafter 
	 	 	5	 
	4. Shares Available Under the Plan 
	 	 	5	 
	 
	 	 	 	 
	IV. STATUS OF THE AWARD 
	 	 	5	 
	5. No Trust or Fund Created 
	 	 	5	 
	6. Non-transferability 
	 	 	5	 
	7. Relationship to Other Benefits 
	 	 	5	 
	 
	 	 	 	 
	V. PAYMENT OF THE AWARD 
	 	 	6	 
	8. In General 
	 	 	6	 
	9. Termination of Employment 
	 	 	7	 
	(a) Death 
	 	 	7	 
	(b) Retirement; Employment by Competitor 
	 	 	7	 
	(i) Awards for Performance Periods Prior to 1995 
	 	 	7	 
	(ii) Awards for Performance Periods After 1994 
	 	 	7	 
	(iii) Employment by Competitor 
	 	 	8	 
	(iv) Rule of 65 
	 	 	8	 
	(c) Other Termination of Your Employment 
	 	 	8	 
	(i) Awards for Performance Periods Prior to 1995 
	 	 	8	 
	(ii) Awards for Performance Periods After 1994 
	 	 	9	 
	(iii) Disability, Leave of Absence of Transfer 
	 	 	9	 
	(d) Termination of Employment After a Change in Control 
	 	 	9	 
	(i) Payment Upon Change in Control 
	 	 	9	 
	(ii) Definition of “Change in Control” 
	 	 	10	 
	(iii) Agreement Concerning a Change in Control 
	 	 	10	 
	(iv) Amendments Subsequent to Change in Control 
	 	 	10	 
	(v) Cause 
	 	 	11	 
	(vi) “Good Reason” 
	 	 	11	 
	10. Withholding 
	 	 	12	 
	11. Arbitration 
	 	 	13	 

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	12. Designation of Beneficiary 
	 	 	13	 
	(a) Designation of Beneficiary and Alternate Beneficiary 
	 	 	13	 
	(b) Change in Beneficiary 
	 	 	13	 
	(c) In the Event of Death of the Beneficiary During Payment 
	 	 	13	 
	 
	 	 	 	 
	VI. ADMINISTRATIONOF THE PLAN 
	 	 	13	 
	13. Powers of the Committee 
	 	 	13	 
	 
	 	 	 	 
	VII. MISCELLANEOUS PROVISIONS 
	 	 	14	 
	14. Changes in Capitalization 
	 	 	14	 
	15. Tax Litigation 
	 	 	14	 
	16. Employment Rights 
	 	 	15	 
	17. Amendment of the Plan 
	 	 	15	 
	18. Governing Law; Section 409A 
	 	 	15	 

ii

 

 

MERRILL LYNCH FINANCIAL ADVISOR

CAPITAL ACCUMULATION AWARD PLAN

     The Merrill Lynch Financial Advisor Capital Accumulation Award Plan reflects MLPF&S’s
commitment to reward top producing Private Client Employees. The purpose of the Award is to
establish and retain a strong sales force and professional managers by recognizing the benefits of
their contributions to MLPF&S.

     The terms and conditions of the Merrill Lynch Financial Advisor Capital Accumulation Award
Plan are as follows:

I. DEFINITIONS

1. Definitions.

     “Account” means a notional book reserve established in the name of an eligible employee by
MLPF&S, to which the Award or Awards granted to such eligible employee will be credited.

     “Account Balance” as of a particular date means the vested and unvested value of the Awards,
including any accrued Appreciation, reflected in the Account as of that date.

     “Affiliate” means any corporation, partnership, or other organization of which ML & Co. owns
or controls, directly or indirectly, not less than 50 percent of the total combined voting power of
all classes of stock or other equity interest.

     “Appreciation” means the amounts accrued on the Awards under Section 3.

     “Awards” means the amounts awarded pursuant to Section 3 of the Plan.

     “Award Date” means a date, established by the Committee with respect to each Award, as of
which such Award will be credited to the Account.

     “Award Year” means the calendar year in which an Award Date falls.

     “Committee” means the Management Development and Compensation Committee of the Board of
Directors of ML & Co.

     “Common Stock” means Merrill Lynch & Co., Inc. Common Stock, par value $1.33 1/3 per share.

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     “Common Stock Amount” means the number derived by dividing the amount of an Award by the Fair
Market Value of Common Stock as of the last day of the Performance Period, or such other date or
period as may be established by the Committee, rounded to the nearest whole number. Such number
represents the total number of shares of Common Stock you may receive on the Payment Date.

     “Company” means ML & Co. and all of its Affiliates.

     “Disability” You will be deemed to have incurred a “Disability” if you are entitled
to receive benefits under the Merrill Lynch & Co., Inc. Long-Term Disability Plan.

     “Fair Market Value” of Common Stock on any given date(s) shall be: (a) the mean of the high
and low sales prices on the New York Stock Exchange Composite Tape on the date(s) in question, or,
if the Common Stock shall not have been traded on any such date(s), the mean of the high and low
sales prices on the New York Stock Exchange Composite Tape on the first day prior thereto on which
the Common Stock was traded; provided, however, if the Distribution Date (as
defined in the Rights Agreement) shall have occurred and the Rights shall then be represented by
separate certificates rather than by certificates representing the Common Stock, there shall be
added to such value calculated in accordance with (a) above, the mean of the high and low sales
prices of the Rights on the New York Stock Exchange Composite Tape on the date(s) in question, or
if the Rights shall not have been traded on any such date(s), the mean of the high and low sales
prices on the New York Stock Exchange Composite Tape on the first day prior thereto on which the
Rights were so traded; or (b) such other amount as may be determined by the Committee by any fair
and reasonable means.

     “Fiscal Year” means the annual period used by ML & Co. for financial accounting purposes.

     “Junior Preferred Stock” means ML & Co.’s Series A Junior Preferred Stock, par value $1.00 per
share.

     “Key Employee” means any employee who has been designated by ML & Co. as one of the 50 highest
paid employees (based on W-2 income) as of the most recently completed fiscal year.

     “Minimum Value” means the dollar amount obtained by applying a per annum rate of 1%,
compounded annually, to the amount of an Award, from and including the last day of the Performance
Period, or such other date as may be established by the Committee, to and including the Payment
Date.

     “ML & Co.” means Merrill Lynch & Co., Inc.

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     “MLPF&S” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, a subsidiary of ML & Co.

     “Payment Calculation Date” means, with respect to an Award, the first day of the month in
which an Award first becomes payable under Section 8 or 9.

     “Payment Date” means, with respect to any amount payable under the Plan, the date on which
such amount first becomes payable.

     “Plan” means this Merrill Lynch Financial Advisor Capital Accumulation Award Plan.

     “Performance Period” means the period, generally a fiscal year of ML & Co., during which you
generate the production/revenue or achieve the goals that are the basis of an Award.

     “Private Client Employee” means a Financial Advisor (including a resident manager or producing
manager), life market estate planning and business insurance specialist (EPBIS), broad market
EPBIS, insurance planning specialist or mortgage and credit specialist, or any other employee group
that the Committee, in its sole discretion, determines are private client employees for purposes of
eligibility for awards under the Plan, as evidenced in the applicable Committee resolutions or
instrument of grant.

     “Retirement” Subject to Sections 8(c) and 9(b), you will be deemed to be eligible for
“Retirement” if your employment with the Company terminates other than for cause or
misconduct (i) on or after you have attained your 65th birthday or (ii) when you cease employment
on or after your 55th birthday and you have completed at least 10 years of service, including
approved leaves of absence of one year or less, or (iii) at any age with the express approval of
the Committee, in its sole discretion, upon a recommendation by the management of MLPF&S, in its
sole discretion. (Participants should be aware that such recommendations will be considered only
in exceptional cases.)

     “Rights” mean the Rights to Purchase Units of Series A Junior Preferred Stock issued pursuant
to the Rights Agreement.

     “Rights Agreement” means the Rights Agreement dated as of December 16, 1987 between ML & Co.
and Manufacturers Hanover Trust Company, Rights Agent.

     “Rule of 65” Subject to Section 8(c) and 9(b), you will be deemed to be eligible for the Rule
of 65 contained in Section 9(b)(iv) of FACAAP if your employment with the Company terminates (other
than for cause or misconduct): (A) (i) on or after you have completed at least 20 years of service
with the Company, including approved leaves of absence of one year or less, and (ii) your

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combined
length of service with the Company and your age equals at least 65; or (B) at any age with the
express approval of the Committee, in its sole discretion, upon a recommendation by the management
of MLPF&S, in its sole discretion. (Participants should be aware that such recommendations will be
considered only in exceptional cases); and (C) you are not eligible for “Retirement” under the
Plan.

     “You” means the individual participant in this Plan.

II. ELIGIBILITY

2. Eligible Employees.

     You are eligible for an Award if (i) you were, during the Performance Period, a Private Client
Employee (regardless of whether you continue to be a Private Client Employee at the time of grant),
(ii) you meet the applicable Award criteria determined pursuant to Section 3 (a) and (iii) as of
the date of grant, your employment with the Company has not terminated for any reason other than
death or Retirement.

III. THE AWARDS; APPRECIATION

3. The Awards.

     (a) Criteria for Awards. The criteria for Awards will be established periodically by the
Committee, upon the recommendation of the management of the Company. The criteria for Awards may
vary from Performance Period to Performance Period and according to type of performance, and may be
announced prior to, during, or following the applicable Performance Period. An Award will
generally be stated as an amount equal to a percentage of achievement against established goals
during a Performance Period. An Award may, however, be a fixed dollar amount and the amount of
Awards may vary according to such factors as are established periodically by the Committee. Awards
granted will be credited to the Account as of the Award Date.

     (b) Calculation of Amounts Payable for Awards Made Prior to January 2003. There shall be
computed, with respect to each Award, both the cash amount and the Common Stock Amount of such
Award. If, as of the Payment Calculation Date, the then Fair Market Value of the Common Stock
Amount is equal to or greater than the Minimum Value of the Common Stock Amount, you will receive
the Common Stock Amount in shares of Common Stock; however, if such Fair Market Value of the Common
Stock Amount as of such date is less than such Minimum Value, you will receive such Minimum Value
in cash. If shares of Common Stock are unavailable for payment under the Plan or if the Committee
shall otherwise, in its sole discretion, so direct, the
Fair Market Value of such shares as of the Payment Calculation Date will instead

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be paid in cash.
Fractional shares shall be paid in cash. Until receipt by you of any share of Common Stock
hereunder, you will have no right, title, or interest in such share, including, without limitation,
the right to receive dividends and to vote any shares.

     (c) Calculation of Amounts Payable for Awards Made in January 2003 and Thereafter. Each award
shall be converted into a Common Stock Amount of such Award. When the award is payable under the
terms of the Plan, you will receive the Common Stock Amount in shares of Common Stock. Fractional
shares shall be paid in cash. Until receipt by you of any share of Common Stock hereunder, you
will have no right, title, or interest in such share, including, without limitation, the right to
receive dividends and to vote any shares.

4. Shares Available Under the Plan.

     The total number of shares of Common Stock that may be issued under the Plan shall be
104,000,000 subject to adjustment as provided in Section 14. Shares of Common Stock issued under
the Plan shall be treasury shares.

IV. STATUS OF THE AWARD

5. No Trust or Fund Created.

     Neither the Plan nor any grant made hereunder shall create or be construed to create a trust
or separate fund of any kind or a fiduciary relationship between the Company and you or any other
person. To the extent that any person acquires a right to receive payments from the Company
pursuant to a grant under the Plan, such right shall be no greater than the right of any unsecured
general creditor of the Company.

6. Non-transferability.

     Your rights under the Plan, including the right to any amounts or shares payable, may not be
assigned, pledged, or otherwise transferred except, in the event of your death, to your designated
beneficiary or, in the absence of such a designation, by will or the laws of descent and
distribution.

7. Relationship to Other Benefits.

     No payment under the Plan shall be taken into account in determining any benefits under any
pension, retirement, group insurance, or other employee benefit plan of the Company. The Plan
shall not preclude the stockholders of ML & Co., the Board of Directors or any committee thereof,
or the Company from authorizing or approving other employee benefit plans or forms of incentive
compensation, nor shall it limit or prevent the continued operation of other

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incentive compensation plans or other employee benefit plans of the Company or the participation in
any such plans by participants in the Plan.

V. PAYMENT OF THE AWARD

8. In General.

     (a) Subject to the provisions of Section 9 and all other requirements of the Plan, the vested
Account Balance with respect to an individual year’s Award, will vest and be paid to you in a lump
sum (in shares of Common Stock; or in cash, in the case of the Minimum Value, as determined under
Section 3) as soon as practicable (but in no event later than two and one-half months) following
January 1 of the tenth year following the Award Year, provided that, for Awards made in and after
January 2003 for Performance Years 2002 and thereafter, you will receive only the Common Stock
Amount and such Common Stock Amount will vest and be paid to you as soon as practicable (but in no
event later than two and one-half months) following January 1 of the eighth year following the
Award Year; and provided further that for Awards made in January 2001 and January 2002 to Financial
Advisors employed by International Private Client, such awards will, (i) in the case of Awards for
the 2000 Performance Period, vest and be paid to you as soon as practicable (but in no event later
than two and one-half months) following January 1 of the fifth year following the Award Year, and,
(ii) in the case of Awards made for the 2001 Performance Period, vest and be paid to you as soon as
practicable (but in no event later than two and one-half months) following January 1 of the seventh
year following the Award Year.

     (b) If you are (i) 65 years of age or older and have completed 10 years or more of service;
(ii) 60 years of age or older and have completed 15 years or more of service; or (iii) 55 years of
age or older and have completed 20 years or more of service; you may be given a one-time option to
cause the acceleration of the vesting of 50% of the total number of shares represented by the
Common Stock Amount of all Awards granted to you under the Plan (in the order and in accordance
with procedures determined by the Administrator) provided that you (1) sign a contract with the
Corporation agreeing not to compete in any way with the business of the Corporation following your
termination of employment and (2) agree to a formal account transition plan with Advisory Division,
and provided further that in the event your employment terminates as a result of Retirement all
non-accelerated Awards granted to you under the Plan that have not been paid and become payable as
a result of such Retirement, shall (notwithstanding the Performance Period to which they relate) be
payable in two equal installments the first of which shall be in January after the date of your
Retirement and the second of which shall be one year after the first payment. In the event that you
satisfy the requirements of the preceding sentence the “Payment Calculation Date” for such vested
awards shall be the first day of the month following the date that such conditions were met and the
payment shall be made as soon as practicable following the Payment Calculation Date This provision
shall not apply

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     to awards made to Financial Advisors employed by International Private Client in January 2001 and
January 2002.

     (c). Disqualification for Misconduct. Notwithstanding any other provision of this
Plan (except Section 9(d), which in the event of a Change in Control shall govern in the event of a
conflict), , in the event of any allegation of any misconduct on your part, including, but not
limited to any violation of any law, regulation, or Company policy, payment of the vested Account
Balance will be delayed until the management of the Company or its designee, upon consultation with
the General Counsel’s office, has, in its sole discretion, determined that either payment is
appropriate under the circumstances, or that your shall be disqualified from receiving the entire
Account Balance. In the event that the management of the Company determines that you are
disqualified from receiving the entire Account Balance, this disqualification shall be deemed
effective as of the date of the alleged misconduct

9. Termination of Employment.

     (a) Death. If you die prior to payment pursuant to Section 8, then your Award(s) will be
deemed to be 100% vested and the Account Balance will be paid to your beneficiary as soon as
practicable. In such event, the “Payment Calculation Date” will be deemed to be the first day of
the month in which the death occurred.

     (b) Retirement; Employment by Competitor. Termination of your employment (other than a
termination under the circumstances covered by Section 8 (c)) when you are eligible for Retirement
or a change in your status in anticipation of Retirement shall have the following effect:

          (i) Awards for Performance Periods Prior to 1995. With respect to Awards granted prior to and
for the 1994 Performance Period (i.e., the Performance Period ended December 30, 1994), your
Award(s) will vest and be paid to you as soon as practicable after your Retirement, in which case
the “Payment Calculation Date” will be deemed to be the first day of the month in which the
Retirement occurred. In addition, if you have entered into a formal account transition plan with
Advisory Division that does not exceed one year and transferred to an IA code for not more than one
year from Retirement, your Awards will be vested and paid to you as soon as practicable after such
transfer, in which case the “Payment Calculation Date will be deemed to be the first day of the
month in which such transfer occurred.

          (ii) Awards for Performance Periods After 1994. With respect to Awards granted for
Performance Periods after the 1994 Performance Period, your Account Balance will vest and become
payable in two installments, the first 50% of the Account Balance will vest and become payable as
of the end of the year in which Retirement occurs (or, in the case of any Award granted after

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Retirement, as of the Award Date), and the remaining Account Balance will vest and
become payable as of the end of the year following the year in which Retirement occurs (subject to
paragraph 9(b)(iii) below). The Payment Calculation Date for each installment will be deemed to be
the first business day of January of the year following the year in which the installment becomes
payable (except that the Payment Calculation Date in respect of any Award granted after Retirement
shall be deemed to be the Award Date), and the payment shall be made as soon thereafter as
practicable. Notwithstanding the foregoing, if the value of any Award as of the first day of the
month in which the Retirement occurs is less than $500, such Award will be paid in a lump sum as
soon as practicable after Retirement and the Payment Calculation Date will be deemed to be the
first day of the month in which the Retirement occurs.

          (iii) Employment by Competitor. Notwithstanding the foregoing, if, within two years of the
date of your Retirement, or at any time after such two-year period if amounts are still payable to
you as provided in subsection (ii) above, you commence employment or become affiliated in any way
with a retail brokerage competitor of the Company or an Affiliate, you will be disqualified from
receiving any remaining Account Balance and any amount paid to you under this section shall be
returned to the Company and all amounts that have not yet vested under this section shall cease to
vest and no longer be payable.

          (iv) Rule of 65. If your employment terminates and you are eligible for the Rule of 65, your
Account Balance will continue to be outstanding and to be paid out upon vesting in accordance with
Section 8, provided that you shall be immediately disqualified from receiving any Account Balance,
if you commence employment or become affiliated in any way with a retail brokerage competitor of
the Company or an Affiliate.

     (c) Other Termination of Your Employment. Termination of your employment for any reason other
than death or Retirement shall have the following effect:

          (i) Awards for Performance Periods Prior to 1995. With respect to Awards granted prior to and
for the 1994 Performance Period (i.e., the Performance Period ended December 30, 1994), you will
receive only partial payment of an Award based upon the percentage of such Award that has vested as
of December 31st of the year prior to the year in which the termination occurs and the remainder of
the Award shall be deemed forfeited. Vesting of your Award(s) shall occur as of the end of the day
on December 31st of each year in accordance with the following schedule:

	 	 	 	 	 
	 	 	Percentage of Total Award
	Year	 	Vested at Year-End
	Award Year
	 	 	0	%
	Second Year
	 	 	0	%
	Third Year
	 	 	0	%
	Fourth Year
	 	 	0	%
	Fifth Year
	 	 	50	%
	Sixth Year
	 	 	60	%
	Seventh Year
	 	 	70	%
	Eighth Year
	 	 	80	%
	Ninth Year
	 	 	90	%
	Tenth Year
	 	 	100	%

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The vested amount will be paid to you in a lump sum as soon as practicable following such
termination. In addition, (A) the “Payment Calculation Date” will be deemed to be the first day of
the month in which such termination occurred and (B) anything else in this Plan to the contrary
notwithstanding, you will receive no more than the Minimum Value with respect to an Award.

          (ii) Awards for Performance Periods After 1994 With respect to Awards granted for Performance
Periods after the 1994 Performance Period if your employment terminates on or prior to the vesting
date, for any reason other than death, Retirement or the Rule of 65, you will be immediately
disqualified from receiving your Account Balance on or prior to such date, you shall immediately
forfeit your entire Award, unless the Committee, in its sole discretion, finds that the
circumstances in the particular case so warrant and allows you to retain any portion or all of your
Account Balance

          (iii) Disability, Leave of Absence or Transfer. Your employment will not be considered as
terminated if you are on an approved leave of absence, have incurred a Disability, or if you
transfer or are transferred but remain in the employ of the Company.

     (d) Termination of Employment After a Change in Control.

          (i) Payment Upon Change in Control. Any other provision of this Plan to the contrary
notwithstanding, in the event that a Change in Control of ML & Co. occurs and thereafter your
employment is terminated by the Company without Cause (as defined in Section 9(d)(v)or by you for
Good Reason (as defined in Section 9(d)(vi), your Award(s) will be deemed to be 100% vested and
your entire Account Balance will be paid to you (or to your beneficiary in the event of death) in
cash in a lump sum, as promptly as possible after such termination of employment but, without
limiting the foregoing, in no event later than 45 days thereafter. Your Common Stock Amount shall
have a cash value equal to the highest of such Common Stock Amount’s (A) Minimum Value on the date
of your termination, (B) Fair Market Value on the date of your termination, or (C) highest Fair
Market Value for any day during the 90-day period ending on the date of the Change in Control, and,
if such termination occurs before the
Payment Date, the “Payment Calculation Date” shall be deemed to be the date

9

 

on which such
termination occurs. Payment shall be calculated according to Section 3 (as modified by this
subsection (e)), regardless of whether a termination under this subsection (e) occurs on or before
December 31 of the ninth year following an Award Year.
 

          (ii) Definition of “Change in Control”. A “Change in Control” means a change in control of ML
& Co. of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), whether or not ML & Co. is then subject to such reporting requirement; provided,
however, that, without limitation, a Change in Control shall be deemed to have occurred if:

     (A) any individual, partnership, firm, corporation, association, trust, unincorporated
organization or other entity, or any syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of ML
& Co. representing 30% or more of the combined voting power of ML & Co.’s then outstanding
securities entitled to vote in the election of directors of ML & Co.; or

     (B) during any period of two consecutive years individuals who at the beginning of such period
constituted the Board of Directors of ML & Co. and any new directors, whose election by the Board
of Directors or nomination for election by the stockholders of ML & Co. was approved by a vote of
at least 3/4 of the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof; or

     (C) all or substantially all of the assets of ML & Co. are liquidated or distributed.

          (iii) Agreement Concerning a Change in Control. If ML & Co. executes an agreement, the
consummation of which would result in the occurrence of the Change in Control as described in
subparagraph (ii), then, with respect to a termination of employment, unless such termination is by
the Company for Cause, or by you other than for Good Reason, occurring after the execution of such
agreement (and, if such agreement expires or is terminated prior to consummation, prior to such
expiration or termination of such agreement), a Change in Control shall be deemed to have occurred
as of the date of the execution of such agreement.

          (iv) Amendments Subsequent to Change in Control. In the event of a Change in Control, no
changes in the Plan and no adjustments, determinations or other exercises of discretion by the
Committee or the Board of Directors, that were made subsequent to the Change in Control and that would

10

 

have the effect of
diminishing your rights or payments under the Plan or this Section 9(e), or of causing you to
recognize income (for federal income tax purposes) with respect to your Account Balance prior to
the actual distribution in cash to you of such Account Balance, shall be effective.

          (v) Cause. Termination of your employment by the Company for “Cause” shall mean termination
upon:

     (A) your willful and continued failure substantially to perform your duties with the Company
(other than any such failure resulting from your incapacity due to physical or mental illness or
any such actual or anticipated failure resulting from termination by you for Good Reason) after a
written demand for substantial performance is delivered to you by the Board of Directors, which
demand specifically identifies the manner in which the Board of Directors believes that you have
not substantially performed your duties; or

     (B) the willful engaging by you in conduct which is demonstrably and materially injurious to
the Company, monetarily or otherwise.

     No act or failure to act by you shall be deemed “willful” unless done, or omitted to be done, by
you not in good faith and without reasonable belief that this action or omission was in the best
interest of the Company.

     Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire membership of the Board of Directors
at a meeting of the Board called and held for such purpose (after reasonable notice to you and an
opportunity for you, together with counsel, to be heard before the Board of Directors), finding
that, in the good faith opinion of the Board of Directors, you were guilty of conduct set forth
above in clause (A) or (B) of the first sentence of this Subsection and specifying the particulars
thereof in detail.

          (vi) “Good Reason” shall mean your termination of your employment with the Company if, without
your written consent, any of the following circumstances shall occur:

     (A) a meaningful and detrimental alteration in your position or in the nature or status of
your responsibilities from those in effect immediately prior to the Change in Control;

     (B) a reduction by the Company of your base salary as in effect just prior to the Change in
Control;

     (C) the relocation of the office of the Company where you were employed at the time of the
Change in Control (the “CIC Location”) to a location

11

 

more than fifty miles away from the CIC
Location, or the Company’s requiring you to be based more than fifty miles away from the CIC
Location (except for required travel on the Company’s business to an extent substantially
consistent with your business travel obligations just prior to the Change in Control);
 

     (D) the failure of the Company to continue in effect any benefit or compensation plan,
including, but not limited to, this Plan, the Company’s retirement program, or the Company’s
Long-Term Incentive Compensation Plan, Employee Stock Purchase Plan, 1978 Incentive Equity Purchase
Plan, cash incentive compensation or other plans adopted prior to the Change in Control, in which
you are participating at the time of the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with respect to such plan in
connection with the Change in Control, or the failure by the Company to continue your participation
therein on at least as favorable a basis, in terms of both the amount of benefits provided and the
level of your participation relative to other participants, as existed at the time of the Change in
Control; or

     (E) the failure of the Company to continue to provide you with benefits at least as favorable
as those enjoyed by you under any of the Company’s pension, life insurance, medical, health and
accident, disability, deferred compensation or savings plans in which you were participating at the
time of the Change in Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive you of any material fringe benefit
enjoyed by you at the time of the Change in Control, or the failure by the Company to provide you
with the number of paid vacation days to which you are entitled on the basis of years of service
with the Company in accordance with the Company’s normal vacation policy in effect at the time of
the Change in Control.

     (e) Special Rule for Key Employees. Notwithstanding any provision of the Plan to the
contrary, if any amount becomes payable hereunder with respect to the termination of employment of
a Participant who is then a Key Employee, the payment of such amount shall not commence until the
earlier of (i) the date that is six months after the date of such termination of employment, or
(ii) the date of such Participant’s death.

10. Withholding.

     The Company shall have the right, before any payment is made or a certificate for any shares
is delivered or any shares are credited to any brokerage account, to deduct or withhold from any
payment under the Plan any Federal, state, or local taxes, including transfer taxes, required by
law to be
withheld or to require you or your beneficiary or estate, as the case may be, to pay any amount, or
the balance of any amount, required to be withheld.

12

 

11. Arbitration.

Any claim or dispute concerning your individual rights or entitlements under or otherwise relating
to this Plan shall be settled by arbitration before either the American Arbitration Association
(“AAA” or JAMS (formerly the “Judicial Arbitration and Mediation Services”) depending upon which of
these forums you choose, in accordance with the Commercial Dispute Resolutions Procedures of the
AAA or the Comprehensive Arbitration Rules and Procedures of JAMS, provided however, that: (1) the
arbitrator shall be required to adhere to established principles of substantive law and the
governing burdens of proof; (2) the arbitrator shall be prohibited for disregarding, adding to or
modifying the terms of the Plan; (3) the arbitrator shall be an attorney licensed to practice law
who is experienced in similar matters; and (4) more than one employee or former employee may
consolidate their claims and join in the same arbitration proceeding only with the consent of all
the parties to the proceeding. No claim or dispute concerning rights or entitlements under or
otherwise relating to the Plan may be brought or litigated in a class action. The award rendered in
this arbitration shall be final and binding, and judgment upon the award may be entered in any
court of competent jurisdiction.

12. Designation of Beneficiary.

     (a) Designation of Beneficiary and Alternate Beneficiary. You may designate, in a writing
delivered to ML & Co. before your death, a beneficiary to receive payments in the event of your
death. You may also designate an alternate beneficiary to receive payments if the primary
beneficiary does not survive you. You may designate more than one person as your beneficiary or
alternate beneficiary, in which case such persons would receive payments as joint tenants with a
right of survivorship as to the amounts not yet paid from your Account. If you die without a
surviving beneficiary, then your estate will be considered your beneficiary.

     (b) Change in Beneficiary. You may change your beneficiary or alternate beneficiary (without
the consent of any prior beneficiary) in a writing delivered to ML & Co. before your death.
Unless you state otherwise in writing, any change in beneficiary or alternate beneficiary will
automatically revoke prior designations only of your beneficiary or only of your alternate
beneficiary, as the case may be, under this Plan only; designations under other Plans will remain
unaffected.

     (c) In the Event of Death of the Beneficiary During Payment. If a beneficiary who is
receiving payments hereunder dies before all of the payments have been made and if there is no
surviving joint tenant, the Account Balance
will be paid as soon as practicable in one lump sum to such beneficiary’s estate and not to any
alternate beneficiary you may have designated.

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VI. ADMINISTRATION OF THE PLAN

13. Powers of the Committee.

     The Committee has full power and authority to interpret, construe, and administer the Plan and
to adopt, amend, and rescind such rules and regulations as, in its opinion, may be advisable for
the administration of the Plan. The Committee’s interpretations and construction hereof, and
actions hereunder, including any determinations regarding the amount or recipient of any payments
and whether any amount of Common Stock payable hereunder will instead be paid in the equivalent
amount of cash, will be binding and conclusive on all persons for all purposes. The Committee 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 its willful misconduct or lack of good
faith.

VII. MISCELLANEOUS PROVISIONS

14. Changes in Capitalization.

     Any other provision of the Plan to the contrary notwithstanding (except for Section 9(e),
which shall control in the event of a change in control), if any change shall occur in or affect
Common Stock on account of a merger, consolidation, reorganization, stock dividend, stock split or
combination, reclassification, recapitalization, or distribution to holders of Common Stock (other
than cash dividends) then, without any action by the Committee, appropriate adjustments shall be
made to (1) the maximum number of shares of Common Stock and Rights subject to and reserved under
the Plan, and (2) the number of shares subject to or reserved for issuance under outstanding
Awards. In addition, if in the opinion of the Board of Directors of ML & Co. (the “Board of
Directors”), after consultation with ML & Co.’s independent public accountants, changes in ML &
Co.’s accounting policies, acquisitions, divestitures, distributions, or other unusual or
extraordinary items have disproportionately and materially affected the value of Common Stock, the
Board of Directors shall make such adjustments, if any, that it may deem necessary or equitable, in
its sole discretion, in order to preserve the benefit of this Plan for ML & Co. and its employees
and stockholders, in the number of shares subject to or reserved for issuance under this Plan and
in the method of calculating Appreciation. In the event of a change in the presently authorized
Common Stock that is limited to a change in the designation thereof or a change of authorized
shares with par value into the same number of shares with a different par value or into the same
number of shares without par value, the shares resulting from any such change shall be deemed to be
Common Stock within the meaning of this Plan and in the method of calculating Appreciation. In the
event of any other change affecting
the Common Stock, such adjustment may be made as shall be deemed equitable by the Board of
Directors to give proper effect to such event, in its sole discretion,

14

 

in order to preserve the
benefit of this Plan for ML & Co. and its employees and stockholders.

15. Tax Litigation.

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

16. Employment Rights.

     Neither the Plan nor any action taken hereunder shall be construed as giving any employee of
the Company the right to become a participant, and a grant under the Plan shall not be construed as
giving any participant any right to be retained in the employ of the Company.

17. Amendment of the Plan.

     The Board of Directors or the Committee (but no other committee of the Board of Directors) may
modify, amend or terminate the Plan at any time. No such modification, amendment or termination
will, without your consent, adversely affect your rights in relation to an Award after it has been
granted to you.

18. Governing Law; Section 409A.

     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. Notwithstanding any provision of this Plan to the contrary, no election, time or form
of payment, modification or other action with respect to the Plan shall be permitted to the extent
that such election, time or form of payment, modification or other action would violate any
requirement of Section 409A of the Code or the regulations thereunder

15EX-10.29

 

Exhibit
10.29

MERRILL LYNCH & CO., INC.

LONG-TERM INCENTIVE COMPENSATION PLAN

FOR MANAGERS AND PRODUCERS

ARTICLE I — GENERAL

     Section 1.1
Purpose.

     The
purposes of the Long-Term Incentive Compensation Plan (the “Plan”) for Managers and
Producers are: (a) to enhance the growth and profitability of Merrill Lynch & Co., Inc., a
Delaware corporation (“ML & Co.”), and its subsidiaries by providing the incentive of long-term
rewards to key employees who are capable of having a significant impact on the performance of ML &
Co. and its subsidiaries; (b) to attract and retain employees of outstanding competence and
ability; (c) to encourage long-term stock ownership by employees; and (d) to further the identity
of interests of such employees with those of stockholders of ML & Co.

     Section 1.2
Definitions.

     For the purpose of the Plan, the following terms shall have the meanings indicated:

     (a) “Board of Directors” or “Board” shall mean the Board of Directors of ML & Co.

     (b) “Code” shall mean the Internal Revenue Code of 1986, as amended, including any successor
law thereto.

     (c) “Company” shall mean ML & Co. and 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. For purposes of this Plan, the
terms “ML & Co.” and “Company” shall include any successor thereto.

     (d) “Committee” shall mean the Management Development and Compensation Committee of the Board
of Directors, or its functional successor or any other Board committee that has been designated by
the Board of Directors to administer the Plan, or the Board of Directors.

     (e) “Common Stock” shall mean the Common Stock, par value $1.33 1/3 per share, of ML & Co. and
a “share of Common Stock” shall mean one share of Common Stock together with, for so long as Rights
are outstanding, one Right (whether trading with the Common Stock or separately).

     (f) “Disability,” unless otherwise provided herein, shall mean any physical or mental
condition that, in the opinion of the Head of Human Resources of Merrill Lynch &

1

 

Co., Inc. (or his or her functional successor), renders an employee incapable of engaging in any
employment or occupation for which he is suited by reason of education or training.

     (g) “Fair Market Value” of shares of Common Stock on any given date(s) shall be: (a) the mean
of the high and low sales prices on the New York Stock Exchange--Composite Tape of such shares on
the date(s) in question, or, if the shares of Common Stock shall not have been traded on any such
date(s), the mean of the high and low sales prices on the New York
Stock Exchange--Composite Tape
on the first day prior thereto on which the shares of Common Stock were so traded; or (b) if the
shares of Common Stock are not traded on the New York Stock Exchange, such other amount as may be
determined by the Committee by any fair and reasonable means.

          “Fair Market Value” of any Other ML & Co. Security on any given date(s) shall be: (a) the mean
of the high and low sales prices of such Other ML & Co. Security on the principal securities
exchange on which such Security is traded on the date(s) in question or, if such Other ML & Co.
Security shall not have been traded on any such exchange on such date(s), the mean of the high and
low sales prices on such exchange on the first day prior thereto on which such Other ML & Co.
Security was so traded; or (b) if the Other ML & Co. Security is not publicly traded on a
securities exchange, such other amount as may be determined by the Committee by any fair and
reasonable means.

     (h) “Junior Preferred Stock” shall mean ML & Co.’s Series A Junior Preferred Stock, par value
$1.00 per share.

     (i) “Key Employee” means any employee who has been designated by ML & Co. as one of the 50
highest paid employees (based on W-2 income) as of the most recently completed fiscal year

     (j) “Other ML & Co. Security” shall mean a financial instrument issued pursuant to Article VI.

     (k) “Participant” shall mean any employee who has met the eligibility requirements set forth
in Section 1.5 hereof and to whom a grant has been made and is outstanding under the Plan.

     (l) “Performance Period” shall mean, in relation to Performance Shares or Performance Units,
any period, for which performance objectives have been established, of not less than one nor more
than ten consecutive ML & Co. fiscal years, commencing with the first day of the fiscal year in
which such Performance Shares or Performance Units were granted.

     (m) “Performance Share” shall mean a right, granted to a Participant pursuant to Article II
that will be paid out as a share of Common Stock.

     (n) “Performance Unit” shall mean a right, granted to a Participant pursuant to Article II, to
receive an amount equal to the Fair Market Value of one share of Common Stock in cash.

2

 

     (o) “Restricted Period” shall mean, (i) in relation to shares of Common Stock receivable in
payment for Performance Shares, the period beginning at the end of the applicable Performance
Period during which restrictions on the transferability of such shares of Common Stock are in
effect; and (ii) in relation to Restricted Shares or Restricted Units, the period beginning with
the first day of the month in which Restricted Shares or Restricted Units are granted, during which
restrictions on the transferability of such Restricted Shares or Restricted Units are in effect,
which shall not be of shorter duration than the Vesting Period applicable to the same Restricted
Shares or Restricted Units.

     (p) “Restricted Share” shall mean a share of Common Stock, granted to a Participant pursuant
to Article III, subject to the restrictions set forth in Section 3.3 hereof.

     (q) “Restricted Unit” shall mean the right, granted to a Participant pursuant to Article III,
as provided by the Committee at the time of grant to receive either: (1) an amount in cash equal to
the Fair Market Value of one share of Common Stock, or (2) one share of Common Stock.

     (r) “Retirement” shall mean the cessation of employment with the Company (1) 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 45; or (2) as the result of (A) becoming employed by an unconsolidated affiliate of the
Company (as specified by the Head of Human Resources or his or her functional equivalent) or (B)
being a part of a divestiture or spin-off designated by the Head of Human Resources or his or her
functional equivalent as eligible, provided that, in each case, termination of employment
by the Company for cause, as defined in a Participant’s grant document, shall not qualify as
Retirement.

     (s) “Rights” mean the Rights to Purchase Units of Junior Preferred Stock issued pursuant to
the Rights Agreement.

     (t) “Rights Agreement” means the Rights Agreement dated as of December 16, 1987 between ML &
Co. and Manufacturers Hanover Trust Company, Rights Agent, as amended from time to time.

     (u) “Stock Appreciation Right” shall mean a right, granted to a Participant pursuant to
Article V, to receive, in cash or shares of Common Stock, an amount equal to the increase in Fair
Market Value, over a specified period of time, of a specified number of shares of Common Stock.

     (v) “Stock Option” shall mean a right, granted to a Participant pursuant to Article IV, to
purchase, before a specified date and at a specified price, a specified number of shares of Common
Stock. Stock Options may be “Incentive Stock Options,” which meet the definition of such in
Section 422A of the Code, or “Nonqualified Stock Options,” which do not meet such definition.

     (w) “Vesting Period” shall mean, in relation to Restricted Shares or Restricted Units, any
period of not less than six (6) months beginning with the first day of the month

3

 

in which the grant of the applicable Restricted Shares or Restricted Units is effective, during
which such Restricted Shares or Restricted Units may be forfeited if the Participant terminates
employment.

     Section 1.3 Administration.

     (a) The Plan shall be administered by the Committee. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to: (i) subject to Section 1.5 hereof, select
Participants after receiving the recommendations of the management of the Company; (ii) determine
the number of Performance Shares, Performance Units, Restricted Shares, Restricted Units, Stock
Appreciation Rights, or Other ML & Co. Securities subject to each grant; (iii) determine the number
of shares of Common Stock subject to each Stock Option grant; (iv) determine the time or times when
grants are to be made or are to be effective; (v) determine the terms and conditions subject to
which grants may be made; (vi) extend the term of any Stock Option; (vii) provide at the time of
grant that all or any portion of any Stock Option shall be canceled upon the Participant’s exercise
of any Stock Appreciation Rights; (viii) prescribe the form or forms of the instruments evidencing
any grants made hereunder; (ix) adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable for the administration of the Plan; (x) construe and interpret the Plan
and all rules, regulations, and instruments utilized thereunder; and (xi) make all determinations
deemed advisable or necessary for the administration of the Plan. All determinations by the
Committee shall be final and binding.

     (b) The Committee shall act in accordance with the procedures established for a Committee
under ML & Co.’s Certificate of Incorporation and By-Laws, the Committee’s charter, or under any
resolution of the Board.

     Section 1.4 Shares Subject to the Plan.

     The total number of shares of Common Stock that may be distributed under the Plan shall be
340,000,000 (whether granted as Restricted Shares or reserved for distribution upon grant of
Restricted Units, Performance Shares, Stock Options, Stock Appreciation Rights (to the extent they
may be paid out in Common Stock), or Other ML & Co. Securities), subject to adjustment as provided
in Article VII hereof. Shares of Common Stock distributed under the Plan may be treasury shares or
authorized but unissued shares. To the extent that awards of Other ML & Co. Securities are
convertible into Common Stock or are otherwise equity securities (or convertible into equity
securities) of ML & Co., they shall be subject to the limitation expressed above on the number of
shares of Common Stock that can be awarded under the Plan. Any shares of Common Stock that have
been granted as Restricted Shares or that have been reserved for distribution in payment for
Restricted Unit or Performance Shares but are later forfeited or for any other reason are not
payable under the Plan may again be made the subject of grants under the Plan. If any Stock
Option, Stock Appreciation Right, or Other ML & Co. Security granted under the Plan is forfeited,
expires or terminates, or any Restricted Unit or Stock Appreciation Right is paid out in cash, the
underlying shares of Common Stock may again be made the subject of grants under the Plan. Units
payable in cash that are later forfeited or for any reason are not payable under the Plan may again
be the subject of grants under the Plan.

4

 

     Section 1.5 Eligibility and Participation.

     Participation in the Plan shall be limited to officers (who may also be members of the Board
of Directors) and other salaried, key employees of the Company or any affiliate of the Company
designated by the Committee.

ARTICLE
II - PROVISIONS APPLICABLE TO PERFORMANCE SHARES AND PERFORMANCE UNITS.

     Section 2.1 Performance Periods and Restricted Periods.

     The Committee shall establish Performance Periods applicable to Performance Shares and
Performance Units and may establish Restricted Periods applicable to Performance Shares, at its
discretion. Each such Performance Period shall commence with the beginning of a fiscal year in
which the Performance Shares and Performance Units are granted and have a duration of not less than
one nor more than ten consecutive fiscal years. Each such Restricted Period shall commence with
the end of the Performance Period established for such Performance Shares and shall end on such
date as may be determined by the Committee at the time of grant. There shall be no limitation on
the number of Performance Periods or Restricted Periods established by the Committee, and more than
one Performance Period may encompass the same fiscal year.

     Section 2.2 Performance Objectives.

     At any time before or during a Performance Period, the Committee shall establish one or more
performance objectives for such Performance Period, provided that such performance objectives shall
be established prior to the grant of any Performance Shares or Performance Units with respect to
such Period. Performance objectives shall be based on one or more measures such as return on
stockholders’ equity, earnings, or any other standard deemed relevant by the Committee, measured
internally or relative to other organizations and before or after extraordinary items, as may be
determined by the Committee; provided, however, that any such measure shall include
all accruals for grants made under the Plan and for all other employee benefit plans of the
Company. The Committee may, in its discretion, establish performance objectives for the Company as
a whole or for only that part of the Company in which a given Participant is involved, or a
combination thereof. In establishing the performance objective or objectives for a Performance
Period, the Committee shall determine both a minimum performance level, below which no Performance
Shares or Performance Units shall be payable, and a full performance level, at or above which 100%
of the Performance Shares or Performance Units shall be payable. In addition, the Committee may,
in its discretion, establish intermediate levels at which given proportions of the Performance
Shares or Performance Units shall be payable. Such performance objectives shall not thereafter be
changed except as set forth in Sections 2.5 and 2.6 and Article VII hereof.

     Section 2.3 Grants of Performance Shares and Performance Units.

     The Committee may select employees to become Participants subject to the provisions of Section
1.5 hereof and grant Performance Shares or Performance Units to

5

 

such Participants at any time prior to or during the first fiscal year of a Performance Period.
Grants shall be deemed to have been made as of the beginning of the first fiscal year of the
Performance Period. Before making grants, the Committee must receive the recommendations of the
management of the Company, which will take into account such factors as level of responsibility,
current and past performance, and performance potential. Subject to the provisions of Section 2.7
hereof, a grant of Performance Shares or Performance Units shall be effective for the entire
applicable Performance Period and may not be revoked. Each grant to a Participant shall be
evidenced by a written instrument stating the number of Performance Shares or Performance Units
granted, the Performance Period, the performance objective or objectives, the proportion of
payments for performance between the minimum and full performance levels, if any, the Restricted
Periods and restrictions applicable to shares of Common Stock receivable in payment for Performance
Shares, and any other terms, conditions, and rights with respect to such grant. At the time of any
grant of Performance Shares, there shall be reserved out of the number of shares of Common Stock
authorized for distribution under the Plan a number of shares equal to the number of Performance
Shares so granted.

     Section 2.4 Rights and Benefits During Performance Period.

     The Committee may provide that, during a Performance Period, a Participant shall be paid cash
amounts, with respect to each Performance Share or Performance Unit held by such Participant, in
the same manner, at the same time, and in the same amount paid, as a dividend on a share of Common
Stock.

     Section 2.5 Adjustment with respect to Performance Shares and Performance Units.

     Any other provision of the Plan to the contrary notwithstanding, the Committee may at any time
adjust performance objectives (up or down) and minimum or full performance levels (and any
intermediate levels and proportion of payments related thereto), adjust the way performance
objectives are measured, or shorten any Performance Period or Restricted Period, if it determines
that conditions, including but not limited to, changes in the economy, changes in competitive
conditions, changes in laws or governmental regulations, changes in generally accepted accounting
principles, changes in the Company’s accounting policies, acquisitions or dispositions, or the
occurrence of other unusual, unforeseen, or extraordinary events, so warrant.

     Section 2.6 Payment of Performance Shares and Performance Units.

     Within 90 days after the end of any Performance Period, the Company shall determine the extent
to which performance objectives established by the Committee pursuant to Section 2.2 hereof for
such Performance Period have been met during such Performance Period and the resultant extent to
which Performance Shares or Performance Units granted for such Performance Period are payable.
Payment for Performance Shares and Performance Units shall be as follows:

6

 

     (a) Performance Shares:

          (i) If a Restricted Period has been established in relation to the Performance Shares:

               (A) At the end of the applicable Performance Period, the number of shares of Common
Stock equal to the number of Performance Shares payable shall be held by the Company in book entry
or certificated form in the name of the employee until the end of the Restricted Period. Such
shares will be nonforfeitable but restricted as to transferability during the applicable Restricted
Period. During the Restricted Period, the Participant shall have all rights of a holder as to such
shares of Common Stock, including the right to receive dividends, to exercise Rights, and to vote
such Common Stock and any securities issued upon exercise of Rights, subject to the following
restrictions: (1) the Participant shall not be entitled to delivery of certificates representing
such shares of Common Stock and any other such securities until the expiration of the Restricted
Period; and (2) none of such shares of Common Stock or Rights may be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of during the Restricted Period. Any shares of Common
Stock or other securities or property received with respect to such shares shall be subject to the
same restrictions as such shares; provided, however, that the Company shall not be
required to register any fractional shares of Common Stock payable to any Participant, but will pay
the value of such fractional shares, measured as set forth in Section 2.6(b) below, to the
Participant.

               (B) At the end of the applicable Restricted Period, all restrictions applicable to
the
shares of Common Stock, and other securities or property received with respect to such shares, held
by the Company for the accounts of recipients of Performance Shares granted in relation to such
Restricted Period shall lapse, and one or more stock certificates for such shares of Common Stock
and securities, free of the restrictions, shall be delivered in book-entry or certificated form to
the Participant, or such shares and securities shall be credited to a brokerage account if the
Participant so directs, as soon as practicable but in no event later than 30 days after the end of
the Restricted Period, provided that, in the event that the end of the Restricted Period is fewer
than 30 days prior to the end of the calendar year, the payment of the shares shall be made in the
first 30 days of the next succeeding calendar year.

          (ii) If a Restricted Period has not been established in relation to the Performance
Shares, at the end of the applicable Performance Period, the number of shares of Common Stock equal
to the number of Performance Shares payable, free of restrictions, shall be registered in the name
of the Participant and delivered in book-entry or certificated form to the Participant, or such
shares shall be credited to a brokerage account if the Participant so directs , as soon as
practicable but in no event later than 30 days after the end of the Restricted Period, provided
that, in the event that the end of the Restricted Period is fewer than 30 days prior to the end of
the calendar year, the payment of the shares shall be made in the first 30 days of the next
succeeding calendar year.

     (b) Performance Units: At the end of the applicable Performance Period, a Participant
shall be paid a cash amount equal to the number of Performance Units payable, times the mean of the
Fair Market Value of Common Stock during the second calendar month following the end of the
Performance Period, as soon as practicable but in no event later than 30 days after the end of
the Performance Period, provided that, in

7

 

the event that the end of the Performance Period is fewer than 30 days prior to the end of the Company’s
fiscal year, the payment shall be made in the first 30 days of the next succeeding fiscal year,
unless some other payment date or Restricted Period is established by the Committee at the time of
grant, in which case, payment to the Participant shall be made as soon as practicable but in no
event later than 30 days after the applicable date, provided that, in the event that the applicable
date is fewer than 30 days prior to the end of the calendar year, the payment shall be made in the
first 30 days of the next succeeding year.

     Section 2.7 Termination of Employment.

     (a) Prior to the end of a Performance Period:

          (i) Death: If a Participant ceases to be an employee of the Company prior to the end
of a Performance Period by reason of death, any outstanding Performance Shares or Performance Units
with respect to such Participant shall become payable and be paid to such Participant’s beneficiary
or estate, as the case may be, as soon as practicable (subject to receipt of proper documentation)
in the manner set forth in Sections 2.6(a)(ii) and 2.6(b) hereof, respectively. In determining the
extent to which performance objectives established for such Performance Period have been met and
the resultant extent to which Performance Shares or Performance Units are payable, the Performance
Period shall be deemed to end as of the end of the fiscal year in which the Participant’s death
occurred, and payment shall be made as soon as practicable (but in no event later than 30 days)
following the end of such fiscal year.

          (ii) Disability or Retirement: The Disability or Retirement of a Participant shall not
constitute a termination of employment for purposes of this Article II, and such Participant shall
not forfeit any Performance Shares or Performance Units held by him or her, provided that following
Disability or Retirement such Participant does not engage in or assist any business that the
Committee, in its sole discretion, determines to be in competition with business engaged in by the
Company during the remainder of the applicable Performance Period. A Participant who does engage
in or assist any business that the Committee, in its sole discretion, determines to be in
competition with business engaged in by the Company shall be deemed to have terminated employment.

          (iii) Other Terminations: If a Participant ceases to be an employee prior to the end
of a Performance Period for any reason other than death, the Participant shall immediately forfeit
all Performance Shares and Performance Units previously granted under the Plan and all right to
receive any payment for such Performance Shares and Performance Units. The Committee may, however,
direct payment in accordance with the provisions of Section 2.6 hereof for a number of Performance
Shares or Performance Units, as it may determine, granted under the Plan to a Participant whose
employment has so terminated (but not exceeding the number of Performance Shares or Performance
Units that could have been payable had the Participant remained an employee) if it finds that the
circumstances in the particular case so warrant. For purposes of the preceding sentence, the
Performance Period over which performance objectives shall be measured shall be deemed to end as of
the end of the fiscal year in which termination occurred, and payment shall be made as soon as
practicable (but in no event later than 30 days) following the end of such fiscal year.

8

 

     (b) After the end of a Performance Period but prior to the end of a Restricted Period:

          (i) Death, Disability, or Retirement: If a Participant ceases to be an employee of the
Company by reason of death or in the case of the Disability or Retirement of a Participant, the
Restricted Period shall be deemed to have ended (subject, in the case of Retirement, to receipt of
appropriate documentation from the Participant regarding the Participant’s competitive status) and
shares held by the Company shall be paid as soon as practicable following the end of the Restricted
Period, in the manner set forth in Section 2.6(a)(i)(B).

          (ii) Other Terminations: Terminations of employment for any reason other than death
after the end of a Performance Period but prior to the end of a Restricted Period shall not have
any effect on the Restricted Period, unless the Committee, in its sole discretion, finds that the
circumstances so warrant and determines that the Restricted Period shall end on an earlier date as
determined by the Committee and that shares held by the Company shall be paid as soon as
practicable following such earlier date in the manner set forth in Section 2.6(a)(i)(B).

     (c) Except as otherwise provided in this Section 2.7, termination of employment after the end
of a Performance Period but before the payment of Performance Shares or Performance Units relating
to such Performance Period shall not affect the amount, if any, to be paid pursuant to Section 2.6
hereof. Approved leaves of absence of one year or less shall not be deemed to be terminations of
employment under this Section 2.7. Leaves of absence of more than one year will be deemed to be
terminations of employment under this Section 2.7, unless the Committee determines otherwise.

ARTICLE
III - PROVISIONS APPLICABLE TO RESTRICTED SHARES AND
RESTRICTED UNITS.

     Section 3.1 Vesting Periods and Restricted Periods.

     The Committee shall establish one or more Vesting Periods applicable to Restricted Shares and
Restricted Units and one or more Restricted Periods applicable to Restricted Shares and Restricted
Units, at its discretion. Each such Vesting Period shall have a duration of not less than six (6)
months, measured from the first day of the month in which the grant of the applicable Restricted
Shares or Restricted Units is effective. Each such Restricted Period shall have a duration of six
(6) or more consecutive months, measured from the first day of the month in which the grant of the
applicable Restricted Shares or Restricted Units is effective, but in no event shall any Restricted
Period be of shorter duration than the Vesting Period applicable to such Restricted Share or
Restricted Unit.

     Section 3.2 Grants of Restricted Shares and Restricted Units.

     The Committee may select employees to become Participants (subject to the provisions of
Section 1.5 hereof) and grant Restricted Shares or Restricted Units to such Participants at any
time. Before making grants, the Committee must receive the
recommendations of the management of the Company, which will take into account such factors as
level of responsibility, current and past performance, and performance potential.

9

 

     Subject to the provisions of Section 3.7 hereof, a grant of Restricted Shares or Restricted
Units shall be effective for the entire applicable Vesting and Restricted Periods and may not be
revoked. Each grant to a Participant shall be evidenced by a written instrument stating the number
of Restricted Shares or Restricted Units granted, the Vesting Period, the Restricted Period, the
restrictions applicable to such Restricted Shares or Restricted Units, the nature and terms of
payment of consideration, if any, and the consequences of forfeiture that will apply to such
Restricted Shares or Restricted Units, and any other terms, conditions, and rights with respect to
such grant.

     Section 3.3 Rights and Restrictions Governing Restricted Shares.

     At the time of grant of Restricted Shares, subject to the receipt by the Company of any
applicable consideration for such Restricted Shares, one or more certificates representing the
appropriate number of shares of Common Stock granted to a Participant shall be registered either in
his or her name or for his or her benefit either individually or collectively with others, but
shall be held by the Company for the account of the Participant. The Participant shall have all
rights of a holder as to such shares of Common Stock, including the right to receive dividends, to
exercise Rights, and to vote such Common Stock and any securities issued upon exercise of Rights,
subject to the following restrictions: (a) the Participant shall not be entitled to delivery of
certificates representing such shares of Common Stock and any other such securities until the
expiration of the Restricted Period; (b) except as provided in Section 3.9, none of the Restricted
Shares may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during
the Restricted Period; and (c) all of the Restricted Shares shall be forfeited and all rights of
the Participant to such Restricted Shares shall terminate without further obligation on the part of
the Company unless the Participant remains in the continuous employment of the Company for the
entire Vesting Period in relation to which such Restricted Shares were granted, except as otherwise
provided in Section 3.7 hereof. Any shares of Common Stock or other securities or property
received with respect to such shares shall be subject to the same restrictions as such Restricted
Shares.

     Section 3.4 Rights Governing Restricted Units.

     During the Vesting Period, or, if longer, the Restricted Period, for Restricted Units, a
Participant may be paid, with respect to each such Restricted Unit, cash amounts in the same
manner, at the same time, and in the same amount paid, as a dividend on a share of Common Stock.
Except as otherwise provided in Section 3.7, the Restricted Units shall be forfeited and all rights
of the Participant to the Restricted Units shall be forfeited without further obligation on the
part of the Company unless the Participant remains in the continuous employment of the Company for
the entire Vesting Period.

     Section 3.5 Adjustment with respect to Restricted Shares and Restricted Units.

10

 

     Any other provision of the Plan to the contrary notwithstanding, the Committee may at any time
shorten any Vesting Period or Restricted Period, if it determines that conditions, including but
not limited to, changes in the economy, changes in competitive conditions, changes in laws or
governmental regulations, changes in generally accepted accounting principles, changes in the
Company’s accounting policies, acquisitions or dispositions, or the occurrence of other unusual,
unforeseen, or extraordinary events, so warrant.

     Section 3.6 Payment of Restricted Shares and Restricted Units.

     (a) Restricted Shares: At the end of the Vesting Period (or if longer, the Restricted
Period), all restrictions contained in the grant of Restricted Shares and in the Plan shall lapse,
and the appropriate number of shares of Common Stock (net of shares withheld at the end of the
Vesting Period under Section 3.6(c)), shall be delivered to the Participant or his or her
beneficiary or estate, as the case may be, free of restrictions, in book-entry or certificated
form or credited to a brokerage account as the Participant or his or her beneficiary or estate, as
the case may be, so directs.

     (b) Restricted Units: At the end of the Vesting Period (or, if longer, the Restricted
Period) applicable to a Participant’s Restricted Units, there shall be paid to the Participant, or
his or her beneficiary or estate, as the case may be, either: (1) an amount in cash equal to the
Fair Market Value of one share of Common Stock on the last trading day of the Vesting Period (or,
if longer, the Restricted Period), or (2) one share of Common Stock for each Restricted Unit, net
of shares withheld by the Company pursuant to Section 3.6(c), free of restrictions. For Restricted
Units paid in Common Stock, the appropriate number of shares shall be delivered to the Participant
or his or her beneficiary or estate, as the case may be, in book-entry or certificated form or
credited to a brokerage account as the Participant or his or her beneficiary or estate, as the case
may be, so directs, as soon as practicable but in no event later than 30 days after the end of the
Vesting or Restricted Period, provided that, in the event that the end of such period is fewer than
30 days prior to the end of the calendar year, the payment of the shares shall be made in the first
30 days of the next succeeding year.

     (c) Payment of Taxes: At the end of the Vesting Period for Restricted Shares or the
Restricted Period for Restricted Units payable in Common Stock, the Company shall satisfy any
minimum federal, state, local or social security withholding requirements that occur as a result
the vesting of Restricted Shares or payment of Restricted Units in shares of Common Stock by
deducting from the number of whole shares of Common Stock otherwise deliverable, such number of
shares as shall have a Fair Market Value, on the applicable date, equal to the minimum tax required
to be withheld by the Company.

     Section 3.7 Termination of Employment.

     (a) Prior to the end of a Vesting Period:

          (i) Death: If a Participant ceases to be an employee of the Company prior to the end
of a Vesting Period by reason of death, all grants of Restricted Shares and Restricted Units
granted to such Participant are immediately payable in accordance

11

 

with their terms, and payment
shall be made as soon as practicable (but in no event later than 30 days after) receipt of
appropriate documentation.

          (ii) Disability or Retirement: The Disability or Retirement of a Participant shall not
constitute a termination of employment for purposes of this Article III and such Participant shall
not forfeit any Restricted Shares or Restricted Units held by him or her, provided that, during the
remainder of the applicable Vesting Period, such Participant does not engage in or assist any
business that the Committee, in its sole discretion, determines to be in competition with business
engaged in by the Company. A Participant who does engage in or assist any business that the
Committee in its sole discretion, determines to be in competition with business engaged in by the
Company shall be deemed to have terminated employment.

          (iii) Other Terminations: Except as otherwise provided herein, if a Participant ceases
to be an employee prior to the end of a Vesting Period for any reason other than death, the
Participant shall immediately forfeit all Restricted Shares and Restricted Units previously
granted, unless the Committee, in its sole discretion, finds that the circumstances in the
particular case so warrant and allows a Participant whose employment has so terminated to retain
any or all of the Restricted Shares or Restricted Units granted to such Participant.
Notwithstanding the foregoing, with respect to any Participant holding unvested Restricted Shares
and/or Restricted Units (x) whose employment is terminated because of a reduction in staff (coded
under termination code number 251 or such other code as may be equivalent to or substituted for
termination code number 251), and (y) who delivers to the Company and complies with a release of
claims he or she may have against the Company or any of its subsidiaries, which will include a
prohibition on solicitation of the Company’s employees and such other restrictions as the Company
may impose (a “Release”), then notwithstanding such termination, Restricted Shares and Restricted
Units granted to such Participant shall continue to vest during the Vesting Period and be
restricted during the Restricted Period for such grant; provided, however, that in
the event of the Employee’s death during the relevant Vesting or Restricted Periods the treatment
of Restricted Shares and Restricted Units will be determined in accordance with the provisions of
Section 3.7(a)(i);

     (b) After the end of a Vesting Period but prior to the end of a Restricted Period:

               (i) Death, Disability, or Retirement: If a Participant ceases to be an employee of
the
Company by reason of death, or in the case of the Disability or Retirement of a Participant, prior
to the end of a Restricted Period, all Restricted Shares and Restricted Units granted to such
Participant are payable as set forth in Section 3.6, subject to the receipt of appropriate
documentation from the Participant with respect to the Participant’s competitive status.

               (ii) Other Terminations: Terminations of employment for any reason other than death
after the end of a Vesting Period but prior to the end of a Restricted Period shall not have any
effect on the Restricted Period, unless the Committee, in its sole discretion, finds that the
circumstances so warrant and determines
that the Restricted Period shall end on an earlier date as determined by the Committee and, in each
case, the applicable Restricted Shares or Restricted Units shall be paid as set forth in Section
3.6.

12

 

Approved leaves of absence of one year or less shall not be deemed to be terminations of employment
under this Section 3.7. Leaves of absence of more than one year will be deemed to be terminations
of employment under this Section 3.7, unless the Committee determines otherwise.

     Section 3.9 Limitations on Transfer of Restricted Shares and Restricted Units.

     Restricted Shares and Restricted Units are not transferable during the Restricted Period by a
Participant except by will or the laws of descent and distribution or bequest; provided, however,
that the Committee shall have the authority, in its discretion, to grant (or to authorize by
amendment of an existing grant) Restricted Shares and Restricted Units that may be transferred by
the Participant during his or her lifetime to any member of his or her immediate family or to a
trust, corporation, limited liability corporation, family limited partnership or other equivalent
vehicle, established for the exclusive benefit of one or more members of his or her immediate
family for estate planning purposes. A transfer of Restricted Shares or Restricted Units will not
be permitted unless the Company has received evidence, to its satisfaction, that such transfer does
not trigger income or social security taxes or withholding requirements. Such transfer may only be
effected by the Company at the written request of a Participant and shall become effective only
when recorded in the Company’s record of outstanding Restricted Shares or Restricted Units. In the
event Restricted Shares or Restricted Units are transferred, such Restricted Shares or Restricted
Units may not be subsequently transferred by the transferee except by will or the laws of descent
and distribution. In the event Restricted Shares or Restricted Units are transferred, such
Restricted Shares or Restricted Units shall continue to be governed by and subject to the terms and
limitations of the Plan and the relevant grant and remain subject to forfeiture in the event the
Participant terminates his or her employment during the Vesting Period as if no transfer had taken
place. As used in this Section, “immediate family” shall mean, with respect to any person, any
child, stepchild or grandchild, and shall include relationships arising from legal adoption.

ARTICLE
IV - PROVISIONS APPLICABLE TO STOCK OPTIONS.

     Section 4.1 Grants of Stock Options.

     The Committee may select employees to become Participants (subject to Section 1.5 hereof) and
grant Stock Options to such Participants at any time; provided, however, that Incentive Stock
Options shall be granted within 10 years of the earlier of the date the Plan is adopted by the
Board or approved by the stockholders. Before making grants, the Committee must receive the
recommendations of the management of the Company, which will take into account such factors as
level of responsibility, current and past performance, and performance potential. Subject to the
provisions of the Plan, the Committee shall also determine the number of shares of Common Stock to
be covered by each Stock Option. The Committee shall have the authority, in its discretion, to
grant “Incentive Stock Options” or “Nonqualified Stock Options,” or to grant both types of Stock
Options. Furthermore, the Committee may grant a Stock Appreciation Right in connection with a
Stock Option, as provided in Article V.

     Section 4.2 Option Documentation.

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     Each Stock Option granted under the Plan shall be evidenced by written documentation
containing such terms and conditions, as the Committee may deem appropriate and are not
inconsistent with the provisions of the Plan.

     Section 4.3 Exercise Price.

     The Committee shall establish the exercise price at the time any Stock Option is granted at
such amount as the Committee shall determine, except that such exercise price shall not be less
than 50% of the Fair Market Value of the underlying shares of Common Stock on the day a Stock
Option is granted and that, with respect to an Incentive Stock Option, such exercise price shall
not be less than 100% of the Fair Market Value of the underlying shares of Common Stock on the day
such Incentive Stock Option is granted. The exercise price will be subject to adjustment in
accordance with the provisions of Article VII of the Plan.

          Section 4.4 Exercise of Stock Options.

     (a) Vesting and Exercisability: Stock Options shall become exercisable at such times
and in such installments as the Committee may provide at the time of grant. The Committee may also
set a Vesting Period for grants of Stock Options. The Committee may also, in its sole discretion,
accelerate the time at which a Stock Option or installment may vest or become exercisable. A Stock
Option may be exercised at any time from the time first set by the Committee until the close of
business on the expiration date of the Stock Option.

     (b) Option Period: For each Stock Option granted, the Committee shall specify the
period during which the Stock Option may be exercised, provided that no Stock Option shall be
exercisable after the expiration of 10 years (or such longer period as the Committee shall
designate) from the date of grant of such Stock Option.

     (c) Exercise in the Event of Termination of Employment:

     (i) Death: If a Participant ceases to be an employee of the Company by reason of
death prior to: (A) the end of a Vesting Period, (B) the exercise of, or (C) the expiration of
Stock Options granted to him or her that remain outstanding on the date of death, such Stock
Options may be exercised to the full extent not yet exercised, regardless of whether or not then
vested or fully exercisable under the terms of the grant or under the terms of Section 4.4(a)
hereof, by his or her estate, beneficiaries, or transferees, as the case may be (subject to the
receipt by the Company of appropriate documentation), at any time and from time to time, but in no
event after the expiration date of such Stock Option.

     (ii) Disability or Retirement: The Disability or Retirement of a Participant shall
not constitute a termination of employment for purposes of this Article IV, provided that following
Disability or Retirement such Participant does not engage in or assist any
business that the Committee in its sole discretion, determines to be in competition with business
engaged in by the Company. A Participant who does engage in or assist any business that the
Committee in its sole discretion, determines to be competition with business engaged in by the
Company shall be deemed to have terminated employment,

14

 

as of the date of such determination. In
the case of Incentive Stock Options, Disability shall be as defined in Code Section 22(e)(3).

     (iii) Other Terminations: Except as provided herein, if a Participant ceases to be an
employee for any reason other than death prior to: (A) the end of the Vesting Period, (B) the
exercise of, or (C) the expiration of a Stock Option, then all outstanding Stock Options granted to
such Participant, whether in his or her name or in the name of another person as a result of a
transfer in accordance with Section 4.4(d), shall expire and be forfeited on a date 90 days
following the date of such termination of employment. Notwithstanding the foregoing, with respect
to any Participant who holds unvested, unexercised non-qualified Stock Options (x) whose employment
is terminated because of a reduction in staff (coded under termination code number 251 or such
other code as may be equivalent to or substituted for termination code number 251), and (y) who
delivers to the Company and complies with a release of claims he or she may have against the
Company or any of its subsidiaries, which will include a prohibition on solicitation of the
Company’s employees and such other restrictions as the Company may impose (a “Release”), then,
notwithstanding such termination, all unvested, unexercised Stock Options shall continue to be and
become exercisable in accordance with their terms until a date that is 30 days after the latest
date on which any Stock Options granted to such employee have become fully exercisable (the
“Exercise End Date”), but in no event later than the original expiration date of such Stock Option,
and may be exercised at any time and from time to time during such period; provided
however, that in the event of the Employee’s death, during such period, the exercisability of
Stock Options will be determined in accordance with the provisions of Section 4.4(c)(i);

In addition, if the Committee, in its sole discretion, finds that the circumstances in the
particular case so warrant, it may determine that the Participant, his or her transferee pursuant
to Section 4.4(d), or such Participant’s or transferee’s estate or beneficiaries, may exercise any
such outstanding Stock Option at any time and from time to time after such termination of
employment, but in no event after the expiration date of such Stock Option (the “Extended Period”).

Approved leaves of absence of one year or less shall not be deemed to be terminations of employment
under this Section 4.4(c)(iii). Leaves of absence of more than one year shall be deemed to be
terminations of employment under this Section 4.4(c)(iii), unless the Committee determines
otherwise.

     (d) Limitations on Transferability: Stock Options are not transferable by a
Participant except by will or the laws of descent and distribution or bequest and are exercisable
during his or her lifetime only by him or her; provided, however, that the Committee shall have the
authority, in its discretion, to grant (or to authorize by amendment of an existing grant) Stock
Options that may be transferred by the Participant during his or her lifetime to any member of his
or her immediate family or to a trust, corporation, limited liability corporation, family limited
partnership or other equivalent vehicle, established for the exclusive benefit of one or more
members of his or her immediate family. A transfer of a Stock Option pursuant to this subparagraph
may
only be effected by the Company at the written request of a Participant and shall become
effective only when recorded in the Company’s record of outstanding Stock Options. In the event a
Stock Option is transferred as contemplated in this subparagraph, such Stock Option may not be
subsequently transferred by the transferee except by will or the laws

15

 

of descent and distribution.
In the event a Stock Option is transferred as contemplated in this subparagraph, such Stock Option
shall continue to be governed by and subject to the terms and limitations of the Plan and the
relevant grant, and the transferee shall be entitled to the same rights as the Participant under
Articles VII, VIII and X hereof, as if no transfer had taken place. As used in this subparagraph,
“immediate family” shall mean, with respect to any person, any child, stepchild or grandchild, and
shall include relationships arising from legal adoption.

     Section 4.5 Payment of Purchase Price and Tax Liability Upon Exercise; Delivery of
Shares.

     (a) Payment of Purchase Price: The purchase price of the shares as to which a Stock
Option is exercised shall be paid to the Company at the time of exercise (i) in cash, (ii) by
delivering freely transferable shares of Common Stock already owned by the person exercising the
Stock Option having a total real-time market price, at the time and on the date of exercise, equal
to the purchase price, (iii) a combination of cash and shares of Common Stock equal in value to the
exercise price, or (iv) by such other means as the Committee, in its sole discretion, may
determine.

     (b) Payment of Taxes: Upon exercise, a Participant may elect to satisfy any federal,
state, local social security taxes required by law to be withheld that arise as a result of the
exercise of a Stock Option by directing the Company to withhold from the shares of Common Stock
otherwise deliverable upon the exercise of such Stock Option, such number of shares as shall have a
total real-time market price at the time and on the date of exercise, at least equal to the amount
of tax to be withheld.

     (c) Delivery of Shares: Upon receipt by the Company of the purchase price, stock
certificate(s) for the shares of Common Stock as to which a Stock Option is exercised (net of any
shares withheld pursuant to Section 4.5(b) above) shall be delivered to the person in whose name
the Stock Option is outstanding or such person’s estate or beneficiaries, as the case may be, or
such shares shall be credited to a brokerage account or otherwise delivered, in such manner as such
person or such person’s estate or beneficiaries, as the case may be, may direct.

     Section 4.6 Limitation on Shares of Common Stock Received upon Exercise of Incentive
Stock Options.

     The aggregate Fair Market Value (determined at the time an Incentive Stock Option is granted)
of the shares of Common Stock with respect to which an Incentive Stock Option is exercisable for
the first time by a Participant during any calendar year (under all plans of the Company) shall not
exceed $100,000 or such other limit as may be established from time to time under the Code.

ARTICLE
V - PROVISIONS APPLICABLE TO STOCK APPRECIATION RIGHTS.

     Section 5.1 Grants of Stock Appreciation Rights.

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     The Committee may select employees to become Participants (subject to the provisions of
Section 1.5 hereof) and grant Stock Appreciation Rights to such Participants at any time. Before
making grants, the Committee must receive the recommendations of the management of the Company,
which will take into account such factors as level of responsibility, current and past performance,
and performance potential. The Committee shall have the authority to grant Stock Appreciation
Rights in connection with a Stock Option or independently. The Committee may grant Stock
Appreciation Rights in connection with a Stock Option, either at the time of grant or by amendment,
in which case each such right shall be subject to the same terms and conditions as the related
Stock Option and shall be exercisable only at such times and to such extent as the related Stock
Option is exercisable. A Stock Appreciation Right granted in connection with a Stock Option shall
entitle the holder to surrender to the Company the related Stock Option unexercised, or any portion
thereof, and receive from the Company in exchange therefor an amount equal to the excess of the
Fair Market Value of one share of the Common Stock on the day preceding the surrender of such Stock
Option over the Stock Option exercise price times the number of shares underlying the Stock Option,
or portion thereof, that is surrendered. A Stock Appreciation Right granted independently of a
Stock Option shall entitle the holder to receive upon exercise an amount equal to the excess of the
Fair Market Value of one share of Common Stock on the day preceding the exercise of the Stock
Appreciation Right over the Fair Market Value of one share of Common Stock on the date such Stock
Appreciation Right was granted, or such other price determined by the Committee at the time of
grant, which shall in no event be less than 50% of the Fair Market Value of one share of Common
Stock on the date such Stock Appreciation Right was granted. Stock Appreciation Rights are not
transferable by a Participant except by will or the laws of descent and distribution and are
exercisable during his or her lifetime only by him or her.

     Section 5.2 Stock Appreciation Rights Granted in Connection with Incentive Stock
Options.

     (a) Stock Appreciation Rights granted in connection with Incentive Stock Options must expire
no later than the last date the underlying Incentive Stock Option can be exercised.

     (b) Such Stock Appreciation Rights may be granted for no more than 100% of the difference
between the exercise price of the underlying Incentive Stock Option and the Fair Market Value of
the Common Stock subject to the underlying Incentive Stock Option at the time the Stock
Appreciation Right is exercised.

     (c) Such Stock Appreciation Rights are transferable only to the extent and at the same time
and under the same conditions as the underlying Incentive Stock Options.

     (d) Such Stock Appreciation Rights may be exercised only when the underlying Incentive Stock
Options may be exercised.

     (e) Such Stock Appreciation Rights may be exercised only when the Fair Market Value of the
shares of Common Stock subject to the Incentive Stock Options exceeds the exercise price of the
Incentive Stock Options.

     Section 5.3 Payment Upon Exercise of Stock Appreciation Rights.

17

 

     The Company’s obligation to any Participant exercising a Stock Appreciation Right may be paid
in cash or shares of Common Stock, or partly in cash and partly in shares, at the sole discretion
of the Committee.

     Section 5.4 Termination of Employment.

     (a) Death: If a Participant ceases to be an employee of the Company prior to the
exercise or expiration of a Stock Appreciation Right outstanding in his or her name on the date of
death, such Stock Appreciation Right may be exercised to the full extent not yet exercised,
regardless of whether or not then fully exercisable under the terms of the grant, by or his or her
estate or beneficiaries, as the case may be, at any time and from time to time within l2 months
after the date of death but in no event after the expiration date of such Stock Appreciation Right.

     (b) Disability: The Disability of a Participant shall not constitute a termination of
employment for purposes of this Article IV, provided that following the Disability such Participant
does not engage in or assist any business that the Committee, in its sole discretion, determines to
be in competition with business engaged in by the Company. A Participant who does engage in or
assist any business that the Committee, in its sole discretion, determines to be in competition
with business engaged in by the Company shall be deemed to have terminated employment.

     (c) Retirement: The Retirement of a Participant shall not constitute a termination of
employment for purposes of this Article IV, provided that following Retirement such Participant
does not engage in or assist any business that the Committee, in its sole discretion, determines to
be in competition with business engaged in by the Company, and such Participant may exercise any
Stock Appreciation Right outstanding in his or her name at any time and from time to time within 5
years after the date his or her Retirement commenced but in no event after the expiration date of
such Stock Appreciation Right. A Participant who does engage in or assist any business that the
Committee, in its sole discretion, determines to be in competition with business engaged in by the
Company shall be deemed to have terminated employment.

     (d) Other Terminations: If a Participant ceases to be an employee prior to the
exercise or expiration of a Stock Appreciation Right for any reason other than death, all
outstanding Stock Appreciation Rights granted to such Participant shall expire on the date of such
termination of employment, unless the Committee, in its sole discretion, determines that he may
exercise any such outstanding Stock Appreciation Right (to the extent that he was entitled to do so
at the date of such termination of such employment) at any time and from time to time within up to
5 years after such termination of employment but in no event after the expiration date of such
Stock Appreciation Right.

ARTICLE
VI - PROVISIONS APPLICABLE TO OTHER ML & CO. SECURITIES.

     Section 6.1 Grants of Other ML & Co. Securities.

     Subject to the provisions of the Plan and any necessary action by the Board of Directors, the
Committee may select employees to become Participants (subject to the

18

 

provisions of Section 1.5
hereof) and grant to Participants Other ML & Co. Securities or the right or option to purchase
Other ML & Co. Securities on such terms and conditions as the Committee shall determine, including,
without limitation, the period such rights or options may be exercised, the nature and terms of
payment of consideration for such Other ML & Co. Securities, whether such Other ML & Co. Securities
shall be subject to any or all of the provisions of Article III of the Plan applicable to
Restricted Shares and/or Restricted Units, the consequences of termination of employment, and the
terms and conditions, if any, upon which such Other ML & Co. Securities may or must be repurchased
by the Company. Before making grants, the Committee must receive the recommendations of the
management of the Company, which will take into account such factors as level of responsibility,
current and past performance, and performance potential. Each such Other ML & Co. Security shall
be issued at a price that will not exceed the Fair Market Value thereof on the date the
corresponding right or option is granted. Other ML & Co. Securities may bear interest or pay
dividends from such date and at a rate or rates or pursuant to a formula or formulas fixed by the
Committee or any necessary action of the Board. Any applicable conversion or exchange rate with
respect to Other ML & Co. Securities shall be fixed by, or pursuant to a formula determined by, the
Committee or any necessary action of the Board at each date of grant and may be predicated upon the
attainment of financial or other performance goals.

     Section 6.2 Terms and Conditions of Conversion or Exchange.

     Each Other ML & Co. Security may be convertible or exchangeable on such date and within such
period of time as the Committee, or the Board if necessary, determines at the time of grant. Other
ML & Co. Securities may be convertible into or exchangeable for (i) shares of Preferred Stock of ML
& Co. or (ii) other securities of ML & Co. or any present or future subsidiary of ML & Co., whether
or not convertible into shares of Common Stock, as the Committee, or the Board if necessary,
determines at the time of grant (or at any time prior to the conversion or exchange date).

ARTICLE
VII - CHANGES IN CAPITALIZATION.

     Any other provision of the Plan to the contrary notwithstanding, if any change shall occur in
or affect shares of Common Stock or Performance Units, Restricted Units, Stock Options, Stock
Appreciation Rights, or Other ML & Co. Securities on account of a merger, consolidation,
reorganization, stock dividend, stock split or combination, reclassification, recapitalization, or
distribution to holders of shares of Common Stock (other than cash dividends) including, without
limitation, a merger or other reorganization event in which the shares of Common Stock cease to
exist, , then, without any action by the Committee, appropriate adjustments shall be made to (1)
the maximum number of shares of Common Stock available for distribution under the Plan; (2) the
number of shares subject to or reserved for issuance and payable under outstanding Performance
Share, Restricted Unit, Restricted Share, and Stock Option grants. In addition, if in the
opinion of the Committee, after consultation with the Company’s independent public accountants,
changes in the Company’s accounting policies, acquisitions, divestitures, distributions, or other
unusual or extraordinary items have disproportionately and materially affected the value of shares
of Common Stock or Performance Units, Restricted Units, Stock Options, Stock Appreciation Rights,
or Other ML & Co. Securities, the Committee shall make such adjustments, if any, that it may deem
necessary or equitable in the performance objectives for the Performance Periods not yet completed,

19

 

including the minimum, intermediate, and full performance levels and portion of payments related
thereto; and any other terms or provisions of any outstanding grants of Performance Shares,
Performance Units, Restricted Shares, Restricted Units, Stock Options, Stock Appreciation Rights,
or Other ML & Co. Securities, in order to preserve the full benefits of such grants for the
Participants, taking into account inflation, interest rates, and any other factors that the
Committee, in its sole discretion, considers relevant. In the event of a change in the presently
authorized shares of Common Stock that is limited to a change in the designation thereof or a
change of authorized shares with par value into the same number of shares with a different par
value or into the same number of shares without par value, the shares resulting from any such
change shall be deemed to be shares of Common Stock within the meaning of the Plan. In the event
of any other change affecting the shares of Common Stock, Performance Units, Restricted Units,
Stock Options, Stock Appreciation Rights, or Other ML & Co. Securities, such adjustment shall be
made as may be deemed equitable by the Committee to give proper effect to such event.

ARTICLE
VIII - PAYMENTS UPON TERMINATION OF EMPLOYMENT AFTER A CHANGE IN CONTROL.

     Section 8.1 Value of Payments Upon Termination After a Change in Control.

     Any other provision of the Plan to the contrary notwithstanding and notwithstanding any
election to the contrary previously made by the Participant, in the event a Change in Control shall
occur and thereafter the Company shall terminate the Participant’s employment without Cause or the
Participant shall terminate his or her employment with the Company for Good Reason, the Participant
shall be paid the value of his or her Performance Shares, Performance Units, Restricted Shares,
Restricted Units, Stock Options, Stock Appreciation Rights, and Other ML & Co. Securities in a lump
sum in cash, promptly after termination of his or her employment but, without limiting the
foregoing, in no event later than 30 days thereafter, provided that, in the event that at the time
of his or her termination, a Participant is a Key Employee, the payment to such Participant shall
be delayed until a date that is six months from the date of such Participant’s termination.
Payments shall be calculated as set forth below:

     (a) Performance Shares and Performance Units.

     Any payment for Performance Shares and Performance Units pursuant to this Section 8.1(a) shall
be calculated by applying performance objectives for any outstanding Performance Shares and
Performance Units as if the applicable Performance Period and any applicable Restricted Period had
ended on the first day of the month in which the Participant’s employment is terminated. The
amount of any payment to a Participant pursuant to this Section 8.1(a) shall be reduced by the
amount of any payment previously made to the Participant with respect to the Performance Shares and
Performance Units, exclusive of ordinary dividend payments, resulting by operation of law from the
Change in Control, including, without limitation, payments resulting from a merger pursuant to
state law. The value of the Performance Shares and Performance Units payable pursuant to this
Section 8.1(a) shall be the amount equal to the number of Performance Shares and Performance Units
payable in accordance with the preceding sentence multiplied by the Fair Market Value of a share of
Common Stock

20

 

on the day the Participant’s employment is terminated or, if higher, the highest Fair
Market Value of a share of the Common Stock on any day during the 90-day period ending on the date
of the Change in Control (the “Pre-CIC Value”).

     (b) Restricted Shares and Restricted Units.

     Any payment under this Section 8.1(b) shall be calculated as if all the relevant Vesting and
Restricted Periods had been fully completed immediately prior to the date on which the
Participant’s employment is terminated. The amount of any payment to a Participant pursuant to
this Section 8.1(b) shall be reduced by the amount of any payment previously made to the
Participant with respect to the Restricted Shares and Restricted Units, exclusive of ordinary
dividend payments, resulting by operation of law from the Change in Control, including, without
limitation, payments resulting from a merger pursuant to state law. The value of the Participant’s
Restricted Shares and Restricted Units payable pursuant to this Section 8.1(b) shall be the amount
equal to the number of the Restricted Shares and Restricted Units outstanding in a Participant’s
name multiplied by the Fair Market Value of a share of Common Stock on the day the Participant’s
employment is terminated or, if higher, the Pre-CIC Value.

     (c) Stock Options and Stock Appreciation Rights.

     Any payment for Stock Options and Stock Appreciation Rights pursuant to this Section 8.1(c)
shall be calculated as if all such Stock Options and Stock Appreciation Rights, regardless of
whether or not then fully exercisable under the terms of the grant, became exercisable immediately
prior to the date on which the Participant’s employment is terminated. The amount of any payment
to a Participant pursuant to this Section 8.1(c) shall be reduced by the amount of any payment
previously made to a Participant with respect to the Stock Options and Stock Appreciation Rights,
exclusive of any ordinary dividend payments, resulting by operation of law from the Change in
Control, including, without limitation, payments resulting from a merger pursuant to state law.
The value of the Participant’s Stock Options and Stock Appreciation Rights payable pursuant to this
Section 8.1(c) shall be

               (i) in the case of a Stock Option, for each underlying share of Common
Stock,
the excess of the Fair Market Value of a share of Common Stock on the day the
Participant’s employment is terminated, or, if higher, the Pre-CIC Value, over the
per share exercise price for such Stock Option;

               (ii) in the case of a Stock Appreciation Right granted in tandem with a
Stock
Option, the Fair Market Value of a share of Common Stock on the day the
Participant’s employment is terminated, or, if higher, the Pre-CIC Value, over the
Stock Option exercise price; and

               (iii) in the case of a Stock Appreciation Right granted independently of a
Stock Option, the Fair Market Value of a share of Common Stock on the day the
Participant’s employment is terminated, or, if higher, the Pre-CIC Value, over the
Fair Market Value of one share of Common Stock on the date such Stock Appreciation
Right was granted, or such other price determined by the Committee at the time of
grant.

     (d) Other ML & Co. Securities.

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     Any payment for Other ML & Co. Securities under this Section 8.1(d) shall be calculated as if
any relevant Vesting or Restricted Periods or other applicable conditions dependent on the passage
of time and relating to the exercisability of any right or option to purchase Other ML & Co.
Securities, or relating to the full and unconditional ownership of such Other ML & Co. Securities
themselves, had been met on the first day of the month in which the Participant’s employment is
terminated. The amount of any payment to a Participant pursuant to this Section 8.1(d) shall be
reduced by the amount of any payment previously made to the Participant with respect to the Other
ML & Co. Securities, exclusive of ordinary dividend payments, resulting by operation of law from
the Change in Control, including, without limitation, payments resulting from a merger pursuant to
state law. The value of the Participant’s Other ML & Co. Securities payable pursuant to this
Section 8.1(d) shall be

               (i) in the case of an option or right to purchase such Other ML & Co.
Security,
for each underlying Other ML & Co. Security, the excess of the Fair Market Value of
such Other ML & Co. Security on the day the Participant’s employment is terminated,
or, if higher, the Pre-CIC Value, over the exercise price of such option or right;
and

               (ii) in the case of the Other ML & Co. Security itself (where there is
no
outstanding option or right relating to such Other ML & Co. Security), the Fair
Market Value of the Other ML & Co. Security on the day the Participant’s employment
is terminated, or, if higher, the Pre-CIC Value.

Section 8.2 A Change in Control.

     A
“Change in Control” shall mean a change in control of ML & Co. of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), whether or not the
Company is then subject to such reporting requirement; provided, however, that,
without limitation, a Change in Control shall be deemed to have occurred if:

     (a) any individual, partnership, firm, corporation, association, trust, unincorporated
organization or other entity, or any syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act, other than the Company’s employee stock ownership plan, is or becomes
the “beneficial owner” (as defined in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of ML & Co. representing 30% or more of the
combined voting power of ML & Co.’s then outstanding securities entitled to vote in the election of
directors of ML & Co.;

     (b) during any period of two consecutive years (not including any period prior to the
Effective Date of this Plan) individuals who at the beginning of such period constituted the Board
of Directors and any new directors, whose election by the Board of Directors or nomination for
election by the stockholders of ML & Co. was approved by a vote of at least three quarters of the
directors then still in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any reason to constitute
at least a majority thereof; or

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     (c) all or substantially all of the assets of ML & Co. are liquidated or distributed.

     Section 8.3 Effect of Agreement Resulting in Change in Control.

     If ML & Co. executes an agreement, the consummation of which would result in the occurrence of
a Change in Control as described in Section 8.2, then, with respect to a termination of employment
without Cause or for Good Reason occurring after the execution of such agreement (and, if such
agreement expires or is terminated prior to consummation, prior to such expiration or termination
of such agreement), a Change in Control shall be deemed to have occurred as of the date of the
execution of such agreement.

     Section 8.4 Termination for Cause.

     Termination of the Participant’s employment by the Company for “Cause” shall mean termination
upon:

     (a) the willful and continued failure by the Participant substantially to perform his or her
duties with the Company (other than any such failure resulting from the Participant’s incapacity
due to physical or mental illness or from the Participant’s Retirement or any such actual or
anticipated failure resulting from termination by the Participant for Good Reason) after a written
demand for substantial performance is delivered to him or her by the Board of Directors, which
demand specifically identifies the manner in which the Board of Directors believes that he or she
has not substantially performed his or her duties; or

     (b) the willful engaging by the Participant in conduct that is demonstrably and materially
injurious to the Company, monetarily or otherwise.

     No act or failure to act by the Participant shall be deemed “willful” unless done, or omitted
to be done, by the Participant not in good faith and without reasonable belief that his or her
action or omission was in the best interest of the Company.

     Notwithstanding the foregoing, the Participant shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to him or her a copy of a resolution duly
adopted by the affirmative vote of not less than three quarters of the entire membership of the
Board of Directors at a meeting of the Board called and held for such purpose (after reasonable
notice to the Participant and an opportunity for him or her, together with counsel, to be heard
before the Board of Directors), finding that, in the good faith opinion of the Board of Directors,
the Participant was guilty of conduct set forth above in clause (a) or (b) of the first sentence of
this Section 8.4 and specifying the particulars thereof in detail.

     Section 8.5 Good Reason.

     “Good Reason” shall mean the Participant’s termination of his or her employment with the
Company if, without the Participant’s written consent, any of the following circumstances shall
occur:

23

 

     (a) Inconsistent Duties. A meaningful and detrimental alteration in the Participant’s
position or in the nature or status of his or her responsibilities (including those as a director
of ML & Co., if any) from those in effect immediately prior to the Change in Control;

     (b) Reduced Salary or Bonus Opportunity. A reduction by the Company in the
Participant’s annual base salary as in effect immediately prior to the Change in Control; a failure
by the Company to increase the Participant’s salary at a rate commensurate with that of other key
executives of the Company; or a reduction in the Participant’s annual cash bonus below the greater
of (i) the annual cash bonus that he received, or to which he was entitled, immediately prior to
the Change in Control, or (ii) the average annual cash bonus paid to the Participant by the Company
for the three years preceding the year in which the Change in Control occurs;

     (c) Relocation. The relocation of the office of the Company where the Participant is
employed at the time of the Change in Control (the “CIC Location”) to a location that in his or her
good faith assessment is an area not generally considered conducive to maintaining the executive
offices of a company such as ML & Co. because of hazardous or undesirable conditions including
without limitation a high crime rate or inadequate facilities, or to a location that is more than
twenty-five (25) miles away from the CIC Location or the Company’s requiring the Participant to be
based more than twenty-five (25) miles away from the CIC Location (except for required travel on
the Company’s business to an extent substantially consistent with his or her customary business
travel obligations in the ordinary course of business prior to the Change in Control);

     (d) Compensation Plans. The failure by the Company to continue in effect any
compensation plan in which the Participant participates, including but not limited to this Plan,
the Company’s retirement program, Employee Stock Purchase Plan, 1978 Incentive Equity Purchase
Plan, Equity Capital Accumulation Plan, Canadian Capital Accumulation Plan, Management Capital
Accumulation Plan, limited partnership offerings, cash incentive compensation or any other plans
adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan in connection with the
Change in Control, or the failure by the Company to continue the Participant’s participation
therein on at least as favorable a basis, both in terms of the amount of benefits provided and the
level of his or her participation relative to other Participants, as existed immediately prior to
the Change in Control;

     (e) Benefits and Perquisites. The failure of the Company to continue to provide the
Participant with benefits at least as favorable as those enjoyed by the Participant under any of
the Company’s retirement, life insurance, medical, health and accident, disability, deferred
compensation or savings plans in which the Participant was
participating immediately prior to the Change in Control; the taking of any action by the Company
that would directly or indirectly materially reduce any of such benefits or deprive the Participant
of any material fringe benefit enjoyed by him or her immediately prior to the Change in Control,
including, without limitation, the use of a car, secretary, office space, telephones, expense
reimbursement, and club dues; or the failure by the Company to provide the Participant with the
number of paid vacation days to which the Participant is entitled on the basis of years of service
with the Company in accordance

24

 

with the Company’s normal vacation policy in effect immediately
prior to the Change in Control;

     (f) No Assumption by Successor. The failure of ML & Co. to obtain a satisfactory
agreement from any successor to assume and agree to perform a Participant’s employment agreement as
contemplated thereunder or, if the business of the Company for which his or her services are
principally performed is sold at any time after a Change in Control, the purchaser of such business
shall fail to agree to provide the Participant with the same or a comparable position, duties,
compensation, and benefits as provided to him or her by the Company immediately prior to the Change
in Control.

     Section 8.6 Effect on Plan Provisions.

     In the event of a Change in Control, no changes in the Plan, or in any documents evidencing
grants of Performance Shares, Performance Units, Restricted Shares, Restricted Units, Stock
Options, Stock Appreciation Rights, or Other ML & Co. Securities and no adjustments, determinations
or other exercises of discretion by the Committee or the Board of Directors, that were made
subsequent to the Change in Control and that would have the effect of diminishing a Participant’s
rights or his or her payments under the Plan or this Article shall be effective, including, but not
limited to, any changes, determinations or other exercises of discretion made to or pursuant to the
Plan. Once a Participant has received a payment pursuant to this Article VIII, shares of Common
Stock that were reserved for issuance in connection with any Performance Shares, Restricted Shares,
Stock Options, or Other ML & Co. Securities for which payment is made shall no longer be reserved
and shares of Common Stock that are Restricted Shares or that are restricted and held by the
Company pursuant to Section 2.6(a)(i), for which payment has been made, shall no longer be
registered in the name of the Participant and shall again be available for grants under the Plan.
If the Participant’s employment is terminated without Cause or for Good Reason after a Change in
Control, any election to defer payment for Performance Shares or Performance Units pursuant to
Section 2.8 hereof or Restricted Shares or Restricted Units pursuant to Section 3.8 hereof shall be
null and void.

ARTICLE
IX - MISCELLANEOUS.

     Section 9.1 Designation of Beneficiary.

          A Participant, or the transferee of a Restricted Share, Restricted Unit or Stock Option
pursuant to Sections 3.9 or 4.4(d), may designate, in a writing delivered to ML & Co. before his or
her death, a person or persons or entity or entities to receive, in the event of his or her death,
any rights to which he or she would be entitled under the Plan. A Participant or Restricted Share,
Restricted Unit or Stock Option transferee, may
also designate an alternate beneficiary to receive payments if the primary beneficiary does not
survive the Participant or the transferee. A Participant or transferee may designate more than one
person or entity as his or her beneficiary or alternate beneficiary, in which case such
beneficiaries would receive payments as joint tenants with a right of survivorship. A beneficiary
designation under the Plan will apply to future grants unless changed or revoked by a Participant

25

 

or the transferee by filing a written or electronic notification of such change or revocation with
the Company. If a Participant or transferee fails to designate a beneficiary, then his or her
estate shall be deemed to be his or her beneficiary.

     Section 9.2 Employment Rights.

     Neither the Plan nor any action taken hereunder shall be construed as giving any employee of
the Company the right to become a Participant, and a grant under the Plan shall not be construed as
giving any Participant any right to be retained in the employ of the Company.

     Section 9.3 Nontransferability.

     Except as provided in Sections 3.9 and 4.4(d), a Participant’s rights under the Plan,
including the right to any amounts or shares payable, may not be assigned, pledged, or otherwise
transferred except, in the event of a Participant’s death, to his or her designated beneficiary or,
in the absence of such a designation, by will or the laws of descent and distribution.

     Section 9.4 Withholding.

     The Company shall have the right, before any payment is made or a certificate for any shares
is delivered or any shares are credited to any brokerage account, to deduct or withhold from any
payment under the Plan any federal, state, local or social security or other taxes, including
transfer taxes, required by law to be withheld or to require the Participant or his or her
beneficiary or estate, as the case may be, to pay any amount, or the balance of any amount,
required to be withheld.

     Section 9.5 Relationship to Other Benefits.

     No payment under the Plan shall be taken into account in determining any benefits under any
retirement, group insurance, or other employee benefit plan of the Company. The Plan shall not
preclude the stockholders of ML & Co., the Board of Directors or any committee thereof, or the
Company from authorizing or approving other employee benefit plans or forms of incentive
compensation, nor shall it limit or prevent the continued operation of other incentive compensation
plans or other employee benefit plans of the Company or the participation in any such plans by
Participants in the Plan.

     Section 9.6 No Trust or Fund Created.

     Neither the Plan nor any grant made hereunder shall create or be construed to create a trust
or separate fund of any kind or a fiduciary relationship between the Company and a Participant or
any other person. To the extent that any person acquires
a right to receive payments from the Company pursuant to a grant under the Plan, such right shall
be no greater than the right of any unsecured general creditor of the Company.

     Section 9.7 Expenses.

     The expenses of administering the Plan shall be borne by the Company.

26

 

     Section 9.8 Indemnification.

     Service on the Committee shall constitute service as a member of the Board of Directors so
that members of the Committee shall be entitled to indemnification and reimbursement as directors
of ML & Co. pursuant to its Certificate of Incorporation, By-Laws, or resolutions of its Board of
Directors or stockholders.

     Section 9.9 Tax Litigation.

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

ARTICLE
X - AMENDMENT AND TERMINATION.

     The Board of Directors or the Committee (but no other committee of the Board of Directors) may
modify, amend or terminate the Plan at any time. No modification, amendment or termination of the
Plan shall have a material adverse effect on the rights of a Participant under a grant previously
made to him without the consent of such Participant.

27

 

ARTICLE
XI - INTERPRETATION.

     Section 11.1 Governmental and Other Regulations.

     The Plan and any grant hereunder shall be subject to all applicable federal, state and local
laws, rules, and regulations and to such approvals by any regulatory or governmental agency that
may, in the opinion of the counsel for the Company, be required.

     Section 11.2 Governing Law.

     The Plan shall be construed and its provisions enforced and administered in accordance with
the laws of the State of New York applicable to contracts entered into and performed entirely in
such State.

ARTICLE
XII - EFFECTIVE DATE.

     The Plan shall not be effective unless it is approved by the Board of Directors of the
Corporation.

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