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c46971_ex10-7a2.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

		 	Exhibit 10.7(a2) 

 

«Date» 

«Name_Full» 

«Company_Business_Line»

«Address1» 

«Address2» 

	
Dear «Name_Short»:

     First Horizon National Corporation, a Tennessee corporation (including any successor thereto, the "Company"), considers the establishment and maintenance of a sound and vital management to be
essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and
that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of
Directors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management to their assigned duties without distraction in
circumstances arising from the possibility of a change in control of the Company. In particular, the Board believes it important, should the Company or its shareholders receive a proposal for transfer of control of the Company, that you be able, if
requested, to assess and advise the Board whether such proposal would be in the best interests of the Company and its shareholders and to take such other action regarding such proposal as the Board might determine to be appropriate, without being
influenced by the uncertainties of your own situation. 

     In order to induce you to remain in the employ of the Company, this letter agreement, which has been approved by the Board, sets forth certain benefits which the Company agrees will be provided to you
in the event of a "change in control" of the Company under the circumstances described below. 

     1. Agreement to Provide Services; Right to Terminate.

     (i)  Except as otherwise provided in paragraph (ii) below, the Company or you may terminate your employment at any time, subject to the Company's providing the benefits hereinafter specified in
accordance with the terms hereof.

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     (ii)  In the event a tender offer or exchange offer is made by a Person (as hereinafter defined) for more than 20 percent (20%) of the combined voting power of the Company's outstanding securities
ordinarily having the right to vote at elections of directors, including shares of the common capital stock of First Horizon National Corporation, par value $0.625 per share (the "Company Voting Securities"), you agree that you will not leave
the employ of the Company (other than as a result of Disability, Retirement, or upon an event which would constitute Good Reason if such event occurred after a change in control of the Company, as such terms are hereinafter defined) and will render
the services contemplated in the recitals to this Agreement until such tender offer or exchange offer has been abandoned or terminated or a change in control of the Company, as defined in Section 3 hereof, has occurred; provided, however, that such obligation shall not extend for a period exceeding one hundred and eighty (180) days from the initial event resulting
in the obligation under this paragraph (ii). For purposes of this Agreement, the term "Person" shall mean and include any individual, corporation, partnership, group, association or other "person", as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in Section 13(d) or Section 14(d) of the Exchange Act, other than the Company, an entity in which the Company directly or indirectly beneficially owns more than 50% of the
voting securities or interests (a "Subsidiary"), or any employee stock ownership or other employee benefit plan or trust sponsored by the Company or a Subsidiary. 

     2. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect until you or the Company shall have given
three (3) years prior written notice of termination of this Agreement; provided, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period
of thirty-six (36) months after a change in control of the Company, as defined in Section 3 hereof, if such change in control shall have occurred during the term of this Agreement. Notwithstanding anything in this Section 2 to the contrary, this
Agreement shall terminate if you or the Company terminate your employment prior to a change in control of the Company, unless you reasonably demonstrate that such termination of employment was at the request of a third party who has taken steps
reasonably calculated to effect a change in control or otherwise arose in connection with or in anticipation of a change in control, in which case your employment shall for all purposes of this Agreement be deemed to have been terminated by you for
Good Reason immediately following a change in control of the Company. 

     3. Change in Control. For purposes of this Agreement, a "change in control" means the occurrence of any one of the following events:

     (i)  individuals who, on January 21, 1997, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a
director subsequent to January 21, 1997, whose election or nomination for election was approved by a vote of at least three-fourths (3/4) of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement
of the Company in which such person is named as a nominee for director, without written objection to such

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nomination) shall be an Incumbent Director; provided, however, that no individual elected or nominated as a
director of the Company initially as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director; 

     (ii) any Person is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined
voting power of the Company Voting Securities; provided, however, that the event described in this paragraph (ii) shall not be
deemed to be a change in control by virtue of any of the following acquisitions: (A) by any underwriter temporarily holding securities pursuant to an offering of such securities, or (B) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (iii)); 

     (iii)  the consummation of a merger, consolidation, share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (A) more than 60% of the total voting power of (x) the corporation
resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the
Surviving Corporation (the "Parent Corporation"), is represented by Company Voting Securities that were outstanding immediately prior to the consummation of such Business Combination (or, if applicable, is represented by shares into which such
Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or
more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least two-thirds (2/3) of the members of the
board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or 

     (iv)  the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale of all or substantially all of the Company's assets. 

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Notwithstanding the foregoing, a change in control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person
becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a change in control of the Company shall then occur. 

     4. Termination Following Change in Control. If any of the events described in Section 3 hereof constituting a change in control of the
Company shall have occurred, you shall be entitled to the benefits provided in Section 5 upon your termination of employment within thirty-six (36) months following such change in control; provided, however, that you shall be entitled to the
benefits provided in Section 5(ix) whether or not your employment has been terminated. For purposes of this Agreement, "Disability," "Retirement," "Cause" and "Good Reason" have the meanings set forth below in this Section 4. 

     (i) Disability. Termination by the Company of your employment based on "Disability" shall mean termination because of your "disability" under
the Company's Long Term Disability Plan, or any successor or substitute plan or plans of the Company, in effect immediately prior to the change in control of the Company. 

     (ii) Retirement. Termination by you or by the Company of your employment based on "Retirement" shall mean termination as a result of your
mandatory retirement in accordance with the Company's retirement policy generally applicable to similarly situated officers, as in effect immediately prior to the change in control of the Company, or in accordance with any retirement arrangement
established with your written consent. 

     (iii) Cause. Termination by the Company of your employment for "Cause" shall mean termination upon (a) the willful and continued failure by
you to perform substantially your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to you by the Chairman of the
Board, Chief Executive Officer or President of the Company which specifically identifies the manner in which such person believes that you have not substantially performed your duties or have failed to follow the policies and procedures of the
Company, which failure to perform causes material and demonstrable economic harm to the Company or its Affiliates, (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company, (c) the conviction
of, or a plea of guilty or nolo contendere to, a felony, (d) the failure by you to cooperate with all government authorities on
matters pertaining to any investigation, litigation or administrative proceeding concerning the Company, (e) the willful and material breach by you of Section 6 of this Agreement or the Company’s written code of business conduct and ethics
(however, to the extent the breach is curable, the Company must give you notice and a reasonable opportunity to cure), (f) your becoming subject to the

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prohibitions of Section 19(a)(1) of the Federal Deposit Insurance Act or Section 21C(f) of the Exchange Act or (g) the failure by you to comply with the terms of this Agreement, including but not limited to Section 6. For purposes
of this paragraph (iii), no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best
interests of the Company or its Affiliates. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company or upon the instructions of the Chief Executive
Officer or other senior executive officer of the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company and its Affiliates. For purposes of this Agreement, "Affiliate"
means any person directly or indirectly controlling, controlled by, or under common control with the Company. It is also expressly understood that your attention to matters or your engagement in activities not directly related to the business of the
Company shall not provide a basis for termination for Cause so long as the Board has approved your engagement in such activities prior to or following a change in control.  Notwithstanding the foregoing, in the case of clause (a), (b), (d), (e) or
(g) of this paragraph (iii), 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-fourths (3/4) of the
entire membership of the Board (excluding you if you are a Board member) at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the
Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth above in such clause of this paragraph (iii) and specifying the particulars thereof in detail. The Company must notify you of any event constituting
Cause within ninety (90) days following the Company's knowledge of its existence or such event shall not constitute Cause under this Agreement.  The Company may place you on paid leave for up to 30 consecutive days while it is determining whether
there is a basis to terminate your employment for Cause. This leave will not constitute Good Reason. 

     (iv) Good Reason. Termination by you of your employment for "Good Reason" shall mean termination based upon the occurrence after a change in
control of the Company of any of the following events, without your written consent specifically acknowledging that any such event shall not give rise to Good Reason under this Agreement: 

 (A) an adverse change in your status, title(s) or position(s) with the Company as in effect immediately prior to the change in control, including, without limitation, any adverse change in your status, title(s) or position(s) as a result of a diminution in your duties or responsibilities, or the assignment to you of any duties or responsibilities which are inconsistent with such status, title(s), or position(s) as in effect immediately prior to the change in control, or any removal of you from, or any failure to reappoint or reelect you to, such position(s) (except in connection with the termination of your employment for Cause, Disability or Retirement or as a result of your death or by you other than for Good Reason); 

 

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 (B) a reduction by the Company in your base salary or annual target bonus opportunity (including any adverse change in the formula for such annual bonus target) as in effect immediately prior to the change in control or as the same may be increased from time to time thereafter; 

 (C) the failure by the Company to provide you with Plans that provide you with substantially equivalent benefits in the aggregate to the Plans as in effect immediately prior to the change in control (at substantially equivalent cost with respect to welfare benefit plans); 

 (D) the Company's requiring you to be based at an office that is greater than 25 miles from where your office is located immediately prior to the change in control; 

 (E) the failure by the Company to obtain from any Successor (as hereinafter defined) the assent to this Agreement contemplated by Section 7 hereof; or 

 (F) any purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (v) below (and, if applicable, paragraph (iii) above); and for purposes of this Agreement, no such purported termination shall be effective. 

An isolated and inadvertent action taken in good faith and which is remedied by the Company within ten (10) days after receipt of notice thereof given by you shall not constitute Good Reason. For purposes of this Agreement, "Plan"
shall mean any compensation plan such as an incentive, stock option, restricted stock, pension restoration or deferred compensation plan or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life
insurance plan or a relocation plan or policy or any other plan, program or policy of the Company intended to benefit employees, including, without limitation, any Plans established after the date hereof. 

     (v)  Notice of Termination.  Any purported termination by the Company or by you following a change in control shall be communicated by
written Notice of Termination to the other party hereto.  For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon. 

     (vi) Date of Termination. "Date of Termination" means (A) the effective date on which your employment by the Company terminates as specified
in a prior written notice by the Company or you, as the case may be, to the other, delivered pursuant to Section 11 or (B) if your employment by the Company terminates by reason of death, the date of your death. In the case of termination by the
Company of your employment for Cause, if you have not previously expressly agreed in writing to the termination, then within thirty (30) days after receipt by you of

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the Notice of Termination with respect thereto, you may notify the Company that a dispute exists concerning the termination, in which event the Date of Termination shall be the date set by mutual written agreement of the parties.
During the pendency of any such dispute, the Company will continue to pay you your full compensation in effect just prior to the time the Notice of Termination is given and until the dispute is resolved. 

5. Compensation Upon Termination or During Disability; Other Agreements.

     (i) In the event that during the thirty-six (36) month period following a change in control of the Company you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your base salary at the rate then in effect and any benefits or awards under any Plans shall
continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with paragraphs 4(i) and 4(vi) hereof.  Thereafter, if your employment is terminated for
Disability within thirty-six (36) months after a change in control of the Company, your benefits shall be determined in accordance with the Plans, and you shall receive benefits under the Company's disability policies at the greater of the rate
immediately prior to the change in control or your Date of Termination.

      (ii)  If, within thirty-six (36) months after a change in control of the Company, your employment by the Company shall be terminated by the Company for Cause or by you (other than for Good Reason or
  Retirement), the Company shall pay you your base salary (subject to any deferral elections) through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any bonus amounts which have become earned
  or payable, but which have not yet been paid to you.  Thereupon the Company shall have no further obligations to you under this Agreement.  Following your termination of employment, your accrued benefits under the Company's Plans shall be paid
  pursuant to the terms of such Plans.

      (iii)  If, within thirty-six (36) months after a change in control of the Company, your employment by the Company shall be terminated on account of Disability, death or Retirement, the Company shall
  pay you your base salary (subject to any deferral elections) through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any bonus amounts which have become earned or payable, but which have not
  yet been paid to you, and a portion of your annual bonus for the fiscal year in which your Date of Termination occurs in an amount at least equal to (A) the product of (1) your bonus amount (as defined below), and (2) a fraction, the numerator of
  which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination, and the denominator of which is three hundred sixty-five (365), reduced by (B) any amounts paid from the Company's annual
  incentive plan for the fiscal year in which your Date of Termination occurs. Thereupon, the Company shall have no further obligations to you under this Agreement.  Following your termination of employment, your accrued benefits under the Company's
  Plans shall be paid pursuant to the terms of such Plans; provided, however, that in the event of termination of

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employment on account of your death within thirty-six (36) months after a change in control of the Company, life insurance benefits paid pursuant to the Company's welfare benefit plans shall be based on the terms of such plans in
effect on the date of death, or if more favorable to you, the terms of such plans in effect immediately prior to the change in control.

       (iv)  If, within thirty-six (36) months after a change in control of the Company, your employment by the Company shall be terminated (a) by the Company other than for Cause, Disability or Retirement
  or (b) by you for Good Reason, then the Company shall pay to you, no later than the fifth day following the Date of Termination, without regard to any contrary provisions of any Plan, a lump sum cash amount equal to the sum of the following amounts:
    

(A) your base salary (subject to any deferral elections) through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given (not taking into account any reductions constituting Good Reason) plus any bonus amounts which have become earned or payable, but which have not yet been paid to you, plus the value of your accrued but unused vacation days; 

(B) a portion of your annual bonus for the fiscal year in which your Date of Termination occurs in an amount at least equal to (1) the product of (x) your bonus amount (as defined below), and (y) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination, and the denominator of which is three hundred sixty-five (365), reduced by (2) any amounts paid from the Company's annual incentive plan for the fiscal year in which your Date of Termination occurs; and 

(C) an amount equal to three (3) times the sum of (1) your highest annual rate of base salary from the Company (or if applicable any Subsidiary or Parent (as defined in Section 16)) during the 12-month period immediately prior to your Date of Termination, and (2) your bonus amount.  

For purposes of this Agreement, the term "base salary" shall include any amounts deducted with respect to you or for your account pursuant to Sections 125 and 401(k) of the Internal Revenue Code of 1986, as amended, (the "Code") or any other deferred compensation plan or program. For purposes of this Agreement, the term "bonus amount" means the average of the annual bonuses received under the Management Incentive Plan, as amended, or any successor or substitute plan
          (“MIP”) for the five full fiscal years immediately prior to your Date of Termination after excluding the highest and lowest of such full-year annual bonuses; provided, however, that, (1) if you have received at least three but fewer than
          five full-year bonuses under the MIP, the term “bonus amount” will be the average of your three most recent full-year annual bonuses that you received under the MIP without giving effect to the preceding exclusions, (2) if you have
    received fewer than three full-year bonuses under the MIP, the term “bonus amount” will be the average of any full-year annual bonuses you received under the MIP and, for this 

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purpose only, 100% of your target bonus under the MIP in effect immediately prior to your Date of Termination will be treated as having been received by you in addition to any actual full-year bonuses, and (3) if any full-year
bonus referred to above was determined using a formula based on a percentage of your business unit pre-tax income or other similar measure of business unit operating results, such bonus for purposes of this calculation shall not exceed the greater
of 100% of your annual base salary in effect immediately prior to your Date of Termination or 100% of your annual base salary in effect immediately prior to the change in control.

      (v)  If, within thirty-six (36) months after a change in control of the Company, your employment by the Company shall be terminated (a) by the Company other than for Cause, Disability or Retirement or
  (b) by you for Good Reason, then the Company shall maintain in full force and effect, for the continued benefit of you and your spouse and dependents for a period terminating on the earliest of (a) three (3) years after the Date of Termination, (b)
  the commencement date of equivalent benefits from a new employer or (c) your normal retirement date under the terms of the First Horizon National Corporation Pension Plan, as amended (or any successor or substitute plan or plans of the Company), the
  medical, dental and life insurance benefits provided to you and your spouse and dependents in which you were entitled to participate immediately prior to the Date of Termination (or, if more favorable to you, the benefits provided under such plans,
  on a plan by plan basis, in which you were entitled to participate immediately prior to the change in control), provided that your continued participation is possible under the general terms and provisions of such plans (and any applicable funding
  media) and you continue to pay an amount equal to your contribution as in effect prior to the change in control or your Date of Termination, as applicable to the benefit provided under such plans for such participation. If, at the end of thirty-six
  (36) months after the Termination Date, you have not reached your normal retirement date and you have not previously received or are not then receiving equivalent benefits from a new employer, the Company shall arrange, at its sole cost and expense,
  to enable you to convert your and your spouse's and dependents' coverage under such plans to individual policies or programs upon the same terms as employees of the Company may apply for such conversions. In the event that your participation in any
  such plan is barred, the Company, at its sole cost and expense, shall arrange to have issued for the benefit of you and your spouse and dependents individual policies of insurance providing benefits substantially similar (on an after-tax basis) to
  those which you otherwise would have been entitled to receive under such plans pursuant to this paragraph (v) or, if such insurance is not available at a reasonable cost to the Company, the Company shall otherwise provide you and your dependents
  with equivalent benefits (on an after-tax basis). You shall not be required to pay any premiums or other charges in an amount greater than that which you would have paid in order to participate in such plans. Notwithstanding anything to the contrary
  in this paragraph (v), the term of the preceding benefits provided pursuant to this paragraph 5(v) will be reduced to the extent required to comply with Section 409A of the Code (“Section 409A”).  Following your termination of employment,
  your accrued benefits under the Company's Plans shall be paid pursuant to the terms of such Plans.

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     (vi)  If, within thirty-six (36) months after a change in control of the Company, your employment by the Company shall be terminated (a) by the Company other than for Cause, Disability, death or
Retirement or (b) by you for Good Reason, disability or retirement all stock options, shares of restricted stock or other stock-based awards, in each case granted following January 1, 2007 pursuant to any stock-based incentive plan of the Company,
that are then outstanding and unvested in accordance with the terms and conditions of the grant or award shall become fully vested upon the Date of Termination (and, in the case of stock-options and similar awards, remain exercisable for the greater
of (I) the period remaining for exercise provided by the terms of each applicable award or its related plan or (II) 90 days after the Date of Termination or, if earlier, until they would have expired but for your termination. If your employment by
the Company shall be terminated on account of Retirement, your stock options and similar awards will remain exercisable for thirty-six (36) months after the Date of Termination <(>or, if earlier, until they would have expired but for your termination).

      (vii) Except as specifically provided in paragraph (v) above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company by reason of
  any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise.

      (viii) If, within thirty-six (36) months after a change in control of the Company, your employment by the Company shall be terminated (a) by the Company other than for Cause, Disability or Retirement
  or (b) by you for Good Reason, then the Company shall provide you with reasonable outplacement services.

        (ix) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the
    Company (or any of its Affiliates) or any entity which effectuates a change in control (or any of its affiliated entities) to you or for your benefit (whether pursuant to the terms of this Agreement or otherwise, but determined without regard to any
    additional payments required under this Section 5(ix)) (the "Payments") would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties are incurred by you with respect to such excise tax (such excise tax,
    together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Company shall pay to you an additional payment or payments (collectively, a "Gross-Up Payment") in an amount such that after
    payment by you of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y) the product of any deductions disallowed
    because of the inclusion of the Gross-up Payment in your adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-up Payment is to be made. For purposes of determining the
  amount of the Gross-up Payment, you shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-up Payment is to be made, (ii) pay applicable 

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state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes and (iii) have otherwise allowable deductions for federal income tax purposes at least equal to the Gross-up Payment. The receipt of a Gross-Up Payment shall in no event be conditioned upon your termination of
employment or your receipt of any other benefits under this Agreement. Notwithstanding the foregoing provisions of this Section 5(ix), if it shall be determined that you are entitled to a Gross-Up Payment, but that the Payments would not be subject
to the Excise Tax if the Payments were reduced by an amount that is less than the greater of (A) 5% of the portion of the Payments that would be treated as “parachute payments” under Section 280G of the Code and (B) $50,000, then the
amounts payable to you under this Agreement shall be reduced (but not below zero) to the maximum amount that could be paid to you without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to you.
The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 5(iv)(C), unless an alternative method of reduction is elected by you. For purposes of reducing the Payments to the Safe Harbor
Cap, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this
Agreement shall be reduced pursuant to this provision.

      Subject to the foregoing provisions of this Section 5(ix), all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment or reduction to the Safe Harbor
  Cap is required, the amount of such Gross-Up Payment or reduction to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by the public accounting firm that is retained by the Company as of the
  date immediately prior to the change in control (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and you within fifteen (15) business days of the receipt of notice from the Company or you that there
  has been a Payment, or such earlier time as is requested by the Company (collectively, the "Determination"). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the change in
  control, the Company shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the
  Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. The Gross-up Payment under this Section 5(ix) with
  respect to any Payments shall be made no later than thirty (30) days following such Payment.  If the Accounting Firm determines that no Excise Tax is payable by you, it shall furnish you with a written opinion to such effect, and to the effect that
  failure to report the Excise Tax, if any, on your applicable federal income tax return will not result in the imposition of a negligence or similar penalty. The Determination by the Accounting Firm shall be binding upon the Company and you.

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     As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that a Gross-Up Payment which will not have been made by the Company
should have been made ("Underpayment") or a Gross-Up Payment is made by the Company which should not have been made ("Overpayment"), consistent with the calculations required to be made hereunder. In the event that you thereafter are required to
make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) shall be promptly paid by the Company to you or for your benefit. In the event the amount of the Gross-up Payment exceeds the amount necessary to reimburse you for your Excise Tax, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by you (but only to the extent you have received a refund if the applicable Excise Tax has
been paid to the Internal Revenue Service) to or for the benefit of the Company. You shall cooperate, to the extent your expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax. 

     (x) To the extent you would otherwise be entitled to any payment during the six months beginning on termination of your employment that would be subject to the additional tax under Section 409A, (i) the payment will not be made
  to you and instead will be made to a trust in compliance with Revenue Procedure 92-64 (the "Rabbi Trust") and (ii) the payment, together with earnings on it, will be paid to you on the earlier of the six-month anniversary of your date of termination
  or your death or disability (within the meaning of Section 409A). Similarly, to the extent you would otherwise be entitled to any benefit (other than a payment) during the six months beginning on termination of your employment that would be subject
  to the Section 409A additional tax, the benefit will be delayed and will begin being provided (together, if applicable, with an adjustment to compensate you for the delay) on the earlier of the six-month anniversary of your date of termination or
  your death or disability (within the meaning of Section 409A).

      The Company will bear all costs related to the establishment and operation of the Rabbi Trust. It is understood that the Rabbi Trust may also be used for similar arrangements with other executives of the Company. 

6. Obligations Following Termination of Employment.

     (i) During your employment with the Company, and for a one year period after your employment terminates for any reason, your shall not, in any manner, directly or indirectly (without the prior written consent of the Company) Solicit anyone who is then an employee of the Company (or who was an employee of the
Company within the prior 12 months) to resign 

  12

 

from the Company or to apply for or accept employment with any other business or enterprise. For this purpose, “Solicit” means any direct or indirect communication of any kind, regardless of who initiates it, that in any
way invites, advises, encourages or requests any person to take or refrain from taking any action.  

     (ii) During the term of this Agreement and following termination of your employment for any reason, you shall not, in any manner, directly or indirectly make or publish any statement (orally or in
  writing) that would libel, slander, disparage, denigrate, ridicule or criticize the Company, any of its affiliates or any of their employees, officers or directors. 

      (iii) You agree that you will cooperate (i) with the Company in the defense of any legal claim involving any matter that arose during your employment with the Company, and (ii) with all government authorities on matters
pertaining to any investigation, litigation or administrative proceeding concerning the Company. The Company will reimburse you for any reasonable travel and out of pocket expenses incurred by you in providing such cooperation.

7. Successors; Binding Agreement.

     (i) The Company will seek, by written request at least five (5) business days prior to the time a Person becomes a Successor (as hereinafter defined), to have such Person, by agreement in form and substance satisfactory to you, assent to the fulfillment of the Company's obligations under this Agreement. Failure of such
Person to furnish such assent by the later of (A) three (3) business days prior to the time such Person becomes a Successor or (B) two (2) business days after such Person receives a written request to so assent shall constitute Good Reason for
termination by you of your employment if a change in control of the Company occurs or has occurred. For purposes of this Agreement, "Successor" shall mean any Person that succeeds to, or has the practical ability to control (either immediately or
with the passage of time), the Company's business directly, by merger or consolidation, or indirectly, by purchase of the Company's voting securities or otherwise.

      (ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If
  you should die following your termination of employment while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this
  Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

      (iii)  For purposes of this Agreement, the "Company" shall include any corporation or other entity which is the surviving or continuing entity in respect of any merger, consolidation or form of
  business combination in which the Company ceases to exist. 

  13

 

     8. Fees and Expenses; Mitigation. (i) The Company shall reimburse you, on a current basis upon receipt of reasonable written evidence of such
fees and expenses, for all legal fees and related expenses incurred by you in connection with this Agreement (including claims under the First Horizon National Corporation Directors and Executives Deferred Compensation Plan, or any successor plan or
plans thereto) following a change in control of the Company, including, without limitation, (a) all such fees and expenses, if any, incurred in contesting or disputing any termination of your employment or incurred by you in seeking advice with
respect to the matters set forth in Section 5(ix) hereof or (b) your seeking to obtain or enforce any right or benefit provided by this Agreement, in each case, regardless of whether or not your claim is upheld by a court of competent jurisdiction;
provided, however, you shall be required to repay any such amounts to the Company to the extent that a court issues a final and non-appealable order setting forth the determination that the position taken by you was frivolous or advanced by you in
bad faith.

      (ii)  You shall not be required to mitigate the amount of any payment the Company becomes obligated to make to you in connection with this Agreement, by seeking other employment or otherwise.

      9.  Taxes.  All payments to be made to you under this Agreement will be subject to required withholding of federal, state and local income
  and employment taxes.

      10. Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 7(ii), 8, 9, 14 and 15
  of this Agreement shall survive termination of this Agreement.

      11.  Notice.  (i)  For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing
  and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid and addressed, in the case of the Company, to the address set forth on the first page of this Agreement
  or, in the case of the undersigned employee, to the address set forth below his signature, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board, Chief Executive Officer or President of the Company,
  with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

      (ii) A written notice of your Date of Termination by the Company or you, as the case may be, to the other, shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) to
  the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated and (iii) specify the termination date (which date shall be not less
  than fifteen (15) (thirty (30), if termination is by the Company for Disability) nor more than sixty (60) days after the giving of

  14

 

such notice).  The failure by you or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right you or the Company have hereunder or preclude
you or the Company from asserting such fact or circumstance in enforcing your or the Company's rights hereunder.

      12.  Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is
  agreed to in a writing signed by you and, on behalf of the Company, by the Chairman of the Board, Chief Executive Officer or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of
  compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or
  representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  The validity, interpretation, construction and performance of this
  Agreement shall be governed by the laws of the State of Tennessee.

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

      14. Employee's Commitment. You agree that subsequent to your period of employment with the Company, you will not at any time communicate or
  disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of the Company or any Affiliate or other confidential information concerning their business, affairs, products, suppliers or customers which,
  if disclosed, would have a material adverse effect upon the business or operations of the Company and its Affiliates, taken as a whole; it being understood, however, that the obligations under this Section 14 shall not apply to the extent that the
  aforesaid matters (a) are disclosed in circumstances where you are legally required to do so or (b) become generally known to and available for use by the public otherwise than by your wrongful act or omission.

      15.  Related Agreements.  To the extent that any provision of any other agreement between the Company or any of its Subsidiaries and you
  shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall
  be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose. Moreover, the benefits provided under this Agreement shall offset any and
  all benefits provided under any severance plan, program or similar arrangement (including any severance provisions of any employment agreement) of the Company and its Subsidiaries. 

  15

 

      The Company will not take any action that would expose any payment or benefit to you under this Agreement or under any plan, arrangement or other agreement to the additional tax of Section 409A, unless (i) the Company is obligated to take the action under an agreement, plan or arrangement to which you are a party, (ii) you request the action, (iii) the Company advises you in writing that the action
may result in the imposition of the additional tax and (iv) you subsequently request the action in a writing that acknowledges you will be responsible for any effect of the action under
Section 409A. The Company will hold you harmless for any action it may take in violation of this paragraph. 

     It is our intention that the benefits and rights to which you could become entitled in connection with termination of employment covered under this Agreement comply with Section 409A. If you or the Company believes, at any time,
  that any of such benefit or right does not comply, it will promptly advise the other and will negotiate reasonably and in good faith to amend the terms of such arrangement such that it complies (with the most limited possible economic effect on you
  and on the Company).

      16. Employment. Employment with the Company for purposes of this Agreement shall include employment with any of its Subsidiaries or with any
  entity which directly or indirectly beneficially owns more than 50% of the voting securities of the Company ("Parent").

      17.  Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which
  together will constitute one and the same instrument. 

  16

 

     If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this
subject. 

Sincerely,

FIRST HORIZON NATIONAL CORPORATION

	By 	
	 
	Name: Kenneth R. Bottoms	 
	Title: Manager – Total Rewards 	 

 

Agreed to this ____________
day of______________________________________

, 200___.

	    
	 	 
	(insert full name) 	 	 
	 	 	 
	 	 	 
	Home Address: 	 	 
	   
	 	 
	   
	 	 
	    
	 	 
	 	 	 
	Title	 	 
	 	 	 
	     
	 	 

  17EX-10.39

 

Exhibit 10.39

MERRILL LYNCH & CO., INC.

2007 DEFERRED COMPENSATION PLAN

FOR A SELECT GROUP OF ELIGIBLE EMPLOYEES

DATED AS OF MAY 24, 2006

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.

 

 

MERRILL LYNCH & CO., INC.

2007 DEFERRED COMPENSATION PLAN

FOR A SELECT GROUP OF ELIGIBLE EMPLOYEES

Table of Contents

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

 

 

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

 

 

MERRILL LYNCH & CO., INC.

2007 DEFERRED COMPENSATION PLAN

FOR A SELECT GROUP OF ELIGIBLE EMPLOYEES

ARTICLE I

GENERAL

	1.1	 	Purpose and Intent.

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

	1.2	 	Definitions.

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

        “Account” means the notional account established on the books and records of ML & Co. for
each Participant to record the Participant’s interest under the Plan.

        “Account Balance” means, as of any date, the Deferred Amounts credited to a Participant’s
Account, adjusted in accordance with Section 3.4 to reflect the performance of the
Participant’s Selected Benchmark Return Options, the Annual Charge, the Debit Balance, (if any)
any adjustments in the event of a Capital Call Default, and any payments made from the Account
under Article V to the Participant prior to that date.

        “Adjusted Compensation” means the financial advisor incentive compensation, account
executive incentive compensation or estate planning and business insurance specialist incentive
compensation, in each case exclusive of base salary, earned by a Participant during the Fiscal
Year ending in 2007, and payable after January 1, 2007, as a result of the Participant’s
production credit level, or such other similar items of compensation as the Administrator shall
designate as “Adjusted Compensation” for purposes of this Plan.

        “Administrator” means the Head of Rewards and Recognition Planning for ML & Co., or his or
her functional successor, or any other person or committee designated as Administrator of the
Plan by the Administrator or the MDCC.

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

        “Annual Charge” means the charge to a Participant’s Account provided for in Section
3.4(h).

        “Available Balance” means amounts in a Participant’s Account that are indexed to liquid
Benchmark Return Options after the Account’s Debit Balance has been reduced to zero.

 

 

        “Benchmark Return Options” means such investment vehicles as the Administrator may from
time to time designate for the purpose of indexing Accounts hereunder. In the event a Benchmark
Return Option ceases to exist or is no longer to be a Benchmark Return Option, the Administrator
may designate a substitute Benchmark Return Option for such discontinued option.

        “Board of Directors” means the Board of Directors of ML & Co.

        “Capital Call” means the periodic demands for funds from a Participant’s Account that will
be equal to and occur simultaneously with capital calls made by private equity funds chosen as a
return option by the Participant.

        “Capital Call Default” means that there is an insufficient Liquid Balance in the
Participant’s Account to fund a Capital Call.

        “Capital Demand Default Adjustment” means the negative adjustment described in Section 3.4
in the number of “units” attributed to a Private Equity Fund Return Options that will be the
result of a Capital Call Default.

        “Cash Compensation” means (1) (for VICP eligible employees) salary in the reference year
plus VICP earned in the reference year and paid in January or February of the next calendar year
or (2) (for Financial Advisors and other employees receiving Adjusted Compensation) base salary
plus Adjusted Compensation paid in the reference year.

        “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.

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

        “Compensation” means, as relevant, a Participant’s Adjusted Compensation, Variable
Incentive Compensation and/or Sign-On Bonus, or such other items or items of compensation as the
Administrator, in his or her sole discretion, may specify in a particular instance.

        “Debit Balance” means, as of any date, the dollar amount, if any, representing the accrued
aggregate Annual Charge not deducted from the Liquid Balance.

        “Deferral Percentage” means the percentage (which, unless the Administrator, in his or her
sole discretion, determines otherwise, shall be in whole percentage increments and not more than
90%) specified by the Participant to be the percentage of each payment of Compensation he or she
wishes to defer under the Plan.

        “Deferred Amounts” means, except as provided in Section 5.6, the amounts of Compensation
actually deferred by the Participant under this Plan.

        “Election Year” means the 2006 calendar year.

        “Eligible Compensation” means (1) for persons eligible for the Variable Incentive
Compensation Program or other similar programs: (A) a Participant’s 2005 base earnings plus (B)
any cash bonus awarded in early 2006, and (2) for persons ineligible for such bonus programs, a
Participant’s 2005 Adjusted Compensation.

        “Eligible Employee” means an employee eligible to defer amounts under this Plan, as
determined under Section 2.1 hereof.

2

 

        “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended from
time to time.

        “Excess Deferred Amounts” means the amount, if any, of a Participant’s Deferred Amounts in
excess of the lesser of 10% of the Participant’s Compensation or $150,000.

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

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

        “Full-Time Domestic Employee” means a full-time employee of the Company paid from the
Company’s domestic based payroll (other than any U.S. citizen or “green card” holder who is
employed outside the United States).

        “Full-Time Expatriate Employee” means a U.S. citizen or “green card” holder employed by the
Company outside the United States and selected by the Administrator as eligible to participate
in the Plan (subject to the other eligibility criteria).

        “Income Builder Return Option” means the option of receiving returns hereunder equal to the
yield of the Moody’s Long-Term Aa Corporate Bond Yield Average (or its successor). Such yield
shall be reset annually as of the last business day of each calendar year, shall remain in
effect until the last business day of the following calendar year, and shall be credited
annually. If the Moody’s Long-Term Aa Corporate Bond Yield Average is no longer in existence, a
new crediting index rate for the Income Builder Return Option will be choosen by the
Administrator.

        “Liquid Balance” means, as of any date, the Deferred Amounts credited to a Participant’s
Account, not including amounts that represent future commitments to Private Equity Funds
adjusted (either up or down) to reflect: (1) the performance of the Participant’s Mutual Fund
Return Balances or the Income Builder Return Option, as provided in Section 3.4(f); (2)
reduction of any Debit Balance; and (3) any payments to the Participant under Article V hereof.

        “Maximum Deferral” means the whole dollar amount specified by the Participant to be the
amount of Compensation he or she elects to be deferred under the Plan.

        “MDCC” means the Management Development and Compensation Committee of the Board of
Directors.

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

        “Moody’s Long-Term Aa Corporate Bond Yield Average” means the average yield-to-maturity of
a selection of long-term bonds rated “Excellent” (2nd highest rating) by the Moody’s
Investor Service.

        “Mutual Fund Return Options” means the mutual funds chosen as Benchmark Return Options by
the Administrator.

        “Net Asset Value” means, with respect to each Benchmark Return Option that is a mutual fund
or other commingled investment vehicle for which such values are determined in the normal course
of business, the net asset value, on the date in question, of the vehicle for which such value
is being determined.

        “Participant” means an Eligible Employee who has elected to defer Compensation under the
Plan.

3

 

        “Plan” means this Merrill Lynch & Co., Inc. 2007 Deferred Compensation Plan for a Select
Group of Eligible Employees.

        “Plan Year” means the Fiscal Year ending in 2007.

        “Private Fund Return Option(s)” means one or more private funds that are chosen by the
Administrator to be offered — with such limitations as may be required — to eligible
Participants as Benchmark Return Options.

        “Private Fund Unit(s)” means the record-keeping units credited to the Accounts of
Participants who have chosen one or more Private Fund Return Options.

        “Retirement” means a Participant’s (i) termination of employment with the Company for
reasons other than for cause on or after the Participant’s 65th birthday, or (ii) termination of
employment on or after the Participant’s 55th birthday if the Participant has at least 10 years
of service.

        “Remaining Deferred Amounts” means the product of a Participant’s Deferred Amounts times a
fraction equal to the number of remaining installment payments divided by the total number of
installment payments.

        “Remaining Excess Deferred Amounts” means the portion, if any, of a Participant’s Remaining
Deferred Amounts attributable to Excess Deferred Amounts.

        “Rule of 60” means a Participant’s termination of employment with the Company for reasons
other than cause on or after (A) having completed at least five (5) years of service and (B)
reaching any age, that, when added to service with the Company (in each case, expressed as
completed years and completed months), equals at least 60; provided that, a Participant shall
not qualify for the Rule of 60 if he or she engages in a business which the Administrator, in
his or her sole discretion, determines to be in competition with the business of the Company.

        “Selected Benchmark Return Option” means a Benchmark Return Option selected by the
Participant in accordance with Section 3.4.

        “Sign-On Bonus” means a single-sum amount paid or payable to a new Eligible Employee during
the Plan Year upon commencement of employment, in addition to base pay and other Compensation,
to induce him or her to become an employee of the Company, or any similar item of compensation
as the Administrator shall designate as “Sign-On Bonus” for purposes of this Plan.

        “Undistributed Deferred Amounts” means, as of any date on which the Annual Charge is
determined, a Participant’s Deferred Amounts (exclusive of any appreciation or depreciation)
minus, for each distribution to a Participant prior to such date, an amount equal to the product
of the Deferred Amounts and a fraction the numerator of which is the amount of such distribution
and the denominator of which is the combined Net Asset Value (prior to distribution) of the
Participant’s Account as of the date of the relevant distribution.

        “Variable Incentive Compensation” means the variable incentive compensation or office
manager incentive compensation that is paid in cash to certain employees of the Company
generally in January or February of the Plan Year with respect to the prior Fiscal Year, which
for purposes of this Plan is considered earned during the Plan Year regardless of when it is
actually paid to the Participant, or such other similar items of compensation as the
Administrator shall designate as “Variable Incentive Compensation” for purposes of this Plan.

4

 

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

ARTICLE II

ELIGIBILITY

	2.1	 	Eligible Employees.

        (a)     General Rule. An individual is an Eligible Employee if he or she (i) is a Full-Time
Domestic Employee or a Full-Time Expatriate Employee, (ii) has at least $300,000 of Eligible
Compensation for the year prior to the Election Year, and (iii) has attained the title of Vice
President or higher.

        (b)     Individuals First Employed During Election Year or Plan Year. Subject to the approval
of the Administrator in his or her sole discretion, an individual who is first employed by the
Company during the Election Year or the Plan Year is an Eligible Employee if his or her Eligible
Compensation, together, if applicable, with the amount of any Variable Incentive Compensation
that will be payable to such individual in the next annual bonus cycle pursuant to a written
bonus guarantee, is greater than $300,000, and he or she is employed as or is to be nominated
for the title of Vice President or higher at the first opportunity following his or her
commencement of employment with the Company.

        (c)     Disqualifying Factors. An individual shall not be an Eligible Employee if either (i)
as of the deadline for submission of elections specified in Section 3.1(a), the individual’s
wages have been attached or are being garnished or are otherwise restrained pursuant to legal
process, or (ii) within 13 months prior to the deadline for submission of elections specified in
Section 3.1(a), the individual has made a hardship withdrawal of Elective 401(k) Deferrals as
defined under the 401(k) Plan.

ARTICLE III

DEFERRAL ELECTIONS; ACCOUNTS

	3.1	 	Deferral Elections.

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

        (b)     Irrevocability of Deferral Election. Except as provided in Section 5.5, an election to
defer the receipt of any Compensation made under Section 3.1(a) is irrevocable once submitted to
the Administrator or his or her designee. The Administrator’s acceptance of an election to
defer Compensation shall not, however, affect the contingent nature of such Compensation under
the plan or program under which such Compensation is payable.

5

 

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

	3.2	 	Crediting to Accounts.

        (a)     Initial Deferrals. A Participant’s Deferred Amounts will be credited to the
Participant’s Account as soon as practicable (but in no event later than the end of the
following month) after the last day of the Fiscal Month during which such Deferred Amounts
would, but for deferral, have been paid and will be accounted for in accordance with Section
3.4. No interest will accrue, nor will any adjustment be made to an Account, for the period
until the Deferred Amounts are credited.

        (b)     Private Fund Return Options. Upon the closing of any Private Return Option, a
Participant’s Account will be credited with a number of units determined by dividing by $1,000
the portion of the Account Balance that the Participant has elected to allocate to the Private
Return Option, as of the day prior to the closing date.

	3.3	 	Minimum Requirements for Deferral.

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

	 	(i)	 	the Participant is not an Eligible Employee as of December 31, 2006, or

	 
	 	(ii)	 	the Participant’s election as applied to the Participant’s Variable
Incentive Compensation (determined by substituting the Election Year for the Plan
Year) or Adjusted Compensation (determined by substituting the Fiscal Year
immediately prior to the Fiscal Year ending in the Election Year for the Fiscal
Year ending in the Plan Year) would have resulted in an annual deferral of less
than $15,000:

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

	3.4	 	Return Options; Adjustment of Accounts.

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

6

 

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

	 	(c)	 	Adjustment of Income Builder Return Option Balances and Other Special Rules.

	 
	 	(i)	 	Crediting.  The portion, if any, of a Participant’s Account Balance
attributable to the Income Builder Return Option shall be credited annually to
reflect the rate of return under such Return Option. Such amounts shall not be
reduced by the annual fee.

	 
	 	(ii)	 	Restatement.  Notwithstanding the foregoing, if a Participant terminates
employment with fewer than 5 years of Merrill Lynch service and 12 months of
participation in the Plan, the portion of the Participant’s Balances attributable
to the Income Builder Return Option shall be restated to reflect crediting for all
periods based on the performance of the Merrill Lynch Premier Institutional Money
Market Fund Return Option instead of the rate of return under the Income Builder
Return Option.

	 
	 	(iii)	 	Death Benefit.  In the event of a Participant’s death while still
employed by the Company, the portion of the Participant’s Account Balance
attributable to the Income Builder Return Option shall be credited with an
additional investment return calculated as if such portion of the Balances had been
credited with the then current rate of return under the Income Builder Return
Option until the later of the fifth anniversary of the Participant’s death or the
date on which the Participant would have attained age 60. In order for the
Participant’s Balances to be eligible for this additional investment return, the
Participant must provide consent to the Company (in accordance with rules and
procedures established by the Administrator) for the Company to purchase, and be
the beneficiary of, one or more insurance policies on the Participant’s life.

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

7

 

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

	 	(i)	 	if the security is listed for trading on one or more national securities
exchanges, the average of the high and low sale prices for that day on the
principal exchange for such security, or if such security is not traded on such
principal exchange on that day, the average of the high and low sales prices on
such exchange on the first day prior thereto on which such security was so traded;

	 
	 	(ii)	 	if the security is not listed for trading on a national securities exchange
but is traded in the over-the-counter market, the average of the highest and lowest
bid prices for such security on the relevant day; or

	 
	 	(iii)	 	if neither clause (i) nor (ii) applies, the value determined by the
Administrator by whatever means he considers appropriate in his or her sole
discretion.

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

	 	(d)	 	Adjustments of Private Fund Return Options.

	 
	 	(i)	 	Whenever a distribution is paid on an actual unit of a Private Fund Return
Option, an amount equal to such per unit distribution times the number of units in
the Participant’s Account will first be applied against any Debit Balance, as
provided in Section 3.4(e), and then, if any portion of such distribution remains
after the Debit Balance is reduced to zero, be credited to the Participant’s
Account to be indexed initially to ML Premier Institutional Fund and then to the
Mutual Fund Return Option(s) chosen by the Participant.

	 
	 	(ii)	 	In the event of a Capital Call Default, a Participant’s notional investment
in the relevant fund will be capped. If this occurs, the number of units
represented by the return option will be adjusted downward to reflect a smaller
investment.

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

	 	(i)	 	In the event that all or any portion of the Account Balance is indexed to a
Benchmark Return Option with less than daily liquidity, the Annual Charge, if any,
will accrue as a Debit Balance and be paid out of future amounts credited to the
Account Balance.

	 
	 	(ii)	 	In the event that the Participant elects to have the Account Balance paid
in installments, the Annual Charge, if any, will be charged on the Remaining Excess
Deferred Amounts after giving effect to the installment payments.

	 
	 	(iii)	 	In the event that the Account Balance is paid out completely during a
Fiscal Year prior to the date upon which the Annual Charge is assessed, a pro
rata Annual Charge will be deducted from amounts to be paid to the Participant
to cover that fraction of the

8

 

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

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

ARTICLE IV

STATUS OF DEFERRED AMOUNTS AND ACCOUNT

	4.1	 	No Trust or Fund Created; General Creditor Status.

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

	4.2	 	Non-Assignability.

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

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

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

9

 

ARTICLE V

PAYMENT OF ACCOUNT

	5.1	 	Manner of Payment.

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

	5.2	 	Termination of Employment.

        (a)     Death, Retirement, Rule of 60. Subject to Section 5.2(b)(2), upon a Participant’s
death or Retirement (as defined in this Plan), or termination when the Participant complies
with the Rule of 60 (as defined in this Plan) prior to payment, the Account Balance will be
paid, in accordance with the Participant’s elections and as provided in Section 5.1, to the
Participant or to the Participant’s beneficiary (in the event of death); provided,
however, that (1) in the event that the Participant enters into competition with the
business of Merrill Lynch, he or she will not be eligible for Retirement or Rule of 60
treatment under this Section 5.2 (a), and (2) in the event that a beneficiary of the
Participant’s Account is the Participant’s estate or is otherwise not a natural person, the
applicable portion of the Account Balance will promptly be paid in a single payment to such
beneficiary notwithstanding any election of installment payments.

(b)      Other Termination of Employment; Treatment of Key Employees

        (1)     Subject to Section 5.2(b)(2), if a Participant’s employment terminates at any time for
any other reason than those described in Section 5.2(a), then, notwithstanding the
Participant’s elections hereunder, any Available Balance will be paid to the Participant in a
single payment in the month following the month of the Participant’s termination.

        (2)     If a Participant’s employment terminates at any time while the Participant constitutes
a specified employee within the meaning of section 409A of the Code, then, notwithstanding the
Participant’s elections hereunder, any Available Balance will be paid to the Participant (or to
the Participant’s beneficiary, in the event of death) in a single payment in the month
following the earlier of (i) the six-month anniversary of the Participant’s termination or (ii)
the month of the Participant’s death.

10

 

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

	5.3	 	Withholding of Taxes.

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

	5.4	 	Beneficiary.

        (a)     Designation of Beneficiary. The Participant may designate, in a writing delivered to
the Administrator or his or her designee before the Participant’s death, a beneficiary to
receive payments in the event of the Participant’s death. The Participant may also designate a
contingent beneficiary to receive payments in accordance with this Plan if the primary
beneficiary does not survive the Participant. The Participant may designate more than one
person as the Participant’s beneficiary or contingent beneficiary, in which case (i) no
contingent beneficiary would receive any payment unless all of the primary beneficiaries
predeceased the Participant, and (ii) the surviving beneficiaries in any class shall share in
any payments in proportion to the percentages of interest assigned to them by the Participant.

        (b)     Change in Beneficiary. The Participant may change his or her beneficiary or
contingent beneficiary (without the consent of any prior beneficiary) in a writing delivered to
the Administrator or his or her designee before the Participant’s death. Unless the
Participant states otherwise in writing, any change in beneficiary or contingent beneficiary
will automatically revoke prior such designations of the Participant’s beneficiary or of the
Participant’s contingent beneficiary, as the case may be, under this Plan only; and any
designations under other deferral agreements or plans of the Company will remain unaffected.

        (c)     Default Beneficiary. In the event that a Participant does not designate a
beneficiary, or no designated beneficiary survives the Participant, the Participant’s
beneficiary shall be the Participant’s surviving spouse, if the Participant is married at the
time of his or her death and not subject to a court-approved agreement or court decree of
separation, or otherwise the person or persons designated to receive benefits on account of the
Participant’s death under the ML & Co. Basic Group Life Insurance Plan (the “Life Insurance
Plan”). However, if an unmarried Participant does not have coverage in effect under the Life
Insurance Plan, or the Participant has assigned his or her death benefit under the Life
Insurance Plan, any amounts payable to the Participant’s beneficiary under the Plan will be
paid to the Participant’s estate.

        (d)     If the Beneficiary Dies During Payment. If a beneficiary who is receiving or is
entitled to receive payments hereunder dies after the Participant dies, but before all the
payments have been made, the portion of the Account Balance to which that beneficiary was
entitled will be paid as soon as practicable in one lump sum to such beneficiary’s estate and
not to any contingent beneficiary the Participant may have designated.

	5.5	 	Distributions Upon Unforeseeable Emergency.

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

11

 

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

	5.6	 	Domestic Relations Orders.

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

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

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

ARTICLE VI

ADMINISTRATION OF THE PLAN

	6.1	 	Powers of the Administrator.

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

12

 

	6.2	 	Grantor Trust.

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

	6.3	 	Payments on Behalf of an Incompetent.

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

	6.4	 	No Right of Set-Off.

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

	6.5	 	Corporate Books and Records Controlling.

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

ARTICLE VII

MISCELLANEOUS PROVISIONS

	7.1	 	Litigation.

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

	7.2	 	Headings Are Not Controlling.

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

	7.3	 	Governing Law.

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

13

 

	7.4	 	Amendment and Termination.

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

14

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